AT&T Announces Third Quarter 2003 Earnings
* Third quarter earnings per diluted share from continuing operations of
$0.58
* Consolidated revenue of $8.6 billion
* Operating income of $829 million
BEDMINSTER, N.J., Oct. 24 -- AT&T (NYSE: T) today reported
income from continuing operations of $458 million, or earnings per diluted
share of $0.58, for the third quarter of 2003. The company's current quarter
income from continuing operations compares to income of $525 million, or
earnings per diluted share of $0.67, in the third quarter of 2002. This
quarter's net income of $418 million, or $0.53 per share, included a charge of
$27 million, or $0.03 per share, related to the cumulative effect of the
adoption of a new accounting standard and $13 million, or $0.02 per share, of
losses from discontinued operations.
"AT&T's third quarter results demonstrate our ability to successfully
execute in a difficult environment by maintaining our focus on controlling
costs, streamlining processes and delighting our customers," said AT&T
Chairman and Chief Executive Officer David W. Dorman. "We continue to operate
from a position of leadership and strength, and we remain among the best
positioned in our industry for a recovery in employment growth and improved
telecom sector spending and demand."
AT&T reported third quarter 2003 consolidated revenue of $8.6 billion,
which included $6.3 billion from AT&T Business Services and $2.4 billion from
AT&T Consumer Services. This represents a consolidated revenue decline of 8.1
percent versus the third quarter of 2002, primarily due to continued declines
in long distance (LD) voice revenue, partially offset by the continued success
of AT&T Consumer Services' bundled local and LD offering, as well as growth in
several key markets of AT&T Business Services.
AT&T's third quarter 2003 operating income totaled $829 million, resulting
in a consolidated operating margin of 9.6 percent. AT&T Business Services
posted operating income of $417 million, yielding a margin of 6.6 percent,
while AT&T Consumer Services generated operating income of $500 million,
yielding a margin of 21.2 percent.
"AT&T is making solid progress in improving our cost structure and
enhancing our overall financial flexibility and strength," said AT&T Chief
Financial Officer Thomas W. Horton. "This quarter's significant free cash
flow allowed us to reduce net debt by $1.5 billion and reduce our year-end net
debt target to less than $9 billion while continuing to invest in the future
of our business."
AT&T UNIT HIGHLIGHTS
AT&T Business Services
* Revenue was $6.3 billion, a decline of 6.2 percent from the prior year
third quarter. The unit's revenue performance reflects pricing
pressure, weakness in retail LD and data demand and overall
telecommunications spending, partially offset by strong growth in
wholesale volumes, local voice and IP&E-services revenue.
* Long distance voice revenue declined 10.5 percent on a quarter-over-
quarter basis, driven by continued pricing pressure, partially offset
by volume growth. Volumes grew nearly 15 percent on a quarter-over-
quarter basis, driven by strong wholesale growth, which more than
offset the decline in retail volumes.
* Local voice revenue grew approximately 38 percent from the prior year
third quarter. Local access lines totaled over 4.3 million at the end
of the current period, representing an increase of almost 97,000 lines
from the second quarter of 2003.
* IP&E-services revenue grew 13.0 percent, while data services revenue
declined 6.5 percent from the prior year quarter.
* The managed component of total data services and IP&E-services revenue
grew about 10 percent from the prior year third quarter and now
comprises approximately 33 percent of this total revenue.
* Operating income totaled $417 million. Operating margin was 6.6
percent, compared with 12.7 percent in the prior year third quarter.
The decline is primarily due to pricing pressure, weak retail demand
resulting from a soft economy, a mix shift from higher margin retail LD
voice service to lower margin wholesale, data and IP&E services, a
$125 million access expense adjustment, as well as a $53 million net
restructuring charge in the current period.
AT&T Consumer Services
* Revenue was $2.4 billion, a decline of 15.8 percent versus the prior
year third quarter, driven by lower LD revenue as a result of the
continued impact of competition, wireless and Internet substitution,
and customer migration to lower priced products and calling plans.
These declines were partially offset by growth in bundled revenue and
pricing actions. Bundled revenue grew by 77 percent compared to the
prior year third quarter, and now represents over 22 percent of AT&T
Consumer Services' total revenue.
