EX-99.2 3 ex99_2.htm AT&T 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
  
Nine Months Ended
   
9/30/2008
    
9/30/2007
    
% Ch
 g  
9/30/2008
    
9/30/2007
    
% Ch
 g
Operating Revenues
                                              
   Wireless service
 $ 11,227     $ 9,834       14.2 %   $ 32,726     $ 28,417       15.2 %
   Voice
   9,313       10,164       -8.4 %     28,525       30,997       -8.0 %
   Data
   6,144       5,880       4.5 %     18,170       17,281       5.1 %
   Directory
   1,333       1,240       7.5 %     4,114       3,417       20.4 %
   Other
   3,325       3,014       10.3 %     9,417       8,467       11.2 %
      Total Operating Revenues
   31,342       30,132       4.0 %     92,952       88,579       4.9 %
                                                 
Operating Expenses
                                              
   Cost of services and sales (exclusive of
                                              
      depreciation and amortization shown separately below)
   13,070       11,736       11.4 %     36,972       34,816       6.2 %
   Selling, general and administrative
   7,676       7,770       -1.2 %     22,976       22,497       2.1 %
   Depreciation and amortization
   4,978       5,322       -6.5 %     14,839       16,354       -9.3 %
      Total Operating Expenses
   25,724       24,828       3.6 %     74,787       73,667       1.5 %
Operating Income
   5,618       5,304       5.9 %     18,165       14,912       21.8 %
Interest Expense
   858       887       -3.3 %     2,577       2,639       -2.3 %
Equity in Net Income of Affiliates
   257       162       58.6 %     712       545       30.6 %
Other Income (Expense) - Net
   (81 )     (17 )     -       (91 )     614       -  
Income Before Income Taxes
   4,936       4,562       8.2 %     16,209       13,432       20.7 %
Income Taxes
   1,706       1,499       13.8 %     5,746       4,617       24.5 %
Net Income
 $ 3,230     $ 3,063       5.5 %   $ 10,463     $ 8,815       18.7 %
                                                 
                                                 
Basic Earnings Per Share
 $ 0.55     $ 0.50       10.0 %   $ 1.76     $ 1.43       23.1 %
Weighted Average Common
                                              
Shares Outstanding (000,000)
   5,893       6,088       -3.2 %     5,938       6,152       -3.5 %
                                                 
Diluted Earnings Per Share
 $ 0.55     $ 0.50       10.0 %   $ 1.75     $ 1.42       23.2 %
Weighted Average Common
                                              
Shares Outstanding with Dilution (000,000)
   5,921       6,129       -3.4 %     5,971       6,196       -3.6 %
                                                 
                                                 
 
 
 
 
Financial Data
                                  
                                   
AT&T Inc.
                                  
Statements of Segment Income
                                              
Dollars in millions
                                              
Unaudited
                                              
   
Three Months Ended
    
Nine Months Ended
                                                 
Wireless
9/30/2008
    
9/30/2007
    
% Ch
 g   
9/30/2008
    
9/30/2007
    
% Ch
 g 
Segment Operating Revenues
                                              
   Service
 $ 11,273     $ 9,860       14.3 %   $ 32,869     $ 28,492       15.4 %
   Equipment
   1,345       1,077       24.9 %     3,607       2,837       27.1 %
      Total Segment Operating Revenues
   12,618       10,937       15.4 %     36,476       31,329       16.4 %
                                                 
Segment Operating Expenses
                                              
   Cost of services and equipment sales
   4,989       4,079       22.3 %     13,261       11,690       13.4 %
   Selling, general and administrative
   3,849       3,183       20.9 %     10,489       9,136       14.8 %
   Depreciation and amortization
   1,401       1,709       -18.0 %     4,327       5,410       -20.0 %
      Total Segment Operating Expenses
   10,239       8,971       14.1 %     28,077       26,236       7.0 %
Segment Operating Income
   2,379       1,966       21.0 %     8,399       5,093       64.9 %
Equity in Net Income of Affiliates
   -       3       -100.0 %     5       12       -58.3 %
Minority Interest
   (57 )     (43 )     -32.6 %     (186 )     (143 )     -30.1 %
Segment Income
 $ 2,322     $ 1,926       20.6 %   $ 8,218     $ 4,962       65.6 %
                                                 
