EX-99.2 3 ex99_2.htm SELECTED FINANCIAL STATEMENTS AND OPERATING DATA ex99_2.htm
Financial Data
                                    
                                     
AT&T Inc.
                                    
Consolidated Statements of Income
                                    
Dollars in millions except per share amounts
                                    
Unaudited
  
  Three Months Ended
    
Twelve Months Ended
   
12/31/2007
    
12/31/2006
    
% Chg
    
12/31/2007
    
12/31/2006
    
% Chg
  
Operating Revenues
                                    
  Voice
   $ 9,801     $ 8,190       19.7%     $ 40,798     $ 33,714       21.0%  
  Data
     5,925       4,684       26.5%       23,206       18,317       26.7%  
  Wireless service
     10,151       199       -       38,568       223       -  
  Directory
     1,389       918       51.3%       4,806       3,634       32.3%  
  Other
     3,083       1,900       62.3%       11,550       7,167       61.2%  
    Total Operating Revenues
     30,349       15,891       91.0%       118,928       63,055       88.6%  
                                                 
Operating Expenses
                                                
  Cost of services and sales (exclusive of
                                                
     depreciation and amortization shown separately below)
     11,734       7,092       65.5%       46,055       28,542       61.4%  
  Selling, general and administrative
     7,900       3,731       -       30,892       14,318       -  
  Depreciation and amortization
     5,223       2,492       -       21,577       9,907       -  
    Total Operating Expenses
     24,857       13,315       86.7%       98,524       52,767       86.7%  
Operating Income
     5,492       2,576       -       20,404       10,288       98.3%  
Interest Expense
     868       465       86.7%       3,507       1,843       90.3%  
Equity in Net Income of Affiliates
     147       605       -75.7%       692       2,043       -66.1%  
Other Income (Expense) - Net
     1       78       -98.7%       615       393       56.5%  
Income Before Income Taxes
     4,772       2,794       70.8%       18,204       10,881       67.3%  
Income Taxes
     1,636       856       91.1%       6,253       3,525       77.4%  
Net Income
   $ 3,136     $ 1,938       61.8%     $ 11,951     $ 7,356       62.5%  
                                                 
                                                 
Basic Earnings Per Share
   $ 0.52     $ 0.50       4.0%     $ 1.95     $ 1.89       3.2%  
Weighted Average Common
                                                
  Shares Outstanding (000,000)
     6,054       3,888       55.7%       6,127       3,882       57.8%  
                                                 
Diluted Earnings Per Share
   $ 0.51     $ 0.50       2.0%     $ 1.94     $ 1.89       2.6%  
Weighted Average Common
                                                
  Shares Outstanding with Dilution (000,000)
     6,095       3,911       55.8%       6,170       3,902       58.1%  
                                                 
 
 
 
AT&T Inc.
                                    
Statements of Segment Income
                                    
Dollars in millions
                                    
Unaudited
                                    
   
Three Months Ended
    
Twelve Months Ended
                                     
Wireless *
  
12/31/2007
    
12/31/2006
    
% Ch
 g  
12/31/2007
    
12/31/2006
    
% Ch
 g
Segment Operating Revenues
                                    
  Service revenues
   $ 10,186     $ 8,803       15.7 %   $ 38,678     $ 33,788       14.5 %
  Equipment sales
     1,169       960       21.8 %     4,006       3,749       6.9 %
    Total Segment Operating Revenues
     11,355       9,763       16.3 %     42,684       37,537       13.7 %
                                                 
Segment Operating Expenses
                                                
  Cost of services and equipment sales
     4,301       3,839       12.0 %     15,991       15,057       6.2 %
  Selling, general and administrative
     3,458       3,007       15.0 %     12,594       11,446       10.0 %
  Depreciation and amortization
     1,669       1,588       5.1 %     7,079       6,462       9.5 %
    Total Segment Operating Expenses
     9,428       8,434       11.8 %     35,664       32,965       8.2 %
Segment Operating Income
     1,927       1,329       45.0 %     7,020       4,572       53.5 %
Equity in Net Income of Affiliates
     4       10       -60.0 %     16       40       -60.0 %
Minority Interest
     (55 )     (40 )     -37.5 %     (198 )     (169 )     -17.2 %
Segment Income
   $ 1,876     $ 1,299       44.4 %   $ 6,838     $ 4,443       53.9 %
 
* Results include 100% of AT&T's actual wireless results.
 
