EX-99.2 3 ex99_2.htm AT&T INC. 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
  
Six Months Ended
   
6/30/2008
    
6/30/2007
    
% Ch
 g   
6/30/2008
    
6/30/2007
    
% Ch
 g 
Operating Revenues
                                    
  Wireless service
   $ 10,894     $ 9,513       14.5 %   $ 21,499     $ 18,583       15.7 %
  Voice
     9,519       10,378       -8.3 %     19,212       20,833       -7.8 %
  Data
     6,054       5,746       5.4 %     12,026       11,401       5.5 %
  Directory
     1,383       1,155       19.7 %     2,781       2,177       27.7 %
  Other
     3,016       2,686       12.3 %     6,092       5,453       11.7 %
    Total Operating Revenues
     30,866       29,478       4.7 %     61,610       58,447       5.4 %
                                                 
Operating Expenses
                                                
  Cost of services and sales (exclusive of
                                                
     depreciation and amortization shown separately below)
     11,900       11,658       2.1 %     23,902       23,080       3.6 %
  Selling, general and administrative
     7,441       7,460       -0.3 %     15,300       14,727       3.9 %
  Depreciation and amortization
     4,958       5,416       -8.5 %     9,861       11,032       -10.6 %
    Total Operating Expenses
     24,299       24,534       -1.0 %     49,063       48,839       0.5 %
Operating Income
     6,567       4,944       32.8 %     12,547       9,608       30.6 %
Interest Expense
     854       879       -2.8 %     1,719       1,752       -1.9 %
Equity in Net Income of Affiliates
     212       210       1.0 %     455       383       18.8 %
Other Income (Expense) - Net
     (43 )     127       -       (10 )     631       -  
Income Before Income Taxes
     5,882       4,402       33.6 %     11,273       8,870       27.1 %
Income Taxes
     2,110       1,498       40.9 %     4,040       3,118       29.6 %
Net Income
   $ 3,772     $ 2,904       29.9 %   $ 7,233     $ 5,752       25.7 %
                                                 
                                                 
Basic Earnings Per Share
   $ 0.64     $ 0.47       36.2 %   $ 1.21     $ 0.93       30.1 %
Weighted Average Common
                                                
  Shares Outstanding (000,000)
     5,926       6,145       -3.6 %     5,962       6,184       -3.6 %
                                                 
Diluted Earnings Per Share
   $ 0.63     $ 0.47       34.0 %   $ 1.21     $ 0.92       31.5 %
Weighted Average Common
                                                
  Shares Outstanding with Dilution (000,000)
     5,962       6,195       -3.8 %     5,997       6,230       -3.7 %
                                                 
 
 
 
 
Financial Data
                                    
                                     
AT&T Inc.
                                    
Statements of Segment Income
                                    
Dollars in millions
                                    
Unaudited
                                    
   
Three Months Ended
  
Six Months Ended
                                     
Wireless
  
6/30/2008
    
6/30/2007
    
% Ch
 g   
6/30/2008
    
6/30/2007
    
% Ch
 g 
Segment Operating Revenues
                                    
  Service
   $ 10,951     $ 9,540       14.8 %   $ 21,596     $ 18,632       15.9 %
  Equipment
     1,082       855       26.5 %     2,262       1,760       28.5 %
    Total Segment Operating Revenues
     12,033       10,395       15.8 %     23,858       20,392       17.0 %
                                                 
Segment Operating Expenses
                                                
  Cost of services and equipment sales
     4,162       3,941       5.6 %     8,272       7,611       8.7 %
  Selling, general and administrative
     3,361       3,040       10.6 %     6,640       5,953       11.5 %
  Depreciation and amortization
     1,446       1,810       -20.1 %     2,926       3,701       -20.9 %
    Total Segment Operating Expenses
     8,969       8,791       2.0 %     17,838       17,265       3.3 %
Segment Operating Income
     3,064       1,604       91.0 %     6,020       3,127       92.5 %
Equity in Net Income of Affiliates
     3       17       -82.4 %     5       24       -79.2 %
Minority Interest
     (69 )     (67 )     -3.0 %     (129 )     (115 )     -12.2 %
Segment Income
   $ 2,998     $ 1,554       92.9 %   $ 5,896     $ 3,036       94.2 %
                                                 
                                                 
Wireline
                                                
Segment Operating Revenues
                                                
  Voice
   $ 9,757     $ 10,586       -7.8 %   $ 19,676     $ 21,263       -7.5 %
  Data
     6,287       5,980       5.1 %     12,492       11,842       5.5 %
  Other
     1,564       1,427       9.6 %     3,064       2,880       6.4 %
    Total Segment Operating Revenues
     17,608       17,993       -2.1 %     35,232       35,985       -2.1 %
                                                 
