AT&T (T) 10-Q 5 Nov 09 2009 Q4 Quarterly report Financial data

CONSOLIDATED STATEMENTS OF INCO

CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (USD $)
In Millions, except Per Share data	3 Months Ended Sep. 30, 2009	3 Months Ended Sep. 30, 2008	9 Months Ended Sep. 30, 2009	9 Months Ended Sep. 30, 2008
Operating Revenues
Wireless service	$12,372	$11,227	$35,978	$32,726
Voice	7,940	9,313	24,702	28,525
Data	6,424	6,144	18,981	18,170
Directory	1,162	1,333	3,622	4,114
Other	2,957	3,325	8,877	9,417
Total operating revenues	30,855	31,342	92,160	92,952
Operating Expenses
Cost of sales (exclusive of depreciation and amortization shown separately below)	12,885	13,022	37,605	36,914
Selling, general and administrative	7,672	7,724	23,225	23,034
Depreciation and amortization	4,910	4,978	14,699	14,839
Total operating expenses	25,467	25,724	75,529	74,787
Operating Income	5,388	5,618	16,631	18,165
Other Income (Expense)
Interest expense	(853)	(858)	(2,581)	(2,577)
Equity in net income of affiliates	181	257	549	712
Other income (expense) - net	27	(23)	43	97
Total other income (expense)	(645)	(624)	(1,989)	(1,768)
Income Before Income Taxes	4,743	4,994	14,642	16,397
Income taxes	1,468	1,705	4,890	5,746
Net Income	3,275	3,289	9,752	10,651
Less: Net Income Attributable to Noncontrolling Interest	(83)	(59)	(236)	(188)
Net Income Attributable to AT&T	$3,192	$3,230	$9,516	$10,463
Basic Earnings Per Share Attributable to AT&T	0.54	0.55	1.61	1.76
Diluted Earnings Per Share Attributable to AT&T	0.54	0.55	1.61	1.75
Weighted Average Number of Common Shares Otstanding - Basic	5,901	5,893	5,899	5,938
Dividends Declared Per Common Share	0.41	0.4	1.23	1.2

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS (USD $)
In Millions	Sep. 30, 2009	Dec. 31, 2008
Current Assets
Cash and cash equivalents	$6,167	$1,792
Accounts receivable - net of allowances for uncollectibles of $1,345 and $1,270	14,796	16,047
Prepaid expenses	1,791	1,538
Deferred income taxes	991	1,014
Other current assets	2,176	2,165
Total current assets	25,921	22,556
Property, Plant and Equipment - Net
Property, plant and equipment	225,669	218,579
Less: accumulated depreciation and amortization	(127,348)	(119,491)
Property, Plant and Equipment - Net	98,321	99,088
Goodwill	71,727	71,829
Licenses	47,946	47,306
Customer Lists and Relationships - Net	7,814	10,582
Other Intangible Assets - Net	5,656	5,824
Investments in Equity Affiliates	2,813	2,332
Other Assets	6,370	5,728
Total Assets	266,568	265,245
Current Liabilities
Debt maturing within one year	6,755	14,119
Accounts payable and accrued liabilities	18,093	20,032
Advanced billing and customer deposits	4,036	3,849
Accrued taxes	1,965	1,874
Dividends payable	2,419	2,416
Total current liabilities	33,268	42,290
Long-Term Debt	65,909	60,872
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes	22,279	19,196
Postemployment benefit obligation	31,750	31,930
Other noncurrent liabilities	13,361	14,207
Total deferred credits and other noncurrent liabilities	67,390	65,333
Stockholders' Equity
Common shares issued ($1 par value)	6,495	6,495
Capital in excess of par value	91,678	91,728
Retained earnings	38,841	36,591
Treasury shares (at cost)	(21,280)	(21,410)
Accumulated other comprehensive loss	(16,161)	(17,057)
Noncontrolling interest	428	403
Total stockholders' equity	100,001	96,750
Total Liabilities and Stockholders' Equity	$266,568	$265,245

PARENTHETICAL DATA TO THE CONSO

PARENTHETICAL DATA TO THE CONSOLIDATED BALANCE SHEETS (USD $)
In Millions	Sep. 30, 2009	Dec. 31, 2008
Current Assets
Net of allowances for uncollectibles	$1,345	$1,270
Stockholders' Equity
Common shares issued - par value	1	1