* Operating income totaled $500 million, yielding an operating margin of
21.2 percent, compared with 21.3 percent in the prior year third
quarter. The slight quarter-over-quarter decline reflects the impact of
substitution, competition and mix shift, largely offset by pricing
actions taken during the quarter.
* At the end of the third quarter, AT&T Consumer provided local service
to more than 3.5 million customers, an increase of 85 percent from the
prior year third quarter. During the current reporting period, AT&T
began offering service in Wisconsin, Minnesota and Arizona. As of
September 30, 2003, local service was available in 15 markets. The
company plans to be testing or actively marketing its residential One
Rate USA(SM) bundled service in 35 states by year-end.
OTHER CONSOLIDATED FINANCIAL HIGHLIGHTS
* In September 2003, in conjunction with our review of accounting and
internal control systems, the Company determined that the liability on
the balance sheet relating to costs incurred in 2001 and 2002
pertaining to access and other connection expense was understated by
$125 million. Since the impact to prior years' annual financial
statements was not material, the Company recorded an additional expense
of $125 million ($77 million after-tax) in the third quarter to reflect
the proper estimate of the liability. The expense, properly recorded
in the respective prior periods, would have decreased annual income
from continuing operations for 2001 and 2002 by $32 million, or $0.04
per diluted share, and $45 million, or $0.06 per diluted share,
respectively.
The expense, properly recorded in the respective periods, would have
(decreased) increased quarterly income from continuing operations for
the three months ended September 30, 2001 by ($33) million, or ($0.04)
per diluted share; for the three months ended December 31, 2001 by
$1 million, or $0.01 per diluted share; for the three months ended
March 31, 2002 by ($64) million, or ($0.08) per diluted share; for the
three months ended June 30, 2002 by $12 million, or $0.02 per diluted
share; for the three months ended September 30, 2002 by $14 million, or
$0.01 per diluted share; and for the three months ended December 31,
2002 by ($7) million, or ($0.01) per diluted share.
A review was conducted by outside legal counsel, under the direction of
the Audit Committee. This review found that two employees, one lower-
level and one mid-level management employee, circumvented the internal
controls process resulting in the financial impacts noted above. The
Company made the appropriate personnel changes and enhanced its
internal controls accordingly.
* Third quarter 2003 income from continuing operations of $458 million
included pretax net restructuring and other charges of $64 million,
primarily related to separation costs associated with management
streamlining initiatives. The company expects to realize an additional
charge for employee separations in the fourth quarter of 2003, although
this charge is expected to be significantly less than the third quarter
2003 restructuring charge.
* Other income (expense) of ($7) million in the third quarter primarily
consisted of losses from the early extinguishment of debt, primarily
offset by investment-related income.
* The third quarter income tax provision reflected an approximate
$120 million benefit relating to final governmental approval of
Research and Experimentation tax credit claims from prior years.
* As of July 1, 2003, AT&T adopted Financial Accounting Standards Board
Interpretation No. 46 (FIN 46), "Consolidation of Variable Interest
Entities -- an Interpretation of Accounting Research Bulletin No. 51."
The consolidation of two entities from which AT&T leases buildings
resulted in the addition of $433 million of assets (principally the
leased properties) and $477 million of liabilities (debt secured by the
properties). This resulted in a charge of $27 million, net of income
taxes, as the cumulative effect of an accounting change.
* AT&T ended the quarter with net debt of $9.3 billion, which includes
$0.5 billion of debt associated with the adoption of FIN 46. Net debt
is defined as total debt of $17.4 billion less cash of $6.8 billion,
restricted cash of $0.5 billion and net foreign debt fluctuations of
$0.9 billion.
* In July of 2003, AT&T announced a $2 billion debt repurchase program.
During the quarter, AT&T redeemed two long-term debt issues totaling
$0.5 billion. AT&T also called three additional debt issues totaling
$1.1 billion to be redeemed on October 22, 2003. In addition, AT&T
exercised its right to repay $0.5 billion of debt associated with
leases capitalized in conjunction with the adoption of FIN 46. The
pretax loss recorded in the third quarter from these events was
$0.1 billion.
* Free cash flow was $2.0 billion for the third quarter, which included
$0.6 billion of tax refunds. Free cash flow is defined as cash flows
provided by operating activities of $2.8 billion less cash used for
capital expenditures and other additions of $0.8 billion.
* Capital expenditures for the third quarter were $1.2 billion, which
includes $433 million for properties consolidated in connection with
the adoption of FIN 46.
