DALLAS--(BUSINESS WIRE)--AT&T Inc. (NYSE:T) today reported fourth-quarter results highlighted by strong wireless revenue growth, record smartphone sales, the highest postpaid net adds in three years and accelerating consumer wireline revenue growth thanks to U-verse services.
“We had an excellent 2012,” said Randall Stephenson, AT&T chairman and chief executive officer. “We grew revenues, increased adjusted earnings per share by 8.5 percent and generated cash from operations at record levels. We used this cash to invest aggressively in the future of our business and returned $23 billion to shareowners through dividends and share repurchases.
“Looking ahead, our key growth platforms — mobile data, U-verse and strategic business services — all have good momentum with a lot of headroom,” Stephenson said. “We’re off to a strong start executing Project VIP, our plan to expand our high-growth platforms to millions more customers, and our 4G LTE network deployment is ahead of schedule, delivering outstanding performance.”
Fourth-Quarter Financial Results
For the quarter ended December 31, 2012, AT&T's consolidated revenues totaled $32.6 billion, up 0.2 percent versus the year-earlier quarter and up an even stronger 2.8 percent when excluding revenues primarily from the divested Advertising Solutions business unit as well as the impact of Superstorm Sandy.
Compared with results for the fourth quarter of 2011, operating expenses were $38.5 billion versus $41.5 billion; operating loss was $6.0 billion, compared to a loss of $9.0 billion; and AT&T’s operating income margin was (18.3) percent, compared to (27.7) percent. Excluding previously noted adjustments, operating expenses were $28.4 billion, compared to an adjusted $27.5 billion in the year-ago quarter, up 3.3 percent; operating income was $4.2 billion, flat versus a year ago; and operating income margin was 12.9 percent.
Fourth-quarter 2012 net income attributable to AT&T totaled $(3.9) billion, or $(0.68) per diluted share, compared to $(6.7) billion, or $(1.12) per diluted share, in the year-earlier quarter. Excluding adjustments of $(1.10) from the non-cash actuarial loss on benefit plans, $(0.02) from storm impacts and adjusted for Advertising Solutions, earnings per share was up 10 percent, $0.44 compared to an adjusted $0.40 in the year-ago quarter.
(The actuarial loss on benefit plans was driven by a reduction in the discount rate from 5.3 percent to 4.3 percent. While our investment returns were better than assumptions, they were not enough to offset the lower discount rate.)
Fourth-quarter 2012 cash from operating activities totaled $10.5 billion, and capital expenditures totaled $5.9 billion. Free cash flow — cash from operating activities minus capital expenditures — totaled $4.6 billion.
Full-Year Results
For full year 2012, compared with 2011 results, AT&T's consolidated revenues totaled $127.4 billion versus $126.7 billion; when excluding the divested Advertising Solutions business unit, revenues were up 2.4 percent for the year. Operating expenses were $114.4 billion, compared with $117.5 billion, down 2.6 percent; net income attributable to AT&T was $7.3 billion versus $3.9 billion; and earnings per diluted share was $1.25 compared with $0.66. Excluding adjustments for both years, earnings per share totaled $2.31, compared with $2.13, an increase of 8.5 percent.
AT&T's full-year cash from operating activities was a record $39.2 billion, up from $34.7 billion in 2011. Capital expenditures, including capitalized interest, totaled $19.7 billion versus $20.3 billion, including a 10.6 percent increase in wireless-related capital investment versus 2011, as AT&T aggressively deployed next-generation mobile broadband networks. Full-year free cash flow also was a record at $19.4 billion.
Share Repurchases
During the quarter, the company repurchased 126.6 million of its shares for $4.4 billion. AT&T has completed its initial 300 million share repurchase authorization and began buying back shares on its second 300 million share repurchase authorization. At the end of the quarter, about 229 million shares remained on the second authorization. In 2012, the company repurchased 371 million shares, or about 6 percent of outstanding shares, for $12.8 billion.
Outlook
AT&T is well positioned to deliver solid revenue and earnings per share growth with stable margins while returning substantial value to shareowners in 2013. At the same time, AT&T is investing in future growth with Project Velocity IP (Project VIP). In 2013, AT&T expects:
- Consolidated revenue growth exceeding 2 percent with continuing strength in wireless service and wireline consumer revenues;
- Earnings per share growth to be upper-single digits or higher;
- Consolidated margins to be stable, with expanding wireless margins offsetting Project VIP investments;
- Led by investments in Project VIP growth initiatives, capital spending to be in the $21 billion range with increased spending in wireless and stable wireline investments;
- LTE build to cover 250 million or more of the U.S. population by yearend;
- Free cash flow exceeding $14 billion: and
- Completion of the company’s 300 million share repurchase authorization as early as mid-year, depending upon market conditions.
2013 outlook assumes little improvement in the economy and is adjusted for impacts from the 2012 sale of Advertising Solutions and other adjustments including non-cash mark-to-market benefit-plan adjustments.
WIRELESS OPERATIONAL HIGHLIGHTS
AT&T delivered strong revenue growth, solid postpaid gains and record smartphone sales in the fourth quarter. Highlights included:
Wireless Revenues Continue Solid Growth. Total wireless revenues, which include equipment sales, were up 5.7 percent year over year to $17.6 billion. Wireless service revenues increased 4.2 percent in the fourth quarter, to $14.9 billion. Wireless data revenues — driven by mobile Internet access, access to applications, messaging and related services — increased by 14.7 percent from the year-earlier quarter to $6.8 billion. Data revenue growth was slowed somewhat by the growth of Mobile Share plans. Fourth-quarter wireless operating expenses totaled $15.1 billion, up 6.9 percent versus the year-earlier quarter, driven by record smartphone volumes, and wireless operating income was $2.6 billion, down 1.2 percent year over year.
Strongest Postpaid Net Adds in Three Years. AT&T posted a net increase in total wireless subscribers of 1.1 million in the fourth quarter to reach 107.0 million in service. Subscriber additions for the quarter included postpaid net adds of 780,000, the best gain in 12 quarters. Connected device net adds were 246,000, and reseller net adds were 234,000. Prepaid had a net loss of 166,000 subscribers primarily due to declines in GoPhone and session-based tablets. Fourth-quarter postpaid net adds reflect accelerated adoption of smartphones, sales of tablets and growth in Mobile Premise services.
Branded computing subscribers, which are included in the previous categories, reached a total of 6.4 million, up 26 percent from a year ago. Branded computing devices includes tablets, tethering plans and other data-only devices. Branded computing sales also have been slowed by the introduction of Mobile Share plans, which include tethering. AT&T added almost 400,000 postpaid tablets in the quarter, with new subscribers and prepaid tablet subscribers migrating to postpaid plans.