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $)
In Millions	9 Months Ended Sep. 30, 2009	9 Months Ended Sep. 30, 2008
Operating Activities
Net Income	$9,752	$10,651
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	14,699	14,839
Provision for uncollectible accounts	1,384	1,297
Deferred income tax expense	2,574	4,063
Net (gain) loss from impairment on sale of investments	89	(2)
Changes in operating assets and liabilities:
Accounts receivable	(133)	(1,597)
Other current assets	(288)	616
Accounts payable and accrued liabilities	(361)	(5,958)
Stock-based compensation tax benefit	0	(15)
Other - net	(2,235)	(1,121)
Total adjustments	15,729	12,122
Net Cash Provided by Operating Activities	25,481	22,773
Construction and capital expenditures
Capital expenditures	(11,067)	(14,388)
Interest during construction	(553)	(455)
Acquisitions, net of cash acquired	(184)	(10,086)
Dispositions	205	1,444
Investments in securities, net of sales	(14)	(103)
Sale of other investments	0	436
Other	44	33
Net Cash Used in Investing Activities	(11,569)	(23,119)
Financing Activities
Net change in short-term borrowings with original maturities of three months or less	(3,918)	5,188
Issuance of long-term debt	8,161	10,924
Repayment of long-term debt	(6,170)	(3,143)
Purchase of treasury shares	0	(6,077)
Issuance of treasury shares	8	317
Dividends paid	(7,252)	(7,150)
Stock-based compensation tax benefit	0	15
Other	(366)	(104)
Net Cash Used in Financing Activities	(9,537)	(30)
Net increase (decrease) in cash and cash equivalents	4,375	(376)
Cash and cash equivalents beginning of year	1,792	1,970
Cash and Cash Equivalents End of Period	6,167	1,594
Cash paid during the nine months ended September 30 for:
Interest	3,307	3,068
Income taxes, net of refunds	$2,535	$5,217

CONSOLIDATED STATEMENTS OF STOC

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (Unaudited) (USD $)
In Millions	Common Stock	Capital in Excess of Par Value	Retained Earnings [Member]	Treasury Stock	Accumulated Other Comprehensive Income (Loss), net of tax	Noncontrolling Interest	Total
Balance - Amount at Dec. 31, 2008	$6,495	$91,728	$36,591	($21,410)	($17,057)	$403	$96,750
Balance - Shares at Dec. 31, 2008	6,495			(602)
Issuance of shares - Shares				7
Issuance of shares - Amount		26		130
Share-based payments		(76)
Net income						236	236
Net Income Attributable to AT&T			9,516				9,516
Dividends			(7,255)
Other			(11)
Other comprehensive income					896
Distributions						(209)
Translation adjustments						(2)
Balance - Amount at Sep. 30, 2009	6,495	91,678	38,841	(21,280)	(16,161)	428	100,001
Balance - Shares at Sep. 30, 2009	6,495			(595)
Balance - Amount at Jun. 30, 2009	6,495
Balance - Shares at Jun. 30, 2009	6,495
Balance - Amount at Sep. 30, 2009	$6,495
Balance - Shares at Sep. 30, 2009	6,495

1_PARENTHETICAL DATA TO THE CON

PARENTHETICAL DATA TO THE CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (USD $)
	7/1/2009 - 9/30/2009	7/1/2008 - 9/30/2008	1/1/2009 - 9/30/2009	1/1/2008 - 9/30/2008
Diluted Earnings Per Share Attributable to AT&T	0.54	0.55	1.61	1.75
Dividends Declared Per Common Share	0.41	0.4	1.23	1.2

PREPARATION OF INTERIM FINANCIA

PREPARATION OF INTERIM FINANCIAL STATEMENTS
	9 Months Ended Sep. 30, 2009 USD / shares
PREPARATION OF INTERIM FINANCIAL STATEMENTS [Abstract]
NOTE 1. PREPARATION OF INTERIM FINANCIAL STATEMENTS	NOTE 1. PREPARATION OF INTERIM FINANCIAL STATEMENTS Basis of PresentationThroughout this document, ATT Inc. is referred to as ATT, we or the Company. The consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission that permit reduced disclosure for interim periods. We believe that these consolidated financial statements include all adjustments (consisting only of normal recurring accruals) necessary to present fairly the results for the interim periods shown. The results for the interim periods are not necessarily indicative of results for the full year. You should read this document in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December31,2008. The consolidated financial statements include the accounts of the Company and our majority-owned subsidiaries and affiliates. Our subsidiaries and affiliates operate in the communications services industry both domestically and internationally, providing wireless and wireline communications services and equipment, managed networking, wholesale services and advertising solutions. All significant intercompany transactions are eliminated in the consolidation process. Investments in partnerships and less than majority-owned subsidiaries where we have significant influence are accounted for under the equity method. Earnings from certain foreign equity investments accounted for using the equity method are included for periods ended within up to one month of our period end. For interim periods, we calculate income taxes by determining an expected annual effective tax rate and applying that rate to pre-tax income for the period. The resulting tax expense is then adjusted for the impact of significant events or issues that arise during the period, such as enactment of tax legislation or resolution of tax controversies. During the third quarter of 2009, we recorded a benefit related to the favorable resolution of federal and state audit issues, which resulted in a decrease to our effective tax rate for the period. The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes, including estimates of probable losses and expenses. Actual results could differ from those estimates. We have reclassified certain amounts in prior-period financial statements to conform to the current periods presentation. Valuation and Other Adjustments In accordance with GAAP, we established obligations for expected termination benefits provided under existing plans to former or inactive employees after employment but before retirement. These benefits include severance payments, workers compensation, disability, medical continuation coverage, and other benefits. At September 30, 2009, we had severance accruals of $516. At December 31, 2008, we had severance accruals of $752. Included in the current liabilities reported on our consolidated balance sheets are acc

