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NEW YORK, Jan. 25 /PRNewswire/ -- AT&T (NYSE: T - news) Chairman C. Michael
Armstrong announced today that the company has delivered eight quarters of
year-over-year revenue growth.
Specific quarterly highlights include:
-- Revenue for the fourth quarter increased 5.9 percent year-over-year pro
forma for the acquisitions of TCI (now AT&T Broadband) and all closed
portions of the IBM Global Network (now AT&T Global Network Services).
On this basis, revenue was $16.335 billion compared to $15.423 billion
a year ago.
-- Operational earnings were $1.844 billion or $0.57 per diluted share in
the fourth quarter, down 16.2 percent from the year-ago quarter of
$0.68 per diluted share, primarily as a result of the impact of the TCI
acquisition. Operational earnings excluding Broadband and Global
Network Services were $0.84 per diluted share, an increase of
23.5 percent from $0.68 in the fourth quarter of 1998.
-- Operational cash earnings per diluted share, which excludes the
amortization of franchise costs, goodwill associated with acquisitions
and equity investments, and other purchased intangibles, were $0.65 in
the fourth quarter.
-- Reported earnings from continuing operations were $0.36 per diluted
share or $1.153 billion compared to $0.75 per share or $1.988 billion
for the fourth quarter of 1998. The decrease was due primarily to the
TCI acquisition and a fourth quarter 1999 net restructuring charge and
a net restructuring benefit realized in the fourth quarter of 1998.
Total revenue on a reported basis increased 20.7 percent to
$16.334 billion compared to the $13.528 billion reported for the same
period in 1998.
``Today's results demonstrate we're delivering on our commitments to investors while aggressively executing our long-term growth strategy,'' Armstrong said. ``For the past two years, we've grown revenue quarter-over- quarter, cut costs significantly and invested in high-growth businesses. In 2000, we'll continue to be focused on meeting our financial commitments, scaling our broadband and wireless operations, and accelerating growth throughout our business.''
4th Quarter at a Glance
4Q99 vs.4Q98
Business Services Revenue $6.3b 6.0%
Consumer Services Revenue $5.4b -4.5%
Wireless Services Revenue (1) $2.1b 41.6%
Broadband Revenue (2) $1.5b 7.9%
AT&T Solutions Revenue (3) $485m 45.5%
Operational EBITDA $5.5b 32.5%
Operational EBIT $3.4b 15.0%
Wireless Subscribers
- Consolidated Mkts 9.6m 33.4%
Wireless Subscribers
- Total (4) 12.2m 26.4%
4th Quarter Highlights
-- Operational EPS $0.57
-- Operational Cash EPS $0.65
-- Total Revenue $16.3 b
-- SG&A-to-Revenue 21.2%
-- Net Debt-to-Operational EBITDA 1.74x
-- Long Distance Volume Growth (5) 7.9%
-- Total Assets $131.0 b
-- 1999 Operational EBITDA $19.9b
-- 1999 Capital Expenditures $13.5b
(1) Includes the acquisition of Vanguard Cellular Systems (Vanguard) in
1999. Excluding Vanguard, revenue increased 33.8%.
(2) Represents full quarter pro forma revenue adjusted for all closed
cable partnerships and At Home Corporation (Excite@Home)
(3) Excludes revenue of Global Network Services
(4) Includes partnership markets
(5) Based on Business, Consumer, Wireless and International long distance
revenue and volume
AT&T also announced it would take a pretax charge of $804 million against fourth-quarter earnings, reducing net income by $496 million, or $0.15 per diluted share. The charge includes about $530 million for replacing existing infrastructure equipment as AT&T increases the capacity and operating efficiency of its advanced wireless network. The charge also includes a loss on the mandated sale of an ACC international operation and severance costs for about 2,800 employees as the company continues to streamline operations. Most of the employees left the company in fourth quarter of 1999, with nearly 40 percent exiting as part of a voluntary program.
In addition, AT&T said that while plans are not yet final, it expects to take charges in the first half of 2000 related to continuing efforts to cut costs by $2 billion by the end of the year and the planned closing of the company's merger with MediaOne.
Full-Year 1999 Highlights:
-- AT&T pro forma revenue for 1999 was $64.141 billion, an increase of
6.2 percent from the $60.394 billion reported for 1998. The increase
of $3.7 billion demonstrates the revenue strength in the company's
growth businesses.
-- Operational earnings per diluted share for 1999 were $2.20 compared to
$2.35 per diluted share in 1998. The decrease is primarily a result of
the TCI acquisition. 1999 operational earnings excluding the impact of
the TCI and Global Network Services acquisitions were $3.08 per diluted
share, an increase of 31.1 percent from 1998.