Postpaid ARPU Increases. Postpaid subscriber ARPU increased 1.9 percent versus the year-earlier quarter to $64.98. When adjusted for the Superstorm Sandy impact, postpaid ARPU grew 2.1 percent. This marked the 16th consecutive quarter AT&T has posted a year-over-year increase in postpaid ARPU.
Smartphones Represent 89 Percent of Postpaid Phone Sales. AT&T sold a record 10.2 million smartphones in the fourth quarter. Smartphones represented 86 percent of postpaid device sales and 89 percent of postpaid phone sales in the quarter. At the end of the quarter, 69.6 percent, or 47.1 million, of AT&T's postpaid phone subscribers had smartphones, up from 58.5 percent, or 39.4 million, a year earlier. AT&T’s ARPU for smartphones is twice that of non-smartphone subscribers, and about 90 percent of smartphone subscribers are on FamilyTalk®, Mobile Share or business plans. Churn levels for these subscribers are significantly lower than for other postpaid subscribers. About 55 percent of AT&T’s postpaid smartphone customers now use a 4G-capable device.
In the quarter, the company activated a record 8.6 million iPhones, with 16 percent new to AT&T. The company also had its best-ever sales quarter for Android smartphones.
More than 6.6 Million Postpaid Subscribers on Mobile Share Plans. The number of subscribers on usage-based data plans (tiered data and Mobile Share plans) continues to increase. More than two-thirds, or 31.7 million, of all smartphone subscribers, are on usage-based data plans. This compares to 56 percent, or 22.1 million, a year ago and 31 percent two years ago. More than three-quarters of customers on tiered data plans have chosen the higher-priced plans.
Mobile Share plans continue to be popular. More than 6.6 million customers, or 9 percent of postpaid subscribers, have already signed up for Mobile Share plans. The number of Mobile Share accounts reached 2.2 million in the fourth quarter for an average of about three devices per account. Take rates on the higher-data plans continue to be much stronger than expected with more than a quarter of Mobile Share accounts 10 gigabytes or higher.
Postpaid Churn Down. For the fourth quarter, postpaid churn was 1.19 percent, down when compared to 1.21 percent in the year-ago fourth quarter. Total churn was 1.42 percent versus 1.39 percent in the fourth quarter of 2011.
Record Smartphone Sales Impact Margins. In the fourth quarter, wireless margins reflected record-setting smartphone sales (800,000 more than fourth-quarter 2011), strong customer upgrade levels and the impact of Superstorm Sandy. This was offset in part by further revenue gains from the company’s high-value smartphone subscribers and improved operating efficiencies. AT&T’s fourth-quarter wireless operating income margin was 14.5 percent versus 15.5 percent in the year-earlier quarter, primarily driven by depreciation and amortization. AT&T’s wireless EBITDA service margin was 29.1 percent, or about the same as 29.2 percent in the fourth quarter of 2011. Without the Superstorm Sandy impact, EBITDA service margin would have been nearly 30 percent. (EBITDA service margin is operating income before depreciation and amortization, divided by total service revenues.)
WIRELINE OPERATIONAL HIGHLIGHTS
AT&T's fourth-quarter wireline results were led by strong U-verse TV and high speed Internet gains and accelerating wireline consumer revenue growth. Highlights included:
Wireline Revenues Increase Sequentially. Total fourth-quarter wireline revenues were $14.9 billion, down 0.5 percent versus the year-earlier quarter but up 0.7 percent sequentially. Fourth-quarter wireline operating expenses were $13.1 billion, down 0.9 percent versus the fourth quarter of 2011. AT&T’s wireline operating income totaled $1.8 billion, up 1.8 percent from the fourth quarter of 2011. Positive consumer revenue trends helped to partially offset declines in revenues from business customers. Fourth-quarter wireline operating income margin was 12.0 percent, compared to 11.7 percent in the year-earlier quarter.
Consumer Revenue Growth Accelerating. Revenues from residential customers totaled $5.5 billion, an increase of 3.0 percent versus the fourth quarter a year ago and the strongest growth in more than four years. Continued strong growth in consumer IP data services in the fourth quarter more than offset lower revenues from voice and legacy products. The fourth quarter marked the tenth consecutive quarter of year-over-year growth in wireline consumer revenues. For full-year 2012, consumer revenues were up 1.9 percent versus 2011.
U-verse continues to transform wireline consumer. IP revenues now represent 61 percent of wireline consumer revenues, up from 53 percent in the year-earlier quarter and 45 percent two years ago. Increased AT&T U-verse penetration and a significant number of subscribers purchasing multiple services drove 17.7 percent year-over-year growth in IP revenues from residential customers (broadband, U-verse TV and U-verse Voice) and 4.0 percent sequential growth. Total U-verse revenues grew 36.3 percent compared with the year-ago fourth quarter and were up 7.2 percent versus the third quarter of 2012.
Total U-verse Subscribers Reach 8 Million. Total U-verse subscribers (TV and high speed Internet) reached 8.0 million in the fourth quarter. U-verse TV added 192,000 subscribers to reach 4.5 million in service. U-verse High Speed Internet delivered a fourth-quarter net gain of 609,000 subscribers to reach a total of 7.7 million, helping offset losses from DSL, and for the first time, the company has more consumer U-verse High Speed Internet subscribers than DSL subscribers. Overall, AT&T wireline broadband subscribers were flat; however, total broadband ARPU was up more than 10 percent year over year.
Fifty-five percent of U-verse broadband subscribers have a plan delivering speeds up to 12 Mbps or higher — up from 46 percent in the year-ago quarter. About 90 percent of new U-verse TV customers also signed up for U-verse High Speed Internet in the fourth quarter. About 70 percent of AT&T U-verse TV subscribers take three or four services from AT&T. ARPU for U-verse triple-play customers was more than $170, up year over year. U-verse TV penetration of customer locations continues to grow and was at 18.7 percent at the end of the fourth quarter.
Strategic Business Services Lead Wireline Business. Total business revenues were $9.1 billion, down 2.1 percent versus the year-earlier quarter and up 0.6 percent from the third quarter of 2012. Business service revenues declined 2.3 percent year over year and were up slightly sequentially. Business revenues were impacted by a slow economy and weak government and business spending. Overall, declines in legacy products were partially offset by continued growth in strategic business services. Revenues from strategic business services, the next-generation capabilities that lead AT&T's most advanced business solutions — including Ethernet, VPN, hosting, IP conferencing and application services — grew 10.6 percent versus the year-earlier quarter, continuing trends in this area. Total business IP data revenues grew 2.4 percent year over year, continuing the transition from legacy data products to next-generation data services.
