EXHIBIT 99.1
CINGULAR WIRELESS POSTS SOLID FIRST-QUARTER RESULTS:
-- NET SUBSCRIBER ADDITIONS OF MORE THAN 1.4 MILLION
-- 50.4 MILLION SUBSCRIBERS AT QUARTER'S END
-- GROSS SUBSCRIBER ADDITIONS OF 4.8 MILLION
-- MONTHLY SUBSCRIBER CHURN OF 2.2 PERCENT OVERALL AND 1.9 PERCENT IN
POSTPAID
-- 210 BASIS-POINT SEQUENTIAL IMPROVEMENT IN NORMALIZED OIBDA MARGIN
-- CONTINUED PROGRESS IN GSM CONVERSION, WITH 84 PERCENT OF MINUTES NOW ON
CINGULAR'S GSM NETWORK
-- INTEGRATION INITIATIVES CONTINUE ON SCHEDULE
FOR RELEASE WEDNESDAY, APRIL 20, 2005
ATLANTA - Cingular Wireless, the nation's largest wireless provider,
today posted solid first-quarter results driven by continued strong subscriber
growth, improved churn and sequential margins, and strength in data and
enterprise services.
Cingular delivered net subscriber additions of more than 1.4 million
and ended the first quarter with 50.4 million subscribers.
Gross additions were nearly 4.8 million while churn was 2.2 percent --
a sequential improvement of 20 basis points. In addition, OIBDA margin --
normalized to exclude direct merger integration costs --increased to 25.5
percent, which is a sequential improvement of 210 basis points. ("Pro forma"
results reflect the acquisition of AT&T Wireless, plus related acquisitions and
dispositions, as if they had occurred on January 1, 2003.)
"Our key indicators of progress continue to point in the right
direction, and that's good news," said Stan Sigman, president and chief
executive officer. "Especially gratifying is that millions of customers are
choosing Cingular and choosing to stay with Cingular. In a fiercely competitive
industry like wireless, such choices are a meaningful indicator of genuine
customer satisfaction.
"We are also pleased that our many merger initiatives - from
improving our network, to rebranding stores, to integrating complex back-office
systems, to selecting and deploying teams of talented people - continue to be on
schedule. In short, the merger is not only working but working better every
day."
GSM PROGRESS AND REDUCED CHURN
In addition to strong subscriber growth during the quarter, Cingular
continued to grow its GSM customer base and had success in transitioning former
AT&T Wireless
customers to Cingular plans. These two developments contributed to the quarter's
improved churn results, the company noted.
At the end of the first quarter, 72 percent of Cingular's subscriber
base was GSM-equipped, up from 65 percent in the fourth quarter of 2004.
Approximately 9 percent of Cingular's customer base upgraded handsets during the
quarter -- almost entirely onto GSM, the world's most widely used wireless
technology. Cingular operates the nation's largest digital voice and data
network, with 84 percent of its minutes now carried on its GSM network. Through
roaming alliances with other GSM-based providers around the world, Cingular has
the largest global presence of any U.S. wireless carrier, with coverage in more
than 170 countries.
Average monthly churn improved to 2.2 percent overall for the first
quarter. This is a sequential improvement of 20 basis points over comparably
calculated churn of 2.4 percent. (As previously disclosed, beginning in the
first quarter of 2005, Cingular has adopted a methodology related to reseller
churn that will result in an aggregate churn calculation which is more
comparable with the company's major competitors.)
FINANCIAL RESULTS
[X] In the first quarter, Cingular's reported revenues were $8.2
billion, which is an improvement of 5.3 percent over pro forma
revenue of $7.8 billion during the year-ago first quarter.*
Operating income was $114 million.
[X] Reported average revenue per user (ARPU) in the quarter was
$49.59, versus $49.97 (pro forma) in the preceding quarter and
down 3.3 percent from pro forma ARPU of $51.26 in the year-ago
first quarter. This represents a significant slowing in the
ARPU decline versus the preceding quarter, when the
year-over-year decrease was 5.5 percent. Among other factors,
ARPU benefited from a substantial increase in data revenues.
[X] ARPU from data services continued its strong growth in the
first quarter, increasing to $3.70, which is $0.81 higher than
the previous quarter. Such growth was spurred by the
ever-increasing popularity of text messaging, mobile instant
messaging, mobile e-mail, downloadable ringtones, games, and
photo messaging. Cingular delivered 4.4 billion text messages
during the quarter.
[X] Cingular's reported first-quarter operating expenses were $8.1
billion and its reported OIBDA service margin was 24.1
percent. Direct merger integration costs increased Cingular's
operating expenses by $105 million in the first quarter.
Expected synergies from the merger of Cingular and AT&T
Wireless operations are on plan and will drive greater cost
savings in the second half of 2005, the company noted.
[X] Normalized to exclude direct merger integration costs,
Cingular's first-quarter OIBDA service margin was 25.5
percent, a sequential increase of 210 basis points.
First-quarter OIBDA service margin included negative pressure
of more than 180 basis points, when compared to the fourth
quarter of 2004, in connection with roaming and other costs on
networks recently sold to T-Mobile. In addition,
purchase and other integration costs added $263 million of
operating expenses during the quarter. This amount is net of
$486 million in amortization of intangibles that were acquired
as part of the merger with AT&T Wireless, partially offset by
purchase accounting adjustments to reduce depreciation
associated with property, plant and equipment.
In the first quarter, to be consistent with industry practices, Cingular's
income statement presentation was changed for the current and prior-year periods
to reflect, as revenues, the gross receipts tax and other fees billed to our
customers and to reflect, as expenses, the taxes assessed by the various state
jurisdictions. The impact of this reclassification was an increase in
first-quarter revenue and expense of $39 million. Similar revenue and expense
increases for the same quarter a year ago were $25 million. Operating income and
net income for all periods were unaffected by this reclassification in
income-statement presentation.
FIRST-QUARTER HIGHLIGHTS AND INITIATIVES
[X] Cingular's Business Markets group continued its leadership in
offering solutions to virtually every type of business
customer - from large enterprises, to mid-size companies,
small businesses, government agencies, and colleges and
universities. Cingular serves 95 of the Fortune 100 companies
and counts more than 80 percent of the Fortune 500 and well
over 1,200 federal, state and local government agencies as
customers. New customers this quarter include, among many
others, Acuity Brands, Inc., the State of Tennessee,
University of Indiana, State of Missouri Highway Patrol, State
of Georgia Department of Health and Human Services, City of
Scottsdale, and County of Milwaukee.
[X] Through roaming agreements with other wireless carriers, the
company increased the breadth of the fastest national wireless
data network in the United States -- EDGE -- to cover more
than 250 million people, with availability in 13,000 cities
and towns and along nearly 40,000 miles of interstate highways
across the country.
[X] Cingular continued to move forward with plans to deploy UMTS
(Universal Mobile Telecommunications System) 3G network
technology with HSDPA (High-Speed Downlink Packet Access).
UMTS with HSDPA provides superior speeds for data and video
services, and it delivers outstanding operating efficiencies,
using the same spectrum and infrastructure for voice and data
on an IP-based platform. Cingular expects to have UMTS/HSDPA
deployed in 15 to 20 markets by the end of the year.
[X] Cingular sponsored the fourth season of the wildly popular
American Idol, which has contributed to the growth of text
messaging in the United States and to the company's own text
messaging traffic.
[X] Cingular also brought out an array of exciting new devices for
consumers. One, among many others, was the Sony Ericsson 710,
an innovatively designed Cingular exclusive that doubles as a
digital camera, complete with a photo light and lens cover. It
lets the user take print-quality pictures and record video
clips. Another was the tri-band Samsung p777, which comes with
MP3 technologies and up to one hour of video recording
capabilities.