Segment Operating Expenses
                                                
  Cost of sales
     7,818       7,817       -       15,780       15,618       1.0 %
  Selling, general and administrative
     3,409       3,685       -7.5 %     6,951       7,486       -7.1 %
  Depreciation and amortization
     3,269       3,301       -1.0 %     6,439       6,742       -4.5 %
    Total Segment Operating Expenses
     14,496       14,803       -2.1 %     29,170       29,846       -2.3 %
Segment Income
   $ 3,112     $ 3,190       -2.4 %   $ 6,062     $ 6,139       -1.3 %
                                                 
                                                 
Advertising & Publishing
                                                
Segment Operating Revenues
   $ 1,407     $ 1,478       -4.8 %   $ 2,824     $ 2,921       -3.3 %
                                                 
Segment Operating Expenses
                                                
  Cost of sales
     439       364       20.6 %     860       797       7.9 %
  Selling, general and administrative
     332       428       -22.4 %     698       729       -4.3 %
  Depreciation and amortization
     203       263       -22.8 %     415       505       -17.8 %
    Total Segment Operating Expenses
     974       1,055       -7.7 %     1,973       2,031       -2.9 %
Segment Income
   $ 433     $ 423       2.4 %   $ 851     $ 890       -4.4 %
                                                 
                                                 
Other
                                                
Segment Operating Revenues
   $ 512     $ 558       -8.2 %   $ 1,056     $ 1,096       -3.6 %
Segment Operating Expenses
     554       643       -13.8 %     1,442       1,155       24.8 %
Segment Operating Loss
     (42 )     (85 )     50.6 %     (386 )     (59 )     -  
Equity in Net Income of Affiliates
     209       202       3.5 %     450       374       20.3 %
Segment Income
   $ 167     $ 117       42.7 %   $ 64     $ 315       -79.7 %
 
 
 
             
Financial Data
            
             
AT&T Inc.
            
Consolidated Balance Sheets
            
Dollars in millions except per share amounts
            
   
6/30/08
    
12/31/07
  
   
Unaudited
        
             
Assets
            
Current Assets
            
 Cash and cash equivalents
   $ 1,631     $ 1,970  
 Accounts receivable - net of allowances for
                
     uncollectibles of $1,303 and $1,364
     15,971       16,185  
 Prepaid expenses
     1,671       1,524  
 Deferred income taxes
     1,407       2,044  
 Other current assets
     2,545       2,963  
  Total current assets
     23,225       24,686  
Property, Plant and Equipment - Net
     97,368       95,890  
Goodwill
     71,528       70,713  
Licenses
     46,771       37,985  
Customer Lists and Relationships - Net
     12,568       14,505  
Other Intangible Assets - Net
     5,844       5,912  
Investments in Equity Affiliates
     2,838       2,270  
Postemployment Benefit
     17,898       17,291  
Other Assets
     6,468       6,392  
   Total Assets
   $ 284,508     $ 275,644  
                 
Liabilities and Stockholders' Equity
                
Current Liabilities
                
 Debt maturing within one year
   $ 16,472     $ 6,860  
 Accounts payable and accrued liabilities
     18,927       21,399  
 Advanced billing and customer deposits
     3,573       3,571  
 Accrued taxes
     3,782       5,027  
 Dividends payable
     2,357       2,417  
  Total current liabilities
     45,111       39,274  
Long-Term Debt
     63,675       57,255  
Deferred Credits and Other Noncurrent Liabilities
                
 Deferred income taxes
     25,136       24,939  
 Postemployment benefit obligation
     24,832       24,011  
 Other noncurrent liabilities
     13,817       14,798  
  Total deferred credits and other noncurrent liabilities
     63,785       63,748  
                 
Stockholders' Equity
                
 Common shares issued ($1 par value)
     6,495       6,495  
 Capital in excess of par value
     91,647       91,638  
 Retained earnings
     35,719       33,297  
 Treasury shares (at cost)
     (21,420 )     (15,683 )
 Accumulated other comprehensive loss
     (504 )     (380 )
  Total stockholders' equity
     111,937       115,367  
   Total Liabilities and Stockholders' Equity
   $ 284,508     $ 275,644  
 
 
 
Financial Data
            
             
AT&T Inc.
            
