8-KOther EventsExhibits & Filings

AT&T INC. 8-K Report, Corporate Update (Jan 29, 2014)

Filed January 29, 2014For Securities:TT-PCTBBT-PA

Summary

AT&T Inc. (T) reported strong fourth-quarter and full-year 2013 results, driven by significant non-cash accounting adjustments for pension and postemployment benefits, which heavily boosted net income. Excluding these one-time items, the company demonstrated solid operational performance. Fourth-quarter revenues reached $33.2 billion, a 1.8% increase year-over-year, primarily fueled by growth in wireless data and equipment, and wireline data. The company also saw improvements in wireless operating income margins due to increased subscriber numbers and data revenue, alongside cost management. For the full year 2013, AT&T's net income was $18.2 billion, a substantial increase from $7.3 billion in 2012, with diluted earnings per share at $3.39 versus $1.25 in the prior year. Despite the reported strong net income figures, investors should note the significant impact of non-cash gains. On an operational basis, the company reported a net gain of 809,000 wireless subscribers in Q4, bringing its total to approximately 110.4 million. The company also provided a positive outlook for 2014, expecting consolidated revenue growth of 2-3% and stable margins, with continued capital expenditures in Project VIP.

Key Highlights

  • 1Q4 2013 Net Income: $6.9 billion, or $1.31 per diluted share. Full Year 2013 Net Income: $18.2 billion, or $3.39 per diluted share.
  • 2Significant non-cash gains of approximately $7.6 billion related to pension and postemployment benefit accounting impacted Q4 2013 net income.
  • 3Q4 2013 Revenues: $33.2 billion, up 1.8% year-over-year, driven by wireless data/equipment and wireline data growth.
  • 4Wireless Segment: Revenues increased 4.5% year-over-year to $18.4 billion in Q4, with operating income margin improving to 21.4%.
  • 5Wireless Subscriber Growth: Net gain of 809,000 wireless subscribers in Q4, reaching a total of 110.4 million by year-end.
  • 6Share Repurchases: $1.9 billion in stock repurchased in Q4 2013, totaling $13.0 billion for the full year.
  • 72014 Outlook: Expects consolidated revenue growth of 2-3% and stable consolidated margins, with capital expenditures around $21 billion.

Frequently Asked Questions

The primary driver of AT&T's reported net income in the fourth quarter of 2013 was a significant non-cash gain of approximately $7.6 billion resulting from the annual adjustment related to pension and postemployment benefit accounting. This made the reported net income appear much higher than operational performance alone might suggest.

AT&T's wireless segment showed strong performance, with revenues increasing by 4.5% year-over-year to $18.4 billion. This was driven by an increase in net subscribers and continued strong growth in data revenues. The wireless operating income margin also improved significantly to 21.4% compared to 14.5% in the prior year's quarter.

For 2014, AT&T expects consolidated revenue growth in the range of 2% to 3%, with continued strength in wireless service and wireline consumer revenues. They anticipate consolidated margins to remain stable, with improvements in wireless margins helping to offset pressures in the wireline segment related to Project VIP. Capital expenditures are expected to be in the $21 billion range.

Yes, AT&T continued its share repurchase program in the fourth quarter of 2013, buying back approximately 54 million shares for $1.9 billion. For the full year 2013, the company repurchased a total of 366 million shares for $13.0 billion.