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Cingular Wireless Posts Solid First-Quarter Results:-- Net subscriber additions of more than 1.4 million
ATLANTA, April 20 /PRNewswire/ -- 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
- 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.
- 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.
- 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.
- 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.
- 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
- 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.
- 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.
- 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.
- 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.
- 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.
- 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 http://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. and BellSouth Corporation , 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. 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 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 inter-company 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
3/31/05 3/31/04 % Change 3/31/05 3/31/04 % 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
3/31/05 3/31/04 % Change 3/31/05 3/31/04 % Change
(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
3/31/05 3/31/04 % Change 3/31/05 3/31/04 % 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 that 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"
POPs 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)
Quarter Ended March 31, 2005 Normalized Item
Integration
GAAP Costs (1) Normalized
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)
Year to Date - March 31, 2005 Normalized Item
Integration
GAAP Costs (1) Normalized
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
3/31/05 3/31/04 % Change 3/31/05 3/31/04 % Change
(Normal- (Restated) (Normal- (Restated)
ized) ized)
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
3/31/05 3/31/04 % Change 3/31/05 3/31/04 % Change
(Normal- (Restated) (Normal- (Restated)
ized) ized)
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
3/31/05 3/31/04 % Change 3/31/05 3/31/04 % Change
(Normal- (Restated) (Normal- (Restated)
ized) ized)
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 that 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"
POPs 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)
(Restated)
Full Year
2002 3/31/03 6/30/03 9/30/03 12/31/03
Operating revenues:
Service revenues $13,922 $3,414 $3,643 $3,701 $3,559
Equipment sales 981 244 255 383 378
Total operating
revenues 14,903 3,658 3,898 4,084 3,937
Operating expenses:
Cost of services 3,594 849 921 1,035 970
Cost of equipment
sales 1,535 396 451 606 578
Selling, general and
administrative 5,429 1,218 1,271 1,442 1,497
Depreciation and
amortization 1,849 488 508 521 572
Total operating
expenses 12,407 2,951 3,151 3,604 3,617
Operating income (loss) 2,496 707 747 480 320
Interest expense 911 225 230 197 204
Minority interest
expense 123 24 35 25 17
Equity in net income
(loss) of affiliates (274) (74) (78) (90) (91)
Other income (expense),
net 29 26 7 4 4
Income (loss) before
income tax and cum.
effect of acctng. chg. 1,217 410 411 172 12
Provision (benefit) for
income taxes 12 2 12 6 8
Income (loss) before
cumulative effect of
accounting change 1,205 408 399 166 4
Cingular Wireless LLC Income Statement - amounts in millions (unaudited)
3/31/04 6/30/04 9/30/04 12/31/04 3/31/05
(Restated)(Restated)(Restated)(Revised)
Operating revenues:
Service revenues $3,583 $3,833 $3,873 $6,313 $7,419
Equipment sales 384 354 419 806 810
Total operating
revenues 3,967 4,187 4,292 7,119 8,229
Operating expenses:
Cost of services 955 983 1,107 1,692 2,144
Cost of equipment sales 537 505 585 1,247 1,295
Selling, general and
administrative 1,372 1,463 1,567 2,947 3,001
Depreciation and
amortization 553 565 573 1,386 1,675
