AT&T Reports Fourth-Quarter and Full-Year Results
BEDMINSTER, N.J., Jan. 23 /PRNewswire-FirstCall/ -- AT&T (NYSE: T) today
announced its fourth-quarter and full-year 2002 results. The company's
fourth-quarter earnings per diluted share, which reflect a gain in
discontinued operations from the disposition of AT&T Broadband, partially
offset by a loss from continuing operations resulting from restructuring and
asset impairment charges announced earlier this month, was $0.66.
The company reported a loss from continuing operations, primarily
resulting from an asset impairment charge associated with the company's past
investment in AT&T Latin America (ALA), and also reflecting the impact of a
restructuring charge associated with planned employee separations and an asset
impairment charge related to the value of the company's DSL assets. The loss
per diluted share from continuing operations was $0.79.
Revenue for the quarter was $9.3 billion, a decline of 8.6 percent from
the year-ago quarter. The company attributes the revenue decline to continued
declines in long distance voice services, partially offset by growth in local
voice as well as data/Internet protocol (IP) and managed services.
"We had solid operating results in the fourth quarter, reflecting our
execution of the basics," said AT&T Chairman and CEO David W. Dorman. "We saw
continued growth in our local voice and data businesses, despite an unsettled
economic environment. We're entering 2003 with a strong focus on meeting
customer needs, improving shareowner value and maintaining our financial
discipline and flexibility."
Full Year 2002 Results
For the full year, the company reported a loss of $17.08 per diluted
share, which reflects a loss related to discontinued operations, a loss
related to the adoption of a new accounting standard and income from
continuing operations.
The loss related to discontinued operations includes a $18.95 loss from
discontinued operations, partially offset by a gain of $1.73 per diluted share
from the disposal of discontinued operations. The loss related to the
adoption of the new accounting standard was $1.12 per diluted share. Income
from continuing operations was $1.26 per diluted share.
Full-year revenue was $37.8 billion, a decline of 10.4 percent from the
previous year.
UNIT HIGHLIGHTS
Note: all comparisons are to same reporting period in prior year
AT&T Business
-- Fourth quarter revenue $6.6 billion, down 3.0 percent
-- Full year revenue $26.6 billion, down 4.1 percent
-- Fourth quarter EBIT, loss of $331 million, down 3.5 percent
-- Fourth quarter EBIT, excluding other income, equity earnings and ALA
charge, $451 million, up 26.7 percent
-- Fourth quarter EBIT margin, excluding other income, equity earnings and
ALA charge, 6.9 percent
-- Full year EBIT, $1.6 billion, up 171.1 percent
-- Full year EBIT, excluding other income, equity earnings and ALA charge,
$3.1 billion, down 16.4 percent
-- Full year EBIT margin, excluding other income, equity earnings and ALA
charge, 11.6 percent
-- LD voice revenue declined about 10 percent in the quarter due to price
declines, volume increased nearly 7 percent, which reflects wholesale
volume growth and declining retail volumes
-- Local voice revenue grew more than 25 percent in the quarter
-- Data/IP/Managed services revenue, including customer premises equipment
sales, grew about 3 percent in the quarter
AT&T Consumer
-- Fourth quarter revenue $2.7 billion, down 20.0 percent
-- Full year revenue $11.5 billion, down 22.3 percent
-- Fourth quarter EBIT $395 million, down 62.7 percent
-- Fourth quarter EBIT, excluding other income and equity earnings,
$389 million, down 56.4 percent
-- Fourth quarter EBIT margin, excluding other income and equity earnings,
14.2 percent
-- Full year EBIT $2.6 billion, down 45.7 percent
-- Full year EBIT, excluding other income and equity earnings,
$2.6 billion, down 44.8 percent
-- Full year EBIT margin, excluding other income and equity earnings,
22.5 percent
-- Any Distance offer added more than 500,000 subscribers in the quarter
and at year-end had more than 2.4 million subscribers; subscriber
base doubled in 2002
OUTLOOK
AT&T said that it does not yet see a significant turnaround in the overall
business services industry, and, as a result, expects total telecom industry
spending will be down again in 2003. However, AT&T believes it is well
positioned to continue to take market share and therefore expects a slower
rate of revenue decline in 2003 compared to 2002. Other expectations for the
corporation include:
-- Full-year operating income margin decline, excluding ALA charge, to be
comparable to the 2002 decline
-- Diluted EPS for the first quarter of 2003 in the range of $0.50 to
$0.55
-- Capital expenditures for 2003 to be approximately $3.3 to $3.5 billion
AT&T Business expects a slower rate of revenue decline in 2003 compared to
2002.
AT&T Consumer expects the 2003 rate of revenue decline to be slightly
better than the decline in 2002.