[X] The company and its partners introduced several business
solutions enabled for its EDGE network, including the first
high-speed wide area wireless solutions for healthcare, the
first commercially available wireless back-up solution for
companies' critical data, and the first national unlimited
EDGE/Wi-Fi plan. Cingular also certified Sybase's popular
suite of iAnywhere mobile workforce solutions for its EDGE
network.
FIRST-QUARTER CONFERENCE CALL
In addition, today, April 20, 2005, the company will hold a conference call with
the investment community beginning at 10:00 a.m. (ET). During the call, we will
discuss our operational and financial results for the first quarter.
The conference call will be webcast and archived on our website at
www.cingular.com/investor for 30 days, as well as on the websites of SBC
Communications Inc. and BellSouth Corp.
Cingular's first-quarter news release and downloadable financial statements will
be available on the company's website beginning at 6:00 a.m. (ET) on April 20.
Dial-in information for the conference call is as follows:
Domestic: 866-406-3487
International: 630-691-2771
Replay: 877-213-9653
(Domestic)
Replay: 630-652-3041
(International)
Passcode: 11195163
Replays will be available for five days.
* First-quarter revenues included $55 million in revenues from properties not
yet divested, which were not included in pro forma results for 2004. Had the $55
million been excluded from first-quarter results, the revenue increase would
have been 4.6 percent.
* * *
About Cingular Wireless
Cingular Wireless is the largest wireless carrier in the United States,
Serving 50.4 million customers. Cingular, a joint venture between SBC
Communications Inc. (NYSE: SBC) and BellSouth Corporation (NYSE: BLS), has the
largest digital voice and data network in the nation -- the ALLOVER(SM)
network - and the largest mobile-to-mobile community of any national wireless
carrier. Cingular is the only U.S. wireless carrier to offer Rollover(SM), the
wireless plan that lets customers keep their unused monthly minutes. Details
of the company are available at http://www.cingular.com . Get Cingular
Wireless press releases e-mailed to you automatically. Sign up at
http://www.cingular.com/newsroom .
FORWARD-LOOKING INFORMATION
In addition to historical information, this document and the conference
calls referred to above may contain forward-looking statements regarding events
and financial trends. Factors that could affect future results and could cause
actual results to differ materially from those expressed or implied in the
forward-looking statements include:
-- the pervasive and intensifying competition in all markets where
Cingular operates;
-- failure to quickly realize capital and expense synergies from the
acquisition of AT&T Wireless as a result of technical, logistical,
regulatory and other factors;
-- problems associated with the transition of Cingular's network to
high-speed technologies;
-- slow growth of Cingular's data services due to lack of popular
applications, terminal equipment, advanced technology and other factors;
-- sluggish economic and employment conditions in the markets Cingular
serves;
-- the final outcome of FCC proceedings, including rulemakings, and
judicial review, if any, of such proceedings;
-- enactment of additional state and federal laws, regulations and
requirements pertaining to Cingular's operations; and
-- the outcome of pending or threatened complaints and litigation.
Such forward-looking information is given as of this date only, and Cingular
assumes no duty to update this information.
CINGULAR WIRELESS LLC
EXHIBIT 99.1
ATTACHMENT - FINANCIAL INFORMATION
OIBDA
OIBDA is defined as operating income (loss) before depreciation and
amortization. Although we have used substantively similar measures in the past,
we now use the term OIBDA to describe the measure we use as it more clearly
reflects the elements of the measure. OIBDA margin is calculated as OIBDA
divided by services revenue. These are non-GAAP financial measures. They differ
from operating income (loss), as calculated in accordance with GAAP, in that
they exclude depreciation and amortization. They differ from net income (loss),
as calculated in accordance with GAAP, in that they exclude, as presented in our
Consolidated Statement of Income: (i) depreciation and amortization, (ii)
interest expense, (iii) minority interest expense, (iv) equity in net income
(loss) of affiliates, (v) other, net, and (vi) provision (benefit) for income
taxes. We believe these measures are relevant and useful information to our
investors as they are an integral part of our internal management reporting and
planning processes and are important metrics our management uses to evaluate the
operating performance of our consolidated operations. They are used by
management as a measurement of our success in acquiring, retaining, and
servicing customers because we believe these measures reflect our ability to
generate and grow subscriber revenues while providing a high level of customer
service in a cost-effective manner. Management also uses these measures as a
method of comparing our performance with that of many of our competitors. The
components of OIBDA include the key revenue and expense items for which our
operating managers are responsible and upon which we evaluate their performance.
Lastly, we use this measure for planning purposes and in presentations to our
board of directors, and we use multiples of this current or projected measure in
our discounted cash flow models to determine the value of our licensing costs
and our overall enterprise valuation.
OIBDA excludes other, net, minority interest expense and equity in net income
(loss) of affiliates, as these do not reflect the operating results of our
subscriber base and our national footprint that we utilize to obtain and service
our subscribers. Equity in net income (loss) of affiliates represents our
proportionate share of the net income (loss) of affiliates in which we exercise
significant influence, but do not control. As we do not control these entities,
our management excludes these results when evaluating the performance of our
primary operations. Although excluded, equity in net income (loss) of affiliates
may include results that are material to our overall net income (loss). We may
record impairment charges in the future related to our investments if there are
declines in the fair values of our investments, which we deem to be other than
temporary. OIBDA also excludes interest expense and the provision (benefit) for
income taxes. Excluding these items eliminates the expenses associated with our
capitalization and tax structures. Finally, OIBDA excludes depreciation and
amortization, in order to eliminate the impact of capital investments.
We believe OIBDA as a percentage of services revenue to be a more relevant
measure of our operating margin than OIBDA as a percentage of total revenue. We
generally subsidize a portion of our handset sales, all of which are recognized
in the period in which we sell the handset. This results in a disproportionate
impact on our margin in that period. Management views this equipment subsidy as
a cost to acquire or retain a subscriber, which is recovered through the ongoing
services revenue that is generated by the subscriber. We also use services
revenue to calculate margin to facilitate comparison, both internally and
externally, with our competitors, as they calculate their margins using services
revenue as well.
There are material limitations to using these non-GAAP financial measures,
including the difficulty associated with comparing these performance measures as
we calculate them to similar performance measures presented by other companies,
and the fact that these performance measures do not take into account certain
significant items, including depreciation and amortization, interest, and tax
expense, and equity in net income (loss) of affiliates that directly affect our
net income or loss. Management compensates for these limitations by carefully
analyzing how our competitors present performance
CINGULAR WIRELESS LLC
EXHIBIT 99.1
measures that are similar in nature to OIBDA as we present it, and considering
the economic effect of the excluded expense items independently as well as in
connection with its analysis of net income (loss) as calculated in accordance
with GAAP. OIBDA and OIBDA margin should be considered in addition to, but not
as a substitute for, other measures of financial performance reported in
accordance with accounting principles generally accepted in the United States of
America. OIBDA and OIBDA margin, as we have defined them, may not be comparable
to similarly titled measures reported by other companies.
Pro Forma Financial Results and ARPU
Pro forma financial results and pro forma ARPU are used to provide more
meaningful period to period comparisons of reported financial results and ARPU.
These unaudited pro forma measures include financial results from acquired
properties, exclude results from divested operations, and reflect intercompany
eliminations and other adjustments for such periods. Our ARPU calculation
excludes Mobitex data revenues and thereby makes our metric more comparable with
other wireless carriers.