Wireline
                                    
Segment Operating Revenues
                                    
  Voice
   $ 10,011     $ 8,190       22.2 %   $ 41,630     $ 33,714       23.5 %
  Data
     6,157       4,684       31.4 %     24,075       18,317       31.4 %
  Other
     1,490       1,441       3.4 %     5,872       5,447       7.8 %
    Total Segment Operating Revenues
     17,658       14,315       23.4 %     71,577       57,478       24.5 %
                                                 
Segment Operating Expenses
                                                
  Cost of sales
     7,413       6,621       12.0 %     30,214       26,693       13.2 %
  Selling, general and administrative
     4,023       3,369       19.4 %     16,180       13,185       22.7 %
  Depreciation and amortization
     3,338       2,410       38.5 %     13,411       9,676       38.6 %
    Total Segment Operating Expenses
     14,774       12,400       19.1 %     59,805       49,554       20.7 %
Segment Income
   $ 2,884     $ 1,915       50.6 %   $ 11,772     $ 7,924       48.6 %
                                                 
                                                 
Advertising & Publishing
                                                
Segment Operating Revenues
   $ 1,473     $ 939       56.9 %   $ 5,851     $ 3,685       58.8 %
                                                 
Segment Operating Expenses
                                                
  Cost of sales
     452       268       68.7 %     1,733       1,121       54.6 %
  Selling, general and administrative
     333       171       94.7 %     1,333       616       -  
  Depreciation and amortization
     181       1       -       924       3       -  
    Total Segment Operating Expenses
     966       440       -       3,990       1,740       -  
Segment Operating Income
     507       499       1.6 %     1,861       1,945       -4.3 %
Equity in Net Income (Loss) of Affiliates
     -       (4 )     -       -       (17 )     -  
Segment Income
   $ 507     $ 495       2.4 %   $ 1,861     $ 1,928       -3.5 %
                                                 
                                                 
Other **
                                                
Segment Operating Revenues
   $ 570     $ 488       16.8 %   $ 2,234     $ 1,878       19.0 %
Segment Operating Expenses
     359       348       3.2 %     1,827       1,485       23.0 %
Segment Operating Income
     211       140       50.7 %     407       393       3.6 %
Equity in Net Income of Affiliates
     143       599       -76.1 %     676       2,020       -66.5 %
Segment Income
   $ 354     $ 739       -52.1 %   $ 1,083     $ 2,413       -55.1 %
 
** Equity in Net Income of Affiliates includes our 60% proportionate share of wireless results in 2006.
 
 
 
Financial Data
            
             
AT&T Inc.
            
Consolidated Balance Sheets
            
Dollars in millions except per share amounts
            
   
12/31/07
    
12/31/06
  
   
Unaudited
        
             
Assets
            
Current Assets
            
 Cash and cash equivalents
   $ 1,970     $ 2,418  
 Accounts receivable - net of allowances for
                
     uncollectibles of $1,364 and $1,276
     16,678       16,194  
 Prepaid expenses
     1,524       1,477  
 Deferred income taxes
     2,099       3,034  
 Other current assets
     2,470       2,430  
  Total current assets
     24,741       25,553  
Property, Plant and Equipment - Net
     95,890       94,596  
Goodwill
     70,713       67,657  
Licenses
     37,985       34,252  
Customer Lists and Relationships - Net
     14,505       18,922  
Other Intangible Assets - Net
     5,912       6,566  
Investments in Equity Affiliates
     2,270       1,995  
Postemployment Benefit
     18,146       14,228  
Other Assets
     6,392       6,865  
   Total Assets
   $ 276,554     $ 270,634  
                 
Liabilities and Stockholders' Equity
                
Current Liabilities
                
 Debt maturing within one year
   $ 6,860     $ 9,733  
 Accounts payable and accrued liabilities
     21,399       22,106  
 Advanced billing and customer deposits
     3,571       3,402  
 Accrued taxes
     5,027       3,026  
 Dividends payable
     2,417       2,215  
  Total current liabilities
     39,274       40,482  
Long-Term Debt
     57,255       50,063  
Deferred Credits and Other Noncurrent Liabilities
                