                                                 
Wireline
                                              
Segment Operating Revenues
                                              
   Voice
 $ 9,515     $ 10,356       -8.1 %   $ 29,191     $ 31,619       -7.7 %
   Data
   6,401       6,076       5.3 %     18,893       17,918       5.4 %
   Other
   1,634       1,509       8.3 %     4,698       4,389       7.0 %
      Total Segment Operating Revenues
   17,550       17,941       -2.2 %     52,782       53,926       -2.1 %
                                                 
Segment Operating Expenses
                                              
   Cost of sales
   8,128       7,778       4.5 %     23,908       23,396       2.2 %
   Selling, general and administrative
   3,354       3,868       -13.3 %     10,305       11,354       -9.2 %
   Depreciation and amortization
   3,331       3,334       -0.1 %     9,770       10,076       -3.0 %
      Total Segment Operating Expenses
   14,813       14,980       -1.1 %     43,983       44,826       -1.9 %
Segment Income
 $ 2,737     $ 2,961       -7.6 %   $ 8,799     $ 9,100       -3.3 %
                                                 
                                                 
Advertising & Publishing
                                              
Segment Operating Revenues
 $ 1,350     $ 1,457       -7.3 %   $ 4,174     $ 4,378       -4.7 %
                                                 
Segment Operating Expenses
                                              
   Cost of sales
   461       417       10.6 %     1,321       1,214       8.8 %
   Selling, general and administrative
   274       338       -18.9 %     972       1,067       -8.9 %
   Depreciation and amortization
   194       238       -18.5 %     609       743       -18.0 %
      Total Segment Operating Expenses
   929       993       -6.4 %     2,902       3,024       -4.0 %
Segment Income
 $ 421     $ 464       -9.3 %   $ 1,272     $ 1,354       -6.1 %
                                                 
                                                 
Other
                                              
Segment Operating Revenues
 $ 501     $ 562       -10.9 %   $ 1,557     $ 1,658       -6.1 %
Segment Operating Expenses
   420       518       -18.9 %     1,862       1,673       11.3 %
Segment Operating Income(Loss)
   81       44       84.1 %     (305 )     (15 )     -  
Equity in Net Income of Affiliates
   257       159       61.6 %     707       533       32.6 %
Segment Income
 $ 338     $ 203       66.5 %   $ 402     $ 518       -22.4 %
 
 
Financial Data
          
           
AT&T Inc.
          
Consolidated Balance Sheets
              
Dollars in millions except per share amounts
              
   
9/30/08
    
12/31/07
  
   
Unaudited
          
                 
Assets
              
Current Assets
              
  Cash and cash equivalents
 $ 1,594     $ 1,970  
  Accounts receivable - net of allowances for
              
     uncollectibles of $1,328 and $1,364
   16,395       16,185  
  Prepaid expenses
   1,657       1,524  
  Deferred income taxes
   1,560       2,044  
  Other current assets
   2,239       2,963  
  Total current assets
   23,445       24,686  
Property, Plant and Equipment - Net
   97,771       95,890  
Goodwill
   71,537       70,713  
Licenses
   46,931       37,985  
Customer Lists and Relationships - Net
   11,495       14,505  
Other Intangible Assets - Net
   5,816       5,912  
Investments in Equity Affiliates
   2,839       2,270  
Postemployment Benefit
   18,164       17,291  
Other Assets
   6,530       6,392  
   Total Assets
 $ 284,528     $ 275,644  
                 
Liabilities and Stockholders' Equity
              
  Current Liabilities
              
  Debt maturing within one year
 $ 17,419     $ 6,860  
  Accounts payable and accrued liabilities
   18,690       21,399  
  Advanced billing and customer deposits
   3,896       3,571  
  Accrued taxes
   2,976       5,027  
  Dividends payable
   2,357       2,417  
    Total current liabilities
   45,338       39,274  
Long-Term Debt
   59,355       57,255  
Deferred Credits and Other Noncurrent Liabilities
              
  Deferred income taxes
   27,776       24,939  
  Postemployment benefit obligation
   25,493       24,011  
  Other noncurrent liabilities
   14,048       14,798  
   Total deferred credits and other noncurrent liabilities
   67,317       63,748  
                 
Stockholders' Equity
              
  Common shares issued ($1 par value)
   6,495       6,495  
  Capital in excess of par value
   91,684       91,638  
  Retained earnings
   36,613       33,297  
  Treasury shares (at cost)
   (21,412 )     (15,683 )
  Accumulated other comprehensive income(loss)
   (862 )     (380 )
   Total stockholders' equity
   112,518       115,367  
    Total Liabilities and Stockholders' Equity
 $ 284,528     $ 275,644  
 
 
 
Financial Data
          
           
AT&T Inc.
          
