Exhibit 99
[AT&T LOGO OMITTED]
News Release
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FOR RELEASE THURSDAY, JANUARY 22, 2004
AT&T Announces Fourth-Quarter and Full-Year 2003 Earnings:
Board of Directors Authorizes the Repurchase of up to $3 Billion of Debt
o Fourth-quarter earnings per diluted share from continuing operations of
$0.43; Full-year earnings per diluted share from continuing operations of
$2.36
o Fourth-quarter revenue of $8.1 billion; Full-year revenue of $34.5 billion
o Fourth-quarter operating income of $633 million; Full-year operating income
of $3.7 billion
BEDMINSTER, N.J. -- AT&T (NYSE: T) today announced its fourth-quarter and
full-year 2003 earnings. The company reported income from continuing operations
of $340 million, or earnings per diluted share of $0.43, for the fourth quarter
of 2003. The company's current-quarter income from continuing operations
compares to a loss of $611 million, or a loss per diluted share of $0.79, in the
fourth quarter of 2002, which included more than $1.2 billion of
asset-impairment charges.
"AT&T's fourth-quarter results reflect our ongoing ability to execute in a
difficult market while transforming our business to meet the challenges of an
evolving and increasingly competitive industry," said AT&T Chairman and Chief
Executive Officer David W. Dorman. "Moving forward, we will continue to leverage
innovation and investment to extend AT&T's competitive differentiation with
customers and to strengthen our position as industry leader and provider of
choice."
AT&T reported fourth-quarter 2003 consolidated revenue of $8.1 billion, which
included $5.9 billion from AT&T Business and $2.2 billion from AT&T Consumer.
This represented a consolidated revenue decline of 12.8 percent versus the
fourth quarter of 2002, primarily due to continued declines in long distance
(LD) voice revenue, partially offset by the continued success of AT&T Consumer's
bundled local and LD offering, as well as growth in several key markets of AT&T
Business.
AT&T's fourth-quarter 2003 operating income totaled $633 million, resulting in a
consolidated operating margin of 7.8 percent. AT&T Business posted operating
income of $274 million, yielding a margin of 4.7 percent, while AT&T Consumer
generated operating income of $441 million, yielding a margin of 19.9 percent.
AT&T also announced that its Board of Directors has authorized the repurchase of
up to $3 billion of debt, subject to market conditions and other relevant
considerations.
Full-Year 2003 Results
For the full year, AT&T reported income from continuing operations of $1.9
billion, or earnings per diluted share of $2.36, compared with income from
continuing operations of $1.0 billion and earnings per diluted share of $1.26 in
2002.
AT&T reported full-year 2003 consolidated revenue of $34.5 billion, which
included $25.0 billion from AT&T Business and $9.5 billion from AT&T Consumer.
This represented a consolidated revenue decline of 8.7 percent versus 2002,
primarily due to continued declines in LD voice revenue, partially offset by the
continued success of AT&T Consumer's bundled local and LD offering, as well as
growth in several key markets of AT&T Business.
AT&T's 2003 consolidated operating income totaled $3.7 billion, resulting in an
operating margin of 10.6 percent. AT&T Business posted operating income of $1.9
billion, yielding a margin of 7.6 percent, while AT&T Consumer generated
operating income of $2.1 billion, yielding a margin of 21.7 percent.
"Despite a difficult year for our industry, AT&T made strong progress in the
areas of cost reduction and productivity improvement while meeting our full-year
consolidated revenue and operating income guidance," said AT&T Chief Financial
Officer Thomas W. Horton. "Our strong free cash flow allowed us to reduce net
debt by nearly a third, while increasing our quarterly dividend by 27 percent
last year."
2004 OUTLOOK
AT&T also announced its expectations for 2004. These expectations 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 these
expectations. These factors include the impact of existing and new competitors,
the impact of vigorous industry pricing competition, oversupply, regulatory
uncertainty and the effects of technological substitution, among other risks.
Accordingly, readers are cautioned not to put undue reliance on these
expectations.
o Consolidated revenue decline between 7-10 percent;
o Consolidated operating income margin between 6-8 percent;
o AT&T Business revenue decline between 4-7 percent;
o AT&T Consumer revenue decline between 15-17 percent;
o Capital expenditures of approximately $2.5 billion.