Pro forma financial results are calculated in accordance with GAAP. For further
detail regarding other pro forma combined historical financial information, see
the information filed by Cingular on Form 8-K dated October 25, 2004, as amended
on November 29, 2004 and March 11, 2005. The unaudited pro forma information is
not intended to represent or be indicative of the results of Cingular that would
have been reported had the merger and the above mentioned items been completed
as of the dates presented, and should not be taken as representative of the
future results of Cingular.
ARPU is defined as cellular/PCS service revenues during the period divided by
average cellular/PCS customers during the period. This metric is used to compare
the recurring revenue amounts generated on our cellular/PCS network to prior
periods and internal targets. We believe that this metric provides useful
information concerning the performance of our ongoing initiatives to attract and
retain high value customers and the use of our network.
Normalized Financial Results
Normalized financial results are presented to remove the tax-effected
integration costs resulting from our acquisition of AT&T Wireless. We believe
that this provides more meaningful period to period comparisons of reported
financial results.
Financial Results and Reconciliations
CINGULAR WIRELESS LLC INCOME STATEMENT - amounts in millions (unaudited)
QUARTER ENDED YEAR TO DATE
-------------------------------------- --------------------------------------
3/31/2005 3/31/2004 % CHANGE 3/31/2005 3/31/2004 % CHANGE
----------- ------------- ---------- ----------- ------------- ----------
(Restated) (Restated)
Operating revenues:
Service revenues $ 7,419 $ 3,583 107.1% $ 7,419 $ 3,583 107.1%
Equipment sales 810 384 110.9% 810 384 110.9%
----------- ------------- ----- ----------- ------------- -----
Total operating revenues 8,229 3,967 107.4% 8,229 3,967 107.4%
----------- ------------- ----- ----------- ------------- -----
Operating expenses:
Cost of services 2,144 955 124.5% 2,144 955 124.5%
Cost of equipment sales 1,295 537 141.2% 1,295 537 141.2%
Selling, general and administrative 3,001 1,372 118.7% 3,001 1,372 118.7%
Depreciation and amortization 1,675 553 202.9% 1,675 553 202.9%
----------- ------------- ----- ----------- ------------- -----
Total operating expenses 8,115 3,417 137.5% 8,115 3,417 137.5%
----------- ------------- ----- ----------- ------------- -----
Operating income (loss) 114 550 (79.3%) 114 550 (79.3%)
----------- ------------- ----- ----------- ------------- -----
Interest expense 338 198 70.7% 338 198 70.7%
----------- ------------- ----- ----------- ------------- -----
Minority interest expense 16 27 (40.7%) 16 27 (40.7%)
----------- ------------- ------ ----------- ------------- -----
Equity in net income (loss) of affiliates 2 (108) (101.9%) 2 (108) (101.9%)
----------- ------------- ------ ----------- ------------- ------
Other income (expense), net 20 4 400.0% 20 4 400.0%
----------- ------------- ----- ----------- ------------- -----
Income (loss) before income tax and cum.
effect of acctng. chg. (218) 221 (198.6%) (218) 221 (198.6%)
----------- ------------- ------ ----------- ------------- ------
Provision (benefit) for income taxes 22 6 266.7% 22 6 266.7%
----------- ------------- ------ ----------- ------------- ------
Income (loss) before cumulative effect of
accounting change (240) 215 (211.6%) (240) 215 (211.6%)
----------- ------------- ------ ----------- ------------- ------
SELECTED FINANCIAL AND OPERATING DATA FOR CINGULAR WIRELESS - amounts in
millions, except customer data in 000s
QUARTER ENDED YEAR TO DATE
-------------------------------------- --------------------------------------
3/31/2005 3/31/2004 % CHANGE 3/31/2005 3/31/2004 % CHANGE
(Amounts in millions, except customer ----------- ------------- ---------- ----------- ------------- ----------
data in 000s) (Restated) (Restated)
OIBDA(1) $ 1,789 $ 1,103 62.2% $ 1,789 $ 1,103 62.2%
OIBDA margin(2) 24.1% 30.8% -670 BP 24.1% 30.8% -670 BP
Total Cellular/PCS Customers(3) 50,369 24,618 104.6% 50,369 24,618 104.6%
Net Customer Additions - Cellular/PCS 1,419 554 156.1% 1,419 554 156.1%
M&A Activity, Partitioned Customers and/or
Other Adjs. (159) 37 (159) 37
Churn - Cellular/PCS(4) 2.2% 2.7% -50 BP 2.2% 2.7% -50 BP
ARPU - Cellular/PCS(5) $ 49.59 $ 48.30 2.7% $ 49.59 $ 48.30 2.7%
Minutes Of Use Per Cellular/PCS Subscriber 508 488 4.1% 508 488 4.1%
Licensed POPs - Cellular/PCS(6) 292 240 292 240
Penetration - Cellular/PCS(7) 17.7% 10.9% 17.7% 10.9%
Total Capital Investments(8) 1,171 466 151.3% 1,171 466 151.3%
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES -
amounts in millions (unaudited)
QUARTER ENDED YEAR TO DATE
-------------------------------------- -------------------------------------
3/31/2005 3/31/2004 % CHANGE 3/31/2005 3/31/2004 % CHANGE
----------- ------------- ---------- ----------- ------------- ---------
(Restated) (Restated)
Income (loss) before cumulative effect
of accounting change (240) 215 (211.6%) (240) 215 (211.6%)
Plus: Interest expense 338 198 70.7% 338 198 70.7%
Plus: Minority interest expense 16 27 (40.7%) 16 27 (40.7%)
Plus: Equity in net loss of affiliates (2) 108 (101.9%) (2) 108 (101.9%)
Plus: Other, net (20) (4) 400.0% (20) (4) 400.0%
Plus: Provision (benefit) for income
taxes 22 6 266.7% 22 6 266.7%
----------- ------------- ----- ----------- ------------- -----
Operating income (loss) 114 550 (79.3%) 114 550 (79.3%)
Plus: Depreciation and amortization 1,675 553 202.9% 1,675 553 202.9%
----------- ------------- ----- ----------- ------------- -----
OIBDA(1) $ 1,789 $ 1,103 62.2% $ 1,789 $ 1,103 62.2%
Capital Expenditures 971 334 190.7% 971 334 190.7%
Plus: Capital investments in equity
affiliates 200 132 51.5% 200 132 51.5%
----------- ------------- ----- ----------- ------------- -----
TOTAL CAPITAL INVESTMENTS(8) $ 1,171 $ 466 151.3% $ 1,171 $ 466 151.3%
Investments in and Advances to Equity
Affiliates 199 132 50.8% 199 132 50.8%
Less: Dividends received from equity
affiliates (1) - (100.0%) (1) - (100.0%)
Less: Advances to Salmon - - 0.0% - - 0.0%
Less: Repayments of advances to Salmon - - 0.0% - - 0.0%
----------- ------------- ---- ----------- ------------- ----
CAPITAL INVESTMENTS IN EQUITY AFFILIATES $ 200 $ 132 51.5% $ 200 $ 132 51.5%
On February 18, 2005, our management and the Audit Committee of the board of
directors of our Manager concluded that our financial statements for fiscal
periods ending December 31, 2000 through December 31, 2003 and the first three
interim periods of 2004 should be restated to correct certain errors relating to
accounting for operating leases and that such previously filed financial
statements should no longer be relied upon. Additionally, our network
infrastructure venture with T-Mobile USA, Inc., GSM Facilities LLC, accounted
for under the equity method, reached a similar conclusion with respect to
operating leases, requiring correction and restatement of the venture's
previously issued financial statements for the years ended December 31, 2003 and
2002. Please see our 2004 Form 10-K filed with the Securities and Exchange
Commission on March 7, 2005 for further information.
