AT&T (T) 10-Q 6 May 10 2010 Q1 Quarterly report Financial data

CONSOLIDATED STATEMENTS OF INCO

CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (USD $)
In Millions, except Per Share data	3 Months Ended Mar. 31, 2010	3 Months Ended Mar. 31, 2009
Operating Revenues
Wireless service	$12,850	$11,646
Voice	7,479	8,503
Data	6,631	6,281
Directory	1,041	1,249
Other	2,648	2,892
Total operating revenues	30,649	30,571
Operating Expenses
Cost of sales (exclusive of depreciation and amortization shown separately below)	12,329	12,195
Selling, general and administrative	7,484	7,753
Depreciation and amortization	4,826	4,886
Total operating expenses	24,639	24,834
Operating Income	6,010	5,737
Other Income (Expense)
Interest expense	(767)	(849)
Equity in net income of affiliates	217	137
Other income (expense) - net	(22)	(15)
Total other income (expense)	(572)	(727)
Income Before Income Taxes	5,438	5,010
Income taxes	2,876	1,809
Net Income	2,562	3,201
Less: Net income attributable to noncontrolling interest	(87)	(75)
Net Income Attributable to AT&T	$2,475	$3,126
Basic Earnings Per Share Attributable to AT&T	0.42	0.53
Diluted Earnings Per Share Attributable to AT&T	0.42	0.53
Weighted Average Number of Common Shares Outstanding - Basic	5,905	5,896
Dividends Declared Per Common Share	0.42	0.41

CONSOLIDATED BALANCE SHEETS (Un

CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $)
In Millions	3 Months Ended Mar. 31, 2010	Dec. 31, 2009
Current Assets
Cash and cash equivalents	$2,617	$3,802
Accounts receivable - net of allowances for doubtful accounts of $1,125 and $1,205	14,167	14,978
Prepaid expenses	1,820	1,572
Deferred income taxes	1,293	1,274
Other current assets	2,465	2,708
Total current assets	22,362	24,334
Property, Plant and Equipment	232,466	230,552
Less: accumulated depreciation and amortization	(133,106)	(130,459)
Property, Plant and Equipment - Net	99,360	100,093
Goodwill	73,052	73,259
Licenses	49,028	48,759
Customer Lists and Relationships - Net	6,624	7,420
Other Intangible Assets - Net	5,680	5,644
Investments in Equity Affiliates	3,278	2,921
Other Assets	6,317	6,322
Total Assets	265,701	268,752
Current Liabilities
Debt maturing within one year	9,437	7,361
Accounts payable and accrued liabilities	18,087	20,999
Advanced billing and customer deposits	4,061	4,170
Accrued taxes	2,639	1,696
Dividends payable	2,482	2,479
Total current liabilities	36,706	36,705
Long-Term Debt	60,024	64,720
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes	25,520	23,803
Postemployment benefit obligation	27,709	27,849
Other noncurrent liabilities	13,276	13,350
Total deferred credits and other noncurrent liabilities	66,505	65,002
Stockholders' Equity
Common stock ($1 par value)	6,495	6,495
Additional paid-in capital	91,557	91,707
Retained earnings	39,373	39,366
Treasury stock (at cost)	(21,137)	(21,260)
Accumulated other comprehensive loss	(14,265)	(14,408)
Noncontrolling interest	443	425
Other comprehensive income	143
Total stockholders' equity	102,466	102,325
Total Liabilities and Stockholders' Equity	$265,701	$268,752

PARENTHETICAL DATA TO THE CONSO

PARENTHETICAL DATA TO THE CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $)
In Millions	Mar. 31, 2010	Dec. 31, 2009
Current Assets
allowances for doubtful accounts	$1,125	$1,205
Stockholders' Equity
Common stock-par value	1	1