AT&T UNIT HIGHLIGHTS
AT&T Business
o Revenue was $5.9 billion in the fourth quarter of 2003, a decline of
10.9 percent from the prior-year fourth quarter. Full-year revenue
declined by 5.9 percent to $25.0 billion. Pricing pressure, LD voice
competition, demand weakness in data and retail LD voice, as well as
overall telecommunications spending all negatively impacted the unit's
revenue performance. Declines were partially offset by growth in
wholesale LD, local voice and IP&E-services revenue.
o Long distance voice revenue declined 13.1 percent on a
quarter-over-quarter basis, driven by continued pricing pressure as
well as the volume mix shift from retail to wholesale. Volumes grew
nearly 7 percent on a quarter-over-quarter basis, driven by strong
wholesale growth, which more than offset the decline in retail volumes.
Full-year LD voice revenue declined 9.3 percent in 2003 compared with
2002, while volumes grew about 11 percent.
o Local voice revenue grew 15.0 percent from the prior year fourth
quarter. Local access lines totaled nearly 4.5 million at the end of
2003, representing an increase of almost 136,000 lines from the third
quarter of 2003. Local voice revenue grew 28.4 percent for the full
year.
o Data revenue declined 6.7 percent from the prior-year quarter and 4.6
percent for the full year. Growth rates were negatively impacted by
pricing pressure, particularly on high-capacity bandwidth circuits, as
well as weak retail demand.
o IP&E-services revenue grew 4.0 percent quarter-over-quarter, and 9.7
percent for the full year. Growth for the fourth quarter and full year
was primarily driven by strength in Web hosting and other advanced
products including Enhanced Virtual Private Network (E-VPN) and
IP-enabled frame (IPeFR). Full year revenue was also positively
impacted by managed Internet access.
o The managed component of total data and IP&E-services revenue grew
about 6 percent from the prior-year fourth quarter and comprised
approximately 33 percent of this revenue for the fourth quarter of
2003.
o Operating income totaled $274 million for the quarter and $1.9 billion
for the year, resulting in operating margins of 4.7 percent and 7.6
percent, respectively. This compares with an operating loss of $612
million or a margin of (9.3) percent in the prior-year fourth quarter
and operating income of $2.0 billion or a margin of 7.4 percent for the
prior year. Both the fourth-quarter and full-year 2002 were negatively
impacted by a $1.0 billion asset-impairment charge related to AT&T's
investment in AT&T Latin America.
AT&T Consumer
o Revenue was $2.2 billion for the fourth quarter, and $9.5 billion for
the full year, representing declines of 18.9 percent and 17.7 percent
versus the same prior year periods, respectively. Declines were driven
by lower standalone 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, partially offset by pricing
actions. These revenue declines were also partially offset by growth in
bundled revenue, which grew nearly 65 percent versus the prior-year
fourth quarter and grew nearly 80 percent for the year. Bundled revenue
represented nearly 27 percent of AT&T Consumer's total revenue for the
quarter.
o Fourth-quarter operating income totaled $441 million, yielding an
operating margin of 19.9 percent, compared with operating income of
$389 million, yielding 14.2 percent operating margin in the prior-year
fourth quarter. Full-year 2003 operating income was $2.1 billion with
an operating margin of 21.7 percent, versus 2002 operating income of
$2.6 billion with an operating margin of 22.5 percent. Fourth-quarter
and full-year 2002 reflect an asset-impairment charge of approximately
$0.2 billion relating to the value of the Company's DSL assets.
o At the end of the fourth quarter, AT&T Consumer had approximately 35
million total customers. This included local service to more than 3.9
million customers, an increase of 63 percent from the end of the
prior-year fourth quarter. During the current reporting period, AT&T
began offering bundled local and LD services in Alabama, Tennessee,
Kentucky, Mississippi, Arkansas, Florida, Missouri, Oklahoma, Kansas,
and Southern California. As of December 31, 2003, bundled local and LD
service was being marketed in 24 states, and tested in 11, fulfilling
AT&T's prior guidance of having a local presence in 35 states by
year-end. As of December 31, 2003, AT&T local service was available to
approximately 61 million households.