Notes:
(1) OIBDA is defined as operating income (loss) before depreciation and
amortization. OIBDA differs from operating income (loss), as calculated in
accordance with GAAP, in it excludes depreciation and amortization. It
differs from net income (loss), as calculated in accordance with GAAP, in
that it excludes, as presented on our Consolidated Statement of Income:
(1) depreciation and amortization, (2) interest expense, (3) minority
interest expense, (4) equity in net income (loss) of affiliates, (5)
other, net, and (6) provision (benefit) for income taxes. OIBDA does not
give effect to cash used for debt service requirements and thus does not
reflect available funds for distributions, reinvestment or other
discretionary uses. OIBDA is not presented as an alternative measure of
operating results or cash flows from operations, as determined in
accordance with generally accepted accounting principles. Our calculation
of OIBDA, as presented, may differ from similarly titled measures reported
by other companies.
(2) OIBDA margin is defined as OIBDA divided by service revenues.
(3) Cellular/PCS customers include customers served through reseller
agreements.
(4) Cellular/PCS churn is calculated by dividing the aggregate number of
cellular/PCS customers who cancel service during each month in a period by
the total number of cellular/PCS customers. at the beginning of each month
in that period.
(5) ARPU is defined as cellular/PCS service revenues during the period divided
by average cellular/PCS customers during the period.
(6) Licensed POPs refers to the number of people residing in areas where we
and our partners have licenses to provide cellular or PCS service
including areas where we have not yet commenced service.
(7) Penetration calculation for 1Q05 is based on licensed "operational" POP's
of 285 million.
(8) Total capital investments includes capital expenditures made by Cingular
and cash/capital contributed to the joint ventures with T-Mobile and AT&T
Wireless (pre-merger).
CINGULAR WIRELESS LLC
Normalized Earnings Summary and Reconciliation to Reported Results
(amounts in millions)
NORMALIZED ITEM
---------------
INTEGRATION
GAAP COSTS(1) NORMALIZED
Quarter Ended March 31, 2005 --------- ----------- ----------
Operating revenues:
Service revenues $ 7,419 $ 0 $ 7,419
Equipment sales 810 - 810
--------- ----------- ----------
Total operating revenues 8,229 - 8,229
--------- ----------- ----------
Operating expenses:
Cost of services 2,144 (3) 2,141
Cost of equipment sales 1,295 - 1,295
Selling, general and administrative 3,001 (102) 2,899
Depreciation and amortization 1,675 - 1,675
--------- ----------- ----------
Total operating expenses 8,115 (105) 8,010
--------- ----------- ----------
Operating income (loss) 114 105 219
Interest expense 338 - 338
Minority interest expense 16 - 16
Equity in net income (loss) of affiliates 2 - 2
Other income (expense), net 20 - 20
--------- ----------- ----------
Income (loss) before income tax and cum. effect of acctng. chg. (218) 105 (113)
--------- ----------- ----------
Provision (benefit) for income taxes 22 17 39
--------- ----------- ----------
Income (loss) before cumulative effect of accounting change (240) 88 (152)
--------- ----------- ----------
NORMALIZED ITEM
---------------
INTEGRATION
GAAP COSTS(1) NORMALIZED
Year to Date - March 31, 2005 --------- ----------- ----------
Operating revenues:
Service revenues $ 7,419 $ 0 $ 7,419
Equipment sales 810 - 810
--------- ----------- ----------
Total operating revenues 8,229 - 8,229
--------- ----------- ----------
Operating expenses:
Cost of services 2,144 (3) 2,141
Cost of equipment sales 1,295 - 1,295
Selling, general and administrative 3,001 (102) 2,899
Depreciation and amortization 1,675 - 1,675
--------- ----------- ----------
Total operating expenses 8,115 (105) 8,010
--------- ----------- ----------
Operating income (loss) 114 105 219
Interest expense 338 - 338
Minority interest expense 16 - 16
Equity in net income (loss) of affiliates 2 - 2
Other income (expense), net 20 - 20
--------- ----------- ----------
Income (loss) before income tax and cum. effect of acctng. chg. (218) 105 (113)
--------- ----------- ----------
Provision (benefit) for income taxes 22 17 39
--------- ----------- ----------
Income (loss) before cumulative effect of accounting change (240) 88 (152)
--------- ----------- ----------
NOTES TO NORMALIZED FINANCIAL DATA
Our normalized earnings have been adjusted for the following:
(1) Tax-effected integration costs resulting from the Cingular acquisition of
AT&T Wireless.
CINGULAR WIRELESS LLC INCOME STATEMENT, NORMALIZED - amounts in millions
(unaudited)
QUARTER ENDED YEAR TO DATE
----------------------------------- -----------------------------------
3/31/2005 3/31/2004 % CHANGE 3/31/2005 3/31/2004 % CHANGE
------------ ---------- --------- ------------ ---------- ---------
(Normalized) (Restated) (Normalized) (Restated)
Operating revenues:
Service revenues $ 7,419 $ 3,583 107.1% $ 7,419 $ 3,583 107.1%
Equipment sales 810 384 110.9% 810 384 110.9%
----------- --------- ------- ----------- --------- -------
Total operating revenues 8,229 3,967 107.4% 8,229 3,967 107.4%
----------- --------- ------- ----------- --------- -------
Operating expenses:
Cost of services 2,141 955 124.2% 2,141 955 124.2%
Cost of equipment sales 1,295 537 141.2% 1,295 537 141.2%
Selling, general and administrative 2,899 1,372 111.3% 2,899 1,372 111.3%
Depreciation and amortization 1,675 553 202.9% 1,675 553 202.9%
----------- --------- ------- ----------- --------- -------
Total operating expenses 8,010 3,417 134.4% 8,010 3,417 134.4%
----------- --------- ------- ----------- --------- -------
Operating income (loss) 219 550 (60.2%) 219 550 (60.2%)
----------- --------- ------- ----------- --------- -------
Interest expense 338 198 70.7% 338 198 70.7%
----------- --------- ------- ----------- --------- -------
Minority interest expense 16 27 (40.7%) 16 27 (40.7%)
----------- --------- ------- ----------- --------- -------
Equity in net income (loss) of affiliates 2 (108) (101.9%) 2 (108) (101.9%)
----------- --------- ------- ----------- --------- -------
Other income (expense), net 20 4 400.0% 20 4 400.0%
----------- --------- ------- ----------- --------- -------
Income (loss) before income tax and cum. effect of
acctng. chg. (113) 221 (151.1%) (113) 221 (151.1%)