 Deferred income taxes
     24,994       27,406  
 Postemployment benefit obligation
     24,866       28,901  
 Unamortized investment tax credits
     150       181  
 Other noncurrent liabilities
     14,648       8,061  
  Total deferred credits and other noncurrent liabilities
     64,658       64,549  
                 
Stockholders' Equity
                
 Common shares issued ($1 par value)
     6,495       6,495  
 Capital in excess of par value
     91,638       91,352  
 Retained earnings
     33,297       30,375  
 Treasury shares (at cost)
     (15,683 )     (7,368 )
 Accumulated other comprehensive income
     (380 )     (5,314 )
  Total stockholders' equity
     115,367       115,540  
   Total Liabilities and Stockholders' Equity
   $ 276,554     $ 270,634  
 
 
 
Financial Data
                  
                   
AT&T Inc.
                  
Consolidated Statements of Cash Flows
                  
Dollars in millions, increase (decrease) in cash and cash equivalents
                  
Unaudited
  
Twelve Months Ended
   
 12/31/07
    
12/31/06
    
12/31/05
  
Operating Activities
                  
Net income
   $ 11,951     $ 7,356     $ 4,786  
Adjustments to reconcile net income to
                        
  net cash provided by operating activities:
                        
 Depreciation and amortization
     21,577       9,907       7,643  
 Undistributed earnings from investments in equity affiliates
     (297 )     (1,946 )     (451 )
 Provision for uncollectible accounts
     1,617       586       744  
 Amortization of investment tax credits
     (31 )     (28 )     (21 )
 Deferred income tax benefit
     (240 )     (87 )     (658 )
 Net gain on sales of investments
     (11 )     (10 )     (135 )
 Gain on license exchange
     (409 )     -       -  
Changes in operating assets and liabilities:
                        
   Accounts receivable
     (1,984 )     519       (94 )
   Other current assets
     (527 )     30       34  
   Accounts payable and accrued liabilities
     672       (2,213 )     74  
   Stock-based compensation tax benefit
     (173 )     (18 )     (3 )
Other - net
     1,927       1,519       1,055  
Total adjustments
     22,121       8,259       8,188  
Net Cash Provided by Operating Activities
     34,072       15,615       12,974  
                         
Investing Activities
                        
Construction and capital expenditures
     (17,717 )     (8,320 )     (5,576 )
Net investments in affiliates
     -       (1,104 )     2,436  
Dispositions
     1,594       756       526  
Acquisitions, net of cash acquired
     (2,873 )     368       1,504  
Proceeds from sale of marketable securities
     471       -       -  
Proceeds from sale of debt and equity securities
     562       -       -  
Investments in debt and equity securities
     (579 )     -       -  
Maturities of held-to-maturity securities
     -       -       99  
Proceeds from note repayment
     -       -       37  
Other
     36       7       -  
Net Cash Used in Investing Activities
     (18,506 )     (8,293 )     (974 )
                         
Financing Activities
                        
Net change in short-term borrowings with
                        
 original maturities of three months or less
     (3,411 )     3,649       (4,119 )
Issuance of long-term debt
     11,367       1,491       1,973  
Repayment of long-term debt
     (6,772 )     (4,242 )     (2,682 )
Purchase of treasury shares
     (10,390 )     (2,678 )     (1,843 )
Issuance of treasury shares
     1,986       589       432  
Repurchase of preferred shares of subsidiaries
     -       -       (728 )
Dividends paid
     (8,743 )     (5,153 )     (4,256 )
Stock-based compensation tax benefit
     173       18       3  
Other
     (224 )     198       (6 )
Net Cash Used in Financing Activities
     (16,014 )     (6,128 )     (11,226 )
Net increase (decrease) in cash and cash equivalents
                        
  from continuing operations
     (448 )     1,194       774  
Net Cash Used in Operating Activities from Discontinued Operations
     -       -       (310 )
Net increase (decrease) in cash and cash equivalents
     (448 )     1,194       464  
Cash and cash equivalents beginning of year
     2,418       1,224       760  
Cash and Cash Equivalents End of Year
   $ 1,970     $ 2,418     $ 1,224  
 
 
 
Financial Data
                                    
                                     
AT&T Inc.
                                    