-- Operational cash earnings per diluted share for 1999 were $2.48.
-- Operational EBITDA increased 31.5 percent to $19.942 billion in 1999
compared to $15.159 billion in 1998. Operational EBIT increased
18.9 percent in 1999 to $12.455 billion compared to $10.478 billion in
1998.
-- Reported earnings from continuing operations per diluted share for 1999
were $1.74 compared to $2.37 for 1998. Revenue on a reported basis for
1999 totaled $62.391 billion, an increase of 17.2 percent compared to
the $53.223 billion reported for 1998.
-- The selling, general and administrative (SG&A) expense-to-revenue ratio
improved to 21.7 percent for 1999 compared to 24.0 percent for 1998,
showing progress in the company's aggressive efforts to manage its
costs.
-- AT&T's capital expenditures for 1999 totaled $13.5 billion.
Approximately three-fourths of the 1999 capital expenditures focused on
investment in growth businesses such as broadband, data, wireless,
local and outsourcing.
AT&T Business Unit Highlights:
-- Business Services reported fourth quarter revenue of $6.329 billion, an
increase of 6.0 percent compared to $5.970 billion for the fourth
quarter of 1998. The increase was driven by strength in data and
domestic long distance voice services. Business Services reported
operational EBITDA of $2.459 billion for the fourth quarter of 1999, an
increase of 20.0 percent from the $2.049 billion reported for the same
period last year. For 1999, revenue increased 6.3 percent to
$25.102 billion and operational EBITDA increased 24.1 percent to
$9.174 billion.
-- Consumer Services had $5.368 billion in revenue for the fourth quarter,
a decline of 4.5 percent compared to $5.621 billion for the year-ago
quarter. The decline reflects competition in consumer long distance as
well as customers moving to optional calling plans and wireless
services. Consumer Services reported an increase in fourth quarter
1999 operational EBITDA of 7.6 percent to $2.318 billion, compared to
$2.154 billion for the comparable 1998 period. Quarter-over-quarter,
operational EBITDA grew for eight consecutive quarters. For 1999,
revenue declined 4.0 percent to $21.972 billion and operational EBITDA
increased 19.2 percent to $8.700 billion.
-- Wireless Services grew fourth quarter revenue 41.6 percent on a
reported basis. The increase is primarily due to consolidated
subscriber growth of 33.4 percent and increased average revenue per
user. Adjusted to exclude the purchase of Vanguard Cellular in the
second quarter of 1999, wireless revenue increased 33.8 percent from
the year-ago quarter. Operational EBITDA, excluding other income,
increased 18.4 percent to $234 million compared to $197 million in the
fourth quarter of 1998. For 1999, revenue increased 41.1 percent on a
reported basis to $7.627 billion and operational EBITDA, excluding
other income, increased 23.4 percent to $1.169 billion.
-- Broadband, on a pro forma basis, adjusted for all closed cable
partnerships and Excite@Home, had fourth quarter revenue of
$1.504 billion, an increase of 7.9 percent, compared to $1.393 billion
for the year-ago quarter. Broadband pro forma operational EBITDA,
excluding other income, increased 8.0 percent in the fourth quarter of
1999 to $378 million, versus $350 million for the fourth quarter of
1998. For 1999, revenue increased 7.4 percent on a pro forma basis to
$5.771 billion and pro forma operational EBITDA, excluding other
income, decreased 23.0 percent to $1.369 billion.
-- Other and Corporate revenue increased 126.4 percent for the fourth
quarter to $973 million compared to $428 million for the fourth quarter
of 1998. Excluding the impact of Global Network Services, revenue
growth for the quarter was essentially flat. Growth in AT&T Solutions'
outsourcing business was offset by the loss of revenue from certain
international operations that were divested. In addition, revenue
growth was offset by an increase in intercompany revenue which is
eliminated within this group. Operational EBITDA, including Global
Network Services, was $121 million for the fourth quarter of 1999. For
1999, revenue increased 113.4 percent to $2.819 billion. Excluding the
impact of Global Network Services, 1999 revenue increased 21.5 percent
to $1.606 billion. For 1999, operational EBITDA, including Global
Network Services, was a loss of $240 million, an improvement of
65.8 percent.
-- AT&T Solutions reported fourth quarter revenue, excluding Global
Network Services, of $485 million versus $333 million for the year-ago
quarter. AT&T Solutions, excluding Global Network Services, reported
EBITDA of $132 million, an increase of 49.1 percent from the
$88 million reported in the fourth quarter of 1998. For 1999, excluding
Global Network Services, revenue increased 48.3 percent to
$1.629 billion and EBITDA increased 27.4 percent to $392 million.