* The third quarter loss from discontinued operations reflects an
estimated loss on certain environmental clean-up matters associated
with the business of NCR Corp., which was spun-off from AT&T in 1996.
In accordance with the separation and distribution agreement between
AT&T and NCR, AT&T shares in certain costs associated with potential
litigation liabilities. AT&T recorded its estimated proportionate
share of the clean-up costs.
DEFINITIONS and NOTES
AT&T Business Services
LD Voice -- includes all of AT&T's domestic and international LD revenue,
including Intralata toll when purchased as part of an LD calling plan.
Local Voice -- includes all local calling and feature revenue, Intralata
toll when purchased as part of a local calling plan, as well as Inter-carrier
local revenue.
Data Services -- includes bandwidth services (dedicated private line
services through high-capacity optical transport), frame relay and
asynchronous transfer mode (ATM) revenue for LD and local, as well as revenue
for managed data services.
Internet Protocol & Enhanced Services (IP&E-services) -- includes all
services that ride on the IP common backbone or that use IP technology,
including managed IP services, as well as application services (e.g., hosting,
security).
Outsourcing, Professional Services & Other -- includes complex bundled
solutions primarily in the wide area/local area network space, AT&T's
professional services revenue associated with the company's federal government
customers, as well as all other Business Services revenue (and eliminations)
not previously defined. Also includes revenue from AT&T Latin America prior
to the first quarter of 2003.
Data, IP&E-Services -- Percent Managed -- managed services refers to
AT&T's management of a client's network or network and applications including
applications that extend to the customer premise equipment.
Data, IP&E-Services -- Percent International -- a data service that either
originates or terminates outside of the United States, or an IP&E-service
installed or wholly delivered outside the United States.
AT&T Consumer Services
Bundled Services -- includes any customer with a local relationship as a
starting point, and all other AT&T subscription-based voice products provided
to that customer.
Standalone LD, Transactional & Other Services -- includes any customer
with solely a long distance relationship, non-voice products, or a non
subscription-based relationship.
Local Customers -- residential customers who subscribe to AT&T local
service.
Bundled Households -- number of households in targeted markets where there
is general availability of AT&T local service.
Other Definitions and Notes
Restricted cash -- $0.5 billion of cash that collateralizes a portion of
private debt and is included in "other assets" on the balance sheet.
Foreign currency fluctuations -- represents mark-to-market adjustments,
net of cash collateral collected, that increased the debt balance by
approximately $0.9 billion at September 30, 2003, on non-U.S. denominated debt
of about $4.0 billion. AT&T has entered into foreign exchange hedges that
substantially offset the fluctuations in the debt balance. The offsetting
mark-to-market adjustments of the hedges are included in "other assets" on the
balance sheet.
Income Statement
AT&T Corp. Consolidated Statements of Operations (Unaudited)
Dollars in millions (except per share amounts)
Three Months Nine Months
Ended Ended
September 30, September 30,
2003 2002 2003 2002
REVENUE
AT&T Business Services 6,282 $6,700 $19,125 $19,970
AT&T Consumer Services 2,353 2,794 7,265 8,791
Corporate and Other 14 (85) 40 (224)
Total Revenue 8,649 9,409 26,430 28,537
OPERATING EXPENSES
Access and other connection 2,785 2,679 8,191 8,214
Costs of services and products 1,954 2,066 5,923 6,166
Selling, general and
administrative 1,793 2,032 5,551 5,911
Depreciation and amortization 1,224 1,243 3,607 3,631
Net restructuring and other
charges 64 (26) 134 (26)