COMPREHENSIVE INCOME

COMPREHENSIVE INCOME
	9 Months Ended Sep. 30, 2009 USD / shares
COMPREHENSIVE INCOME [Abstract]
NOTE 2. COMPREHENSIVE INCOME	NOTE 2. COMPREHENSIVE INCOME The components of our comprehensive income for the three and nine months ended September 30, 2009 and 2008 include net income, adjustments to stockholders equity for the foreign currency translation adjustment, net unrealized gain (loss) on available-for-sale securities, net unrealized gain (loss) on cash flow hedges and defined benefit postretirement plans. The foreign currency translation adjustment was due to exchange rate fluctuations in our foreign affiliates local currencies and the reclassification adjustment on cash flow hedges was due to the amortization of losses from our interest rate locks. Following is our comprehensive income with the respective tax impacts for the three months and nine months periods ending September 30, 2009 and 2008: Three months ended Nine months ended September 30, September 30, 2009 2008 2009 2008 Net income $ 3,275 $ 3,289 $ 9,752 $ 10,651 Other comprehensive income, net of tax: Foreign currency translation adjustment (includes $6, $3, $(2) and $8 attributable to noncontrolling interest), net of taxes of $1, $(75), $45 and $(15) 2 (139 ) 86 (29 ) Net unrealized gains (losses) on securities: Unrealized gains (losses), net of taxes of $115, $(118), $130 and $(153) 229 (220 ) 258 (284 ) Less reclassification adjustment realized in net income, net of taxes of $(17), $(6), $24 and $(15) (34 ) (12 ) 43 (28 ) Net unrealized gains (losses) on cash flow hedges: Unrealized gains (losses) on cross currency swaps, net of taxes of $(26), $24, $169 and $(28) (52 ) 44 316 (52 ) Unrealized gain (loss) on interest rate locks, net of taxes of $(30), $0, $(1) and $(2) (60 ) - (10 ) (3 ) Reclassification adjustment for losses on cash flow hedges included in net income, net of taxes of $2, $2, $6 and $6 4 4 11 13 Defined benefit postretirement plans: Amortization of net actuarial (gain) loss and prior service benefit included in net income, net of taxes of $32, $(17), $99 and $(50) 64 (31 ) 190 (90 ) Other - (1 ) - (1 ) Other comprehensive income (loss) 153 (355 ) 894 (474 ) Less: Total comprehensive income attributable to the noncontrolling interest (89 ) (62 ) (234 ) (196 ) Total Comprehensive IncomeAttributable to ATT $ 3,339 $ 2,872 $ 10,412 $ 9,981