4th Quarter at a Glance 4Q02 vs. 4Q01 4th Quarter Highlights
AT&T revenue $9.3B (8.6%) EPS $0.66
AT&T Business revenue $6.6B (3.0%) EPS from
continuing
operations ($0.79)
AT&T Consumer revenue $2.7B (20.0%)
EBIT $119M 11.6%
EBIT, excluding other
income, equity earnings
and ALA charge $783M (6.3%)
Capital expenditures $1.3B (21.4%)
Year at a Glance 2002 vs. 2001 Full-Year Highlights
AT&T revenue $37.8B (10.4%) EPS $(17.08)
AT&T Business revenue $26.6B (4.1%) EPS from
continuing
operations $1.26
AT&T Consumer revenue $11.5B (22.3%) Total assets $55.3B
EBIT $3.9B 157.8% Debt, net of cash,
monetizations and
fluctuations in
foreign debt
value $12.9B
EBIT, excluding other
income, equity earnings
and ALA charge $5.5B (31.0%)
Capital expenditures $3.9B (30.8%)
The table below provides a reconciliation of EBIT and EBIT, excluding
other income, equity earnings and the ALA impairment charge, to the comparable
Generally Accepted Accounting Principle (GAAP) measure of Operating (Loss)
Income:
($ in millions) 4Q02 2002
EBIT $119 $3,886
Less:
Other income (expense) 208 (77)
Pretax net earnings (losses) related to
equity investments 158 (512)
Pretax minority interest income 33 114
Operating (Loss) Income $ (280) $4,361
EBIT, excluding other income,
equity earnings and ALA
impairment charge $783 $5,485
Add:
ALA impairment charge (1,029) (1,029)
Less:
Pretax minority interest income* 34 95
Operating (Loss) Income $ (280) $4,361
* Excludes minority interest in other income
DEFINITIONS and NOTES
Note: Financial statements have been restated to reflect the one-for-five
reverse stock split and to reflect AT&T Broadband as a discontinued operation
in all periods presented. AT&T Broadband was spun off on November 18, 2002.
AT&T Group does not include the results of Liberty Media Group, which was
tracked as a separate class of stock through August 10, 2001, the split-off
date.
EBIT refers to earnings before interest, taxes, cumulative effect of
accounting changes, dividend requirements on preferred stock, premium on
exchange of AT&T Wireless tracking stock and discontinued operations.
EBIT, excluding other income and equity earnings, refers to EBIT,
excluding other income (expense), and pretax net equity earnings (losses)
related to equity investments.
EBIT, excluding other income, equity earnings and the ALA charge refers to
EBIT, excluding other income (expense), pretax net earnings (losses) related
to equity investments and the fourth-quarter charge related to AT&T's past
investment in AT&T Latin America.
EBIT margin, excluding other income and equity earnings refers to EBIT,
excluding other income (expense) and pretax net earnings (losses) related to
equity investments as a percentage of reported revenue.
EBIT margin, excluding other income, equity earnings and ALA charge refers
to EBIT, excluding other income (expense), pretax net earnings (losses)
related to equity investments and the fourth-quarter charge related to AT&T's
past investment in AT&T Latin America as a percentage of reported revenue.
EPS is earnings per diluted share.
AT&T Group Combined Statements of Income (Unaudited)
Dollars in millions (except per share amounts)
For the Three Months For the Year
Ended December 31, Ended December 31,
2002 2001 2002 2001
Revenue $9,290 $10,168 $37,827 $42,197
Operating Expenses
Access and other connection 2,576 2,830 10,790 12,085
Costs of services and products 2,197 2,322 8,363 8,621
Selling, general and administrative 2,077 2,021 7,988 8,064
Depreciation and amortization 1,257 1,156 4,888 4,559
Net restructuring and other charges 1,463 1,036 1,437 1,036
Total operating expenses 9,570 9,365 33,466 34,365
Operating (loss) income (280) 803 4,361 7,832
Other income (expense), net 208 (58) (77) 1,327
Interest (expense) (361) (413) (1,448) (1,493)
(Loss) income from continuing
operations before income taxes,
minority
interest income, and net earnings
(losses) related to equity
investments (433) 332 2,836 7,666
(Provision) for income taxes (225) (134) (1,587) (2,890)
Minority interest income 33 39 114 131
Net earnings (losses) related to
equity investments 14 (453) (400) (4,836)
(Loss) income from continuing
operations (611) (216) 963 71
(Loss) from discontinued operations,
net of taxes (197) (1,175) (14,513) (4,052)
Gain on disposition of discontinued
operations, net of taxes 1,324 -- 1,324 13,503
Income (loss) before cumulative
effect of accounting changes 516 (1,391) (12,226) 9,522
Cumulative effect of accounting
changes, net of taxes -- -- (856) 359
Income (loss) of AT&T Group 516 (1,391) (13,082) 9,881
Dividend requirements of preferred