Consolidated Statements of Cash Flows
            
Dollars in millions, increase (decrease) in cash and cash equivalents
            
Unaudited
  
   Six Months Ended
   
     6/30/08
    
       6/30/07
  
Operating Activities
            
Net income
   $ 7,233     $ 5,752  
Adjustments to reconcile net income to
                
  net cash provided by operating activities:
                
 Depreciation and amortization
     9,861       11,032  
 Undistributed earnings from investments in equity affiliates
     (415 )     (344 )
 Provision for uncollectible accounts
     860       738  
 Deferred income tax expense (benefit)
     1,384       (546 )
 Net gain on sales of investments
     (27 )     (64 )
 Gain on license exchange
     -       (409 )
Changes in operating assets and liabilities:
                
   Accounts receivable
     (776 )     87  
   Other current assets
     274       (665 )
   Accounts payable and accrued liabilities
     (5,117 )     (287 )
   Stock-based compensation tax benefit
     (14 )     (107 )
Other - net
     242       (108 )
Total adjustments
     6,272       9,327  
Net Cash Provided by Operating Activities
     13,505       15,079  
                 
Investing Activities
                
Construction and capital expenditures
                
  Capital expenditures
     (9,320 )     (7,460 )
  Interest during construction
     (257 )     (78 )
Acquisitions, net of cash acquired
     (10,087 )     (221 )
Dispositions
     623       520  
Proceeds from sale of securities, net of investments
     (73 )     509  
Other
     41       17  
Net Cash Used in Investing Activities
     (19,073 )     (6,713 )
                 
Financing Activities
                
Net change in short-term borrowings with
                
 original maturities of three months or less
     6,590       (1,993 )
Issuance of long-term debt
     10,924       5,924  
Repayment of long-term debt
     (1,605 )     (2,065 )
Purchase of treasury shares
     (6,077 )     (6,904 )
Issuance of treasury shares
     310       1,252  
Dividends paid
     (4,802 )     (4,414 )
Stock-based compensation tax benefit
     14       107  
Other
     (125 )     (121 )
Net Cash Provided by (Used in) Financing Activities
     5,229       (8,214 )
Net increase (decrease) in cash and cash equivalents
     (339 )     152  
Cash and cash equivalents beginning of year
     1,970       2,418  
Cash and Cash Equivalents End of Period
   $ 1,631     $ 2,570  
 
 
 
 
Financial Data
                                    
                                     
AT&T Inc.
                                    
Supplementary Operating and Financial Data
                                    
Dollars in millions except per share amounts
                                    
Unaudited
  
Three Months Ended
  
Six Months Ended
   
6/30/2008
  
6/30/2007
  
% Ch
 g   
6/30/2008
  
6/30/2007
  
% Ch
 g 
                                     
Wireless
                                    
Wireless Customers (000)
                       72,882       63,673       14.5 %
     Net Customer Additions (000)
     1,333       1,456       -8.4 %     2,628       2,647       -0.7 %
     M&A Activity, Partitioned Customers and Other Adjs. (000)
     182       -       -       202       64       -  
Postpaid Customers (000)
                             57,043       51,488       10.8 %
     Net Postpaid Customer Additions (000)
     894       912       -2.0 %     1,599       1,592       0.4 %
     Postpaid Churn
     1.1 %     1.2 %  
-10 B
 P      1.2 %     1.3 %  
-10 B
 P 
Licensed POPs (000,000)
                             304       299       1.7 %
                                                 
In-Region Wireline 1
                                                
Total Consumer Revenue Connections (000) 8
                                                
Retail Consumer Primary Switched/VoIP connections 2
                             29,349       32,124       -8.6 %
Retail Consumer Additional Switched/VoIP connections 2
                             3,703       4,232        -12.5 % 
Consumer Broadband Connections 3
                             12,581       11,260       11.7 %
Video Connections: 4
                                                
Satellite Connections
                             2,235       1,846       21.1 %
U-verse Video Connections
                             549       51       -  
               Total Consumer Revenue Connections (000)
                             48,417       49,513       -2.2 %
                                                 
         Net Consumer Revenue Connection Changes (000)
     (923 )     248       -       (1,021 )     652       -  
                                                 
Switched Access Lines (000) 8
                                                
    Retail Consumer - Primary
                             29,319       32,124       -8.7 %
    Retail Consumer - Additional
                             3,701       4,232       -12.5 %
    Retail Business
                             22,428       23,144       -3.1 %
Retail
                             55,448       59,500       -6.8 %
                                                 
Wholesale 5
                             3,248       4,283       -24.2 %
Coin 6
                             164       295       -44.4 %
               Total Switched Access Lines (000)
                             58,860       64,078       -8.1 %
                                                 