Supplementary Operating and Financial Data
                                    
Dollars in millions except per share amounts
                                    
Unaudited
  
Three Months Ended
    
Year to Date
   
12/31/2007
    
12/31/2006
    
% Ch
 g   
12/31/2007
    
12/31/2006
    
% Ch
 g 
                                     
Wireless
                                    
Wireless Customers (000)
                       70,052       60,962       14.9 %
     Net Customer Additions (000)
     2,675       2,357       13.5 %     7,315       6,892       6.1 %
     M&A Activity, Partitioned Customers and Other Adjs. (000)
     1,711       (61 )     -       1,775       (74 )     -  
Postpaid Customers (000)
                             55,310       49,877       10.9 %
     Net Postpaid Customer Additions (000)
     1,178       861       36.8 %     3,982       3,730       6.8 %
     Postpaid Churn
     1.2%       1.5%    
-30 B
 P     1.3%       1.5%    
-20 B
 P
Licensed POPs (000,000) 1
                             299       296       1.0 %
                                                 
In-Region Wireline 2
                                                
Total Consumer Revenue Connections (000)
                                                
  Retail Consumer Access Lines
                             35,047       37,120       -5.6 %
  Consumer Broadband Connections 3
                             12,082       10,278       17.6 %
  Video Connections: 4
                                                
Satellite Connections
                             2,116       1,507       40.4 %
U-verse Video Connections
                             231       3       -  
               Total Consumer Revenue Connections (000)
                             49,476       48,908       1.2 %
                                                 
         Net Consumer Revenue Connections Changes (000)
     (163 )     15,711       -       568       15,905       -96.4 %
                                                 
Switched Access Lines (000)8
                                                
    Retail Consumer - Primary
                             31,035       32,636       -4.9 %
    Retail Consumer - Additional
                             4,012       4,484       -10.5 %
    Retail Business
                             22,754       23,295       -2.3 %
  Retail
                             57,801       60,415       -4.3 %
                                                 
  Wholesale 5
                             3,530       5,724       -38.3 %
  Coin 6
                             251       330       -23.9 %
               Total Switched Access Lines (000)
                             61,582       66,469       -7.4 %
                                                 
         Net Switched Access Line Changes (000)
     (1,289 )     19,382       -       (4,887 )     17,056       -  
                                                 
Total Broadband Connections (000) 3, 8
                             14,156       12,170       16.3 %
  Net Broadband Connections Changes (000) 3
     396       4,015       -90.1 %     1,986       5,249       -62.2 %
Video Connections (000) 4, 8
                             2,347       1,510       55.4 %
  Net Video Connections Changes (000) 4
     235       867       -72.9 %     837       997       -16.0 %
                                                 
AT&T Inc.
                                                
Capital Expenditures
   $ 5,593     $ 2,162       -     $ 17,717     $ 8,320       -  
Dividends Declared per Share
   $ 0.4000     $ 0.3550       12.7 %   $ 1.4650     $ 1.3525       8.3 %
End of Period Common Shares Outstanding (000,000)
                             6,044       6,239       -3.1 %
Debt Ratio 7
                             35.7%       34.1%    
160 B
 P
Total Employees
                             309,050       304,180       1.6 %
                                                 
                                                 
1  
Licensed POPs numbers do not include Dobson.
    
2  
In-region Wireline represents access lines served by AT&T's incumbent local exchange companies.
3  
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  
Wholesale lines include 0.2 million lines purchased by AT&T Corp. at 12/31/07 and 1.3 million at 12/31/06.
6  
Coin includes both retail and wholesale access lines.
    
7  
Total long-term debt plus debt maturing within one year divided by total debt plus total stockholders' equity.
8  
Prior year amounts restated to conform to current period reporting methodology.
 