EARNINGS PER SHARE

EARNINGS PER SHARE
	9 Months Ended Sep. 30, 2009 USD / shares
EARNINGS PER SHARE [Abstract]
NOTE 3. EARNINGS PER SHARE	NOTE 3. EARNINGS PER SHARE A reconciliation of the numerators and denominators of basic earnings per share and diluted earnings per share for net income for the three and nine months ended September 30, 2009 and 2008 are shown in the table below: Three months ended Nine months ended September 30, September 30, 2009 2008 2009 2008 Numerators Numerator for basic earnings per share: Net income attributable to ATT $ 3,192 $ 3,230 $ 9,516 $ 10,463 Dilutive potential common shares: Other stock-based compensation 2 2 7 7 Numerator for diluted earnings per share $ 3,194 $ 3,232 $ 9,523 $ 10,470 Denominators (000,000) Denominator for basic earnings per share: Weighted-average number of common shares outstanding 5,901 5,893 5,899 5,938 Dilutive potential common shares: Stock options 3 6 3 12 Other stock-based compensation 18 22 20 21 Denominator for diluted earnings per share 5,922 5,921 5,922 5,971 Basic earnings per share $ 0.54 $ 0.55 $ 1.61 $ 1.76 Diluted earnings per share $ 0.54 $ 0.55 $ 1.61 $ 1.75 At September 30, 2009, we had issued and outstanding options to purchase approximately 180 million shares of ATT common stock. The exercise prices of options to purchase a weighted average of 158 million shares in the third quarter and 165 million for the first nine months were above the average market price of ATT stock. Accordingly, we did not include these amounts in determining the dilutive potential common shares for the respective period. At September 30, 2009, the exercise price of 19 million share options was below market price. At September 30, 2008, we had issued and outstanding options to purchase approximately 206 million shares of ATT common stock. The exercise prices of options to purchase a weighted average of 173 million shares in the third quarter and 131 million for the first nine months were above the average market price of ATT stock. Accordingly, we did not include these amounts in determining the dilutive potential common shares for the respective period. At September 30, 2008, the exercise price of 34 million share options was below market price.

SEGMENT INFORMATION

SEGMENT INFORMATION
	9 Months Ended Sep. 30, 2009 USD / shares
SEGMENT INFORMATION [Abstract]
NOTE 4. SEGMENT INFORMATION	NOTE 4. SEGMENT INFORMATION Our segments are strategic business units that offer different products and services over various technology platforms and are managed accordingly. We analyze our various operating segments based on segment income before income taxes, reviewing operating revenues, operating expenses (depreciation and non-depreciation) and equity income for each segment. We make our capital allocations decisions primarily based on the network (wireless or wireline) providing services. Interest expense and other income (expense) net are managed only on a total company basis and are, accordingly, reflected only in consolidated results. Therefore, these items are not included in the calculation of each segments percentage of our consolidated results. We have four reportable segments: (1)wireless, (2)wireline, (3)advertising solutions and (4)other. The wireless segment uses our nationwide network to provide consumer and business customers with wireless voice and advanced data communications services. The wireline segment uses our regional, national and global network to provide consumer and business customers with landline voice and data communications services, ATT U-verseSM TV, high-speed broadband and voice services (U-verse) and managed networking to business customers. Additionally, we offer satellite television services through our agency arrangements. The advertising solutions segment publishes Yellow and White Pages directories and sells advertising in various media, including directory and Internet-based advertising, and local search. The other segment includes results from Sterling Commerce Inc., customer information services and all corporate and other operations. This segment includes our portion of the results from our international equity investments. Also included in the other segment are impacts of management decisions affecting the company for which management does not evaluate the individual operating segments. In the following tables, we show how our segment results are reconciled to our consolidated results. The Wireless, Wireline, Advertising Solutions and Other columns represent the segment results of each operating segment. The Consolidation and Elimination column adds in those line items that we manage on a consolidated basis only: interest expense and other income (expense)net. This column also eliminates any intersegment transactions included in each segments results. Segment assets at September 30, 2009 were materially unchanged from the year ended December 31, 2008 with the exception of other segment assets. Our other segment assets totaled $14,078, which increased $5,376, or 61.8%, primarily due to an increase in cash. For the three months ended September 30, 2009 Advertising Consolidation Consolidated Wireless Wireline Solutions Other and Elimination Results Revenues from external customers $ 13,627 $ 15,706 $ 1,161 $ 360 $ 1 $ 30,855 Intersegment revenues 27 598 19 67 (711 ) - Total segment operating revenue