Total operating
expenses 3,417 3,516 3,832 7,272 8,115
Operating income (loss) 550 671 460 (153) 114
Interest expense 198 199 200 303 338
Minority interest expense 27 41 20 (2) 16
Equity in net income (loss)
of affiliates (108) (95) (98) (114) 2
Other income (expense), net 4 1 - 11 20
Income (loss) before income
tax and cum. effect of
acctng. chg. 221 337 142 (557) (218)
Provision (benefit) for
income taxes 6 (2) - (62) 22
Income (loss) before
cumulative effect of
accounting change 215 339 142 (495) (240)
Selected Financial and Operating Data for Cingular Wireless
- amounts in millions, except customer data in 000s
(Restated)
Full Year
2002 3/31/03 6/30/03 9/30/03 12/31/03
OIBDA (1) $4,345 $1,195 $1,255 $1,001 $892
OIBDA margin (2) 31.2% 35.0% 34.4% 27.0% 25.1%
Integration Costs $0 $0 $0 $0 $0
OIBDA - normalized $4,345 $1,195 $1,255 $1,001 $892
OIBDA margin - normalized 31.2% 35.0% 34.4% 27.0% 25.1%
Total Cellular/PCS
Customers (3) 21,925 22,114 22,640 23,385 24,027
Net Customer Additions
- Cellular/PCS 359 189 540 745 642
M&A Activity, Partitioned
Customers and/or Other Adjs. (32) - (14) - -
Churn - Cellular/PCS (4) 2.8% 2.6% 2.5% 2.8% 2.8%
ARPU - Cellular/PCS (5) $52.14 $51.07 $53.47 $52.80 $49.38
Minutes Of Use Per
Cellular/PCS Subscriber 390 405 445 456 475
Licensed POPs
- Cellular/PCS (6) 219 235 236 236 236
Penetration
- Cellular/PCS (7) 10.1% 10.0% 10.2% 10.6% 10.8%
Total Cingular Interactive
Customers 817 835 788 788 789
Net Customer Additions
- Cingular Interactive 84 18 (47) - 1
Total Capital Investments (8) 3,934 401 756 1,008 1,188
Selected Financial and Operating Data for Cingular Wireless
- amounts in millions, except customer data in 000s
3/31/04 6/30/04 9/30/04 12/31/04 3/31/05
(Restated)(Restated)(Restated)(Revised)
OIBDA (1) $1,103 $1,236 $1,033 $1,233 $1,789
OIBDA margin (2) 30.8% 32.2% 26.7% 19.5% 24.1%
Integration Costs $0 $0 $43 $245 $105
OIBDA - normalized $1,103 $1,236 $1,076 $1,478 $1,894
OIBDA margin - normalized 30.8% 32.2% 27.8% 23.4% 25.5%
Total Cellular/PCS
Customers (3) 24,618 25,044 25,672 49,109 50,369
Net Customer Additions -
Cellular/PCS 554 428 657 1,713 1,419
M&A Activity, Partitioned
Customers and/or Other Adjs. 37 (2) (29) 21,724 (159)
Churn - Cellular/PCS (4) 2.7% 2.7% 2.8% 2.6% 2.2%
ARPU - Cellular/PCS (5) $48.30 $50.75 $50.25 $49.51 $49.59
Minutes Of Use Per
Cellular/PCS Subscriber 488 523 537 526 508
Licensed POPs
- Cellular/PCS (6) 240 243 243 290 292
Penetration
- Cellular/PCS (7) 10.9% 11.1% 11.4% 17.2% 17.7%
Total Cingular Interactive
Customers 768 735 653 NA NA
Net Customer Additions
- Cingular Interactive (21) (33) (82) NA NA
Total Capital Investments (8) 466 989 645 1,772 1,171
Reconciliations of Non-GAAP Financial Measures to GAAP Financial Measures
- amounts in millions (unaudited)
(Restated)
Full Year
2002 3/31/03 6/30/03 9/30/03 12/31/03
Income (loss) before
cumulative effect of
accounting change 1,205 408 399 166 4
Plus: Interest expense 911 225 230 197 204
Plus: Minority interest
expense 123 24 35 25 17
Plus: Equity in net loss
of affiliates 274 74 78 90 91
Plus: Other, net (29) (26) (7) (4) (4)
Plus: Provision (benefit)
for income taxes 12 2 12 6 8
Operating income (loss) 2,496 707 747 480 320
Plus: Depreciation and
amortization 1,849 488 508 521 572
OIBDA (1) $4,345 $1,195 $1,255 $1,001 $892
Plus: Integration costs - - - - -
OIBDA - normalized (1) $4,345 $1,195 $1,255 $1,001 $892
Capital Expenditures 3,085 327 668 773 966
Plus: Capital
investments in
equity affiliates 849 74 88 235 222
Total Capital
Investments (8) $3,934 $401 $756 $1,008 $1,188
Investments in and Advances
to Equity Affiliates 450 74 87 234 221
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
Service revenues 13,922 3,414 3,643 3,701 3,559
Less: Mobitex data
revenues 189 55 53 54 58
Service revenues used to
calculate ARPU $13,733 $3,359 $3,590 $3,647 $3,501
Reconciliations of Non-GAAP Financial Measures to GAAP Financial Measures
- amounts in millions (unaudited)