OTHER CONSOLIDATED FINANCIAL HIGHLIGHTS
o The Board of Directors has authorized the repurchase of up to $3
billion in debt. The timing and method of these repurchases has not yet
been determined and will depend on market conditions and other relevant
factors and may take the form of calls, tender offers or open-market
purchases.
o Fourth-quarter 2003 income from continuing operations of $340 million
included pretax net restructuring and other charges of $67 million,
primarily related to employee separation costs.
o Other income (expense) of $102 million in the fourth quarter primarily
consisted of investment-related income and settlements related to prior
business divestitures.
o The fourth-quarter effective income tax rate of 28.0 percent benefited
in part from Research and Experimentation tax-credit claims from prior
years.
o AT&T ended the year with net debt of $8.8 billion. Net debt is defined
as total debt of $14.4 billion less cash of $4.4 billion, restricted
cash of $0.5 billion and net foreign debt fluctuations of $0.8 billion.
o Free cash flow was $0.7 billion for the fourth quarter and $5.4 billion
for the year. Free cash flow is defined as cash flows provided by
operating activities of $1.4 billion for the quarter and $8.5 billion
for the year, less cash used for capital expenditures and other
additions of $0.7 billion for the quarter and $3.2 billion for the
year.
o Capital expenditures for the fourth quarter were $0.8 billion and $3.4
billion for the year. The full year capital expenditure amount includes
$0.4 billion for properties consolidated in connection with the third
quarter adoption of Financial Accounting Standards Board Interpretation
No. 46 (FIN 46), "Consolidation of Variable Interest Entities - an
Interpretation of Accounting Research Bulletin No. 51."
o EBITDA was $8.5 billion for the year and is defined as operating income
of $3.7 billion excluding depreciation and amortization of $4.9
billion.
DEFINITIONS and NOTES
AT&T Business
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 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 premises 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
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 $0.8
billion at December 31, 2003, on non-U.S. denominated debt of about $2.7
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 Ended For the Years Ended
December 31, December 31,
2003 2002 2003 2002
REVENUE
AT&T Business $ 5,867 $ 6,588 $ 24,992 $ 26,558
AT&T Consumer 2,219 2,736 9,484 11,527
Corporate and Other 13 (34) 53 (258)
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Total Revenue 8,099 9,290 34,529 37,827
OPERATING EXPENSES
Access and other connection 2,606 2,576 10,797 10,790
Costs of services and products 1,702 2,197 7,625 8,363
Selling, general and administrative 1,828 2,077 7,379 7,988
Depreciation and amortization 1,263 1,257 4,870 4,888
Net restructuring and other charges 67 1,463 201 1,437
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Total operating expenses 7,466 9,570 30,872 33,466
Operating Income 633 (280) 3,657 4,361
Other income (expense), net 102 208 191 (77)
Interest (expense) (241) (361) (1,158) (1,448)
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Income (loss) from continuing operations before income taxes,
minority interest income, and net (losses) earnings related to
equity investments 494 (433) 2,690 2,836
(Provision) for income taxes (139) (225) (816) (1,587)
Minority interest income - 33 1 114
Net (losses) earnings related to equity investments (15) 14 (12) (400)
------------------------------ -----------------------------
Income (loss) from continuing operations 340 (611) 1,863 963
(Loss) from discontinued operations - net of income taxes - (197) (13) (14,513)
Gain on disposition of discontinued operations - net of income taxes - 1,324 - 1,324
------------------------------ -----------------------------
Income (loss) before cumulative effect of accounting changes 340 516 1,850 (12,226)