Total operating expenses 7,820 7,994 23,406 23,896
Operating Income 829 1,415 3,024 4,641
Other (expense) income, net (7) (180) 89 (285)
Interest (expense) (289) (355) (917) (1,087)
Income from continuing operations
before income taxes, minority
interest income, and net
earnings (losses) related to
equity investments 533 880 2,196 3,269
(Provision) for income taxes (72) (370) (677) (1,362)
Minority interest income - 28 1 81
Net (losses) earnings related to
equity investments (3) (13) 3 (414)
Income from continuing operations 458 525 1,523 1,574
(Loss) from discontinued
operations - net of income taxes (13) (318) (13) (14,316)
Income (loss) before cumulative
effect of accounting changes 445 207 1,510 (12,742)
Cumulative effect of accounting
changes - net of income taxes (27) - 15 (856)
Net income (loss) 418 207 1,525 (13,598)
Weighted-average common shares
(millions) 789 770 787 736
Weighted-average common shares
and potential common shares
(millions) 791 788 788 759
PER BASIC SHARE:
Earnings from continuing
operations $0.58 $0.68 $1.94 $2.14
(Loss) from discontinued
operations (0.02) (0.41) (0.02) (19.45)
Cumulative effect of accounting
changes (0.03) - 0.02 (1.16)
Earnings (loss) per basic share $0.53 $0.27 $1.94 $(18.47)
PER DILUTED SHARE:
Earnings from continuing
operations $0.58 $0.67 $1.93 $2.07
(Loss) from discontinued
operations (0.02) (0.41) (0.01) (18.86)
Cumulative effect of accounting
changes (0.03) - 0.02 (1.13)
Earnings (loss) per diluted share $0.53 $0.26 $1.94 $(17.92)
Dividends declared per share $0.2375 $0.1875 $0.6125 $0.5625
Quarterly Income Statements
AT&T Corp. Consolidated Statements of Income (Unaudited)
Dollars in millions (except per share amounts)
3Q03 2Q03 1Q03
REVENUE
AT&T Business Services $6,282 $6,406 $6,437
AT&T Consumer Services 2,353 2,376 2,536
Corporate and Other 14 13 13
Total revenue 8,649 8,795 8,986
OPERATING EXPENSES
Access and other connection 2,785 2,708 2,698
Costs of services and products 1,954 1,958 2,011
Selling, general and
administrative 1,793 1,837 1,921
Depreciation and amortization 1,224 1,197 1,186
Net restructuring and other
charges 64 66 4
Total operating expenses 7,820 7,766 7,820
Operating income (loss) 829 1,029 1,166
Other (expense)/income, net (7) 86 10
Interest (expense) (289) (296) (332)
Income (loss) from continuing
operations before income
taxes, minority
interest income, and net earnings
(losses) related to equity
investments 533 819 844
(Provision) for income taxes (72) (308) (297)
Minority interest income - - 1
Net (losses) earnings related
to equity investments (3) 25 (19)
Income (loss) from continuing
operations 458 536 529
(Loss) from discontinued
operations - net of income taxes (13) - -
Gain on disposition of discontinued
operations - net of income taxes - - -
Income (loss) before cumulative
effect of accounting changes 445 536 529
Cumulative effect of accounting
changes, net of income taxes (27) - 42
Net income (loss) $418 $536 $571
Weighted-average common shares
(millions) 789 787 784
Weighted-average common shares and
potential common shares (millions) 791 787 785
PER BASIC SHARE:
Earnings (loss) from continuing
operations $0.58 $0.68 $0.67
(Loss) from discontinued
operations (0.02) - -
Gain on disposition of
discontinued operations - - -
Cumulative effect of accounting
changes (0.03) - 0.06
Earnings (loss) per basic share $0.53 $0.68 $0.73
PER DILUTED SHARE:
Earnings (loss) from continuing
operations $0.58 $0.68 $0.67
(Loss) from discontinued
operations (0.02) - -
Gain on disposition of
discontinued operations - - -
Cumulative effect of accounting
changes (0.03) - 0.06
Earnings (loss) per diluted share $0.53 $0.68 $0.73
Quarterly Income Statements
AT&T Corp. Consolidated Statements of Income (Unaudited)
Dollars in millions (except per share amounts)
4Q02 3Q02 2Q02 1Q02 2002
REVENUE
AT&T Business
Services $6,588 $6,700 $6,742 $6,528 $26,558
AT&T Consumer
Services 2,736 2,794 2,911 3,086 11,527
