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TIDM58KM
RNS Number : 0664M
AT & T Inc.
09 August 2011
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of report (Date of earliest event reported) July 21, 2011
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
of Incorporation) Number) Identification 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 July 21, 2011, its results of operations for the second 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 July 21, 2011 reporting financial
results for the second quarter ended June 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: July 21, By: /s/ Paul W.
2011 Stephens______________
Paul W. Stephens Senior
Vice President and
Controller
For more information, contact:
McCall Butler
917-209-5792
mbutler@attnews.us
AT&T Reports Strong Wireless Gains, Record Mobile Broadband Sales and Continued Strength in U-verse and Strategic Business Services in Second-Quarter Results
-- $0.60 diluted EPS, compared to $0.67 diluted EPS, and $0.60 per diluted share when excluding a significant item in the second quarter of 2010
-- Consolidated revenues of $31.5 billion in the second quarter, up more than $680 million, or 2.2 percent, versus the year-earlier period
-- 9.5 percent growth in wireless revenues, with a 7.4 percent increase in wireless service revenues
-- Total wireless subscribers up 1.1 million to reach 98.6 million subscribers in service, with gains in every customer category including 331,000 postpaid net adds
-- Best-ever second-quarter smartphone sales of 5.6 million; nearly 70 percent of total postpaid sales were smartphones
-- iPhone activations remain strong at 3.6 million, with 24 percent of subscribers new to AT&T; iPhone subscriber churn down slightly sequentially
-- Sales of Android and other smartphones doubled year over year; more than 40 percent of smartphone sales in the quarter
-- Branded computing subscribers (includes tablets, aircards, MiFi devices, tethering plans and other data-only devices) up 545,000, almost doubling since the second quarter of 2010 to reach 4.0 million
-- 23.4 percent growth in wireless data revenues, up $1 billion versus the year-earlier quarter
-- Postpaid subscriber ARPU (average monthly revenues per subscriber) up 2.0 percent to $63.87, the tenth consecutive quarter with a year-over-year increase
-- Fourth consecutive quarter of year-over-year growth in wireline consumer revenues, driven by AT&T U-verse(R) services
-- 202,000 net gain in AT&T U-verse TV subscribers to reach 3.4 million in service, with continued high broadband and voice attach rates
-- 21.9 percent growth in wireline consumer Internet Protocol (IP) data revenues to reach nearly half of consumer revenue, driven by continued AT&T U-verse expansion
-- Continued increase in strategic business services revenues, up 19.4 percent year over year, their strongest growth in six quarters
Note: AT&T's second-quarter earnings conference call will be broadcast live via the Internet at 10 a.m. ET on Thursday, July 21, 2011, at www.att.com/investor.relations.
DALLAS, July 21, 2011 - AT&T Inc. (NYSE:T) today reported second-quarter results, highlighted by robust mobile broadband growth, record second-quarter smartphone sales and stable sequential wireline revenues.
"We delivered another strong quarter capping a solid first half of the year," said Randall Stephenson, AT&T chairman and chief executive officer. "Mobile broadband growth continues to be robust, and we are seeing encouraging signs in wireline revenues. This adds to our confidence as we look ahead.
"Mobile broadband with IP infrastructure and cloud services are transforming our industry and are creating unprecedented opportunity. AT&T is strongly positioned to lead in this new era," Stephenson said. "Our planned acquisition of T-Mobile USA will accelerate development of next-generation capabilities, and it will lay the groundwork for continued high-tech innovation for years to come."
Second-Quarter Financial Results
For the quarter ended June 30, 2011, AT&T's consolidated revenues totaled $31.5 billion, up more than $680 million, or 2.2 percent, versus the year-earlier quarter, marking the company's sixth consecutive quarter with a year-over-year revenue increase.
Compared with results for the second quarter of 2010, AT&T's operating income margin was 19.6 percent, compared to 19.7 percent; and operating expenses were $25.3 billion versus $24.7 billion; operating income was $6.2 billion, up from $6.1 billion.
Second-quarter 2011 net income attributable to AT&T totaled $3.6 billion, or $0.60 per diluted share. These results compare with reported net income attributable to AT&T of $4.0 billion, or $0.67 per diluted share, in the second quarter of 2010. Earnings per share for the second quarter of 2011 matched earnings per share excluding the Telmex Internacional transaction in the year-ago second quarter.
Second-quarter 2011 cash from operating activities totaled $9.0 billion, and capital expenditures totaled $5.3 billion. Free cash flow - cash from operating activities minus capital expenditures - totaled $3.7 billion.
Compared with results for the first half of 2010, year to date through the second quarter, cash from operating activities totaled $16.8 billion versus $15.8 billion; capital expenditures totaled $9.5 billion compared to $8.2 billion; and free cash flow totaled $7.3 billion versus $7.6 billion.
Updating Outlook
Led by increased wireless demand, AT&T now expects capital expenditures in the $20 billion range for full-year 2011. Previously, the company expected capital expenditures in the low-to-mid $19 billion range. Free cash flow guidance remains unchanged, with expected growth over 2010 levels.
WIRELESS OPERATIONAL HIGHLIGHTS
Led by continued strong performance in mobile broadband in the second quarter, AT&T delivered solid growth in its wireless business, including strong revenue growth, record second-quarter smartphone gains and strong net adds including postpaid and branded computing devices. Highlights included:
Postpaid Leads Solid Subscriber Gains. AT&T posted a net gain in total wireless subscribers of 1.1 million, to reach 98.6 million in service. This included gains in every customer category. Net adds for the quarter include postpaid net adds of 331,000. Excluding the impacts of the Alltel and Centennial integration migrations, postpaid net adds were 504,000. Prepaid net adds were 137,000, connected device net adds were 379,000 and reseller net adds were 248,000. Second-quarter net adds reflect adoption of smartphones, increases in prepaid subscribers and sales of tablets and connected devices such as automobile monitoring systems, security systems and a host of other products.