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 and one of the most honored companies in the world. Its subsidiaries and affiliates – AT&T operating companies – are the providers of AT&T services in the United States and internationally. With a powerful array of network resources that includes the nation’s largest 4G network, AT&T is a leading provider of wireless, Wi-Fi, high speed Internet, voice and cloud-based services. A leader in mobile Internet, AT&T also offers the best wireless coverage worldwide of any U.S. carrier, offering the most wireless phones that work in the most countries. It also offers advanced TV services under the AT&T U-verse® and AT&T │DIRECTV brands. The company’s suite of IP-based business communications services is one of the most advanced in the world.
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/aboutus or follow our news on Twitter at @ATT, on Facebook at http://www.facebook.com/att and YouTube at http://www.youtube.com/att.
© 2013 AT&T Intellectual Property. All rights reserved. 4G not available everywhere. 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 operating income before depreciation and amortization. EBITDA differs from Segment Operating Income (loss), as calculated in accordance with U.S. 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, Adjusted Operating Expenses, Adjusted Operating Revenues, Adjusted Operating Income Margin and Adjusted diluted EPS are non-GAAP financial measures calculated by excluding from operating revenues, operating expenses and equity in net income of affiliates certain significant items that are non-operational or non-recurring in nature, including dispositions. 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 Expenses, Adjusted Operating Revenues, 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.
| Financial Data | |||||||||||||||||||||||
| AT&T Inc. | |||||||||||||||||||||||
| Consolidated Statements of Income | |||||||||||||||||||||||
| Dollars in millions except per share amounts | |||||||||||||||||||||||
| Unaudited | Three Months Ended | Twelve Months Ended | |||||||||||||||||||||
| 12/31/2012 | 12/31/2011 | % Chg | 12/31/2012 | 12/31/2011 | % Chg | ||||||||||||||||||
| Operating Revenues | |||||||||||||||||||||||
| Wireless service | $ | 14,949 | $ | 14,347 | 4.2 | % | $ | 59,186 | $ | 56,726 | 4.3 | % | |||||||||||
| Data | 8,103 | 7,581 | 6.9 | % | 31,798 | 29,560 | 7.6 | % | |||||||||||||||
| Voice | 5,464 | 5,994 | -8.8 | % | 22,619 | 25,126 | -10.0 | % | |||||||||||||||
| Directory | - | 781 | - | 1,049 | 3,293 | -68.1 | % | ||||||||||||||||
| Other | 4,062 | 3,800 | 6.9 | % | 12,782 | 12,018 | 6.4 | % | |||||||||||||||
| Total Operating Revenues | 32,578 | 32,503 | 0.2 | % | 127,434 | 126,723 | 0.6 | % | |||||||||||||||
| Operating Expenses | |||||||||||||||||||||||
|
Cost of services and sales (exclusive of depreciation and amortization shown separately below) |
17,552 | 16,865 | 4.1 | % | 55,215 | 54,836 | 0.7 | % | |||||||||||||||
| Selling, general and administrative | 16,412 | 17,145 | -4.3 | % | 41,079 | 41,382 | -0.7 | % | |||||||||||||||
| Impairment of intangible assets | - | 2,910 | - | - | 2,910 | - | |||||||||||||||||
| Depreciation and amortization | 4,572 | 4,573 | - | 18,143 | 18,377 | -1.3 | % | ||||||||||||||||
| Total Operating Expenses | 38,536 | 41,493 | -7.1 | % | 114,437 | 117,505 | -2.6 | % | |||||||||||||||
| Operating Income (Loss) | (5,958 | ) | (8,990 | ) | 33.7 | % | 12,997 | 9,218 | 41.0 | % | |||||||||||||
| Interest Expense | 820 | 952 | -13.9 | % | 3,444 | 3,535 | -2.6 | % | |||||||||||||||
| Equity in Net Income of Affiliates | 215 | 135 | 59.3 | % | 752 | 784 | -4.1 | % | |||||||||||||||
| Other Income (Expense) - Net | 12 | 117 | -89.7 | % | 134 | 249 | -46.2 | % | |||||||||||||||
| Income (Loss) Before Income Taxes | (6,551 | ) | (9,690 | ) | 32.4 | % | 10,439 | 6,716 | 55.4 | % | |||||||||||||
| Income Tax (Benefit) Expense | (2,772 | ) | (3,062 | ) | 9.5 | % | 2,900 | 2,532 | 14.5 | % | |||||||||||||
| Net Income (Loss) | (3,779 | ) | (6,628 | ) | 43.0 | % | 7,539 | 4,184 | 80.2 | % | |||||||||||||
| Less: Net Income Attributable to Noncontrolling Interest | (78 | ) | (50 | ) | -56.0 | % | (275 | ) | (240 | ) | -14.6 | % | |||||||||||
| Net Income (Loss) Attributable to AT&T | $ | (3,857 | ) | $ | (6,678 | ) | 42.2 | % | $ | 7,264 | $ | 3,944 | 84.2 | % | |||||||||
| Basic Earnings (Loss) Per Share Attributable to AT&T | $ | (0.68 | ) | $ | (1.12 | ) | 39.3 | % | $ | 1.25 | $ | 0.66 | 89.4 | % | |||||||||
|
Weighted Average Common Shares Outstanding (000,000) |
5,661 | 5,933 | -4.6 | % | 5,801 | 5,928 | -2.1 | % | |||||||||||||||
| Diluted Earnings (Loss) Per Share Attributable to AT&T | $ | (0.68 | ) | $ | (1.12 | ) | 39.3 | % | $ | 1.25 | $ | 0.66 | 89.4 | % | |||||||||
|
Weighted Average Common Shares Outstanding with Dilution (000,000) |
5,680 | 5,955 | -4.6 | % | 5,821 | 5,950 | -2.2 | % | |||||||||||||||
| Financial Data | |||||||||||||||||||||||||||
| AT&T Inc. | |||||||||||||||||||||||||||
| Statements of Segment Income | |||||||||||||||||||||||||||
| Dollars in millions | |||||||||||||||||||||||||||
| Unaudited | |||||||||||||||||||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||||||
| Wireless | 12/31/2012 | 12/31/2011 | % Chg | 12/31/2012 | 12/31/2011 | % Chg | |||||||||||||||||||||
| Segment Operating Revenues | |||||||||||||||||||||||||||