Today's earnings announcement refers only to AT&T common stock group and does not include the financial results of Liberty Media Group, which reports its results separately. A detailed explanation of AT&T's fourth quarter business unit performance can be found on the Internet at http://www.att.com/ir/.
Expense Highlights:
-- Total operating expenses, on an operational basis, for the fourth
quarter were $13.069 billion compared to $10.655 billion for the fourth
quarter of 1998. The increase primarily reflects the impact of the TCI
and Global Network Services acquisitions. Excluding these
acquisitions, total operating expenses increased 1.6 percent to
$10.831 billion due to higher depreciation and amortization expenses
but was slightly offset by lower network and other costs of services as
well as declining access and other interconnection expenses.
-- Access and other interconnection expenses fell 1.3 percent to
$3.632 billion compared to $3.679 billion for the fourth quarter of
1998. The decline is due primarily to mandated reductions in
per-minute access charges and lower negotiated international settlement
rates. Others factors contributing to the decline include changes in
the types of communications traffic handled and network planning
methods. These decreases were largely offset by higher universal
service fund contributions, increased per-line charges and an overall
long distance volume increase of 7.9 percent, which was the result of
high-teen growth in Business Services volume combined with the high-
single-digit decline in Consumer Services long distance volumes.
-- Network and other costs of services increased $1.121 billion, or
40.8 percent compared to the fourth quarter of 1998. Excluding
Broadband and Global Network Services, network and other costs of
services decreased $54 million, or 1.9 percent, primarily due to
network cost control initiatives and a lower provision for
uncollectibles in Consumer and Business Services. These decreases were
partially offset as the number of wireless subscribers grew with the
continued success of AT&T Digital One Rate service. This has resulted
in higher off-network roaming and handset equipment expenses. In
addition, the decrease was also partly offset by increased costs
associated with revenue growth in AT&T Solutions' outsourcing unit.
-- Amortization of goodwill, franchise costs and other purchased
intangibles was $401 million in the fourth quarter of 1999 versus
$63 million in the year-ago quarter. The increase was primarily due to
the TCI merger. Amortization of goodwill associated with
nonconsolidated investments and recorded as a component of other income
was $139 million for the fourth quarter of 1999 and $9 million for the
fourth quarter of 1998.
-- Depreciation and other amortization expenses in the fourth quarter of
1999 increased 48.5 percent compared to the same quarter in 1998.
Excluding Broadband and Global Network Services, depreciation and other
amortization expenses increased 22.6 percent due to growth in AT&T's
depreciable asset base resulting from the continued investment in the
company's infrastructure throughout 1998 and 1999.
-- Selling, general and administrative (SG&A) expenses increased
15.2 percent compared to the fourth quarter of 1998. Excluding
Broadband and Global Network Services, SG&A expenses decreased
0.5 percent versus the year-ago quarter due primarily to AT&T's cost
control initiatives. The decreases were partially offset by increased
spending in AT&T's growth businesses, including wireless services and
AT&T Solutions' outsourcing unit. On a reported basis, SG&A as a
percent of revenues was 21.2 percent for the fourth quarter of 1999, an
improvement compared to the 22.2 percent for the fourth quarter of
1998.
-- Other income (expense) was an expense of $167 million in the fourth
quarter of 1999 compared to income of $78 million for the year-ago
quarter. The decrease is attributable primarily to higher equity
losses and goodwill amortization associated with investments such as
Excite@Home and Cablevision Systems.
-- Interest expense increased $438 million in the fourth quarter of 1999
compared to the fourth quarter of 1998. The increase was primarily
driven by a higher level of average debt outstanding associated with
AT&T's acquisitions. AT&T continues to refinance or retire assumed
debt, as appropriate, to lower its interest expense.
Balance Sheet Highlights
-- Total assets at December 31, 1999, were $130.973 billion, an increase
from the $59.550 billion reported at December 31, 1998. The increase
is primarily due to the acquisitions of TCI and Global Network
Services.
-- Total liabilities were $81.850 billion at December 31, 1999, an
increase from the $33.919 billion reported at December 31, 1998. The
increase primarily results from the acquisition of TCI, particularly
debt and deferred income taxes, as well as the issuance of short-term
debt and $8.5 billion in bond offerings. These increases were
partially offset by the retirement of $2.8 billion in long-term debt.
-- During the second quarter of 1999, Microsoft Corp. purchased
$5.0 billion of convertible securities from a subsidiary trust holding
solely subordinated debt of AT&T (recorded net of a $0.3 million
discount).