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $)
In Millions	3 Months Ended Mar. 31, 2010	3 Months Ended Mar. 31, 2009
Operating Activities
Net Income	$2,562	$3,201
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	4,826	4,886
Undistributed earnings from investments in equity affiliates	(201)	(124)
Bad debt expense	350	509
Deferred income tax expense	1,612	126
Net loss from impairment and sale of investments	50	82
Changes in operating assets and liabilities:
Accounts receivable	461	573
Other current assets	88	(51)
Accounts payable and accrued liabilities	(2,084)	(1,931)
Net Income Attributable to Noncontrolling Interest	(87)	(75)
Other - net	(324)	719
Total adjustments	4,691	4,714
Net Cash Provided by Operating Activities	7,253	7,915
Investing Activities
Capital expenditures	(3,156)	(3,173)
Interest during construction	(184)	(185)
Acquisitions, net of cash acquired	(178)	0
Dispositions	1	181
Sale of securities, net of investments	(20)	15
Other	8	5
Net Cash Used in Investing Activities	(3,529)	(3,157)
Financing Activities
Net change in short-term borrowings with original maturities of three months or less	323	(3,909)
Issuance of long-term debt	0	5,450
Repayment of long-term debt	(2,512)	(1,261)
Issuance of treasury stock	3	1
Dividends paid	(2,479)	(2,416)
Other	(244)	(603)
Net Cash Used in Financing Activities	(4,909)	(2,738)
Net increase (decrease) in cash and cash equivalents	(1,185)	2,020
Cash and cash equivalents beginning of year	3,802	1,792
Cash and Cash Equivalents End of Period	2,617	3,812
Cash paid (refunded) during the year for:
Interest	1,072	1,276
Income taxes, net of refunds	$41	($30)

CONSOLIDATED STATEMENTS OF CHAN

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) (USD $)
In Millions	Common Stock	Additional Paid-in Capital	Retained Earnings	Treasury Stock	Accumulated Other Comprehensive Income (Loss), net of tax	Noncontrolling Interest	Total
Balance at beginning of year at Dec. 31, 2009	$6,495	$91,707	$39,366	($21,260)	($14,408)	$425	$102,325
Shares outstanding balance at beginning of year at Dec. 31, 2009	6,495			(593)
Issuance of shares		73		123			196
Issuance of treasury shares				7
Share-based payments		(223)					(223)
Net Income attributable to AT&T			2,475				2,475
Other comprehensive income (loss) attributable to AT&T					143		143
Net Income Attributable to Noncontrolling Interest						87	87
Dividends to stockholders			(2,482)				(2,482)
Other			14
Distributions						(68)	(68)
Translation adjustments applicable to noncontrolling interest						(1)	(1)
Shares outstanding balance at end of period at Mar. 31, 2010	6,495			(586)
Balance at end of period at Mar. 31, 2010	$6,495	$91,557	$39,373	($21,137)	($14,265)	$443	$102,466

1_PARENTHETICAL DATA TO THE CON

PARENTHETICAL DATA TO THE CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) (USD $)
	3 Months Ended Mar. 31, 2010	3 Months Ended Mar. 31, 2009
Consolidated Statements of Changes in Stockholders' Equity
Diluted Earnings Per Share Attributable to AT&T	0.42	0.53
Dividends Declared Per Common Share	0.42	0.41

PREPARATION OF INTERIM FINANCIA

PREPARATION OF INTERIM FINANCIAL STATEMENTS
	3 Months Ended Mar. 31, 2010
PREPARATION OF INTERIM FINANCIAL STATEMENTS
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 Regulation S-X and other applicable rules of the Securities and Exchange Commission (SEC) that permit reduced disclosures for interim reporting. We believe that these consolidated financial statements include all adjustments (consisting only of normal recurring accruals) necessary to present fairly the results for the presented interim periods. The results for the interim periods are not necessarily indicative of those 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 December 31, 2009. In preparing the accompanying unaudited consolidated financial statements, we have reviewed all known events that have occurred after March 31, 2010, and through the date that our Form 10-Q was available for issuance for possible inclusion in this Form 10-Q (see Note 7). 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. 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 presentationsee Note 4 for a discussion of our change in approach to intersegment activity, effective January 1, 2010. Recent Accounting Standards Fair Value Measurements and DisclosuresIn January 2010, the FASB issued Fair Value Measurements and DisclosuresImproving Disclosures about Fair Value Measurements (Accounting Standards Update (ASU) 2010-06), which requires new disclosures and explanations for transfers of financial assets and liabilities between certain levels in the fair value hierarchy. ASU 2010-06 also clarifies that fair value measurement disclosures are required for each class of financial asset and liability, which may be a subset of a caption in the consolidated balance sheets, and those disclosures should include a discussion of inputs and valuation techniques. For financial assets and li