Cumulative effect of accounting changes - net of income taxes - - 15 (856)
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Net income (loss) 340 516 1,865 (13,082)
============================== =============================
Weighted-average common shares (millions) 791 776 788 746
Weighted-average common shares and potential common shares (millions) 793 776 789 766
PER BASIC SHARE:
Earnings (loss) from continuing operations $ 0.43 $ (0.79) $ 2.37 $ 1.29
(Loss) from discontinued operations - (0.26) (0.02) (19.44)
Gain on disposition of discontinued operations - 1.71 - 1.77
Cumulative effect of accounting changes - - 0.02 (1.15)
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Earnings (loss) per basic share $ 0.43 $ 0.66 $ 2.37 $(17.53)
============================== =============================
PER DILUTED SHARE:
Earnings (loss) from continuing operations $ 0.43 $ (0.79) $ 2.36 $ 1.26
(Loss) from discontinued operations - (0.26) (0.02) (18.95)
Gain on disposition of discontinued operations - 1.71 - 1.73
Cumulative effect of accounting changes - - 0.02 (1.12)
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Earnings (loss) per diluted share $ 0.43 $ 0.66 $ 2.36 $(17.08)
============================== =============================
Dividends declared per share $ 0.2375 $ 0.1875 $ 0.8500 $ 0.7500
Quarterly Income Statements
AT&T Corp. Consolidated Statements of Income (Unaudited)
Dollars in millions (except per share amounts)
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4Q03 3Q03 2Q03 1Q03 2003 4Q02 3Q02 2Q02 1Q02 2002
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REVENUE
AT&T Business $ 5,867 $ 6,282 $ 6,406 $ 6,437 $ 24,992 $ 6,588 $ 6,700 $ 6,742 $ 6,528 $ 26,558
AT&T Consumer 2,219 2,353 2,376 2,536 9,484 2,736 2,794 2,911 3,086 11,527
Corporate and Other 13 14 13 13 53 (34) (85) (73) (66) (258)
Total revenue 8,099 8,649 8,795 8,986 34,529 9,290 9,409 9,580 9,548 37,827
OPERATING EXPENSES
Access and other
connection 2,606 2,785 2,708 2,698 10,797 2,576 2,679 2,747 2,788 10,790
Costs of services and
products 1,702 1,954 1,958 2,011 7,625 2,197 2,066 2,086 2,014 8,363
Selling, general and
administrative 1,828 1,793 1,837 1,921 7,379 2,077 2,032 1,942 1,937 7,988
Depreciation and
amortization 1,263 1,224 1,197 1,186 4,870 1,257 1,243 1,213 1,175 4,888
Net restructuring and
other charges 67 64 66 4 201 1,463 (26) - - 1,437
Total operating expenses 7,466 7,820 7,766 7,820 30,872 9,570 7,994 7,988 7,914 33,466
Operating income (loss) 633 829 1,029 1,166 3,657 (280) 1,415 1,592 1,634 4,361
Other income (expense),
net 102 (7) 86 10 191 208 (180) (50) (55) (77)
Interest (expense) (241) (289) (296) (332) (1,158) (361) (355) (336) (396) (1,448)
Income (loss) from
continuing operations
before income taxes,
minority interest income,
and net (losses) earnings
related to equity
investments 494 533 819 844 2,690 (433) 880 1,206 1,183 2,836
(Provision) for income
taxes (139) (72) (308) (297) (816) (225) (370) (513) (479) (1,587)
Minority interest income - - - 1 1 33 28 33 20 114
Net (losses) earnings
related to equity
investments (15) (3) 25 (19) (12) 14 (13) (123) (278) (400)
Income (loss) from
continuing operations 340 458 536 529 1,863 (611) 525 603 446 963
(Loss) from discontinued
operations - net of income
taxes - (13) - - (13) (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 340 445 536 529 1,850 516 207 (12,830) (119) (12,226)
Cumulative effect of
accounting changes, net of
income taxes - 27 - 42 15 - - - (856) (856)
Net income (loss) $340 $418 $536 $571 $1,865 $516 $207 (12,830) (975) (13,082)
Weighted-average common
shares (millions) 791 789 787 784 788 776 770 730 709 746
Weighted-average common
shares and potential common
shares (millions) 793 791 787 785 789 776 788 750 738 766
PER BASIC SHARE:
Earnings (loss) from
continuing operations $ 0.43 $ 0.58 $ 0.68 $ 0.67 $ 2.37 $ (0.79) $ 0.68 $ 0.83 $ 0.63 $ 1.29
(Loss) from discontinued
operations - (0.02) - - (0.02) (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 - (0.03) - 0.06 0.02 - - - (1.21) (1.15)