Strongest Quarter Ever for Branded Computing Device Sales. AT&T had a record quarter with branded computing subscribers, a new growth area for the company that includes tablets, aircards, MiFi devices, tethering plans and other data-only devices. AT&T added 545,000 of these devices to reach 4.0 million, nearly twice as many in service as a year ago. Most of those new subscribers were tablets, with 377,000 added in the quarter, of which 30 percent were postpaid.
Postpaid Churn Remains Stable. Total churn was 1.43 percent versus 1.29 percent in the second quarter of 2010 and 1.36 percent in the first quarter of 2011. Postpaid churn was 1.15 percent, compared to 1.01 percent in the year-ago second quarter and 1.18 percent in the first quarter of 2011. Excluding the impacts of the Alltel and Centennial migrations, postpaid churn of 1.06 percent for the quarter was relatively stable with 0.99 percent in the year-ago quarter and better than the 1.12 percent in the first quarter of 2011.
Smartphones Near 70 Percent of Postpaid Sales. AT&T continues to deliver robust smartphone sales. (Smartphones are voice and data devices with an advanced operating system to better manage data and Internet access.) In the second quarter, 5.6 million smartphones were sold, a second-quarter record and the third-highest quarter ever. Smartphone sales also increased more than 43 percent year over year. Sales of non-iPhone smartphones more than doubled year over year. Nearly 70 percent of postpaid device sales were smartphones. During the quarter, 3.6 million iPhones were activated.
At the end of the quarter, 49.9 percent of AT&T's 68.4 million postpaid subscribers had smartphones, up from 35.8 percent a year earlier. The average ARPU for smartphones on AT&T's network is 1.8 times that of the company's non-smartphone devices. More than 85 percent of smartphone subscribers are on FamilyTalk or business plans. Churn levels for these subscribers are significantly lower than for other postpaid subscribers.
Strong Wireless Revenue Growth Continues. Total wireless revenues, which include equipment sales, were up 9.5 percent year over year to $15.6 billion. Wireless service revenues increased 7.4 percent, to $14.2 billion, in the second quarter.
Wireless Data Revenues Lead Growth. Wireless data revenues - driven by Internet access, access to applications, messaging and related services - increased more than $1 billion, or 23.4 percent, from the year-earlier quarter to $5.4 billion. AT&T's postpaid wireless subscribers on monthly data plans increased by 19.5 percent over the past year. Versus the year-earlier quarter, total text messages carried on the AT&T network increased by 24 percent to 190.8 billion, and multimedia messages increased by 54 percent to 4.0 billion.
Postpaid ARPU Expansion. Driven by strong data growth, postpaid subscriber ARPU increased 2.0 percent versus the year-earlier quarter to $63.87. This marked the tenth consecutive quarter AT&T has posted a year-over-year increase in postpaid ARPU. Postpaid data ARPU reached $24.57, up 16.6 percent versus the year-earlier quarter.
Wireless Margins Expand Sequentially Even with Strong Smartphone Sales. Second-quarter wireless margins reflect increased operating costs associated with strong smartphone sales, high customer upgrade levels and the Alltel and Centennial merger costs, offset in part by improved operating efficiencies and further revenue growth from the company's growing base of high-quality smartphone subscribers. AT&T's second-quarter wireless operating income margin was 27.0 percent versus 28.9 percent in the year-earlier quarter, and AT&T's wireless EBITDA service margin was 41.1 percent, compared with 43.1 percent in the second quarter of 2010. Without customer migration and integration costs from the Alltel and Centennial mergers, the service margin would have been 42.0 percent. (EBITDA service margin is earnings before interest, taxes, depreciation and amortization, divided by total service revenues.) Second-quarter wireless operating expenses totaled $11.4 billion, up 12.5 percent versus the year-earlier quarter, and wireless operating income was $4.2 billion, up 2.3 percent year over year.
WIRELINE OPERATIONAL HIGHLIGHTS
AT&T's second-quarter wireline results were highlighted by stable sequential revenues, the fourth consecutive quarter of year-over-year wireline consumer growth and stabilizing wireline business revenues. Other highlights included:
Wireline Consumer Revenues Grow for Fourth Consecutive Quarter. Driven by strength in IP data services, revenues from residential customers totaled $5.4 billion in the second quarter. Versus the second quarter of 2010, consumer wireline revenues increased 0.1 percent, the fourth consecutive quarter of year-over-year growth, and revenues also increased sequentially.
U-verse TV and ARPU Continue Gains. AT&T U-verse TV added 202,000 subscribers to reach 3.4 million in service. In the second quarter, the AT&T U-verse High Speed Internet attach rate continued to run above 90 percent and 55 percent of new subscribers took AT&T U-verse Voice. 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 $170, up 8.3 percent year over year.
AT&T's U-verse deployment now reaches 29 million living units. Companywide penetration of eligible living units is 15.5 percent, and overall penetration is 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 5.3 million at the end of the quarter, representing 21.5 percent of households served.
U-verse Broadband Continues Strong Growth. AT&T U-verse High Speed Internet delivered a second-quarter gain of 439,000 subscribers to reach a total of 4.1 million, helping offset losses from DSL. At the end of the second quarter, AT&T had 16.5 million total wired consumer broadband connections, up 3.3 percent over the past year and down slightly from first-quarter 2011 levels largely due to seasonality. About 70 percent of consumers have a broadband plan of 3 Mbps or higher.