COMPREHENSIVE INCOME

COMPREHENSIVE INCOME
	3 Months Ended Mar. 31, 2010
Notes to Financial Statements [Abstract]
COMPREHENSIVE INCOME	NOTE 2. COMPREHENSIVE INCOME The components of our comprehensive income for the three months ended March 31, 2010 and 2009 include net income, adjustments to stockholders equity for foreign currency translation adjustments, net unrealized gain (loss) on available-for-sale securities, net unrealized gain (loss) on cash flow hedges and defined benefit postretirement plans. Foreign currency translation adjustments were 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 ending March 31, 2010 and 2009: Three months ended March 31, 2010 2009 Net income $ 2,562 $ 3,201 Other comprehensive income, net of tax: Foreign currency translation adjustments (includes $(1) and $(7) attributable to noncontrolling interest), net of taxes of $50 and $(20) 93 (35 ) Net unrealized gains (losses) on available-for-sale securities: Unrealized gains (losses), net of taxes of $48 and $(51) 90 (90 ) Less reclassification adjustment realized in net income, net of taxes of $(13) and $44 (25 ) 77 Net unrealized gains (losses) on cash flow hedges: Unrealized gains (losses), net of taxes of $(16) and $96 (30 ) 184 Less: Reclassification adjustment realized in net income, net of taxes of $2 and $3 3 3 Defined benefit postretirement plans: Net actuarial gains (losses) and prior service benefit (cost) arising during the period, net of taxes of $(12) (19 ) - Amortization of net actuarial (gain) loss and prior service benefit included in net income, net of taxes of $18 and $32 30 57 Other - (1 ) Other comprehensive income 142 195 Total comprehensive income 2,704 3,396 Less: Total comprehensive income attributable to the noncontrolling interest (86 ) (68 ) Total Comprehensive Income Attributable to ATT $ 2,618 $ 3,328

EARNINGS PER SHARE

EARNINGS PER SHARE
	3 Months Ended Mar. 31, 2010
Notes to Financial Statements [Abstract]
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 first quarter,2010 and 2009, are shown in the table below: Three months ended March 31, 2010 2009 Numerators Numerator for basic earnings per share: Net income attributable to ATT $ 2,475 $ 3,126 Dilutive potential common shares: Other share-based payment 3 3 Numerator for diluted earnings per share $ 2,478 $ 3,129 Denominators (000,000) Denominator for basic earnings per share: Weighted-average number of common shares outstanding 5,905 5,896 Dilutive potential common shares: Stock options 3 2 Other share-based payment 27 24 Denominator for diluted earnings per share 5,935 5,922 Basic earnings per share $ 0.42 $ 0.53 Diluted earnings per share $ 0.42 $ 0.53 At March 31, 2010 and 2009, we had issued and outstanding options to purchase approximately 142 and 193 million shares of ATT common stock. The exercise prices of 120 and 176 million shares were above the market price of ATT stock at March 31, 2010 and 2009. Accordingly, we did not include these amounts in determining the dilutive potential common shares for the respective periods. At March 31, 2010, the exercise prices of 18 million stock options were below market price.

SEGMENT INFORMATION

SEGMENT INFORMATION
	3 Months Ended Mar. 31, 2010
Notes to Financial Statements [Abstract]
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. 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. The customers and long-lived assets of our reportable segments are predominantly in the United States. 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 receive commissions on sales of satellite television services offered through our agency arrangements. The Advertising Solutions segment includes our directory operations, which publish Yellow and White Pages directories and sell directory advertising 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 corporate-wide decisions for which the individual operating segments are not being evaluated. Historically, intersegment activity has been reported as revenue in the billing segment and offsetting operating expense in the purchasing segment. Upon consolidation, the intersegment revenue and expense were eliminated with the consolidated results reflecting the cash operating and depreciation expense of providing the intersegment service. As part of ATTs ongoing initiatives to manage its business from an external customer perspective, we no longer report intersegment revenue and report the cash operating and depreciation expense related to intersegment activity to the purchasing segment which provided services to the external customer. While this change did not impact ATTs total consolidated results, the impact to each operating segment varied. In particular, the Wireless segment, as a purchaser of network, IT and other services from the Wireline segment, experienced a reduction in cash operating expense partially offset by increased depreciation expense with the net result being increased operating margins. This change was effective with the reporting of operating results for the quarter ended March 31, 2010. We have reclassified certain amounts in 2009 financial statements to conform to the current periods presentation. In the following tables, we show how our segment results are reconciled to our co