Earnings (loss) per basic
share $ 0.43 $ 0.53 $ 0.68 $ 0.73 $ 2.37 $ 0.66 $ 0.27 $ (17.58) $ (1.38) $ (17.53)
PER DILUTED SHARE:
Earnings (loss) from
continuing operations $ 0.43 $ 0.58 $ 0.68 $ 0.67 $ 2.36 $ (0.79) $ 0.67 $ 0.80 $ 0.60 $ 1.26
(Loss) from discontinued
operations - (0.02) - - (0.02) (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 - (0.03) - 0.06 0.02 - - - (1.16) (1.12)
Earnings (loss) per
diluted share $ 0.43 $ 0.53 $ 0.68 $ 0.73 $ 2.36 $ 0.66 $ 0.26 $ (17.11) $ (1.32) $ (17.08)
Historical Segment Data
Segment Disclosures (Unaudited)
Dollars in millions
4Q03 3Q03 2Q03 1Q03 2003 4Q02 3Q02 2Q02 1Q02 2002
AT&T Business
LD Voice $ 2,481 $ 2,801 $ 2,873 $ 2,961 $ 11,116 $ 2,853 $ 3,129 $ 3,224 $ 3,048 $ 12,254
Local Voice 386 379 384 335 1,484 336 274 277 268 1,155
Total Voice 2,867 3,180 3,257 3,296 12,600 3,189 3,403 3,501 3,316 13,409
Data Services 1,940 1,949 1,993 2,000 7,882 2,079 2,086 2,077 2,018 8,260
IP&E-Services 460 476 459 445 1,840 442 421 406 408 1,677
Total Data and IP&E-
Services 2,400 2,425 2,452 2,445 9,722 2,521 2,507 2,483 2,426 9,937
Outsourcing, Professional
Services & Other 600 677 697 696 2,670 878 790 758 786 3,212
Total Revenue 5,867 6,282 6,406 6,437 24,992 6,588 6,700 6,742 6,528 26,558
Operating Income (Loss)(1) 274 417 597 600 1,888 (612) 854 856 867 1,965
Operating Margin 4.7% 6.6% 9.3% 9.3% 7.6% (9.3%) 12.7% 12.7% 13.3% 7.4%
Capital Expenditures(5) 740 995 763 636 3,134 1,297 912 930 575 3,714
Depreciation & Amortization 1,199 1,162 1,133 1,126 4,620 1,173 1,128 1,141 1,104 4,546
Total Data and IP&E-Services
- % managed 33% 33% 31% 30% 32% 30% 29% 29% 29% 29%
Total Data and IP&E-Services
- % international 14% 14% 14% 14% 14% 15% 14% 15% 13% 14%
LD Volume Growth - Yr/Yr 7% 15% 12% 12% 11% 7% 2% (1%) (1%) 2%
LD Volume % Wholesale 53% 51% 47% 45% 50% 42% 38% 34% 33% 37%
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AT&T Consumer
Standalone LD, Transactional
and Other Services $ 1,625 $ 1,832 $ 1,916 $ 2,112 $ 7,485 $ 2,375 $ 2,499 $ 2,670 $ 2,869 $ 10,413
Bundled Services 594 521 460 424 1,999 361 295 241 217 1,114
Total Revenue 2,219 2,353 2,376 2,536 9,484 2,736 2,794 2,911 3,086 11,527
Operating Income(2) 441 500 489 632 2,062 389 595 787 821 2,592
Operating Margin 19.9% 21.2% 20.6% 24.9% 21.7% 14.2% 21.3% 27.0% 26.6% 22.5%
Capital Expenditures 19 14 19 22 74 32 34 33 28 127
Depreciation & Amortization 36 35 36 35 142 57 89 43 41 230
Local Customers (in thousands) 3,950 3,547 3,130 2,778 3,950 2,423 1,916 1,549 1,266 2,423
Bundled Households (in
millions) 60.7 47.7 40.1 32.2 60.7 32.2 32.2 17.6 13.1 32.2
- ------------------------------------------------------------------------------------------------------------------------------------
Corporate and Other
Revenue $ 13 $ 14 $ 13 $ 13 $ 53 $(34) $(85) $(73) $(66) $(258)
Operating (Loss)(3) (82) (88) (57) (66) (293) (57) (34) (51) (54) (196)
Capital Expenditures(5) 13 198 8 4 223 17 23 13 10 63
Depreciation & Amortization 28 27 28 25 108 27 26 29 30 112
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Total AT&T
Revenue $ 8,099 $ 8,649 $ 8,795 $ 8,986 $34,529 $ 9,290 $ 9,409 $ 9,580 $ 9,548 $ 37,827
Operating Income (Loss)(4) 633 829 1,029 1,166 3,657 (280) 1,415 1,592 1,634 4,361
Operating Margin 7.8% 9.6% 11.7% 13.0% 10.6% (3.0%) 15.0% 16.6% 17.1% 11.5%
Capital Expenditures(5) 772 1,207 790 662 3,431 1,346 969 976 613 3,904
Depreciation & Amortization 1,263 1,224 1,197 1,186 4,870 1,257 1,243 1,213 1,175 4,888
<FN>
(1)Includes net business restructuring and asset impairment (charges) benefits of ($33M) in 4Q03, ($53M) in 3Q03, ($47M) in 2Q03,
and ($4M) in 1Q03, totaling ($137M) in 2003; ($1,230M) in 4Q02 and $27M in 3Q02, totaling ($1,203M) in 2002.
(2)Includes net business restructuring and asset impairment (charges) benefits of ($17M) in 4Q03, ($4M) in 3Q03, and ($5M) in
2Q03, totaling ($26M) in 2003; ($223M) in 4Q02 and $12M in 3Q02, totaling ($211M) in 2002.