IP Data Nears Half of Consumer Revenues. U-verse continues to drive a transformation in AT&T's consumer business, reflected by the fact that consumer IP revenues now represent 49.2 percent of AT&T's wireline consumer revenues, up from 40.4 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 21.9 percent year-over-year growth in IP revenues from residential customers (broadband, U-verse TV and U-verse Voice) and 5.6 percent sequential growth. U-verse revenues grew 57.0 percent compared with the year-ago second quarter and 10.7 percent versus the first quarter of 2011.
Growth in Revenues Per Household. Wireline revenues per household served increased 5.2 percent versus the year-earlier second quarter and were up 1.8 percent sequentially (average revenue per household is total consumer wireline revenues divided by the average monthly households in service), driven by AT&T U-verse services. This marked AT&T's 14(th) consecutive quarter with year-over-year growth in wireline consumer revenues per household.
Consumer Connection Trends Continue. In the second 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, broadband and VoIP (Voice over Internet Protocol) connections. AT&T U-verse Voice connections increased by 162,000 in the quarter and 695,000 over the past four quarters. Total consumer revenue connections at the end of the second quarter were 42.5 million, compared with 44.3 million at the end of the second quarter of 2010 and 43.1 million at the end of the first quarter of 2011.
Wireline Business Revenues Stable Sequentially. Total business revenues were $9.3 billion, declining 0.3 percent sequentially and down 4.1 percent versus the year-earlier quarter. The year-over-year decline reflects economic weakness in voice and legacy data products somewhat offset by growth in IP data. Excluding the effect of the third-quarter 2010 sale of Japan assets, business service revenues, which exclude CPE, declined 3.2 percent year over year, compared to a year-over-year decline of 4.0 percent in the year-ago quarter.
Strong Strategic Business Services Revenue Growth Continues. 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 19.4 percent versus the year-earlier quarter continuing strong trends in this area. This now represents a more than $5.5 billion annualized revenue stream.
VPN Growth Drives Business IP Revenues. Total business IP data revenues grew 8.8 percent versus the year-earlier second 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 0.4 percent year over year and grew 0.9 percent sequentially.
Wireline Revenue Trends Stabilizing. AT&T's second-quarter wireline operating income margin was 13.1 percent, down slightly compared to 13.2 percent in the year-earlier quarter and up from 11.5 percent in the first quarter of 2011. Improved consumer and business IP data revenue trends and execution of cost initiatives helped to partially offset declines in voice revenues. Second-quarter total wireline revenues were $14.9 billion, down 3.2 percent versus the year-earlier quarter and stable sequentially. Second-quarter wireline operating expenses were $13.0 billion, down 3.1 percent versus the second quarter of 2010 and down 1.8 percent sequentially. Wireline operating income totaled $2.0 billion, down versus the second quarter of 2010 and up from $1.7 billion in the first quarter of 2011.
Web Site Links: Related Media Kits: =================================== ==================================== AT&T Web Site AT&T 2010 Annual Report AT&T Investor Relations AT&T Investor Relations Events and 2011 AT&T Events Calendar Presentations Related Releases: Related Fact Sheets: =================================== ==================================== 10.2 Percent Wireless Revenue AT&T Historical Dividend Data Growth, Record Net Adds and Smartphone Sales Highlight AT&T's First-Quarter Results AT&T Declares Quarterly Dividend AT&T Files Public Statement with FCC Supporting T-Mobile Acquisition
*AT&T products and services are provided or offered by subsidiaries and affiliates of AT&T Inc. under the AT&T brand and not by AT&T Inc.
About AT&T
AT&T Inc. (NYSE:T) is a premier communications holding company. Its subsidiaries and affiliates - AT&T operating companies - are the providers of AT&T services in the United States and around the world. With a powerful array of network resources that includes the nation's fastest mobile broadband network, AT&T is a leading provider of wireless, Wi-Fi, high speed Internet and voice services. A leader in mobile broadband, AT&T also offers the best wireless coverage worldwide, offering the most wireless phones that work in the most countries. It also offers advanced TV services under the AT&T U-verse(R) and AT&T | DIRECTV brands. The company's suite of IP-based business communications services is one of the most advanced in the world. In domestic markets, AT&T Advertising Solutions and AT&T Interactive are known for their leadership in local search and advertising.
Additional information about AT&T Inc. and the products and services provided by AT&T subsidiaries and affiliates is available at http://www.att.com. This AT&T news release and other announcements are available at http://www.att.com/newsroom and as part of an RSS feed at www.att.com/rss. Or follow our news on Twitter at @ATT. Find us on Facebook at www.Facebook.com/ATT to discover more about our consumer and wireless services or at www.Facebook.com/ATTSmallBiz to discover more about our small business services.
(c) 2011 AT&T Intellectual Property. All rights reserved. Mobile broadband not available in all areas. AT&T, the AT&T logo and all other marks contained herein are trademarks of AT&T Intellectual Property and/or AT&T affiliated companies. All other marks contained herein are the property of their respective owners.
Cautionary Language Concerning Forward-Looking Statements Information set forth in this news release contains financial estimates and other forward-looking statements that are subject to risks and uncertainties, and actual results may differ materially. A discussion of factors that may affect future results is contained in AT&T's filings with the Securities and Exchange Commission. AT&T disclaims any obligation to update or revise statements contained in this news release based on new information or otherwise. This news release may contain certain non-GAAP financial measures. Reconciliations between the non-GAAP financial measures and the GAAP financial measures are available on the company's website at www.att.com/investor.relations. Accompanying financial statements follow.