----------- --------- ------- ----------- --------- -------
Provision (benefit) for income taxes 39 6 550.0% 39 6 550.0%
----------- --------- ------- ----------- --------- -------
Income (loss) before cumulative effect of accounting
change (152) 215 (170.7%) (152) 215 (170.7%)
----------- --------- ------- ----------- --------- -------
SELECTED FINANCIAL AND OPERATING DATA FOR CINGULAR WIRELESS - amounts in
millions, except customer data in 000s
QUARTER ENDED YEAR TO DATE
---------------------------------- ----------------------------------
3/31/2005 3/31/2004 % CHANGE 3/31/2005 3/31/2004 % CHANGE
------------ ---------- -------- ------------ ---------- --------
(Amounts in millions, except customer data in 000s) (Normalized) (Restated) (Normalized) (Restated)
OIBDA - normalized (1) $ 1,894 $ 1,103 71.7% $ 1,894 $ 1,103 71.7%
OIBDA margin - normalized (2) 25.5% 30.8% -530 BP 25.5% 30.8% -530 BP
Total Cellular/PCS Customers (3) ** 50,369 24,618 104.6% 50,369 24,618 104.6%
Net Customer Additions - Cellular/PCS ** 1,419 554 156.1% 1,419 554 156.1%
M&A Activity, Partitioned Customers and/or Other Adjs. ** (159) 37 (159) 37
Churn - Cellular/PCS (4) ** 2.2% 2.7% -50 BP 2.2% 2.7% -50 BP
ARPU - Cellular/PCS (5) ** $ 49.59 $ 48.30 2.7% $ 49.59 $ 48.30 2.7%
Minutes Of Use Per Cellular/PCS Subscriber ** 508 488 4.1% 508 488 4.1%
Licensed POPs - Cellular/PCS (6) ** 292 240 292 240
Penetration - Cellular/PCS (7) ** 17.7% 10.9% 17.7% 10.9%
Total Capital Investments (8) ** 1,171 466 151.3% 1,171 466 151.3%
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES -
amounts in millions (Unaudited)
QUARTER ENDED YEAR TO DATE
---------------------------------- ----------------------------------
3/31/2005 3/31/2004 % CHANGE 3/31/2005 3/31/2004 % CHANGE
------------ ---------- -------- ------------ ---------- ---------
(Normalized) (Restated) (Normalized) (Restated)
Income (loss) before cumulative effect of accounting change (152) 215 (170.7%) (152) 215 (170.7%)
Plus: Interest expense 338 198 70.7% 338 198 70.7%
Plus: Minority interest expense 16 27 (40.7%) 16 27 (40.7%)
Plus: Equity in net loss of affiliates (2) 108 (101.9%) (2) 108 (101.9%)
Plus: Other, net (20) (4) 400.0% (20) (4) 400.0%
Plus: Provision (benefit) for income taxes 39 6 550.0% 39 6 550.0%
--------- ------ ------ ---------- --------- -------
Operating income (loss) 219 550 (60.2%) 219 550 (60.2%)
Plus: Depreciation and amortization 1,675 553 202.9% 1,675 553 202.9%
--------- ------ ------ ---------- --------- -------
OIBDA - NORMALIZED (1) $ 1,894 $1,103 71.7% $ 1,894 $ 1,103 71.7%
OIBDA margin (2) 24.1% 30.8% -670 BP 24.1% 30.8% -670 BP
Plus: OIBDA margin, merger integration expenses 1.4% - 1.4% -
OIBDA MARGIN - NORMALIZED 25.5% 30.8% -530 BP 25.5% 30.8% -530 BP
Capital Expenditures 971 334 190.7% 971 334 190.7%
Plus: Capital investments in equity affiliates 200 132 51.5% 200 132 51.5%
--------- ------ ------ ---------- --------- -------
TOTAL CAPITAL INVESTMENTS (8) ** 1,171 466 151.3% 1,171 466 151.3%
Investments in and Advances to Equity Affiliates 199 132 50.8% 199 132 50.8%
Less: Dividends received from equity affiliates (1) - (100.0%) (1) - (100.0%)
Less: Advances to Salmon - - 0.0% - - 0.0%
Less: Repayments of advances to Salmon - - 0.0% - - 0.0%
--------- ------ ------ ---------- --------- -------
CAPITAL INVESTMENTS IN EQUITY AFFILIATES ** $ 200 $ 132 51.5% $ 200 $ 132 51.5%
** Metrics and calculations are not impacted by the 1Q05 and YTD 2005
normalization of merger integration costs.
On February 18, 2005, our management and the Audit Committee of the board of
directors of our Manager concluded that our financial statements for fiscal
periods ending December 31, 2000 through December 31, 2003 and the first three
interim periods of 2004 should be restated to correct certain errors relating to
accounting for operating leases and that such previously filed financial
statements should no longer be relied upon. Additionally, our network
infrastructure venture with T-Mobile USA, Inc., GSM Facilities LLC, accounted
for under the equity method, reached a similar conclusion with respect to
operating leases, requiring correction and restatement of the venture's
previously issued financial statements for the years ended December 31, 2003 and
2002. Please see our 2004 Form 10-K filed with the Securities and Exchange
Commission on March 7, 2005 for further information.
Notes:
(1) OIBDA is defined as operating income (loss) before depreciation and
amortization. OIBDA differs from operating income (loss), as calculated in
accordance with GAAP, in it excludes depreciation and amortization. It
differs from net income (loss), as calculated in accordance with GAAP, in
that it excludes, as presented on our Consolidated Statement of Income: (1)
depreciation and amortization, (2) interest expense, (3) minority interest
expense, (4) equity in net income (loss) of affiliates, (5) other, net, and
(6) provision (benefit) for income taxes. OIBDA does not give effect to cash
used for debt service requirements and thus does not reflect available funds
for distributions, reinvestment or other discretionary uses. OIBDA is not
presented as an alternative measure of operating results or cash flows from
operations, as determined in accordance with generally accepted accounting
principles. Our calculation of OIBDA, as presented, may differ from
similarly titled measures reported by other companies.
(2) OIBDA margin is defined as OIBDA divided by service revenues.
(3) Cellular/PCS customers include customers served through reseller agreements.
(4) Cellular/PCS churn is calculated by dividing the aggregate number of
cellular/PCS customers who cancel service during each month in a period by
the total number of cellular/PCS customers. at the beginning of each month
in that period.
(5) ARPU is defined as cellular/PCS service revenues during the period divided
by average cellular/PCS customers during the period.
(6) Licensed POPs refers to the number of people residing in areas where we and
our partners have licenses to provide cellular or PCS service including
areas where we have not yet commenced service.
(7) Penetration calculation for 1Q05 is based on licensed "operational" POP's of
285 million.
(8) Total capital investments includes capital expenditures made by Cingular and
cash/capital contributed to the joint ventures with T-Mobile and AT&T
Wireless (pre-merger).