| Service | $ | 14,949 | $ | 14,347 | 4.2 | % | $ | 59,186 |
|
$ |
56,726 | 4.3 | % | ||||||||||||||
| Equipment | 2,693 | 2,349 | 14.6 | % | 7,577 | 6,489 | 16.8 | % | |||||||||||||||||||
| Total Segment Operating Revenues | 17,642 | 16,696 | 5.7 | % | 66,763 | 63,215 | 5.6 | % | |||||||||||||||||||
| Segment Operating Expenses | |||||||||||||||||||||||||||
| Operations and support | 13,296 | 12,513 | 6.3 | % | 43,296 | 41,282 | 4.9 | % | |||||||||||||||||||
| Depreciation and amortization | 1,781 | 1,588 | 12.2 | % | 6,873 | 6,329 | 8.6 | % | |||||||||||||||||||
| Total Segment Operating Expenses | 15,077 | 14,101 | 6.9 | % | 50,169 | 47,611 | 5.4 | % | |||||||||||||||||||
| Segment Operating Income | 2,565 | 2,595 | -1.2 | % | 16,594 | 15,604 | 6.3 | % | |||||||||||||||||||
| Equity in Net Income (Loss) of Affiliates | (17 | ) | (10 | ) | -70.0 | % | (62 | ) | (29 | ) | - | ||||||||||||||||
| Segment Income | $ | 2,548 | $ | 2,585 | -1.4 | % | $ | 16,532 |
|
$ |
15,575 | 6.1 | % | ||||||||||||||
| Segment Operating Income Margin | 14.5 |
% |
|
15.5 | % | 24.9 | % | 24.7 | % | ||||||||||||||||||
| Wireline | |||||||||||||||||||||||||||
| Segment Operating Revenues | |||||||||||||||||||||||||||
| Data | $ | 8,103 | $ | 7,581 | 6.9 | % | $ | 31,798 |
|
$ |
29,560 | 7.6 | % | ||||||||||||||
| Voice | 5,464 | 5,994 | -8.8 | % | 22,619 | 25,126 | -10.0 | % | |||||||||||||||||||
| Other | 1,355 | 1,429 | -5.2 | % | 5,150 | 5,454 | -5.6 | % | |||||||||||||||||||
| Total Segment Operating Revenues | 14,922 | 15,004 | -0.5 | % | 59,567 | 60,140 | -1.0 | % | |||||||||||||||||||
| Segment Operating Expenses | |||||||||||||||||||||||||||
| Operations and support | 10,354 | 10,354 | - | 41,207 | 41,360 | -0.4 | % | ||||||||||||||||||||
| Depreciation and amortization | 2,775 | 2,889 | -3.9 | % | 11,123 | 11,615 | -4.2 | % | |||||||||||||||||||
| Total Segment Operating Expenses | 13,129 | 13,243 | -0.9 | % | 52,330 | 52,975 | -1.2 | % | |||||||||||||||||||
| Segment Operating Income | 1,793 | 1,761 | 1.8 | % | 7,237 | 7,165 | 1.0 | % | |||||||||||||||||||
| Equity in Net Income (Loss) of Affiliates | (1 | ) | - | - | (2 | ) | - | - | |||||||||||||||||||
| Segment Income | $ | 1,792 | $ | 1,761 | 1.8 | % | $ | 7,235 |
|
$ |
7,165 | 1.0 | % | ||||||||||||||
| Segment Operating Income Margin | 12.0 |
% |
|
11.7 | % | 12.1 | % | 11.9 | % | ||||||||||||||||||
| Advertising Solutions | |||||||||||||||||||||||||||
| Segment Operating Revenues | $ | - | $ | 781 | - | $ | 1,049 |
|
$ |
3,293 | -68.1 | % | |||||||||||||||
| Segment Operating Expenses | |||||||||||||||||||||||||||
| Operations and support | - | 558 | - | 773 | 2,265 | -65.9 | % | ||||||||||||||||||||
| Impairment of Intangible Assets | - | 2,910 | - | - | 2,910 | - | |||||||||||||||||||||
| Depreciation and amortization | - | 85 | - | 106 | 386 | -72.5 | % | ||||||||||||||||||||
| Total Segment Operating Expenses | - | 3,553 | - | 879 | 5,561 | -84.2 | % | ||||||||||||||||||||
| Segment Income (Loss) | $ | - | $ | (2,772 | ) | - | $ | 170 |
|
$ |
(2,268 | ) | - | ||||||||||||||
| Segment Income Margin | - | - | 16.2 | % | (68.9 | ) | % | ||||||||||||||||||||
| Other | |||||||||||||||||||||||||||
| Segment Operating Revenues | $ | 14 | $ | 22 | -36.4 | % | $ | 55 |
|
$ |
75 | -26.7 | % | ||||||||||||||
| Segment Operating Expenses | 336 | 4,316 | -92.2 | % | 1,065 | 5,078 | -79.0 | % | |||||||||||||||||||
| Segment Operating Income (Loss) | (322 | ) | (4,294 | ) | 92.5 | % | (1,010 | ) | (5,003 | ) | 79.8 | % | |||||||||||||||
| Equity in Net Income of Affiliates | 233 | 145 | 60.7 | % | 816 | 813 | 0.4 | % | |||||||||||||||||||
| Segment Income (Loss) | $ | (89 | ) | $ | (4,149 | ) | 97.9 | % | $ | (194 | ) |
|
$ |
(4,190 | ) | 95.4 | % | ||||||||||
| Financial Data | ||||||||
| AT&T Inc. | ||||||||
| Consolidated Balance Sheets | ||||||||
| Dollars in millions except per share amounts | ||||||||
| Unaudited |
December 31, |
|||||||
| 2012 | 2011 | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 4,868 | $ | 3,045 | ||||
|
Accounts receivable - net of allowances for doubtful accounts of $547 and $878 |
12,657 | 13,231 | ||||||
| Prepaid expenses | 1,035 | 1,102 | ||||||
| Deferred income taxes | 1,036 | 1,470 | ||||||
| Other current assets | 3,110 | 4,137 | ||||||
| Total current assets | 22,706 | 22,985 | ||||||
| Property, Plant and Equipment - Net | 109,767 | 107,087 | ||||||
| Goodwill | 69,773 | 70,842 | ||||||
| Licenses | 52,352 | 51,374 | ||||||
| Customer Lists and Relationships - Net | 1,391 | 2,757 | ||||||
| Other Intangible Assets - Net | 5,032 | 5,212 | ||||||
| Investments in and Advances to Equity Affiliates | 4,581 | 3,718 | ||||||
| Other Assets | 6,713 | 6,467 | ||||||
| Total Assets | $ | 272,315 | $ | 270,442 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Current Liabilities | ||||||||
| Debt maturing within one year | $ | 3,486 | $ | 3,453 | ||||
| Accounts payable and accrued liabilities | 20,911 | 19,956 | ||||||
| Advanced billing and customer deposits | 3,808 | 3,872 | ||||||
| Accrued taxes | 1,026 | 1,003 | ||||||
| Dividends payable | 2,556 | 2,608 | ||||||
| Total current liabilities | 31,787 | 30,892 | ||||||
| Long-Term Debt | 66,358 | 61,300 | ||||||
| Deferred Credits and Other Noncurrent Liabilities | ||||||||
| Deferred income taxes | 28,491 | 25,748 | ||||||
| Postemployment benefit obligation | 41,392 | 34,011 | ||||||
| Other noncurrent liabilities | 11,592 | 12,694 | ||||||