NOTE:EBITDA is defined as earnings before interests, taxes, depreciation and amortization. EBITDA differs from Segment Operating Income (loss), as calculated in accordance with generally accepted accounting principles (GAAP), in that it excludes depreciation and amortization. EBITDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. EBITDA is not presented as an alternative measure of operating results or cash flows from operations, as determined in accordance with GAAP. Our calculation of EBITDA, as presented, may differ from similarly titled measures reported by other companies.
NOTE:Free cash flow is defined as cash from operations minus capital expenditures. We believe this metric provides useful information to our investors because management regularly reviews free cash flow as an important indicator of how much cash is generated by normal business operations, including capital expenditures, and makes decisions based on it. Management also views it as a measure of cash available to pay debt and return cash to shareowners.
NOTE:Adjusted Operating Income and Adjusted Operating Income Margin are non-GAAP financial measures calculated by excluding from operating revenues and operating expenses significant items that are non-operational or non-recurring in nature. Management believes that these measures provide relevant and useful information to investors and other users of our financial data in evaluating the effectiveness of our operations and underlying business trends. Adjusted Operating Income and Adjusted Operating Income Margin should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP. Our calculation of Adjusted Operating Income, as presented, may differ from similarly titled measures reported by other companies.
NOTE:2008, 2009 and 2010 have been restated for the benefit plan accounting change. Detailed schedules can be found on AT&T's website at www.att.com/investor.relations.
Financial Data
AT&T Inc.
------------------ ----------- ----------- ----- ----------- ----------- -----
Consolidated
Statements of
Income
Dollars in
millions except
per share amounts
------------------ ----------- ----------- ----- ----------- ----------- -----
Unaudited Three Months Ended Six Months Ended
-------------------------------------- -------------------------------------
6/30/2011 6/30/2010 % Chg 6/30/2011 6/30/2010 % Chg
------------------ ----------- ----------- --------- ----------- ----------- ---------
Operating Revenues
Wireless service $ 14,157 $ 13,186 7.4% $ 28,118 $ 26,036 8.0%
Data 7,356 6,866 7.1% 14,536 13,517 7.5%
Voice 6,342 7,224 -12.2% 12,893 14,707 -12.3%
Directory 841 1,007 -16.5% 1,709 2,048 -16.6%
Other 2,799 2,525 10.9% 5,486 5,030 9.1%
------------------- ------- ------- ----- ------- ------- -----
Total Operating
Revenues 31,495 30,808 2.2% 62,742 61,338 2.3%
------------------- ------- ------- ----- ------- ------- -----
Operating Expenses
Cost of services
and sales
(exclusive of
depreciation
and
amortization
shown
separately
below) 13,332 12,452 7.1% 26,735 24,835 7.7%
Selling, general
and
administrative 7,396 7,454 -0.8% 14,848 14,850 -
Depreciation and
amortization 4,602 4,819 -4.5% 9,186 9,599 -4.3%
------------------- ------- ------- ----- ------- ------- -----
Total Operating
Expenses 25,330 24,725 2.4% 50,769 49,284 3.0%
------------------- ------- ------- ----- ------- ------- -----
Operating Income 6,165 6,083 1.3% 11,973 12,054 -0.7%
------------------- ------- ------- ----- ------- ------- -----
Interest Expense 848 754 12.5% 1,694 1,519 11.5%
Equity in Net
Income of
Affiliates 207 195 6.2% 456 412 10.7%
Other Income
(Expense) - Net 27 723 -96.3% 86 701 -87.7%
------------------- ------- ------- ----- ------- ------- -----
Income from
Continuing
Operations Before
Income Taxes 5,551 6,247 -11.1% 10,821 11,648 -7.1%
Income Tax Expense 1,893 2,160 -12.4% 3,695 5,023 -26.4%
------------------- ------- ------- ----- ------- ------- -----
Income from
Continuing
Operations 3,658 4,087 -10.5% 7,126 6,625 7.6%
------------------- ------- ------- ----- ------- ------- -----
Loss from
Discontinued
Operations, net of
tax - (5) - - (3) -
------------------- ------- ------- ----- ------- ------- -----
Net Income 3,658 4,082 -10.4% 7,126 6,622 7.6%
------------------- ------- ------- ----- ------- ------- -----
Less: Net Income
Attributable to
Noncontrolling
Interest (67) (79) 15.2% (127) (166) 23.5%
------------------- ------- ------- ----- ------- ------- -----
Net Income
Attributable to
AT&T $ 3,591 $ 4,003 -10.3% $ 6,999 $ 6,456 8.4%
=================== ======= ======= ===== ======= ======= =====
Basic Earnings Per
Share from
Continuing
Operations
Attributable to
AT&T $ 0.60 $ 0.68 -11.8% $ 1.18 $ 1.09 8.3%
Basic Earnings Per
Share from
Discontinued
Operations
Attributable to
AT&T - - - - - -
------- ------- ----- ------- ------- -----
Basic Earnings Per
Share Attributable
to AT&T $ 0.60 $ 0.68 -11.8% $ 1.18 $ 1.09 8.3%
======= ======= ===== ======= ======= =====
Weighted Average
Common Shares
Outstanding
(000,000) 5,932 5,909 0.4% 5,929 5,907 0.4%
Diluted Earnings
Per Share from
Continuing
Operations
Attributable to
AT&T $ 0.60 $ 0.67 -10.4% $ 1.18 $ 1.09 8.3%
Diluted Earnings
Per Share from
Discontinued
Operations
Attributable to
AT&T - - - - - -
------- ------- ----- ------- ------- -----
Diluted Earnings
Per Share
Attributable to
AT&T $ 0.60 $ 0.67 -10.4% $ 1.18 $ 1.09 8.3%
======= ======= ===== ======= ======= =====
Weighted Average
Common Shares
Outstanding with
Dilution
(000,000) 5,953 5,937 0.3% 5,948 5,936 0.2%
Financial
Data
AT&T Inc.