CINGULAR WIRELESS LLC INCOME STATEMENT - amounts in millions (unaudited)
FULL YEAR
---------
2002 03/31/2003 06/30/2003 09/30/2003 12/31/2003 03/31/2004
---------- ---------- ---------- ---------- ---------- ----------
(Restated) (Restated) (Restated) (Restated) (Restated) (Restated)
Operating revenues:
Service revenues $13,922 $3,414 $3,643 $3,701 $3,559 $3,583
Equipment sales 981 244 255 383 378 384
------- ------ ------ ------ ------ ------
Total operating revenues 14,903 3,658 3,898 4,084 3,937 3,967
------- ------ ------ ------ ------ ------
Operating expenses:
Cost of services 3,594 849 921 1,035 970 955
Cost of equipment sales 1,535 396 451 606 578 537
Selling, general and administrative 5,429 1,218 1,271 1,442 1,497 1,372
Depreciation and amortization 1,849 488 508 521 572 553
------- ------ ------ ------ ------ ------
Total operating expenses 12,407 2,951 3,151 3,604 3,617 3,417
------- ------ ------ ------ ------ ------
Operating income (loss) 2,496 707 747 480 320 550
------- ------ ------ ------ ------ ------
Interest expense 911 225 230 197 204 198
------- ------ ------ ------ ------ ------
Minority interest expense 123 24 35 25 17 27
------- ------ ------ ------ ------ ------
Equity in net income (loss) of affiliates (274) (74) (78) (90) (91) (108)
------- ------ ------ ------ ------ ------
Other income (expense), net 29 26 7 4 4 4
------- ------ ------ ------ ------ ------
Income (loss) before income tax and
cum. effect of acctng. chg. 1,217 410 411 172 12 221
------- ------ ------ ------ ------ ------
Provision (benefit) for income taxes 12 2 12 6 8 6
------- ------ ------ ------ ------ ------
Income (loss) before cumulative effect
of accounting change 1,205 408 399 166 4 215
------- ------ ------ ------ ------ ------
06/30/2004 09/30/2004 12/31/2004 03/31/2005
---------- --------- ---------- ----------
(Restated) (Restated) (Revised)
Operating revenues:
Service revenues $3,833 $3,873 $6,313 $7,419
Equipment sales 354 419 806 810
------ ------ ------ ------
Total operating revenues 4,187 4,292 7,119 8,229
------ ------ ------ ------
Operating expenses:
Cost of services 983 1,107 1,692 2,144
Cost of equipment sales 505 585 1,247 1,295
Selling, general and administrative 1,463 1,567 2,947 3,001
Depreciation and amortization 565 573 1,386 1,675
------ ------ ------ ------
Total operating expenses 3,516 3,832 7,272 8,115
------ ------ ------ ------
Operating income (loss) 671 460 (153) 114
------ ------ ------ ------
Interest expense 199 200 303 338
------ ------ ------ ------
Minority interest expense 41 20 (2) 16
------ ------ ------ ------
Equity in net income (loss) of affiliates (95) (98) (114) 2
------ ------ ------ ------
Other income (expense), net 1 - 11 20
------ ------ ------ ------
Income (loss) before income tax and
cum. effect of acctng. chg. 337 142 (557) (218)
------ ------ ------ ------
Provision (benefit) for income taxes (2) - (62) 22
------ ------ ------ ------
Income (loss) before cumulative effect
of accounting change 339 142 (495) (240)
------ ------ ------ ------
SELECTED FINANCIAL AND OPERATING DATA FOR CINGULAR WIRELESS - amounts in
millions, except customer data in 000s
FULL YEAR
---------
2002 03/31/2003 06/30/2003 09/30/2003 12/31/2003 03/31/2004
--------- ---------- ---------- ---------- ---------- ----------
(Restated) (Restated) (Restated) (Restated) (Restated) (Restated)
OIBDA (1) $ 4,345 $ 1,195 $ 1,255 $ 1,001 $ 892 $ 1,103
OIBDA margin (2) 31.2% 35.0% 34.4% 27.0% 25.1% 30.8%
Integration Costs $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
OIBDA - normalized $ 4,345 $ 1,195 $ 1,255 $ 1,001 $ 892 $ 1,103
OIBDA margin - normalized 31.2% 35.0% 34.4% 27.0% 25.1% 30.8%
Total Cellular/PCS Customers (3) 21,925 22,114 22,640 23,385 24,027 24,618
Net Customer Additions - Cellular/PCS 359 189 540 745 642 554
M&A Activity, Partitioned Customers
and/or Other Adjs. (32) - (14) - - 37
Churn - Cellular/PCS (4) 2.8% 2.6% 2.5% 2.8% 2.8% 2.7%
ARPU - Cellular/PCS (5) $ 52.14 $ 51.07 $ 53.47 $ 52.80 $ 49.38 $ 48.30
Minutes Of Use Per Cellular/PCS Subscriber 390 405 445 456 475 488
Licensed POPs - Cellular/PCS (6) 219 235 236 236 236 240
Penetration - Cellular/PCS (7) 10.1% 10.0% 10.2% 10.6% 10.8% 10.9%
Total Cingular Interactive Customers 817 835 788 788 789 768
Net Customer Additions - Cingular
Interactive 84 18 (47) - 1 (21)
Total Capital Investments (8) 3,934 401 756 1,008 1,188 466
06/30/2004 09/30/2004 12/31/2004 03/31/2005
---------- ---------- ---------- ----------
(Restated) (Restated) (Revised)
OIBDA (1) $ 1,236 $ 1,033 $ 1,233 $ 1,789
OIBDA margin (2) 32.2% 26.7% 19.5% 24.1%
Integration Costs $ 0 $ 43 $ 245 $ 105
OIBDA - normalized $ 1,236 $ 1,076 $ 1,478 $ 1,894
OIBDA margin - normalized 32.2% 27.8% 23.4% 25.5%
Total Cellular/PCS Customers (3) 25,044 25,672 49,109 50,369
Net Customer Additions - Cellular/PCS 428 657 1,713 1,419
M&A Activity, Partitioned Customers
and/or Other Adjs. (2) (29) 21,724 (159)
Churn - Cellular/PCS (4) 2.7% 2.8% 2.6% 2.2%
ARPU - Cellular/PCS (5) $ 50.75 $ 50.25 $ 49.51 $ 49.59
Minutes Of Use Per Cellular/PCS Subscriber 523 537 526 508
Licensed POPs - Cellular/PCS (6) 243 243 290 292
Penetration - Cellular/PCS (7) 11.1% 11.4% 17.2% 17.7%
Total Cingular Interactive Customers 735 653 NA NA
Net Customer Additions - Cingular
Interactive (33) (82) NA NA
Total Capital Investments (8) 989 645 1,772 1,171
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES -
amounts in millions (unaudited)
FULL YEAR
---------
2002 03/31/2003 06/30/2003 09/30/2003 12/31/2003 03/31/2004
---------- ---------- ---------- ---------- ---------- ----------
(Restated) (Restated) (Restated) (Restated) (Restated) (Restated)
Income (loss) before cumulative effect of
accounting change 1,205 408 399 166 4 215
Plus: Interest expense 911 225 230 197 204 198
Plus: Minority interest expense 123 24 35 25 17 27
Plus: Equity in net loss of affiliates 274 74 78 90 91 108
Plus: Other, net (29) (26) (7) (4) (4) (4)
Plus: Provision (benefit) for income taxes 12 2 12 6 8 6
------- ------ ------ ------ ------ ------
Operating income (loss) 2,496 707 747 480 320 550
Plus: Depreciation and amortization 1,849 488 508 521 572 553
------- ------ ------ ------ ------ ------
OIBDA (1) $ 4,345 $1,195 $1,255 $1,001 $ 892 $1,103
Plus: Integration costs - - - - - -
------- ------ ------ ------ ------ ------
OIBDA - NORMALIZED (1) $ 4,345 $1,195 $1,255 $1,001 $ 892 $1,103
Capital Expenditures 3,085 327 668 773 966 334
Plus: Capital investments in equity affiliates 849 74 88 235 222 132
------- ------ ------ ------ ------ ------
TOTAL CAPITAL INVESTMENTS (8) $ 3,934 $401 $ 756 $1,008 $1,188 $ 466
Investments in and Advances to Equity Affiliates 450 74 87 234 221 132
Less: Dividends received from equity affiliates (3) - (1) (1) (1) -
Less: Advances to Salmon 25 - - - - -
Less: Repayments of advances to Salmon (421) - - - - -
------- ------ ------ ------ ------ ------
CAPITAL INVESTMENTS IN EQUITY AFFILIATES $ 849 $ 74 $ 88 $ 235 $ 222 $ 132
Service revenues 13,922 3,414 3,643 3,701 3,559 3,583
Less: Mobitex data revenues 189 55 53 54 58 58
------- ------ ------ ------ ------ ------
SERVICE REVENUES USED TO CALCULATE ARPU $13,733 $3,359 $3,590 $3,647 $3,501 $3,525
06/30/2004 09/30/2004 12/31/2004 03/31/2005
---------- ---------- ---------- ----------
(Restated) (Restated) (Revised)
Income (loss) before cumulative effect of
accounting change 339 142 (495) (240)
Plus: Interest expense 199 200 303 338
Plus: Minority interest expense 41 20 (2) 16
Plus: Equity in net loss of affiliates 95 98 114 (2)
Plus: Other, net (1) - (11) (20)
Plus: Provision (benefit) for income taxes (2) - (62) 22
------ ------- ------ ------
Operating income (loss) 671 460 (153) 114
Plus: Depreciation and amortization 565 573 1,386 1,675
------ ------- ------ ------
OIBDA (1) $1,236 $ 1,033 $1,233 $1,789
Plus: Integration costs - 43 245 105
------ ------- ------ ------
OIBDA - NORMALIZED (1) $1,236 $ 1,076 $1,478 $1,894
Capital Expenditures 783 634 1,698 971
Plus: Capital investments in equity affiliates 206 11 74 200
------ ------- ------ ------
TOTAL CAPITAL INVESTMENTS (8) $ 989 $ 645 $1,772 $1,171
Investments in and Advances to Equity Affiliates 206 10 74 199
Less: Dividends received from equity affiliates - (1) - (1)
Less: Advances to Salmon - - - -
Less: Repayments of advances to Salmon - - - -
------ ------- ------ ------
CAPITAL INVESTMENTS IN EQUITY AFFILIATES $ 206 $ 11 $ 74 $ 200
Service revenues 3,833 3,873 6,313 7,419
Less: Mobitex data revenues 59 54 36 18
------ ------- ------ ------
SERVICE REVENUES USED TO CALCULATE ARPU $3,774 $ 3,819 $6,277 $7,401
On February 18, 2005, our management and the Audit Committee of the board of
directors of our Manager concluded that our financial statements for fiscal
periods ending December 31, 2000 through December 31, 2003 and the first three
interim periods of 2004 should be restated to correct certain errors relating to
accounting for operating leases and that such previously filed financial
statements should no longer be relied upon. Additionally, our network
infrastructure venture with T-Mobile USA, Inc., GSM Facilities LLC, accounted
for under the equity method, reached a similar conclusion with respect to
operating leases, requiring correction and restatement of the venture's
previously issued financial statements for the years ended December 31, 2003 and
2002. Please see our 2004 Form 10-K filed with the Securities and Exchange
Commission on March 7, 2005 for further information.