Corporate and
Other (34) (85) (73) (66) (258)
Total revenue 9,290 9,409 9,580 9,548 37,827
OPERATING EXPENSES
Access and other
connection 2,576 2,679 2,747 2,788 10,790
Costs of services
and products 2,197 2,066 2,086 2,014 8,363
Selling, general
and administrative 2,077 2,032 1,942 1,937 7,988
Depreciation and
amortization 1,257 1,243 1,213 1,175 4,888
Net restructuring
and other charges 1,463 (26) - - 1,437
Total operating
expenses 9,570 7,994 7,988 7,914 33,466
Operating income
(loss) (280) 1,415 1,592 1,634 4,361
Other (expense)/
income, net 208 (180) (50) (55) (77)
Interest (expense) (361) (355) (336) (396) (1,448)
Income (loss) from
continuing operations
before income taxes,
minority interest
income, and net
earnings (losses)
related to equity
investments (433) 880 1,206 1,183 2,836
(Provision) for
income taxes (225) (370) (513) (479) (1,587)
Minority interest
income 33 28 33 20 114
Net (losses) earnings
related to equity
investments 14 (13) (123) (278) (400)
Income (loss) from
continuing
operations (611) 525 603 446 963
(Loss) from
discontinued
operations - net
of income taxes (197) (318) (13,433) (565) (14,513)
Gain on disposition
of discontinued
operations - net
of income taxes 1,324 - - - 1,324
Income (loss)
before cumulative
effect of accounting
changes 516 207 (12,830) (119) (12,226)
Cumulative effect of
accounting changes,
net of income taxes - - - (856) (856)
Net income (loss) $516 $207 $(12,830) $(975) $(13,082)
Weighted-average
common shares
(millions) 776 770 730 709 746
Weighted-average
common shares and
potential common
shares (millions) 776 788 750 738 766
PER BASIC SHARE:
Earnings (loss) from
continuing
operations $(0.79) $0.68 $0.83 $0.63 $1.29
(Loss) from
discontinued
operations (0.26) (0.41) (18.41) (0.80) (19.44)
Gain on disposition
of discontinued
operations 1.71 - - - 1.77
Cumulative effect of
accounting changes - - - (1.21) (1.15)
Earnings (loss) per
basic share $0.66 $0.27 $(17.58) $(1.38) $(17.53)
PER DILUTED SHARE:
Earnings (loss) from
continuing
operations $(0.79) $0.67 $0.80 $0.60 $1.26
(Loss) from
discontinued
operations (0.26) (0.41) (17.91) (0.76) (18.95)
Gain on disposition
of discontinued
operations 1.71 - - - 1.73
Cumulative effect of
accounting changes - - - (1.16) (1.12)
Earnings (loss) per
diluted share $0.66 $0.26 $(17.11) $(1.32) $(17.08)
Historical Segment Data
Segment Disclosures (Unaudited)
Dollars in millions
3Q03 2Q03 1Q03
AT&T Business Services
LD Voice $2,801 $2,873 $2,961
Local Voice 379 384 335
Total Voice 3,180 3,257 3,296
Data Services 1,949 1,993 2,000
IP&E-Services 476 459 445
Total Data Services, IP&E-Services 2,425 2,452 2,445
Outsourcing, Professional
Services & Other 677 697 696
Total Revenue 6,282 6,406 6,437
Operating Income (Loss)(1) 417 597 600
Operating Margin 6.6% 9.3% 9.3%
Capital Expenditures(5) 995 763 636
Depreciation & Amortization 1,162 1,133 1,126
Total Data Services, IP&E-Services -
% managed 33% 31% 30%
Total Data Services, IP&E-Services -
% international 14% 14% 14%
LD Volume Growth - Yr/Yr 15% 12% 12%
LD Volume % Wholesale 51% 47% 45%
AT&T Consumer Services
Standalone LD, Transactional
and Other Services $1,832 $1,916 $2,112
Bundled Services 521 460 424
Total Revenue 2,353 2,376 2,536
Operating Income(2) 500 489 632
Operating Margin 21.2% 20.6% 24.9%
Capital Expenditures 14 19 22
Depreciation & Amortization 35 36 35
Local Customers (in thousands) 3,547 3,130 2,778
Bundled Households (in millions) 47.7 40.1 32.2
Corporate and Other
Revenue $14 $13 $13
Operating (Loss)(3) (88) (57) (66)
Capital Expenditures(5) 198 8 4
Depreciation & Amortization 27 28 25
Total AT&T
Revenue $8,649 $8,795 $8,986
Operating Income (Loss)(4) 829 1,029 1,166
Operating Margin 9.6% 11.7% 13.0%
Capital Expenditures(5) 1,207 790 662
Depreciation & Amortization 1,224 1,197 1,186
(1) Includes net business restructuring and asset impairment
(charges) benefits of ($53M) in 3Q03, ($47M) in 2Q03, ($4) in
1Q03, ($1,230M) in 4Q02 and $27M in 3Q02.