PENSION AND POSTRETIREMENT BENE

PENSION AND POSTRETIREMENT BENEFITS
	3 Months Ended Mar. 31, 2010
Notes to Financial Statements [Abstract]
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 2010. 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 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 March 31, 2010 2009 Pension (benefit) cost: Service cost benefits earned during the period $ 269 $ 272 Interest cost on projected benefit obligation 787 845 Expected return on assets (1,143 ) (1,140 ) Amortization of prior service (benefit) cost (4 ) 27 Recognized actuarial loss 171 166 Net pension cost $ 80 $ 170 Postretirement (benefit) cost: Service cost benefits earned during the period $ 87 $ 88 Interest cost on accumulated postretirement benefit obligation 563 630 Expected return on assets (284 ) (239 ) Amortization of prior service benefit (156 ) (90 ) Recognized actuarial gain (2 ) - Postretirement cost $ 208 $ 389 Combined net pension and postretirement cost $ 288 $ 559 Our combined net pension and postretirement cost decreased $271 in the first quarter of 2010. The decrease was primarily related to lower interest costs due to a lower obligation, as a result of retiree medical and drug coverage changes, partially offset by a change in the discount rate from 7% to 6.5%. An increase in amortization of prior service benefit, driven by the utilization of market interest rates for lump sum pension distributions, under the Pension Protection Actand changes in future retiree benefits, also contributed to the decrease in combined net pension and postretirement cost. 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 greater of the projected benefit obligation or the market-related value of assets (MRVA). Under GAAP, the expected long-term rate of return is calculated on the MRVA. GAAP requires that actual gains and losses on pension and postretirement plan assets be recognized in the MRVA equally ov

FAIR VALUE MEASUREMENTS AND DIS

FAIR VALUE MEASUREMENTS AND DISCLOSURE
	3 Months Ended Mar. 31, 2010
Notes to Financial Statements [Abstract]
FAIR VALUE MEASUREMENTS AND DISCLOSURE	NOTE 6. FAIR VALUE MEASUREMENTS AND DISCLOSURE GAAP requires disclosures for financial assets and liabilities that are remeasured at fair value at least annually. GAAP establishes the Fair Value Measurement and Disclosure framework which provides a three-tiered fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy under Fair Value Measurement and Disclosure are described below: Level 1 Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that ATT has the ability to access. Level 2 Inputs to the valuation methodology include: Quoted prices for similar assets and liabilities in active markets; Quoted prices for identical or similar assets or liabilities in inactive markets; Inputs other than quoted market prices that are observable for the asset or liability; Inputs that are derived principally from or corroborated by observable market data by correlation or other means. If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability. Level 3 Inputs to the valuation methodology are unobservable and significant to the fair value measurement. Fair value is often based on internally developed models in which there are few, if any, external observations. The assets or liabilitys fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. The valuation methodologies described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. ATT believes its valuation methods are appropriate and consistent with other market participants. The use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. There have been no changes in the methodologies used at March 31, 2010 and December 31, 2009. Long-Term Debt and Other 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: March 31, December 31, 2010 2009 Carrying Fair Carrying Fair Amount Value Amount Value Notes and debentures $ 68,868 $ 72,372 $ 71,811 $ 75,212 Commercial paper 318 318 - - Bank borrowings 38 38 33 33 Available-for-sale securities 2,140 2,140 1,885 1,885 The fair values of our notes and debentures were estimated based on quoted market prices, where available, or on the net present value method

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS
	3 Months Ended Mar. 31, 2010
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS	NOTE 7. SUBSEQUENT EVENTS Equity Method Investments On January 13, 2010, Amrica Mvil S.A. de C.V. (Amrica Mvil) announced that its Board of Directors had authorized it to submit a tender offer for 100% of Carso Global Telecom, S.A. de C.V. (CGT), a holding company that owns 59.4% of Tlefonos de Mxico, S.A. de C.V. (Telmex) and 60.7% of Telmex Internacional, S.A.B. de C.V. (Telmex Internacional), in exchange for Amrica Mvil shares and an offer for Telmex Internacional shares not owned by CGT, to be exchanged for cash or Amrica Mvil shares, at the election of the shareholders. On April 30, 2010, we disclosed that we intend to tender our shares in Telmex Internacional for Amrica Mvil shares, at the offered exchange rate and that we may make additional market purchases of Amrica Mvil shares with a market value of up to an aggregate of $600 in order to maintain our pre-exchange offer percentage ownership in Amrica Mvil. Such purchases may be funded with the proceeds of market sales of shares and/or American Depository Shares in Telmex with a market value of up to an aggregate of $600. We are in the process of evaluating the impact to our results from these potential transactions.

Document Information

Document Information
	3 Months Ended Mar. 31, 2010
Document Information [Text Block]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	2010-03-31

Entity Information

Entity Information (USD $)
Share data in Millions	3 Months Ended Mar. 31, 2010	Apr. 30, 2010	Jun. 30, 2009
Entity [Text Block]
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			$146,600,000,000
Entity Common Stock, Shares Outstanding		5,909
Document Fiscal Year Focus	2,010
Document Fiscal Period Focus	Q1