In 2003, to be consistent with industry practices, historical consolidated
statements of income for all periods presented were reclassified to reflect
billings to our customers for the Universal Service Fund (USF) and other
regulatory fees as operating revenues and the costs related to payments into the
associated regulatory funds as operating expenses. Similar reclassifications
have also been made to 2003 and 2004 historical results for certain gross
receipts taxes and other fees which are billed to our customers. Operating
income and net income for all periods were unaffected.
Notes:
(1) OIBDA is defined as operating income (loss) before depreciation and
amortization. OIBDA differs from operating income (loss), as calculated in
accordance with GAAP, in it excludes depreciation and amortization. It
differs from net income (loss), as calculated in accordance with GAAP, in
that it excludes, as presented on our Consolidated Statement of Income: (1)
depreciation and amortization, (2) interest expense, (3) minority interest
expense, (4) equity in net income (loss) of affiliates, (5) other, net, and
(6) provision (benefit) for income taxes. OIBDA does not give effect to cash
used for debt service requirements and thus does not reflect available funds
for distributions, reinvestment or other discretionary uses. OIBDA is not
presented as an alternative measure of operating results or cash flows from
operations, as determined in accordance with generally accepted accounting
principles. Our calculation of OIBDA, as presented, may differ from
similarly titled measures reported by other companies.
(2) OIBDA margin is defined as OIBDA divided by service revenues.
(3) Cellular/PCS customers include customers served through reseller agreements.
(4) Cellular/PCS churn is calculated by dividing the aggregate number of
cellular/PCS customers who cancel service during each month in a period by
the total number of cellular/PCS customers. at the beginning of each month
in that period.
(5) ARPU is defined as cellular/PCS service revenues during the period divided
by average cellular/PCS customers during the period.
(6) Licensed POPs refers to the number of people residing in areas where we and
our partners have licenses to provide cellular or PCS service including
areas where we have not yet commenced service.
(7) Penetration calculation for 1Q05 is based on licensed "operational" POP's of
285 million.
(8) Total capital investments includes capital expenditures made by Cingular and
cash/capital contributed to the joint ventures with T-Mobile and AT&T
Wireless (pre-merger).
CINGULAR WIRELESS LLC BALANCE SHEET - amounts in millions (unaudited)
03/31/2005 12/31/2004 INCR(DECR) % + / -
---------- ---------- ---------- --------
(audited)
(Revised)
ASSETS
Current assets:
Cash and cash equivalents 209 352 (143) (40.6%)
Accounts receivable - net of allowance for
doubtful accounts 3,220 3,448 (228) (6.6%)
Inventories 492 690 (198) (28.7%)
Prepaid expenses and other current assets 985 1,080 (95) (8.8%)
------ ------ ------ -----
TOTAL CURRENT ASSETS 4,906 5,570 (664) (11.9%)
Property, plant and equipment - net 21,516 21,958 (442) (2.0%)
Intangible assets - net 50,506 51,338 (832) (1.6%)
Other assets 3,544 3,372 172 5.1%
------ ------ ------ -----
TOTAL ASSETS 80,472 82,238 (1,766) (2.1%)
LIABILITIES AND MEMBERS' CAPITAL
Current liabilities:
Debt maturing within one year 2,197 2,158 39 1.8%
Accounts payable and accrued liabilities 5,382 5,825 (443) (7.6%)
------ ------ ------ -----
TOTAL CURRENT LIABILITIES 7,579 7,983 (404) (5.1%)
Long-term debt to affiliates 9,628 9,628 - 0.0%
Long-term debt to external parties 13,140 14,229 (1,089) (7.7%)
------ ------ ------ -----
TOTAL LONG-TERM DEBT 22,768 23,857 (1,089) (4.6%)
Other noncurrent liabilities 5,212 5,253 (41) (0.8%)
Minority interests in consolidated entities 619 609 10 1.6%
Members' capital 44,294 44,536 (242) (0.5%)
------ ------ ------ -----
TOTAL LIABILITIES AND MEMBERS' CAPITAL 80,472 82,238 (1,766) (2.1%)
On February 18, 2005, our management and the Audit Committee of the board of
directors of our Manager concluded that our financial statements for fiscal
periods ending December 31, 2000 through December 31, 2003 and the first three
interim periods of 2004 should be restated to correct certain errors relating to
accounting for operating leases and that such previously filed financial
statements should no longer be relied upon. Additionally, our network
infrastructure venture with T-Mobile USA, Inc., GSM Facilities LLC, accounted
for under the equity method, reached a similar conclusion with respect to
operating leases, requiring correction and restatement of the venture's
previously issued financial statements for the years ended December 31, 2003 and
2002. Please see our 2004 Form 10-K filed with the Securities and Exchange
Commission on March 7, 2005 for further information.
CINGULAR WIRELESS LLC PRO FORMA INCOME STATEMENT - amounts in millions
(unaudited)
On October 26, 2004, Cingular acquired AT&T Wireless, combining substantially
all of their respective domestic wireless operations. The following tables
present selected unaudited pro forma combined consolidated financial statements
and key operating metrics for the new combined entity. Although we believe this
presentation provides meaningful comparative information for existing
operations, it is not intended to represent or be indicative of the consolidated
results of operations or financial condition of Cingular that would have been
reported had the merger been completed as of the dates presented, and should not
be taken as representative of the future consolidated results of operations or
financial condition of Cingular.
On February 18, 2005, our management and the Audit Committee of the board of
directors of our Manager concluded that our financial statements for fiscal
periods ending December 31, 2000 through December 31, 2003 and the first three
interim periods of 2004 should be restated to correct certain errors relating to
accounting for operating leases and that such previously filed financial
statements should no longer be relied upon. Please see our 2004 Form 10-K filed
with the Securities and Exchange Commission on March 7, 2005 for further
information regarding this restatement. In conjunction with this restatement, on
March 11, 2005, we filed an amended Form 8-K report to restate the pro forma
financial information as originally contained in our Form 8-K/A filed on
November 29, 2004. In addition, the unaudited proforma results reflect
reclassifications to 2003 and 2004 for certain gross receipts taxes and other
fees which are billed to our customers.