(3)Includes net business restructuring (charges) of ($17M) in 4Q03, ($7M) in 3Q03, and ($14M) in 2Q03, totaling ($38M) in 2003;
($10M) in 4Q02 and ($13M) in 3Q02, totaling ($23M) in 2002.
(4)Includes net business restructuring and asset impairment (charges) benefits of ($67M) in 4Q03, ($64M) in 3Q03, ($66M) in 2Q03,
and ($4M) in 1Q03, totaling ($201M) in 2003; ($1,463M) in 4Q02 and $26M in 3Q02, totaling ($1,437M) in 2002.
(5)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 for 3Q03.
</FN>
Balance Sheet
AT&T Corp. Consolidated Balance Sheets(1) (Unaudited)
Dollars in millions
December 31, December 31,
2003 2002
ASSETS
Cash and cash equivalents $ 4,353 $ 8,014
Accounts receivable, less allowances of $579 and $669 4,036 5,286
Deferred income taxes 715 1,075
Other current assets 744 1,693
--------------------------------
Total Current Assets 9,848 16,068
Property, plant and equipment, net of accumulated
depreciation of $34,299 and $31,021 24,376 25,604
Goodwill 4,801 4,626
Other purchased intangible assets, net of accumulated
amortization of $320 and $244 499 556
Prepaid pension costs 3,861 3,596
Other assets 4,603 4,987
--------------------------------
TOTAL ASSETS $ 47,988 $ 55,437
================================
LIABILITIES
Accounts payable and accrued expenses $ 3,256 $ 3,819
Compensation and benefit-related liabilities 1,783 1,949
Debt maturing within one year 1,343 3,762
Other current liabilities 2,501 2,924
--------------------------------
Total Current Liabilities 8,883 12,454
Long-term debt 13,066 18,812
Long-term compensation and benefit-related liabilities 3,528 4,144
Deferred income taxes 5,395 3,992
Other long-term liabilities and deferred credits 3,160 3,723
--------------------------------
Total Liabilities 34,032 43,125
--------------------------------
SHAREOWNERS' EQUITY
AT&T Common Stock, $1 par value, authorized 6,000,000,000 shares;
issued and outstanding 791,911,022 shares (net of 172,179,303
treasury shares) at December 31, 2003 and 783,037,580 shares
(net of 171,801,716 treasury shares) at December 31, 2002 792 783
Additional paid-in capital 27,722 28,163
Accumulated deficit (14,707) (16,566)
Accumulated other comprehensive income (loss) 149 (68)
--------------------------------
Total Shareowners' Equity 13,956 12,312
--------------------------------
TOTAL LIABILITIES & SHAREOWNERS' EQUITY $ 47,988 $ 55,437
================================
<FN>
(1)Certain prior period amounts have been reclassified to conform to our current
presentation.
</FN>
Reconciliation of Non-GAAP Measures
Net debt is defined as total debt, less cash, restricted cash and foreign
debt fluctuations:
Total Debt $ 14,409
Cash $ 4,353
Restricted cash $ 498
Foreign debt fluctuations $ 770
------------------
Net Debt $ 8,788
==================
Reconciliation of EBITDA to net income for the year ended
December 31, 2003:
(dollars in millions)
Net Debt/EBITDA as of December 31, 2003 1.0x
Margin
EBITDA $ 8,527 24.7%
Depreciation and amortization (4,870)
---------------------
Subtotal Operating Income 3,657 10.6%
Other income (expense), net 191
Interest (expense) (1,158)
(Provision) for taxes (816)
Minority interest income 1
Net (losses) related to equity investments (12)
---------------------
Net income from continuing operations 1,863
Net (loss) from discontinued operations, net of
income taxes (13)
Cumulative effect of accounting change, net of
income taxes 15
---------------------
Net income $ 1,865 5.4%
=====================
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
888-428-4473 to access the call. Callers outside the U.S. should dial +
1-651-291-0561.
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 in the
afternoon on Thursday, January 22 until Tuesday, January 27th. To access the
replay, please visit http://www.att.com/ir, or U.S. callers can dial
800-475-6701, access code 696610. Callers outside the U.S. should dial
+1-320-365-3844, access code 696610.
The foregoing, including statements relating to possible debt repurchases,
contains "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. These risk factors include the impact of
increasing competition, continued capacity oversupply, regulatory uncertainty
and the effects of technological substitution, among other risks. 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.
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