 
 
 Financial Data                        
                         
 AT&T Inc.                        
Non-GAAP Wireless Reconciliations
                        
Wireless Segment Adjusted OIBDA
                        
Dollars in Millions
                        
unaudited                         
                         
Quarter Ended December 31, 2007
    
 Adjusting Items
      
                       
   
GAAP
    
Integration Costs
  
Intangible Amortization
  
Adjusted
  
Service Revenues
   $ 10,186                 $ 10,186  
Equipment Revenues
     1,169                   1,169  
Total Operating Revenues
   $ 11,355     $ -     $ -     $ 11,355  
                                 
Operating Expenses
                                
Cost of Services and Equipment Sales
     4,301       (147 )     -       4,154  
Selling, General and Administrative
     3,458       (148 )     -       3,310  
Depreciation and Amortization
     1,669       (68 )     (628 )     973  
Total Operating Expenses
     9,428       (363 )     (628 )     8,437  
                                 
Operating Income
     1,927                       2,918  
                                 
Plus: Depreciation and Amortization
     1,669                       973  
OIBDA
     3,596                       3,891  
OIBDA as a % of Service Revenue
     35.3%                       38.2%  
                                 
                             
                             
Quarter Ended December 31, 2006
      
 Adjusting Items
        
   
GAAP
    
Integration
Costs
  
Intangible Amortization
  
Adjusted
  
Service Revenues
   $ 8,803                     $ 8,803  
Equipment Revenues
     960                       960  
Total Operating Revenues
   $ 9,763     $ -     $ -     $ 9,763  
                                 
Operating Expenses
                                
Cost of Services and Equipment Sales
     3,839       (79 )     -       3,760  
Selling, General and Administrative
     3,007       (36 )     -       2,971  
Depreciation and Amortization
     1,588       (109 )     (292 )     1,187  
Total Operating Expenses
     8,434       (224 )     (292 )     7,918  
                                 
Operating Income
     1,329                       1,845  
                                 
Plus: Depreciation and Amortization
     1,588                       1,187  
OIBDA
     2,917                       3,032  
OIBDA as a % of Service Revenue
     33.1%                       34.4%  
OIBDA is defined as operating income (loss) before depreciation and amortization.  OIBDA differs from segment operating income (loss), as calculated in accordance with generally accepted accounting principles (GAAP), in that it excludes depreciation and amortization.  OIBDA 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.  OIBDA is not presented as an alternative measure of operating results or cash flows from operations, as determined in accordance with GAAP.  Our calculation of OIBDA, as presented, may differ from similarly titled measures reported by other companies.
 
 
 
Financial Data
  
       
 AT&T Inc.      
Non-GAAP Consolidated Reconciliations      
Reconciliation of Free Cash Flow and Free Cash Flow Yield
      
Dollars in Millions
      
unaudited      
 
      
December 31, 2007
  
  Twelve Months Ended
 
       
Net cash provided by operating activities
   $ 34,072  
Less: Construction and capital expenditures
     17,717  
Free Cash Flow
   $ 16,355  
         
End of Period Share Price
   $ 41.56  
End of Period Shares Outstanding (Ms)
     6,044  
Market Capitalization
   $ 251,189  
         
Free Cash Flow Yield
     6.5%  
 
Free cash flow yield is based upon cash from continuing operations less capital expenditures as a percentage of market capitalization computed on 12/31/07.  Market capitalization is computed by mulitplying the end of period share price by the end of period shares outstanding as of 12/31/07.
 
 
 
Financial Data
            
 
 
            
 AT&T Inc.            
Non-GAAP Consolidated Reconciliations            
Reconciliation of Free Cash Flow after Dividends
        
Dollars in Millions
            
unaudited            
 
            
December 31, 2007
  
Three Months Ended
    
Twelve Months Ended
  
             
Net cash provided by operating activities
   $ 9,852     $ 34,072  
Less: Construction and capital expenditures
     5,593       17,717  
Less: Dividends paid
     2,159       8,743  
Free Cash Flow after Dividends
   $ 2,100     $ 7,612  
 
Free cash flow after dividends is defined as cash from operations minus capital expenditures and dividends. Management reviews free cash flow monthly as an important indicator of how much cash is generated by normal business operations, including capital expenditures, and makes business decisions based on this measure. Management also views free cash flow as a measure of cash available to pay debt and return value to shareowners.