| Total deferred credits and other noncurrent liabilities | 81,475 | 72,453 | ||||||
| Stockholders' Equity | ||||||||
| Common stock | 6,495 | 6,495 | ||||||
| Additional paid-in capital | 91,038 | 91,156 | ||||||
| Retained earnings | 22,481 | 25,453 | ||||||
| Treasury stock | (32,888 | ) | (20,750 | ) | ||||
| Accumulated other comprehensive income | 5,236 | 3,180 | ||||||
| Noncontrolling interest | 333 | 263 | ||||||
| Total stockholders' equity | 92,695 | 105,797 | ||||||
| Total Liabilities and Stockholders' Equity | $ | 272,315 | $ | 270,442 | ||||
| Financial Data | ||||||||||||
| AT&T Inc. | ||||||||||||
| Consolidated Statements of Cash Flows | ||||||||||||
| Dollars in millions | ||||||||||||
| Unaudited | ||||||||||||
| 2012 | 2011 | 2010 | ||||||||||
| Operating Activities | ||||||||||||
| Net income | $ | 7,539 | $ | 4,184 | $ | 20,179 | ||||||
|
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||||||
| Depreciation and amortization | 18,143 | 18,377 | 19,379 | |||||||||
| Undistributed earnings from investments in equity affiliates | (615 | ) | (623 | ) | (603 | ) | ||||||
| Provision for uncollectible accounts | 1,117 | 1,136 | 1,334 | |||||||||
|
Deferred income tax expense and noncurrent unrecognized tax benefits |
1,285 | 2,937 | (3,280 | ) | ||||||||
| Net (gain) loss from sale of investments, net of impairments | (19 | ) | (89 | ) | (802 | ) | ||||||
| Impairment of intangible assets | - | 2,910 | 85 | |||||||||
| Remeasurement of pension and postretirement benefits | 9,994 | 6,280 | 2,521 | |||||||||
| Income from discontinued operations | - | - | (779 | ) | ||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Accounts receivable | (1,365 | ) | (1,164 | ) | (101 | ) | ||||||
| Other current assets | 1,017 | (397 | ) | (185 | ) | |||||||
| Accounts payable and accrued liabilities | 1,798 | (341 | ) | (1,230 | ) | |||||||
| Retirement benefit funding | - | (1,000 | ) | - | ||||||||
| Other - net | 282 | 2,533 | (1,296 | ) | ||||||||
| Total adjustments | 31,637 | 30,559 | 15,043 | |||||||||
|
Net Cash Provided by Operating Activities |
39,176 | 34,743 | 35,222 | |||||||||
| Investing Activities | ||||||||||||
| Construction and capital expenditures: | ||||||||||||
| Capital expenditures | (19,465 | ) | (20,110 | ) | (19,530 | ) | ||||||
| Interest during construction | (263 | ) | (162 | ) | (772 | ) | ||||||
| Acquisitions, net of cash acquired | (828 | ) | (2,368 | ) | (2,906 | ) | ||||||
| Dispositions | 812 | 1,301 | 1,830 | |||||||||
| Sales (purchases) of securities, net | 65 | 62 | (100 | ) | ||||||||
| Other | (1 | ) | 27 | 29 | ||||||||
|
Net Cash Used in Investing Activities |
(19,680 | ) | (21,250 | ) | (21,449 | ) | ||||||
| Financing Activities | ||||||||||||
|
Net change in short-term borrowings with original maturities of three months or less |
1 | (1,625 | ) | 1,592 | ||||||||
| Issuance of long-term debt | 13,486 | 7,936 | 2,235 | |||||||||
| Repayment of long-term debt | (8,733 | ) | (7,574 | ) | (9,294 | ) | ||||||
| Purchase of treasury stock | (12,752 | ) | - | - | ||||||||
| Issuance of treasury stock | 477 | 237 | 50 | |||||||||
| Dividends paid | (10,241 | ) | (10,172 | ) | (9,916 | ) | ||||||
| Other | 89 | (451 | ) | (516 | ) | |||||||
|
Net Cash Used in Financing Activities |
(17,673 | ) | (11,649 | ) | (15,849 | ) | ||||||
| Net increase (decrease) in cash and cash equivalents | 1,823 | 1,844 | (2,076 | ) | ||||||||
| Cash and cash equivalents beginning of year | 3,045 | 1,201 | 3,277 | |||||||||
| Cash and Cash Equivalents End of Year | $ | 4,868 | $ | 3,045 | $ | 1,201 | ||||||
| Financial Data | ||||||||||||||||||||
| AT&T Inc. | ||||||||||||||||||||
| Supplementary Operating and Financial Data | ||||||||||||||||||||
| Dollars in millions except per share amounts, subscribers and connections in (000s) | ||||||||||||||||||||
| Unaudited | Three Months Ended | Twelve Months Ended | ||||||||||||||||||
| 12/31/2012 | 12/31/2011 | % Chg | 12/31/2012 | 12/31/2011 | % Chg | |||||||||||||||
| Wireless | ||||||||||||||||||||
| Volumes | ||||||||||||||||||||
| Total | 106,957 | 103,247 | 3.6 | % | ||||||||||||||||
| Postpaid | 70,497 | 69,309 | 1.7 | % | ||||||||||||||||
| Prepaid | 7,328 | 7,225 | 1.4 | % | ||||||||||||||||
| Reseller | 14,875 | 13,644 | 9.0 | % | ||||||||||||||||
| Connected Devices | 14,257 | 13,069 | 9.1 | % | ||||||||||||||||
| Wireless Net Adds | ||||||||||||||||||||
| Total | 1,094 | 2,497 | -56.2 | % | 3,764 | 7,699 | -51.1 | % | ||||||||||||
| Postpaid | 780 | 717 | 8.8 | % | 1,438 | 1,429 | 0.6 | % | ||||||||||||
| Prepaid | (166 | ) | 159 | - | 128 | 674 | -81.0 | % | ||||||||||||
| Reseller | 234 | 592 | -60.5 | % | 1,027 | 1,874 | -45.2 | % | ||||||||||||
| Connected Devices | 246 | 1,029 | -76.1 | % | 1,171 | 3,722 | -68.5 | % | ||||||||||||
| M&A Activity, Partitioned Customers and Other Adjs. | (8 | ) | 12 | - | (54 | ) | 12 | - | ||||||||||||
| Wireless Churn | ||||||||||||||||||||
| Postpaid Churn | 1.19 | % | 1.21 | % | -2 BP | 1.09 | % | 1.18 | % | -9 BP | ||||||||||
| Total Churn | 1.42 | % | 1.39 | % | 3 BP | 1.35 | % | 1.37 | % | -2 BP | ||||||||||
| Other | ||||||||||||||||||||
| Branded Computing Subscribers1 | 6,429 | 5,105 | 25.9 | % | ||||||||||||||||
| Licensed POPs (000,000) | 313 | 313 | - | |||||||||||||||||
| Wireline | ||||||||||||||||||||
| Voice | ||||||||||||||||||||
| Total Wireline Voice Connections | 34,792 | 39,012 | -10.8 | % | ||||||||||||||||