PENSION AND POSTRETIREMENT BENE

PENSION AND POSTRETIREMENT BENEFITS
	9 Months Ended Sep. 30, 2009 USD / shares
PENSION AND POSTRETIREMENT BENEFITS [Abstract]
NOTE 5. PENSION AND POSTRETIREMENT BENEFITS	NOTE 5. PENSION AND POSTRETIREMENT BENEFITS Substantially all of our employees are covered by one of various noncontributory pension and death benefit plans. We also provide certain medical, dental and life insurance benefits to substantially all retired employees under various plans and accrue actuarially determined postretirement benefit costs as active employees earn these benefits. Our objective in funding these plans, in combination with the standards of the Employee Retirement Income Security Act of 1974, as amended (ERISA), is to accumulate assets sufficient to meet the plans obligations to provide benefits to employees upon their retirement. No significant cash contributions are required under ERISA regulations during 2009. The following details pension and postretirement benefit costs included in operating expenses (in cost of sales and selling, general and administrative expenses) in the accompanying Consolidated Statements of Income. We account for these costs in accordance with GAAP standards for employers accounting for pensions and other postretirement benefits. In the following table, gains are denoted with parentheses and losses are not. A portion of these expenses is effectively capitalized as part of the benefit load on internal construction and capital expenditures, historically averaging approximately 10%. Three months ended Nine months ended September 30, September 30, 2009 2008 2009 2008 Pension (benefit) cost: Service cost benefits earned during the period $ 265 $ 294 $ 808 $ 880 Interest cost on projected benefit obligation 835 830 2,525 2,489 Expected return on assets (1,140 ) (1,400 ) (3,421 ) (4,201 ) Amortization of prior service cost 6 34 62 100 Recognized actuarial loss 163 1 495 7 Net pension (benefit) cost $ 129 $ (241 ) $ 469 $ (725 ) Postretirement (benefit) cost: Service cost benefits earned during the period $ 81 $ 108 $ 257 $ 322 Interest cost on accumulated postretirement benefit obligation 595 637 1,856 1,912 Expected return on assets (239 ) (331 ) (716 ) (995 ) Amortization of prior service benefit (134 ) (92 ) (313 ) (271 ) Recognized actuarial loss (gain) - - (1 ) - Postretirement cost $ 303 $ 322 $ 1,083 $ 968 Combined net pension and postretirement cost $ 432 $ 81 $ 1,552 $ 243 Our combined net pension and postretirement cost increased $351 in the third quarter and $1,309 for the first nine months of 2009. The increase was due to lower expected return on assets and an increase in amortization of actuarial losses, both primarily from investment losses in 2008. As allowed under GAAP, we use a method in which gains and losses are amortized only when the net gains or losses exceed 10 percent of the great

FINANCIAL INSTRUMENTS

FINANCIAL INSTRUMENTS
	9 Months Ended Sep. 30, 2009 USD / shares
FINANCIAL INSTRUMENTS [Abstract]
NOTE 6. FINANCIAL INSTRUMENTS	NOTE 6. FINANCIAL INSTRUMENTS The carrying amounts and estimated fair values of our long-term debt, including current maturities, and other financial instruments, are summarized as follows at September 30, 2009: 2009 Carrying Fair Amount Value Notes and debentures $ 72,471 $ 76,588 Commercial paper - - Bank borrowings 25 25 Available-for-sale securities 1,952 1,952 GAAP standards require disclosures for financial assets and liabilities that are remeasured at fair value at least annually. GAAP standards establish a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. Substantially all of our available-for-sale securities are valued using quoted market prices (referred to as Level 1). Adjustments to fair value are recorded in accumulated other comprehensive income (OCI) until the investment is sold or experiences an other-than-temporary decline in fair value (see Note 2). All of our derivatives are Level 2. The fair values of our notes and debentures were estimated based on quoted market prices, where available, or on the net present value method of expected future cash flows using current interest rates. The carrying value of debt with an original maturity of less than one year approximates market value. Our available-for-sale securities are carried at fair value, and realized gains and losses on these securities were included in Other income (expense) net in the consolidated statements of income. The fair value of our available-for-sale securities was principally determined based on quoted market prices, and the carrying amount of the remaining securities approximates fair value. These securities include $1,566 of equities, $303 in government fixed income bonds and $83 of other securities. Our short-term investments, other short-term and long-term held-to-maturity investments and customer deposits are recorded at amortized cost, and the respective carrying amounts approximate fair values. DerivativesWe use interest rate swaps, interest rate locks and foreign currency exchange contracts to manage our market risk to changes in interest rates and foreign exchange rates. We do not use financial instruments for trading or speculative purposes. Virtually all of our derivatives are designated as fair value hedges or cash flow hedges. Fair Value HedgingWe designate our fixed-to-floating interest rates swaps as fair value hedges. The purpose of these swaps is to manage interest rate risk by managing our mix of fixed-rate and floating-rate debt. Unrealized gains or losses on interest rate swaps are recorded at fair market value as assets or liabilities, respectively. Changes in the fair value of the interest rat

Document Information

Document Information
	9 Months Ended Sep. 30, 2009 USD / shares
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	2009-09-30

Entity Information

Entity Information (USD $)
Share data in Millions	9 Months Ended Sep. 30, 2009	Oct. 31, 2009	Jun. 30, 2008
Entity Information [Line Items]
Entity Registrant Name	AT&T INC.
Entity Central Index Key	0000732717
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$198,500,000,000
Entity Common Stock, Shares Outstanding		5,901