(2) Includes net business restructuring and asset impairment
(charges) benefits of ($4M) in 3Q03, ($5M) in 2Q03, ($223M) in
4Q02 and $12M in 3Q02.
(3) Includes net business restructuring (charges) of ($7M) in
3Q03, ($14M) in 2Q03, ($10M) in 4Q02 and ($13M) in 3Q02.
(4) Includes net business restructuring and asset impairment
(charges) benefits of ($64M) in 3Q03, ($66M) in 2Q03, ($4) in
1Q03, ($1,463M) in 4Q02 and $26M in 3Q02.
(5) Total AT&T capital expenditures includes $433M related to the
adoption of FIN 46 of which $241M is included in Business
Services and $192M is included in
Corporate and Other
Historical Segment Data
Segment Disclosures (Unaudited)
Dollars in millions
4Q02 3Q02 2Q02 1Q02 2002
AT&T Business Services
LD Voice $2,853 $3,129 $3,224 $3,048 $12,254
Local Voice 336 274 277 268 1,155
Total Voice 3,189 3,403 3,501 3,316 13,409
Data Services 2,079 2,086 2,077 2,018 8,260
IP&E-Services 442 421 406 408 1,677
Total Data Services,
IP&E-Services 2,521 2,507 2,483 2,426 9,937
Outsourcing, Professional
Services & Other 878 790 758 786 3,212
Total Revenue 6,588 6,700 6,742 6,528 26,558
Operating Income (Loss)(1) (612) 854 856 867 1,965
Operating Margin (9.3%) 12.7% 12.7% 13.3% 7.4%
Capital Expenditures(5) 1,297 912 930 575 3,714
Depreciation & Amortization 1,173 1,128 1,141 1,104 4,546
Total Data Services,
IP&E-Services -
% managed 30% 29% 29% 29% 29%
Total Data Services,
IP&E-Services -
% international 15% 14% 15% 13% 14%
LD Volume Growth - Yr/Yr 7% 2% (1%) (1%) 2%
LD Volume % Wholesale 42% 38% 34% 33% 37%
AT&T Consumer Services
Standalone LD, Transactional
and Other Services $2,375 $2,499 $2,670 $2,869 $10,413
Bundled Services 361 295 241 217 1,114
Total Revenue 2,736 2,794 2,911 3,086 11,527
Operating Income(2) 389 595 787 821 2,592
Operating Margin 14.2% 21.3% 27.0% 26.6% 22.5%
Capital Expenditures 32 34 33 28 127
Depreciation & Amortization 57 89 43 41 230
Local Customers
(in thousands) 2,423 1,916 1,549 1,266 2,423
Bundled Households
(in millions) 32.2 32.2 17.6 13.1 32.2
Corporate and Other
Revenue $(34) $(85) $(73) $(66) $(258)
Operating (Loss)(3) (57) (34) (51) (54) (196)
Capital Expenditures(5) 17 23 13 10 63
Depreciation & Amortization 27 26 29 30 112
Total AT&T
Revenue $9,290 $9,409 $9,580 $9,548 $37,827
Operating Income (Loss)(4) (280) 1,415 1,592 1,634 4,361
Operating Margin (3.0%) 15.0% 16.6% 17.1% 11.5%
Capital Expenditures(5) 1,346 969 976 613 3,904
Depreciation & Amortization 1,257 1,243 1,213 1,175 4,888
(1) Includes net business restructuring and asset impairment
(charges) benefits of ($53M) in 3Q03, ($47M) in 2Q03, ($4) in
1Q03, ($1,230M) in 4Q02 and $27M in 3Q02.
(2) Includes net business restructuring and asset impairment
(charges) benefits of ($4M) in 3Q03, ($5M) in 2Q03, ($223M) in
4Q02 and $12M in 3Q02.
(3) Includes net business restructuring (charges) of ($7M) in
3Q03, ($14M) in 2Q03, ($10M) in 4Q02 and ($13M) in 3Q02.
(4) Includes net business restructuring and asset impairment
(charges) benefits of ($64M) in 3Q03, ($66M) in 2Q03, ($4) in
1Q03, ($1,463M) in 4Q02 and $26M in 3Q02.