------------- ----------- ----------- ----- ----------- ----------- -----
Statements of
Segment
Income
Dollars in
millions
------------- ----------- ----------- ----- ----------- ----------- -----
Unaudited
Three Months Ended Six Months Ended
------------------------------------------- -------------------------------------------
Wireless 6/30/2011 6/30/2010 % Chg 6/30/2011 6/30/2010 % Chg
------------- ----------- ----------- ----- ----------- ----------- -----
Segment
Operating
Revenues
Service $ 14,157 $ 13,186 7.4% $ 28,118 $ 26,036 8.0%
Equipment 1,445 1,056 36.8% 2,793 2,103 32.8%
------------- ------- ------- ----- ------- ------- -----
Total Segment
Operating
Revenues 15,602 14,242 9.5% 30,911 28,139 9.9%
------------- ------- ------- ----- ------- ------- -----
Segment
Operating
Expenses
Operations
and support 9,782 8,553 14.4% 19,640 16,726 17.4%
Depreciation
and
amortization 1,613 1,578 2.2% 3,118 3,136 -0.6%
------------- ------- ------- ----- ------- ------- -----
Total Segment
Operating
Expenses 11,395 10,131 12.5% 22,758 19,862 14.6%
------------- ------- ------- ----- ------- ------- -----
Segment
Operating
Income 4,207 4,111 2.3% 8,153 8,277 -1.5%
Equity in Net
Income
(Loss) of
Affiliates (8) 8 - (12) 20 -
------------- ------- ------- ----- ------- ------- -----
Segment
Income $ 4,199 $ 4,119 1.9% $ 8,141 $ 8,297 -1.9%
============= ======= ======= ===== ======= ======= =====
Segment
Operating
Income
Margin 27.0% 28.9% 26.4% 29.4%
Wireline
------------- ------- ------- ----- ------- ------- -----
Segment
Operating
Revenues
Data $ 7,356 $ 6,866 7.1% $ 14,536 $ 13,517 7.5%
Voice 6,342 7,224 -12.2% 12,893 14,707 -12.3%
Other 1,237 1,332 -7.1% 2,456 2,644 -7.1%
------------- ------- ------- ----- ------- ------- -----
Total Segment
Operating
Revenues 14,935 15,422 -3.2% 29,885 30,868 -3.2%
------------- ------- ------- ----- ------- ------- -----
Segment
Operating
Expenses
Operations
and support 10,104 10,289 -1.8% 20,370 20,801 -2.1%
Depreciation
and
amortization 2,876 3,105 -7.4% 5,834 6,181 -5.6%
------------- ------- ------- ----- ------- ------- -----
Total Segment
Operating
Expenses 12,980 13,394 -3.1% 26,204 26,982 -2.9%
------------- ------- ------- ----- ------- ------- -----
Segment
Operating
Income 1,955 2,028 -3.6% 3,681 3,886 -5.3%
Equity in Net
Income of
Affiliates - - - - 5 -
------------- ------- ------- ----- ------- ------- -----
Segment
Income $ 1,955 $ 2,028 -3.6% $ 3,681 $ 3,891 -5.4%
============= ======= ======= ===== ======= ======= =====
Segment
Operating
Income
Margin 13.1% 13.2% 12.3% 12.6%
Advertising
Solutions
------------- ------- ------- ----- ------- ------- -----
Segment
Operating
Revenues $ 841 $ 1,007 -16.5% $ 1,709 $ 2,048 -16.6%
------------- ------- ------- ----- ------- ------- -----
Segment
Operating
Expenses
Operations
and support 580 662 -12.4% 1,153 1,326 -13.0%
Depreciation
and
amortization 102 132 -22.7% 207 270 -23.3%
------------- ------- ------- ----- ------- ------- -----
Total Segment
Operating
Expenses 682 794 -14.1% 1,360 1,596 -14.8%
------------- ------- ------- ----- ------- ------- -----
Segment
Income $ 159 $ 213 -25.4% $ 349 $ 452 -22.8%
============= ======= ======= ===== ======= ======= =====
Segment
Income
Margin 18.9% 21.2% 20.4% 22.1%
Other
------------- ------- ------- ----- ------- ------- -----
Segment
Operating
Revenues $ 117 $ 137 -14.6% $ 237 $ 283 -16.3%
Segment
Operating
Expenses 273 406 -32.8% 447 844 -47.0%
------------- ------- ------- ----- ------- ------- -----
Segment
Operating
Loss (156) (269) 42.0% (210) (561) 62.6%
Equity in Net
Income of
Affiliates 215 187 15.0% 468 387 20.9%
------------- ------- ------- ----- ------- ------- -----
Segment
Income
(Loss) from
Continuing
Operations $ 59 $ (82) - $ 258 $ (174) -
============= ======= ======= ===== ======= ======= =====
Financial Data
AT&T Inc.