| Net Change | (1,029 | ) | (1,086 | ) | 5.2 | % | (4,220 | ) | (4,551 | ) | 7.3 | % | ||||||||
| Broadband | ||||||||||||||||||||
| Total Wireline Broadband Connections | 16,390 | 16,427 | -0.2 | % | ||||||||||||||||
|
Net Change2 |
(2 | ) | (49 | ) | 95.9 | % | (37 | ) | 118 | - | ||||||||||
| Video | ||||||||||||||||||||
| U-verse | 4,536 | 3,791 | 19.7 | % | ||||||||||||||||
| Satellite | 1,600 | 1,765 | -9.3 | % | ||||||||||||||||
| Total Video Connections | 6,136 | 5,556 | 10.4 | % | ||||||||||||||||
| Net Change | 159 | 164 | -3.0 | % | 580 | 639 | -9.2 | % | ||||||||||||
| Consumer Revenue Connections | ||||||||||||||||||||
| Broadband3 | 14,531 | 14,492 | 0.3 | % | ||||||||||||||||
| Video Connections4 | 6,114 | 5,542 | 10.3 | % | ||||||||||||||||
| Voice5 | 18,614 | 21,232 | -12.3 | % | ||||||||||||||||
| Total Consumer Revenue Connections | 39,259 | 41,266 | -4.9 | % | ||||||||||||||||
| Net Change | (418 | ) | (586 | ) | 28.7 | % | (2,007 | ) | (2,161 | ) | 7.1 | % | ||||||||
| AT&T Inc. | ||||||||||||||||||||
| Construction and capital expenditures | ||||||||||||||||||||
| Capital expenditures | $ 5,846 | $ 5,485 | 6.6 | % | $ 19,465 | $ 20,110 | -3.2 | % | ||||||||||||
| Interest during construction | $ 66 | $ 43 | 53.5 | % | $ 263 | $ 162 | 62.3 | % | ||||||||||||
| Dividends Declared per Share | $ 0.45 | $ 0.44 | 2.3 | % | $ 1.77 | $ 1.73 | 2.3 | % | ||||||||||||
| End of Period Common Shares Outstanding (000,000) | 5,581 | 5,927 | -5.8 | % | ||||||||||||||||
| Debt Ratio6 | 43.0 | % | 38.0 | % | 500 BP | |||||||||||||||
| Total Employees | 241,810 | 256,420 | -5.7 | % | ||||||||||||||||
|
1 |
Branded Computing Subscribers includes tablets, tethering plans, aircards, mobile Wi-Fi hot spots and other data-only devices. | |||||||||||||||||||
|
2 |
Prior year amounts restated to conform to current period reporting methodology. | |||||||||||||||||||
|
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 |
Includes consumer U-verse Voice over Internet Protocol connections of 2,905 as of December 31, 2012. | |||||||||||||||||||
|
6 |
Total long-term debt plus debt maturing within one year divided by total debt plus total stockholders' equity. | |||||||||||||||||||
|
Note: For the end of 4Q12, total switched access lines were 31,887, retail business switched access lines totaled 14,274, and wholesale and coin switched access lines totaled 1,904. |
||||||||||||||||||||
| Financial Data | |||||||||||||||||||||||||||||
| AT&T Inc. | |||||||||||||||||||||||||||||
| Non-GAAP Wireless Reconciliation | |||||||||||||||||||||||||||||
| Wireless Segment EBITDA | |||||||||||||||||||||||||||||
| Dollars in millions | |||||||||||||||||||||||||||||
| Unaudited | |||||||||||||||||||||||||||||
| Three Months Ended |
|
Twelve Months Ended |
|||||||||||||||||||||||||||
| 12/31/11 | 3/31/12 | 6/30/12 | 9/30/12 | 12/31/12 | 12/31/11 | 12/31/12 | |||||||||||||||||||||||
| Segment Operating Revenues | |||||||||||||||||||||||||||||
| Service | $ | 14,347 | $ | 14,566 | $ | 14,765 | $ | 14,906 | $ | 14,949 | $ | 56,726 | $ | 59,186 | |||||||||||||||
| Equipment | 2,349 | 1,570 | 1,588 | 1,726 | 2,693 | 6,489 | 7,577 | ||||||||||||||||||||||
| Total Segment Operating Revenues | 16,696 | 16,136 | 16,353 | 16,632 | 17,642 | 63,215 | 66,763 | ||||||||||||||||||||||
| Segment Operating Expenses | |||||||||||||||||||||||||||||
| Operations and support | 12,513 | 9,978 | 9,590 | 10,432 | 13,296 | 41,282 | 43,296 | ||||||||||||||||||||||
| Depreciation and amortization | 1,588 | 1,666 | 1,696 | 1,730 | 1,781 | 6,329 | 6,873 | ||||||||||||||||||||||
| Total Segment Operating Expenses | 14,101 | 11,644 | 11,286 | 12,162 | 15,077 | 47,611 | 50,169 | ||||||||||||||||||||||
| Segment Operating Income | 2,595 | 4,492 | 5,067 | 4,470 | 2,565 | 15,604 | 16,594 | ||||||||||||||||||||||
| Segment Operating Income Margin | 15.5 | % | 27.8 | % | 31.0 | % | 26.9 | % | 14.5 | % | 24.7 | % | 24.9 | % | |||||||||||||||
| Plus: Depreciation and amortization | 1,588 | 1,666 | 1,696 | 1,730 | 1,781 | 6,329 | 6,873 | ||||||||||||||||||||||
| EBITDA | 4,183 | 6,158 | 6,763 | 6,200 | 4,346 | 21,933 | 23,467 | ||||||||||||||||||||||
| EBITDA as a % of Service Revenue | 29.2 | % | 42.3 | % | 45.8 | % | 41.6 | % | 29.1 | % | 38.7 | % | 39.6 | % | |||||||||||||||
| EBITDA is defined as Operating Income Before 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 Wireless Reconciliation | |||||||||
| Wireless Segment Adjusted EBITDA | |||||||||
| Dollars in millions | |||||||||
| Unaudited | |||||||||
| Three Months Ended |
|
Twelve Months Ended |
|||||||
| 12/31/12 | 12/31/12 | ||||||||
| Reported Service Revenues | $ | 14,949 | $ | 59,186 | |||||
| Adjustments: | |||||||||
| Storm Impacts | 22 | 22 | |||||||
| Total Adjusted Service Revenues | $ | 14,971 | $ | 59,208 | |||||
| EBITDA | $ | 4,346 | $ | 23,467 | |||||
| Adjustments: | |||||||||
| Storm Impacts | 128 | 128 | |||||||
| Adjusted EBITDA | $ | 4,474 | $ | 23,595 | |||||
| Adjusted EBITDA as a % of Adjusted Service Revenues | 29.9% | 39.9% | |||||||
|
EBITDA is defined as Operating Income Before Depreciation and Amortization. Annual Service EBITDA Margin is calculated as the sum of quarterly EBITDA divided by the sum of quarterly Service Revenues. |
|||||||||
|
Adjusted EBITDA 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 EBITDA 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 EBITDA, as presented, may differ from similarly titled measures reported by other companies. |