(5) Total AT&T capital expenditures includes $433M related to the
adoption of FIN 46 of which $241M is included in Business
Services and $192M is included in
Corporate and Other
Balance Sheet
AT&T Corp. Consolidated Balance Sheets (Unaudited)
Dollars in millions
September 30, December 31, %
2003 2002 Change
ASSETS
Cash and cash equivalents $6,751 $8,014 (15.8%)
Accounts receivable, less
allowances of $681 and $669 4,525 5,286 (14.4%)
Deferred income taxes 617 910 (32.2%)
Other current assets 1,109 1,693 (34.4%)
Total Current Assets 13,002 15,903 (18.2%)
Property, plant and
equipment, net of
accumulated depreciation
of $33,689 and $31,021 24,719 25,604 (3.5%)
Goodwill 4,691 4,626 1.4%
Other purchased intangible
assets, net of accumulated
depreciation of $298 and
$244 508 556 (8.6%)
Prepaid pension costs 3,791 3,596 5.4%
Other assets 4,596 4,987 (7.9%)
TOTAL ASSETS $51,307 $55,272 (7.2%)
LIABILITIES
Accounts payable $3,297 $3,819 (13.7%)
Payroll and benefit-related
liabilities 1,091 1,519 (28.2%)
Debt maturing within one year 4,647 3,762 23.5%
Other current liabilities 2,974 2,924 1.7%
Total Current Liabilities 12,009 12,024 (0.1%)
Long-term debt 12,759 18,812 (32.2%)
Long-term benefit-related
liabilities 4,240 4,001 (6.0%)
Deferred income taxes 5,580 4,739 17.7%
Other long-term liabilities
and deferred credits 3,180 3,384 (6.0%)
Total Liabilities 37,768 42,960 (12.1%)
SHAREOWNERS' EQUITY
AT&T Common Stock, $1 par
value, authorized
6,000,000,000 shares;
issued and outstanding
789,220,022 shares (net of
171,692,349 treasury shares)
at September 30, 2003 and
783,037,580 shares
(net of 171,801,716 treasury
shares) at December 31,
2002 789 783 0.8%
Additional paid-in capital 27,855 28,163 (1.1%)
Accumulated deficit (15,044) (16,566) 9.2%
Accumulated other
comprehensive loss (61) (68) 9.2%
Total Shareowners' Equity 13,539 12,312 10.0%
TOTAL LIABILITIES &
SHAREOWNERS' EQUITY $51,307 $55,272 (7.2%)
NOTE TO FINANCIAL MEDIA: AT&T executives will discuss the company's
performance in a two-way conference call for financial analysts at 8:15 a.m.
ET today. Reporters are invited to listen to the call. U.S. callers should
dial 888-276-0010 to access the call. Callers outside the U.S. should dial
+1-612-326-1003.
In addition, Internet rebroadcasts of the call will be available on the
AT&T Web site beginning later today. The Web site address is
http://www.att.com/ir. An audio rebroadcast of the conference call will be
available beginning at 11:15AM on Tuesday, October 21 until 11:59PM on
Thursday, October 23. To access the replay, please visit
http://www.att.com/ir, or U.S. callers can dial 800-475-6701, access code
661284. Callers outside the U.S. should dial +1-320-365-3844, access code
661284.
The foregoing, including statements relating to possible future dividends,
are "forward-looking statements" which are based on management's beliefs as
well as on a number of assumptions concerning future events made by and
information currently available to management. Readers are cautioned not to
put undue reliance on such forward-looking statements, which are not a
guarantee of performance and are subject to a number of uncertainties and
other factors, many of which are outside AT&T's control, that could cause
actual results to differ materially from such statements. For a more detailed
description of the factors that could cause such a difference, please see
AT&T's10-K, 10-Q, 8-K and other filings with the Securities and Exchange
Commission. AT&T disclaims any intention or obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. This information is presented solely to provide
additional information to further understand the results of AT&T. The
declaration of future dividends is made at the discretion of AT&T's Board of
Directors, which will consider AT&T's financial condition and all other
relevant factors, and there can be no assurance as to the declaration and
amount of future dividends, if any.
SOURCE AT&T
-0- 10/24/2003
/CONTACT: Media - Paul Kranhold, +1-908-234-5105, or Dan Lawler,
+1-908-234-6846, or Investor Relations, +1-908-532-1680, all for AT&T/
/Web site: http://www.att.com/ir /
(T)
END