----------------------------------------------- ----------- --------
Consolidated Balance Sheets
Dollars in millions except per share amounts
----------------------------------------------- ----------- --------
6/30/11 12/31/10
Unaudited
----------------------------------------------- ----------- --------
Assets
Current Assets
Cash and cash equivalents $ 3,831 $ 1,437
Accounts receivable - net of allowances for
doubtful accounts of $908 and $957 13,608 13,610
Prepaid expenses 1,563 1,458
Deferred income taxes 1,180 1,170
Other current assets 2,057 2,276
----------------------------------------------- ------- -------
Total current assets 22,239 19,951
----------------------------------------------- ------- -------
Property, Plant and Equipment - Net 104,606 103,196
Goodwill 73,591 73,601
Licenses 50,403 50,372
Customer Lists and Relationships - Net 3,643 4,708
Other Intangible Assets - Net 5,407 5,440
Investments in Equity Affiliates 5,207 4,515
Other Assets 6,918 6,705
----------------------------------------------- ------- -------
Total Assets $ 272,014 $268,488
=============================================== ======= =======
Liabilities and Stockholders' Equity
Current Liabilities
Debt maturing within one year $ 7,910 $ 7,196
Accounts payable and accrued liabilities 18,145 20,055
Advanced billing and customer deposits 3,804 4,086
Accrued taxes 1,130 72
Dividends payable 2,548 2,542
----------------------------------------------- ------- -------
Total current liabilities 33,537 33,951
----------------------------------------------- ------- -------
Long-Term Debt 58,663 58,971
----------------------------------------------- ------- -------
Deferred Credits and Other Noncurrent
Liabilities
Deferred income taxes 25,065 22,070
Postemployment benefit obligation 28,350 28,803
Other noncurrent liabilities 12,290 12,743
----------------------------------------------- ------- -------
Total deferred credits and other noncurrent
liabilities 65,705 63,616
----------------------------------------------- ------- -------
Stockholders' Equity
Common stock 6,495 6,495
Additional paid-in capital 91,687 91,731
Retained earnings 33,687 31,792
Treasury stock (20,786) (21,083)
Accumulated other comprehensive income 2,720 2,712
Noncontrolling interest 306 303
----------------------------------------------- ------- -------
Total stockholders' equity 114,109 111,950
----------------------------------------------- ------- -------
Total Liabilities and Stockholders' Equity $ 272,014 $268,488
=============================================== ======= =======
Financial Data
AT&T Inc.
------------------------------------------------- ------- --------
Consolidated Statements of Cash Flows
Dollars in millions
------------------------------------------------- ------- --------
Six months ended
Unaudited June 30,
2011 2010
------------------------------------------------- -------- -----------
Operating Activities
Net income $ 7,126 $ 6,622
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 9,186 9,599
Undistributed earnings from investments in equity
affiliates (417) (378)
Provision for uncollectible accounts 523 671
Deferred income tax expense and noncurrent
unrecognized tax benefits 2,818 2,249
Net gain from impairment and sale of investments (44) (629)
Loss from discontinued operations - 3
Changes in operating assets and liabilities:
Accounts receivable (521) 394
Other current assets 104 389
Accounts payable and accrued liabilities (1,133) (3,063)
Net income attributable to noncontrolling
interest (127) (166)
Other - net (758) 120
------------------------------------------------- ------ -------
Total adjustments 9,631 9,189
------------------------------------------------- ------ -------
Net Cash Provided by Operating Activities 16,757 15,811
------------------------------------------------- ------ -------
Investing Activities
Construction and capital expenditures
Capital expenditures (9,405) (7,856)
Interest during construction (77) (379)
Acquisitions, net of cash acquired (62) (2,554)
Dispositions 30 14
(Purchases) and sales of securities, net 45 (545)
Other 19 15
------------------------------------------------- ------ -------
Net Cash Used in Investing Activities (9,450) (11,305)
------------------------------------------------- ------ -------
Financing Activities
Net change in short-term borrowings with
original maturities of three months or less (1,603) 3,280
Issuance of long-term debt 2,985 -
Repayment of long-term debt (1,290) (4,661)
Issuance of treasury shares 199 5
Dividends paid (5,082) (4,960)
Other (122) (534)
------------------------------------------------- ------ -------
Net Cash Used in Financing Activities (4,913) (6,870)
------------------------------------------------- ------ -------
Net increase (decrease) in cash and cash
equivalents 2,394 (2,364)
Cash and cash equivalents beginning of year 1,437 3,741
------------------------------------------------- ------ -------
Cash and Cash Equivalents End of Period $ 3,831 $ 1,377
================================================= ====== =======
Financial Data
AT&T Inc.