|||||||||
| Financial Data | ||||||||||||||||
| AT&T Inc. | ||||||||||||||||
| Non-GAAP Financial Reconciliation | ||||||||||||||||
| Free Cash Flow | ||||||||||||||||
| Dollars in Millions | ||||||||||||||||
| Unaudited | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2011 | 2012 | 2011 | 2012 | |||||||||||||
| Net cash provided by operating activities | $ | 7,489 | $ | 10,520 | $ | 34,743 | $ | 39,176 | ||||||||
| Less: Construction and capital expenditures | (5,528 | ) | (5,912 | ) | (20,272 | ) | (19,728 | ) | ||||||||
| Free Cash Flow | $ | 1,961 | $ | 4,608 | $ | 14,471 | $ | 19,448 | ||||||||
| Free Cash Flow after Dividends | ||||||||||||||||
| Dollars in Millions | ||||||||||||||||
| Unaudited | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2011 | 2012 | 2011 | 2012 | |||||||||||||
| Net cash provided by operating activities | $ | 7,489 | $ | 10,520 | $ | 34,743 | $ | 39,176 | ||||||||
| Less: Construction and capital expenditures | (5,528 | ) | (5,912 | ) | (20,272 | ) | (19,728 | ) | ||||||||
| Free Cash Flow | 1,961 | 4,608 | 14,471 | 19,448 | ||||||||||||
| Less: Dividends paid | (2,545 | ) | (2,503 | ) | (10,172 | ) | (10,241 | ) | ||||||||
| Free Cash Flow After Dividends | $ | (584 | ) | $ | 2,105 | $ | 4,299 | $ | 9,207 | |||||||
|
Free cash flow includes reimbursements of certain postretirement benefits paid. |
||||||||||||||||
|
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. 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. |
||||||||||||||||
| Financial Data | ||||||||||||||||
| AT&T Inc. | ||||||||||||||||
| Non-GAAP Consolidated Reconciliation | ||||||||||||||||
| Net-Debt-to-Adjusted EBITDA Ratio | ||||||||||||||||
| Dollars in millions | ||||||||||||||||
| Unaudited | ||||||||||||||||
| Three Months Ended | ||||||||||||||||
| 3/31/12 | 6/30/12 | 9/30/12 | 12/31/12 | 2012 | ||||||||||||
| Operating Revenues | $ | 31,822 | $ | 31,575 | $ | 31,459 | $ | 32,578 | $ | 127,434 | ||||||
| Operating Expenses | 25,721 | 24,758 | 25,422 | 38,536 | 114,437 | |||||||||||
| Total Operating Income | 6,101 | 6,817 | 6,037 | (5,958 | ) | 12,997 | ||||||||||
| Add Back Depreciation and Amortization | 4,560 | 4,499 | 4,512 | 4,572 | 18,143 | |||||||||||
| Consolidated Reported EBITDA | 10,661 | 11,316 | 10,549 | (1,386 | ) | 31,140 | ||||||||||
| Add Back: | ||||||||||||||||
| Actuarial Loss on Benefit Plan | 9,994 | 9,994 | ||||||||||||||
| Consolidated Adjusted EBITDA* | 10,661 | 11,316 | 10,549 | 8,608 | 41,134 | |||||||||||
| End-of-period current debt | 3,486 | |||||||||||||||
| End-of-period long-term debt | 66,358 | |||||||||||||||
| Total End-of-Period Debt | 69,844 | |||||||||||||||
| Less Cash and Cash Equivalents | 4,868 | |||||||||||||||
| Net Debt Balance | 64,976 | |||||||||||||||
| Net-Debt-to-Adjusted EBITDA Ratio | 1.58 | |||||||||||||||
|
*Adjusted EBITDA excludes the impact of the benefit plan actuarial loss in order to better represent AT&T's operational performance. |
||||||||||||||||
|
Adjusted EBITDA excludes all actuarial losses ($10 billion loss in 2012) associated with our pension and postemployment benefit plans, which we immediately recognize in the income statement, pursuant to our accounting policy for the recognition of actuarial gains/losses. As a result, the Adjusted EBITDA reflects an expected return on plan assets of $4.3 billion (based on an average expected return on plan assets of 8.25%), rather than the actual return on plan assets of $6.3 billion (actual return of 12.1%), as included in the GAAP measure of income. |
||||||||||||||||
|
Our calculation of Adjusted EBITDA, as presented, may differ from similarly titled measures reported by other companies. |
||||||||||||||||
| Financial Data | ||||||||||||||||
| AT&T Inc. | ||||||||||||||||
| Non-GAAP Financial Reconciliation | ||||||||||||||||
| Adjusted Operating Revenues | ||||||||||||||||
| Dollars in Millions | ||||||||||||||||
| Unaudited | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2011 | 2012 | 2011 | 2012 | |||||||||||||
| Reported Operating Revenues | $ | 32,503 | $ | 32,578 | $ | 126,723 | $ | 127,434 | ||||||||
| Adjustments: | ||||||||||||||||
| Removal of Advertising Solutions | (781 | ) | - | (3,293 | ) | (1,049 | ) | |||||||||
| Storm Impacts | - | 27 | - | 27 | ||||||||||||
| Adjusted Operating Revenues | $ | 31,722 | $ | 32,605 | $ | 123,430 | $ | 126,412 | ||||||||
|
Year-over-year growth - Adjusted |
2.8 | % | 2.4 | % | ||||||||||||
|
Adjusted Operating Revenues is a non-GAAP financial measure calculated by excluding from operating revenues significant items that are non-operational or non-recurring in nature, including dispositions. 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 Revenues 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 Revenues may differ from similarly titled measures reported by other companies. |
||||||||||||||||
| Adjusted Operating Income | ||||||||||||||||
| Dollars in Millions | ||||||||||||||||
| Unaudited | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2011 | 2012 | 2011 | 2012 | |||||||||||||
| Reported Operating Income | $ | (8,990 | ) | $ | (5,958 | ) | $ | 9,218 | $ | 12,997 | ||||||
| Adjustments: | ||||||||||||||||
| Removal of Advertising Solutions | 2,772 | - | 2,268 | (170 | ) | |||||||||||
| Storm Impacts | - | 176 | - | 176 | ||||||||||||