Consolidated Statements of Cash Flows
              
Dollars in millions increase (decrease) in cash and cash equivalents
              
Unaudited
Nine Months Ended
     
9/30/08 
    
9/30/07
  
Operating Activities
              
Net income
 $ 10,463     $ 8,815  
Adjustments to reconcile net income to
              
    net cash provided by operating activities:
              
  Depreciation and amortization
   14,839       16,354  
  Undistributed earnings from investments in equity affiliates
   (572 )     (434 )
  Provision for uncollectible accounts
   1,297       1,142  
  Deferred income tax expense
   4,063       486  
  Net gain on sales of investments
   (2 )     (29 )
  Gain on license exchange
   -       (409 )
Changes in operating assets and liabilities:
              
    Accounts receivable
   (1,597 )     (1,253 )
    Other current assets
   616       (661 )
    Accounts payable and accrued liabilities
   (5,958 )     (46 )
    Stock-based compensation tax benefit
   (15 )     (149 )
  Other - net
   (361 )     529  
  Total adjustments
   12,310       15,530  
  Net Cash Provided by Operating Activities
   22,773       24,345  
                 
Investing Activities
              
Construction and capital expenditures
              
    Capital expenditures
   (14,388 )     (12,124 )
    Interest during construction
   (455 )     (125 )
Acquisitions, net of cash acquired
   (10,086 )     (233 )
Dispositions
   1,444       993  
Proceeds from sale of securities, net of investments
   (103 )     584  
Sale of other investments
   436       -  
Other
   33       28  
Net Cash Used in Investing Activities
   (23,119 )     (10,877 )
                 
Financing Activities
              
Net change in short-term borrowings with
              
  original maturities of three months or less
   5,188       (4,279 )
Issuance of long-term debt
   10,924       7,898  
Repayment of long-term debt
   (3,143 )     (3,008 )
Purchase of treasury shares
   (6,077 )     (8,912 )
Issuance of treasury shares
   317       1,736  
Dividends paid
   (7,150 )     (6,584 )
Stock-based compensation tax benefit
   15       149  
Other
   (104 )     (172 )
Net Cash Used in Financing Activities
   (30 )     (13,172 )
Net increase (decrease) in cash and cash equivalents
   (376 )     296  
Cash and cash equivalents beginning of year
   1,970       2,418  
Cash and Cash Equivalents End of Period
 $ 1,594     $ 2,714  
 
 
 
Financial Data
                                    
                                     
AT&T Inc.
                                    
Supplementary Operating and Financial Data
                                                
Dollars in millions except per share amounts
                                                
Unaudited
  
Three Months Ended
  
Nine Months Ended
   
9/30/2008
  
9/30/2007
  
% Ch
 g   
9/30/2008
 
9/30/2007
  
% Ch
 g 
                                                 
Wireless
                                                
    Wireless Customers (000)
                             74,871       65,666       14.0 %
        Net Customer Additions (000)
     1,976       1,993       -0.9 %     4,604       4,640       -0.8 %
        M&A Activity, Partitioned Customers and Other Adjs. (000)
     13       -       -       215       64       -  
     Postpaid Customers (000)
                             58,735       52,689       11.5 %
        Net Postpaid Customer Additions (000)
     1,693       1,212       39.7 %     3,292       2,804       17.4 %
        Postpaid Churn
     1.2 %     1.3 %  
-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) 6
                                                
Retail Consumer Voice Connections 2
                             28,329       31,658       -10.5 %
Retail Consumer Additional Voice Connections 2                            
3,526
        4,112       -14.3  % 
Consumer Broadband Connections 3
                             12,730       11,716       8.7 %
Video Connections: 4
                                                
Satellite Connections
                             2,182       1,986       9.9 %
U-verse Video Connections
                             781       126       -  
Total Consumer Revenue Connections (000)
                             47,548       49,598       -4.1 %
Net Consumer Revenue Connection Changes (000)
     (869 )     85       -       (1,890 )     737       -  
                                                 
Total Broadband Connections (000) 3, 6
                             14,841       13,760       7.9 %
Net Broadband Connection Changes (000) 3, 6
     148       499       -70.3 %     685       1,590       -56.9 %
Total Video Connections (000) 4
                             2,963       2,112       40.3 %
Net Video Connection Changes (000) 4
     179       215       -16.7 %     616       602       2.3 %
                                                 