stock, net -- -- -- (652)
Premium on exchange of AT&T Wireless
tracking stock -- -- -- (80)
Income (loss) attributable to common
shareowners $516 $(1,391) $(13,082) $9,149
AT&T Common Stock Group:
Earnings (loss) 516 (1,391) (13,082) 9,114
Weighted-average shares (millions) 776 708 746 729
Weighted-average shares and potential
common shares (millions)* 776 708 766 729
AT&T Common Stock Group - per basic
share:
(Loss) earnings from continuing
operations $(0.79) $(0.31) $1.29 $(0.91)
(Loss) from discontinued operations (0.26) (1.66) (19.44) (5.60)
Gain on disposition of discontinued
operations 1.71 -- 1.77 18.53
Cumulative effect of accounting
changes -- -- (1.15) 0.49
AT&T Common Stock Group earnings
(loss) $0.66 $(1.97) $(17.53) $12.51
AT&T Common Stock Group - per diluted
share:
(Loss) earnings from continuing
operations $(0.79) $(0.31) $1.26 $(0.91)
(Loss) from discontinued operations (0.26) (1.66) (18.95) (5.60)
Gain on disposition of discontinued
operations 1.71 -- 1.73 18.53
Cumulative effect of accounting
changes -- -- (1.12) 0.49
AT&T Common Stock Group earnings
(loss) $0.66 $(1.97) $(17.08) $12.51
Dividends declared per share $0.1875 $0.1875 $0.75 $0.75
AT&T Wireless Group:
Earnings $-- $-- $-- $35
Weighted-average shares (millions) -- -- -- 438
Weighted-average shares and potential
common shares (millions)* -- -- -- 438
Earnings per basic and common share $-- $-- $-- $0.08
* Weighted-average shares assumes dilution from the potential conversion
of debt and equity securities and the potential exercise of
outstanding stock options and other performance awards, unless they are
anti-dilutive to earnings (loss) per diluted share.
AT&T Group Combined Balance Sheets (Unaudited)
Dollars in millions
At December 31,
2002 2001
ASSETS
Cash and cash equivalents $8,014 $10,680
Accounts receivable, less allowances
of $669 and $754 5,286 7,153
Other receivables 173 1,431
Deferred income taxes 910 1,192
Other current assets 1,520 622
Total current assets from
discontinued operations -- 1,649
TOTAL CURRENT ASSETS 15,903 22,727
Property, plant and equipment, net of
accumulated depreciation
of $31,021 and $29,088 25,604 26,803
Goodwill, net of accumulated
amortization in 2001 of $564 4,626 5,314
Prepaid pension costs 3,596 3,329
Other assets 5,543 5,805
Total non-current assets from
discontinued operations -- 101,503
TOTAL ASSETS $55,272 $165,481
LIABILITIES
Accounts payable $3,819 $4,156
Payroll and benefit-related
liabilities 1,519 1,606
Debt maturing within one year 3,762 10,134
Other current liabilities 2,924 3,929
Total current liabilities from
discontinued operations -- 5,801
TOTAL CURRENT LIABILITIES 12,024 25,626
Long-term debt 18,812 24,025
Long-term benefit-related liabilities 4,001 3,459
Deferred income taxes 4,739 2,438
Other long-term liabilities and
deferred credits 3,384 7,159
Total non-current liabilities from
discontinued operations -- 43,071
TOTAL LIABILITIES 42,960 105,778
Minority Interest from Discontinued
Operations -- 3,303
Company-Obligated Convertible
Quarterly Income Preferred
Securities of Subsidiary Trust
Holding Solely Subordinated
Debt Securities of AT&T from
Discontinued Operations -- 4,720
SHAREOWNERS' EQUITY
AT&T Common Stock, $1 par value,
authorized 6,000,000,000 shares;
issued and outstanding 783,037,580
shares (net of 171,801,716
treasury shares) at December 31,
2002 and 708,481,149 shares
(net of 170,349,286 treasury
shares) at December 31, 2001 783 708
Additional paid-in capital 25,464 52,099
Accumulated deficit (13,867) (785)
Accumulated other comprehensive loss (68) (342)
TOTAL SHAREOWNERS' EQUITY 12,312 51,680
TOTAL LIABILITIES AND SHAREOWNERS'
EQUITY $55,272 $165,481
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 website beginning later today. The website address is
http://www.att.com/ir. A copy of the earnings commentary is also available
online. An audio rebroadcast of the conference call will be available
beginning in the afternoon on Thursday, January 23 until midnight on Saturday,
January 25. To access the replay, please visit http://www.att.com/ir, or U.S.
callers can dial 800-475-6701, access code 661273. Callers outside the U.S.
should dial +1 320-365-3844, access code 661273.
The foregoing 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's 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.
SOURCE AT&T
-0- 01/23/2003
/CONTACT: Eileen Connolly, +1-908-234-8510, or Dan Lawler,
+1-908-234-6846, both of AT&T /
/Photo: http://www.newscom.com/cgi-bin/prnh/19991018/ATT /
/Web site: http://www.att.com/
(T)
-END-
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