-- Debt-to-capital ratio (debt divided by total debt and equity) was
44.3 percent at December 31, 1999, compared to 20.9 percent at
December 31, 1998. Equity includes the $5.0 billion convertible
securities issued to Microsoft Corporation and debt includes the
$1.6 billion nonconvertible securities issued by TCI's subsidiary
trusts.
Definitions
EBIT refers to earnings before interest and taxes.
EBITDA refers to earnings before interest, taxes and depreciation and
amortization.
Operational Cash Earnings: Refers to operational earnings excluding the
amortization of franchise costs, goodwill associated with acquisitions and
equity investments, and other purchased intangibles.
Operational Earnings: These results exclude certain gains and charges as
well as the impact of AT&T's ownership interests in Cablevision Systems
Corp. (Cablevision) and Excite@Home.
Reported Earnings: The attached income statement reflects Reported
Earnings in accordance with generally accepted accounting principles.
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 document also contains certain information such as operational EPS, operational cash EPS and reported and operational EBIT and EBITDA that is not presented in accordance with generally accepted accounting principles. This information is presented solely to provide additional information to further understand the results of AT&T.
AT&T Group
Combined Statements of Income (Unaudited)
For the Three For the Twelve
Months Ended Months Ended
December 31, December 31,
1999 1998 1999 1998
Dollars in Millions
(except per share amounts)
Revenue $16,334 $13,528 $62,391 $53,223
Operating Expenses
Access and other
interconnection 3,632 3,679 14,686 15,328
Network and other
costs of services 3,870 2,749 14,385 10,495
Amortization of
goodwill, franchise
costs and other
purchased intangibles 401 63 1,301 251
Depreciation and
other amortization 1,730 1,165 6,138 4,378
Selling, general and
administrative 3,456 2,999 13,516 12,770
Restructuring and
other charges, net 804 (313) 1,506 2,514
Total operating
expenses 13,893 10,342 51,532 45,736
Operating income 2,441 3,186 10,859 7,487
Other income
(expense) (167) 78 (501) 1,247
Interest expens 543 105 1,651 427
Income from continuing
operations before
income taxes 1,731 3,159 8,707 8,307
Provision for
income taxes 578 1,171 3,257 3,072
Income from continuing
operations 1,153 1,988 5,450 5,235
Income from discontinued
operations (net of
taxes of $6) -- -- -- 10
Gain on sale of
discontinued
operations(net of
taxes of $799) -- -- -- 1,290
Extraordinary loss
(net of taxes of $80) -- -- -- 137
Income available
to AT&T shareowners $ 1,153 $ 1,988 $ 5,450 $ 6,398
Weighted-average
common shares and
potential common
shares (millions)* 3,264 2,653 3,152 2,700
Per common share - basic:
Income from continuing
operations $0.36 $0.76 $1.77 $1.96
Income from discontinued
operations -- -- -- --
Gain on sale of
discontinued
operations -- -- -- 0.48
Extraordinary loss -- -- -- 0.05
Total $0.36 $0.76 $1.77 $2.39
Per common share - diluted:
Income from continuing
operations $0.36 $0.75 $1.74 $1.94
Income from
discontinued operations -- -- -- --
Gain on sale of
discontinued operations -- -- -- 0.48
Extraordinary loss -- -- -- 0.05
Total $0.36 $0.75 $1.74 $2.37
Dividends declared
per common share $0.22 $0.22 $0.88 $0.88
1998 amounts have been restated to conform with our current presentation and reflect the 3-for-2 stock split.
EPS Reconciliation
For the three months ended
December 31, 1999 December 31, 1998
After-tax Diluted EPS After-tax Diluted EPS
(Dollars in millions, except per share amounts)
Income from continuing
operations attributable
to AT&T Group $1,153 $0.36 $1,988 $0.75
Add:
Losses of Cablevision
and Excite@Home
(pretax $316) 195 0.06 -- --
Wireless asset impairment
(pretax $531) 327 0.10 -- --
International charges, net
(pretax $179 4q99
& $85 4q98) 110 0.03 53 0.02
Restructuring and other
(pretax $145) 91 0.03 -- --
Local asset impairment
charge (pretax $32) -- -- 20 0.01
Less:
Pension settlement gain
(pretax $51 4q99
& $338 4q98) 32 0.01 209 0.08
Business restructuring
reserve reversal
(pretax $92) -- -- 57 0.02
Operational earnings
from continuing
operations attributable
to AT&T Group $1,844 $0.57 $1,795 $0.68
Note: For detailed descriptions of individual items, please refer to the
text of this document.
Logo: http://www.newscom.com/cgi-bin/prnh/19991018/ATT
SOURCE:
AT&T
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