AT&T Inc.
                                                
Construction and capital expenditures
                                                
Capital expenditures
   $ 5,068     $ 4,664       8.7 %   $ 14,388     $ 12,124       18.7 %
Interest during construction
   $ 198     $ 47       -     $ 455     $ 125       -  
Dividends Declared Per Share
   $ 0.4000     $ 0.3550       12.7 %   $ 1.2000     $ 1.0650       12.7 %
End of Period Common Shares Outstanding (000,000)
                             5,893       6,072       -2.9 %
Debt Ratio 5
                             40.6 %     35.3 %  
530 B
 P 
Total Employees
                             303,530       303,670       -  
                                                 
                                                 
                                                 
1
  In-region wireline represents access lines served by AT&T's incumbent local exchange companies.
2
  Includes consumer U-verse voice over IP connections.
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
  Total long-term debt plus debt maturing within one year divided by total debt plus total stockholders' equity.
6
  Prior year amounts restated to conform to current period reporting methodology.
 
Note: For the end of 3Q08, total switched access lines were 57,191, business switched access lines totaled 22,159, and wholesale and coin switched access lines totaled 3,281.
 
 
 
Financial Data
                      
                       
AT&T Inc.
                      
Non-GAAP Wireless Reconciliations
                      
Wireless Segment Adjusted OIBDA
                              
Dollars in Millions
                              
                                 
Unaudited
                              
                                 
                                 
Quarter Ended September 30, 2008
                              
   
Adjusting Items
   
GAAP
  
  Intangible Amortization
 
Adjusted
        
Service Revenues
 $ 11,273             $ 11,273          
Equipment Revenues
   1,345               1,345          
Total Operating Revenues
 $ 12,618     $ -     $ 12,618          
                                 
                                 
Operating Expenses
                              
   Cost of Services and Equipment Sales
   4,989       -       4,989          
   Selling, General and Administrative
   3,849       -       3,849          
   Depreciation and Amortization
   1,401       (499 )     902          
Total Operating Expenses
   10,239       (499 )     9,740          
                                 
                                 
Operating Income
   2,379               2,878          
                                 
Plus: Depreciation and Amortization
   1,401               902          
OIBDA
   3,780               3,780          
OIBDA as a % of Service Revenue
   33.5 %             33.5 %        
                                 
                                 
                                 
                                 
Quarter Ended September 30, 2007
                              
   
  Adjusting Items
 
GAAP
  
 Integration Costs
Intangible Amortization
    
Adjusted
  
Service Revenues
 $ 9,860                     $ 9,860  
Equipment Revenues
   1,077                       1,077  
Total Operating Revenues
 $ 10,937     $ -     $ -     $ 10,937  
                                 
                                 
Operating Expenses
                              
   Cost of Services and Equipment Sales
   4,079       (60 )     -       4,019  
   Selling, General and Administrative
   3,183       (117 )     -       3,066  
   Depreciation and Amortization
   1,709       (83 )     (658 )     968  
Total Operating Expenses
   8,971       (260 )     (658 )     8,053  
                                 
                                 
Operating Income
   1,966                       2,884  
                                 
Plus: Depreciation and Amortization
   1,709                       968  
OIBDA
   3,675                       3,852  
OIBDA as a % of Service Revenue
   37.3 %                     39.1 %
 
OIBDA is defined as operating income (loss) before depreciation and amortization. OIBDA differs from segment operating income (loss), as calculated in accordance with 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
            
September 30, 2008
Three Months Ended
  
Nine Months Ended
  
             
             
Net cash provided by operating activities
$
 9,268  
$
 22,773  
Less: Construction and capital expenditures
   (5,266 )   (14,843 )
Free Cash Flow
$
 4,002  
$
 7,930  
 
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
        
     
9/30/08
    
9/30/07
  
YoY % Change
  
                         
Reported Wireline Operating Expenses
   $ 14,813     $ 14,980     -1.1 %
   Operating Adjustments
                      
      Cash Integration Costs
     -       139     -  
      Intangible Amortization
     396       473     -16.3 %
   Total Adjusting Items
     396       612     -35.3 %
Adjusted Wireline Operating Expenses
   $ 14,417     $ 14,368     0.3 %
 
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.