PRO FORMA
---------
03/31/2003 06/30/2003 09/30/2003 12/31/2003 03/31/2004
---------- ---------- ---------- ---------- ----------
(Restated) (Restated) (Restated) (Restated) (Restated)
Operating revenues:
Service revenues $6,921 $7,318 $7,509 $7,232 $7,093
Equipment sales 461 486 700 705 722
------ ------ ------ ------ ------
Total operating revenues 7,382 7,804 8,209 7,937 7,815
------ ------ ------ ------ ------
Operating expenses:
Cost of services 1,705 1,857 2,036 1,920 1,860
Cost of equipment sales 858 917 1,095 1,193 1,117
Selling, general and administrative 2,587 2,674 2,879 3,166 2,853
Depreciation and amortization 1,515 1,469 1,589 1,551 1,515
------ ------ ------ ------ ------
Total operating expenses 6,665 6,917 7,599 7,830 7,345
------ ------ ------ ------ ------
Operating income 717 887 610 107 470
------ ------ ------ ------ ------
Interest expense 348 369 341 346 340
Minority interest expense 28 37 28 16 27
Equity in net income (loss) of affiliates 27 39 (20) 176 (20)
Other income (expense), net - 59 23 (1) 46
------ ------ ------ ------ ------
Income (loss) before income tax and cum. effect of acctng. chg. 368 579 244 (80) 129
------ ------ ------ ------ ------
Provision for income taxes 75 133 50 38 30
------ ------ ------ ------ ------
Income (loss) before cumulative effect of accounting change 293 446 194 (118) 99
------ ------ ------ ------ ------
PRO FORMA
---------
06/30/2004 09/30/2004 12/31//2004
---------- ---------- -----------
(Restated) (Restated) (Restated)
Operating revenues:
Service revenues $7,452 $7,401 $7,196
Equipment sales 715 837 892
------ ------ ------
Total operating revenues 8,167 8,238 8,088
------ ------ ------
Operating expenses:
Cost of services 1,849 2,005
Cost of equipment sales 1,119 1,124
Selling, general and administrative 2,934 3,034
Depreciation and amortization 1,510 1,476
------ ------
Total operating expenses 7,412 7,639
------ ------
Operating income 755 599
------ ------
Interest expense 342 354
Minority interest expense 41 20
Equity in net income (loss) of affiliates 28 37
Other income (expense), net 25 (27)
------ ------
Income (loss) before income tax and cum. effect of acctng. chg. 425 235
------ ------
Provision for income taxes 77 48
------ ------
Income (loss) before cumulative effect of accounting change 348 187
------ ------
SELECTED PRO FORMA FINANCIAL AND OPERATING DATA FOR CINGULAR WIRELESS
PRO FORMA
---------
03/31/2003 06/30/2003 09/30/2003 12/31/2003 03/31/2004 06/30/2004 09/30/2004 12/31//2004
---------- ---------- ---------- ---------- ---------- ---------- ---------- -----------
(Restated) (Restated) (Restated) (Restated) (Restated) (Restated) (Restated) (Restated)
OIBDA (1) (in millions) $ 2,232 $ 2,356 $ 2,199 $1,658 $1,985 $2,265 $ 2,075
OIBDA margin (2) 32.2% 32.2% 29.3% 22.9% 28.0% 30.4% 28.0%
Total Cellular/PCS Customers (3)
(000's) 42,960 43,846 44,930 45,664 45,953 46,404 47,177 48,773
Net Customer Additions -
Cellular/PCS (000's) 416 970 951 736 174 424 808 1,757
M&A Activity, Partitioned Customers
and/or Other Adjs. (000's) - (84) 133 (2) 115 27 (35) (161)
Churn - Cellular/PCS (4) 2.5% 2.3% 2.8% 3.0% 3.2% 3.0% 3.2% 2.6%
ARPU - Cellular/PCS (5) $ 53.53 $ 55.57 $ 55.74 $52.89 $51.26 $53.42 $ 52.38 $49.97
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES TO GAAP FINANCIAL MEASURES -
amounts in millions (unaudited)
PRO FORMA
---------
03/31/2003 06/30/2003 09/30/2003 12/31/2003 03/31/2004
---------- ---------- ---------- ---------- ----------
(Restated) (Restated) (Restated) (Restated) (Restated)
Income (loss) before cumulative effect of accounting change 293 446 194 (118) 99
Plus: Interest expense 348 369 341 346 340
Plus: Minority interest expense 28 37 28 16 27
Plus: Equity in net (income) loss of affiliates (27) (39) 20 (176) 20
Plus: Other, net - (59) (23) 1 (46)
Plus: Provision for income taxes 75 133 50 38 30
------ ------ ------ ------ ------
Operating income 717 887 610 107 470
Plus: Depreciation and amortization 1,515 1,469 1,589 1,551 1,515
------ ------ ------ ------ ------
OIBDA (1) 2,232 2,356 2,199 1,658 1,985
Service revenues (Proforma) 6,921 7,318 7,509 7,232 7,093
Less: Mobitex data revenues 55 53 54 58 58
------ ------ ------ ------ ------
SERVICE REVENUES USED TO CALCULATE ARPU (PRO FORMA) $6,866 $7,265 $7,455 $7,174 $7,035
PRO FORMA
---------
06/30/2004 09/30/2004 12/31//2004
---------- ---------- -----------
(Restated) (Restated)
Income (loss) before cumulative effect of accounting change 348 187
Plus: Interest expense 342 354
Plus: Minority interest expense 41 20
Plus: Equity in net (income) loss of affiliates (28) (37)
Plus: Other, net (25) 27
Plus: Provision for income taxes 77 48
------ ------
Operating income 755 599
Plus: Depreciation and amortization 1,510 1,476
------ ------
OIBDA (1) 2,265 2,075
Service revenues (Proforma) 7,452 7,401 7,196
Less: Mobitex data revenues 59 54 36
------ ------ ------
SERVICE REVENUES USED TO CALCULATE ARPU (PRO FORMA) $7,393 $7,347 $7,160
Notes:
(1) OIBDA is defined as operating income (loss) before depreciation and
amortization. OIBDA differs from operating income (loss), as calculated in
accordance with GAAP, in it excludes depreciation and amortization. It
differs from net income (loss), as calculated in accordance with GAAP, in
that it excludes, as presented on our Consolidated Statement of Income: (1)
depreciation and amortization, (2) interest expense, (3) minority interest
expense, (4) equity in net income (loss) of affiliates, (5) other, net, and
(6) provision (benefit) for income taxes. OIBDA does not give effect to cash
used for debt service requirements and thus does not reflect available funds
for distributions, reinvestment or other discretionary uses. OIBDA is not
presented as an alternative measure of operating results or cash flows from
operations, as determined in accordance with generally accepted accounting
principles. Our calculation of OIBDA, as presented, may differ from
similarly titled measures reported by other companies.
(2) OIBDA margin is defined as OIBDA divided by service revenues.
(3) Cellular/PCS customers include customers served through reseller agreements.
(4) Cellular/PCS customer churn is calculated by dividing the aggregate number
of cellular/PCS customers who cancel service during each month in a period
by the total number of cellular/PCS customers at the beginning of each month
in that period.
(5) ARPU is defined as cellular/PCS service revenues during the period divided
by average cellular/PCS customers during the period.