------------------------------ ------- ------- ------ -------- ----------- --------
Supplementary Operating
and Financial Data
Dollars in millions
except per share amounts
------------------------------ ------- ------- ------ -------- ----------- --------
Unaudited Three Months Ended Six Months Ended
------------------------------------ -------------------------------------------
6/30/2011 6/30/2010 % Chg 6/30/2011 6/30/2010 % Chg
------------------------------ ----------- ----------- ---------- ------------ --------------- ------------
Wireless
Volumes (000)
------------------------------ ------- ------- -------- -----------
Total 98,615 90,130 9.4%
------------------------------ ------- ------- ------- -------
Postpaid6 68,353 66,970 2.1%
Prepaid6 6,750 5,881 14.8%
Reseller6 12,522 10,597 18.2%
Connected Devices6 10,990 6,682 64.5%
Wireless Net Adds (000)
------------------------------ ------- ------- ------- -------
Total 1,095 1,562 -29.9% 3,079 3,419 -9.9%
------------------------------ ------ ------ ------- -------
Postpaid6 331 496 -33.3% 393 1,008 -61.0%
Prepaid6 137 300 -54.3% 222 324 -31.5%
Reseller6 248 (130 ) - 809 139 -
Connected Devices6 379 896 -57.7% 1,655 1,948 -15.0%
M&A Activity, Partitioned
Customers and Other
Adjs. 1 1,581 - 1,591
Wireless Churn
Postpaid Churn6 1.15% 1.01 % 14 BP 1.17% 1.04% 13 BP
Total Churn6 1.43% 1.29 % 14 BP 1.40% 1.29% 11 BP
Other
Licensed POPs (000,000) 313 307 2.0%
In-Region Wireline1
Voice
------------------------------ ------ ------ ------- -------
Total Wireline Voice
Connections 41,298 46,058 -10.3%
------------------------------ ------ ------ ------- -------
Net Change (1,159) (1,327 ) 12.7% (2,265) (2,430) 6.8%
Broadband
------------------------------ ------ ------ ------- -------
Total Wireline Broadband
Connections 16,473 15,952 3.3%
------------------------------ ------ ------ ------- -------
Net Change (12) (92 ) 87.0% 163 163 -
Video
------------------------------ ------ ------ ------- -------
U-verse 3,407 2,505 36.0%
Satellite 1,852 2,053 -9.8%
------------------------------ ------ ------ ------- -------
Total Video Connections 5,259 4,558 15.4%
============================== ====== ====== ======= =======
Net Change 168 135 24.4% 342 319 7.2%
Consumer Revenue Connections
------------------------------ ------ ------ ------- -------
Broadband3 14,520 13,925 4.3%
Video Connections4 5,250 4,557 15.2%
Voice2 22,735 25,780 -11.8%
------------------------------ ------ ------ ------- -------
Total Consumer Revenue
Connections 42,505 44,262 -4.0%
============================== ====== ====== ======= =======
Net Change (574) (782 ) 26.6% (922) (1,025) 10.0%
AT&T Inc.
Construction and capital
expenditures
Capital
expenditures $ 5,272 $ 4,709 12.0% $ 9,405 $ 7,856 19.7%
Interest during
construction $ 42 $ 195 -78.5% $ 77 $ 379 -79.7%
Dividends Declared
per Share $ 0.43 $ 0.42 2.4% $ 0.86 $ 0.84 2.4%
End of Period Common
Shares Outstanding
(000,000) 5,925 5,909 0.3%
Debt Ratio5 36.8% 40.4% -360 BP
Total Employees 258,870 272,450 -5.0%
1 In-region wireline represents access
lines served by AT&T's incumbent local
exchange companies.
2 Includes consumer U-verse Voice over
Internet Protocol connections of 2,023
as of June 30, 2011.
3 Consumer wireline broadband connections include
DSL lines, U-verse High Speed Internet access
and satellite broadband.
4 Video connections include sales under agency
agreements with EchoStar and DirecTV customers
and U-verse connections.
5 Total long-term debt plus debt maturing within
one year divided by total debt plus total
stockholders' equity.
6 Prior year amounts restated to conform
to current period reporting methodology.
Note: For the end of 2Q11, total switched access lines were
39,275, retail business switched access lines totaled 16,293,
and wholesale and coin switched access lines totaled 2,270.
Financial Data
AT&T Inc.
Non-GAAP
Wireless
Reconciliation
--------------- ----------- ----------- ------------ ----------- -----------
Wireless
Segment EBITDA
Dollars in
millions
Unaudited
Three Months Ended
6/30/2010 9/30/2010 12/31/2010 3/31/2011 6/30/2011
----------- ----------- ------------ ----------- -----------
Segment
Operating
Revenues
Service $ 13,186 $ 13,675 $ 13,799 $ 13,961 $ 14,157
Equipment 1,056 1,505 1,382 1,348 1,445
--------------- ------- ------- -------- ------- -------
Total Segment
Operating
Revenues 14,242 15,180 15,181 15,309 15,602
--------------- ------- ------- -------- ------- -------
Segment
Operating
Expenses
Operations and
support 8,553 10,032 9,988 9,858 9,782
Depreciation
and
amortization 1,578 1,640 1,721 1,505 1,613
--------------- ------- ------- -------- ------- -------
Total Segment
Operating
Expenses 10,131 11,672 11,709 11,363 11,395
--------------- ------- ------- -------- ------- -------
Segment
Operating
Income 4,111 3,508 3,472 3,946 4,207
Plus:
Depreciation
and
amortization 1,578 1,640 1,721 1,505 1,613
--------------- ------- ------- -------- ------- -------
EBITDA 5,689 5,148 5,193 5,451 5,820
--------------- ------- ------- -------- ------- -------
EBITDA as a %
of Service
Revenue 43.1% 37.6% 37.6% 39.0% 41.1%
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 Six Months Ended
June 30, June 30,
2010 2011 2010 2011
-------------------- -------- ------- ------- ---------
Net cash provided by
operating
activities $ 8,573 $ 9,025 $15,811 $16,757
Less: Construction
and capital
expenditures (4,904) (5,314) (8,235) (9,482)
Free Cash Flow $ 3,669 $ 3,711 $ 7,576 $ 7,275
-------------------- ------- ------ ------ ------
Free cash flow is defined as cash from operations minus capital expenditures. We believe these metrics provide useful information to our investors because management regularly reviews free cash flow as an important indicator of how much cash is generated by normal business operations, including capital expenditures, and makes decisions based on it. Management also views free cash flow as a measure of cash available to pay debt and return cash to shareowners.