         Net Switched Access Line Changes (000)
     (1,555 )     (1,351 )     -15.1 %     (2,722 )     (2,391 )     -13.8 %
                                                 
Total Broadband Connections (000) 3, 8
                             14,693       13,261       10.8 %
Net Broadband Connection Changes (000) 3, 8
     46       400       -88.5 %     537       1,091       -50.8 %
Total Video Connections (000) 4
                             2,784       1,897       46.8 %
Net Video Connection Changes (000) 4
     173       200       -13.5 %     437       387       12.9 %
                                                 
AT&T Inc.
                                                
Construction and capital expenditures
                                                
Captial expenditures
   $ 5,142     $ 4,122       24.7 %   $ 9,320     $ 7,460       24.9 %
Interest during construction
   $ 187     $ 43       -     $ 257     $ 78       -  
                                                 
Dividends Declared per Share
   $ 0.4000     $ 0.3550       12.7 %   $ 0.8000     $ 0.7100       12.7 %
End of Period Common Shares Outstanding (000,000)
                             5,892       6,107       -3.5 %
Debt Ratio 7
                             41.7 %     35.6 %  
610 B
 P 
Total Employees
                             307,550       301,840       1.9 %
                                                 
                                                 
 
1
  In-region wireline represents access lines served by AT&T's incumbent local exchange companies.
2
  Primarily switched access lines.  Also includes VoIP.
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 06/30/08 and 0.6 million at 06/30/07.
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 June 30, 2008
  
Adjusting Items
 
      
   
GAAP
    
Intangible Amortization
  
Adjusted
        
Service Revenues
   $ 10,951           $ 10,951        
Equipment Revenues
     1,082             1,082        
Total Operating Revenues
   $ 12,033     $ -     $ 12,033        
                               
Operating Expenses
                              
Cost of Services and Equipment Sales
     4,162       -       4,162        
Selling, General and Administrative
     3,361       -       3,361        
Depreciation and Amortization
     1,446       (529 )     917        
Total Operating Expenses
     8,969       (529 )     8,440        
                               
Operating Income
     3,064               3,593        
                               
Plus: Depreciation and Amortization
     1,446               917        
OIBDA
     4,510               4,510        
OIBDA as a % of Service Revenue
     41.2 %             41.2 %      
                               
Quarter Ended June 30, 2007
  
Adjusting Items
 
   
GAAP
    
Integration Costs
  
Intangible Amortization
  
Adjusted
  
Service Revenues
   $ 9,540                     $ 9,540  
Equipment Revenues
     855                       855  
Total Operating Revenues
   $ 10,395     $ -     $ -     $ 10,395  
                                 
Operating Expenses
                                
Cost of Services and Equipment Sales
     3,941       (48 )     -       3,893  
Selling, General and Administrative
     3,040       (115 )     -       2,925  
Depreciation and Amortization
     1,810       (83 )     (737 )     990  
Total Operating Expenses
     8,791       (246 )     (737 )     7,808  
                                 
Operating Income
     1,604                       2,587  
                                 
Plus: Depreciation and Amortization
     1,810                       990  
OIBDA
     3,414                       3,577  
OIBDA as a % of Service Revenue
     35.8 %                     37.5 %
 
  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
            
Dollars in Millions
            
             
Unaudited
            
June 30, 2008
  
Three Months Ended
    
Six Months Ended
  
             
Net cash provided by operating activities
  
$
 8,548    
$
 13,505  
Less: Construction and capital expenditures
     5,329       9,577  
Free Cash Flow
  
$
 3,219    
$
 3,928  
 
 
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.
 
 
 
Financial Data
                  
                   
AT&T Inc.
                  
Non-GAAP Consolidated Reconciliations
                  
Adjusted and Reported Wireline Operating Expenses
              
Dollars in Millions
                  
                   
Unaudited
                  
   
Three Months Ended
        
   
6/30/08
    
6/30/07
    
YoY % Change
  
                   
Reported Wireline Operating Expenses
  
$
 14,496     $ 14,803       -2.1 %
Operating Adjustments
                        
Cash Integration Costs
     -       141       -  
Intangible Amortization
     432       578       -25.3 %
Total Adjusting Items
     432       719       -39.9 %
Adjusted Wireline Operating Expenses
  
$
 14,064     $ 14,084       -0.1 %
 
 
Adjusted Wireline operating expenses differs from reported operating expenses in that it excludes the merger-related expenses shown above and provides additional comparability to prior periods.