| Actuarial Loss on Benefit Plan | 6,280 | 9,994 | 6,280 | 9,994 | ||||||||||||
| Termination of T-Mobile Acquisition | 4,181 | - | 4,181 | - | ||||||||||||
| Adjusted Operating Income | $ | 4,243 | $ | 4,212 | $ | 21,947 | $ | 22,997 | ||||||||
| Year-over-year growth - Adjusted | -0.7 | % | 4.8 | % | ||||||||||||
|
Adjusted Operating Income is a 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 this measure 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 excludes all actuarial losses ($10 billion loss in 2012) associated with our pension and postemployment benefit plans, which we immediately recognize in the income statement, pursuant to our accounting policy for the recognition of actuarial gains/losses. As a result, the Adjusted Operating Income reflects an expected return on plan assets of $4.3 billion (based on an average expected return on plan assets of 8.25%), rather than the actual return on plan assets of $6.3 billion (actual return of 12.1%), as included in the GAAP measure of income. |
||||||||||||||||
|
Adjusted Operating Income 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 Operating Expenses | ||||||||||||
| Dollars in Millions | ||||||||||||
| Unaudited | ||||||||||||
| Three Months Ended | ||||||||||||
| December 31, | ||||||||||||
| 2011 | 2012 | |||||||||||
| Reported Operating Expenses | $ | 41,493 | $ | 38,536 | ||||||||
| Adjustments: | ||||||||||||
| Removal of Advertising Solutions | (3,553 | ) | - | |||||||||
| Storm Impacts | - | (149 | ) | |||||||||
| Actuarial Loss on Benefit Plan | (6,280 | ) | (9,994 | ) | ||||||||
| Termination of T-Mobile Acquisition | (4,181 | ) | - | |||||||||
| Adjusted Operating Expenses | $ | 27,479 | $ | 28,393 | ||||||||
| Year-over-year growth - Adjusted | 3.3 | % | ||||||||||
|
Adjusted Operating Expenses is a non-GAAP financial measures calculated by excluding from operating expenses significant items that are non-operational or non-recurring in nature. Management believes that this measure 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 Expenses excludes all actuarial losses ($10 billion loss in 2012) associated with our pension and postemployment benefit plans, which we immediately recognize in the income statement, pursuant to our accounting policy for the recognition of actuarial gains/losses. As a result, the Adjusted Operating Expenses reflects an expected return on plan assets of $4.3 billion (based on an average expected return on plan assets of 8.25%), rather than the actual return on plan assets of $6.3 billion (actual return of 12.1%), as included in the GAAP measure of income. |
||||||||||||
|
Adjusted Operating Expenses 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 Expenses, 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 | ||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2011 | 2012 | 2011 | 2012 | |||||||||||||
| Reported Diluted EPS | $ | (1.12 | ) | $ | (0.68 | ) | $ | 0.66 | $ | 1.25 | ||||||
| Significant Items: | ||||||||||||||||
| Removal of Advertising Solutions | 0.46 | - | 0.41 | (0.03 | ) | |||||||||||
| Storm Impacts | - | 0.02 | - | 0.02 | ||||||||||||
| Actuarial Loss on Benefit Plan | 0.65 | 1.10 | 0.65 | 1.07 | ||||||||||||
| Termination of T-Mobile Acquisition | 0.44 | - | 0.44 | - | ||||||||||||
| Tax Adjustments | (0.03 | ) | - | (0.03 | ) | - | ||||||||||
| Adjusted Diluted EPS | $ | 0.40 | $ | 0.44 | $ | 2.13 | $ | 2.31 | ||||||||
| Year-over-year growth - Adjusted | 10.0 | % | 8.5 | % | ||||||||||||
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Weighted Average Common Shares Outstanding with Dilution (000,000) |
5,955 | 5,680 | 5,950 | 5,821 | ||||||||||||
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Adjusted diluted EPS is a non-GAAP financial measure calculated by excluding from operating revenues, operating expenses and equity in net income of affiliates certain significant items that are non-operational or non-recurring in nature, including dispositions. 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. |
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Adjusted diluted EPS excludes all actuarial losses ($10 billion loss in 2012) associated with our pension and postemployment benefit plans, which we immediately recognize in the income statement, pursuant to our accounting policy for the recognition of actuarial gains/losses. As a result, the Adjusted diluted EPS reflects an expected return on plan assets of $4.3 billion (based on an average expected return on plan assets of 8.25%), rather than the actual return on plan assets of $6.3 billion (actual return of 12.1%), as included in the GAAP measure of income. |
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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. |
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EBITDA DISCUSSION
For AT&T, EBITDA is defined as operating income before 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 Expenses, Adjusted Operating Revenues, Adjusted Operating Income Margin and Adjusted diluted EPS are non-GAAP financial measures calculated by excluding from operating revenues, operating expenses and equity in net income of affiliates certain significant items that are non-operational or non-recurring in nature, including dispositions. 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 Expenses, Adjusted Operating Revenues, 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.