Free Cash Flow after
Dividends
Dollars in Millions
Unaudited
Three Months Ended Six Months Ended
June 30, June 30,
2010 2011 2010 2011
-------------------- -------- ------- ------- ---------
Net cash provided by
operating
activities $ 8,573 $ 9,025 $15,811 $16,757
Less: Construction
and capital
expenditures (4,904) (5,314) (8,235) (9,482)
Free Cash Flow 3,669 3,711 7,576 7,275
-------------------- ------- ------ ------ ------
Less: Dividends paid (2,481) (2,542) (4,960) (5,082)
Free Cash Flow After
Dividends $ 1,188 $ 1,169 $ 2,616 $ 2,193
-------------------- ------- ------ ------ ------
Financial Data
AT&T Inc.
Non-GAAP Financial Reconciliation
--------------------------------------------- ---------- ----------- ---------------------
Annualized Net Debt-to-EBITDA Ratio
Dollars in millions
Unaudited
Three Months Ended
2011
3/31/2011 6/30/2011 YTD
--------------------------------------------- ---------- ----------- ---------------------
Operating Revenues $ 31,247 $ 31,495 $ 62,742
Operating Expenses 25,439 25,330 50,769
Total Operating Income 5,808 6,165 11,973
Add Back Depreciation and Amortization 4,584 4,602 9,186
Total Consolidated EBITDA 10,392 10,767 21,159
Annualized Consolidated EBITDA* 42,318
End-of-period current debt 7,910
End-of-period long-term debt 58,663
Total End-of-Period Debt 66,573
(Premiums) Discounts on long-term debt (134 )
Normalized Debt Balance 66,439
Less Cash and Cash Equivalents 3,831
Normalized Net Debt Balance 62,608
Annualized Net Debt-to-EBITDA Ratio 1.48
--------------------------------------------- --------- ------- ----- --------------
*EBITDA is annualized by dividing YTD EBITDA by YTD number of quarters and
multiplying by four. Note: 4Q11 EBITDA will exclude the impact of benefit plan
actuarial gains/losses in order to better represent AT&T's operational
performance.
EBITDA DISCUSSION
EBITDA is defined as earnings before interest, taxes, depreciation and amortization. EBITDA service margin is calculated as EBITDA divided by service revenues. EBITDA differs from Segment Operating Income (Loss), as calculated in accordance with GAAP, in that it excludes depreciation and amortization. EBITDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. EBITDA is not presented as an alternative measure of operating results or cash flows from operations, as determined in accordance with generally accepted accounting principles. Our calculation of EBITDA, as presented, may differ from similarly titled measures reported by other companies.
We believe these measures are relevant and useful information to our investors as they are part of AT&T Mobility's internal management reporting and planning processes and are important metrics that AT&T Mobility's management uses to evaluate the operating performance of its regional operations. These measures are used by management as a gauge of AT&T Mobility's success in acquiring, retaining and servicing subscribers because we believe these measures reflect AT&T Mobility's ability to generate and grow subscriber revenues while providing a high level of customer service in a cost-effective manner. Management also uses these measures as a method of comparing AT&T Mobility's performance with that of many of its competitors. The financial and operating metrics which affect EBITDA include the key revenue and expense drivers for which AT&T Mobility's operating managers are responsible and upon which we evaluate their performance.
EBITDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. EBITDA excludes other income (expense) - net, minority interest in earnings of consolidated entities and equity in net income (loss) of affiliates, as these do not reflect the operating results of AT&T Mobility's subscriber base and its national footprint that AT&T Mobility utilizes to obtain and service its customers. Equity in net income (loss) of affiliates represents AT&T Mobility's proportionate share of the net income (loss) of affiliates in which it exercises significant influence, but does not control. As AT&T Mobility does not control these entities, our management excludes these results when evaluating the performance of our primary operations. EBITDA excludes interest expense and the provision for income taxes. Excluding these items eliminates the expenses associated with its capitalization and tax structures. Finally, EBITDA excludes depreciation and amortization, in order to eliminate the impact of capital investments.
We believe EBITDA as a percentage of service revenues to be a more relevant measure of AT&T Mobility's operating margin than EBITDA as a percentage of total revenue. AT&T Mobility generally subsidizes a portion of its handset sales, all of which are recognized in the period in which AT&T Mobility sells the handset. This results in a disproportionate impact on its margin in that period. Management views this equipment subsidy as a cost to acquire or retain a subscriber, which is recovered through the ongoing service revenue that is generated by the subscriber. AT&T Mobility also uses service revenues to calculate margin to facilitate comparison, both internally and externally with its competitors, as they calculate their margins using services revenue as well.
There are material limitations to using these non-GAAP financial measures. EBITDA and EBITDA service margin, as we have defined them, may not be comparable to similarly titled measures reported by other companies. Furthermore, these performance measures do not take into account certain significant items, including depreciation and amortization, interest expense, tax expense and equity in net income (loss) of affiliates, which directly affect AT&T Mobility's net income. Management compensates for these limitations by carefully analyzing how its competitors present performance measures that are similar in nature to EBITDA as we present it, and considering the economic effect of the excluded expense items independently as well as in connection with its analysis of net income as calculated in accordance with GAAP. EBITDA and EBITDA service margin should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP.
FREE CASH FLOW DISCUSSION
Free cash flow is defined as cash from operations minus capital expenditures. Free cash flow after dividends is defined as cash from operations minus capital expenditures and dividends. Free cash flow yield is defined as cash from continuing operations less capital expenditures as a percentage of market capitalization computed on the last trading day of the quarter. Market capitalization is computed by multiplying the end of period stock price by the end of period shares outstanding. We believe these metrics provide useful information to our investors because management monthly reviews free cash flow as an important indicator of how much cash is generated by normal business operations, including capital expenditures, and makes decisions based on it. Management also views it as a measure of cash available to pay debt and return cash to shareowners.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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