3/31/04 6/30/04 9/30/04 12/31/04 3/31/05
(Restated)(Restated)(Restated)(Revised)
Income (loss) before
cumulative effect of
accounting change 215 339 142 (495) (240)
Plus: Interest expense 198 199 200 303 338
Plus: Minority interest
expense 27 41 20 (2) 16
Plus: Equity in net loss
of affiliates 108 95 98 114 (2)
Plus: Other, net (4) (1) - (11) (20)
Plus: Provision (benefit)
for income taxes 6 (2) - (62) 22
Operating income (loss) 550 671 460 (153) 114
Plus: Depreciation and
amortization 553 565 573 1,386 1,675
OIBDA (1) $1,103 $1,236 $1,033 $1,233 $1,789
Plus: Integration costs - - 43 245 105
OIBDA - normalized (1) $1,103 $1,236 $1,076 $1,478 $1,894
Capital Expenditures 334 783 634 1,698 971
Plus: Capital investments
in equity affiliates 132 206 11 74 200
Total Capital Investments (8) $466 $989 $645 $1,772 $1,171
Investments in and Advances
to Equity Affiliates 132 206 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 $132 $206 $11 $74 $200
Service revenues 3,583 3,833 3,873 6,313 7,419
Less: Mobitex data
revenues 58 59 54 36 18
Service revenues used to
calculate ARPU $3,525 $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 that 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"
POPs 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)
3/31/05 12/31/04 Incr(Decr) % +/-
(audited)
Assets (Revised)
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
(Restated)
3/31/03 6/30/03 9/30/03 12/31/03
Operating revenues:
Service revenues $6,921 $7,318 $7,509 $7,232
Equipment sales 461 486 700 705
Total operating revenues 7,382 7,804 8,209 7,937
Operating expenses:
Cost of services 1,705 1,857 2,036 1,920
Cost of equipment sales 858 917 1,095 1,193
Selling, general and
administrative 2,587 2,674 2,879 3,166
Depreciation and amortization 1,515 1,469 1,589 1,551
Total operating expenses 6,665 6,917 7,599 7,830
Operating income 717 887 610 107
Interest expense 348 369 341 346
Minority interest expense 28 37 28 16
Equity in net income (loss) of
affiliates 27 39 (20) 176
Other income (expense), net - 59 23 (1)
Income (loss) before income tax and
cum. effect of acctng. chg. 368 579 244 (80)
Provision for income taxes 75 133 50 38
Income (loss) before cumulative
effect of accounting change 293 446 194 (118)
Pro Forma
(Restated)
3/31/04 6/30/04 9/30/04 12/31/04
Operating revenues:
Service revenues $7,093 $7,452 $7,401 $7,196
Equipment sales 722 715 837 892
Total operating revenues 7,815 8,167 8,238 8,088
Operating expenses:
Cost of services 1,860 1,849 2,005
Cost of equipment sales 1,117 1,119 1,124
Selling, general and administrative 2,853 2,934 3,034
Depreciation and amortization 1,515 1,510 1,476
Total operating expenses 7,345 7,412 7,639
Operating income 470 755 599
Interest expense 340 342 354
Minority interest expense 27 41 20
Equity in net income (loss) of
affiliates (20) 28 37
Other income (expense), net 46 25 (27)
Income (loss) before income tax and
cum. effect of acctng. chg. 129 425 235
Provision for income taxes 30 77 48
Income (loss) before cumulative effect
of accounting change 99 348 187
Selected Pro Forma Financial and Operating Data for Cingular Wireless
Pro Forma
(Restated)
3/31/03 6/30/03 9/30/03 12/31/03
OIBDA (1) (in millions) $2,232 $2,356 $2,199 $1,658
OIBDA margin (2) 32.2% 32.2% 29.3% 22.9%
Total Cellular/PCS Customers (3)
(000's) 42,960 43,846 44,930 45,664
Net Customer Additions - Cellular/PCS
(000's) 416 970 951 736
M&A Activity, Partitioned Customers
and/or Other Adjs. (000's) - (84) 133 (2)
Churn - Cellular/PCS (4) 2.5% 2.3% 2.8% 3.0%
ARPU - Cellular/PCS (5) $53.53 $55.57 $55.74 $52.89
Selected Pro Forma Financial and Operating Data for Cingular Wireless
Pro Forma
(Restated)
3/31/04 6/30/04 9/30/04 12/31/04
OIBDA (1) (in millions) $1,985 $2,265 $2,075
OIBDA margin (2) 28.0% 30.4% 28.0%
Total Cellular/PCS Customers (3)
(000's) 45,953 46,404 47,177 48,773
Net Customer Additions - Cellular/PCS
(000's) 174 424 808 1,757
M&A Activity, Partitioned Customers
and/or Other Adjs. (000's) 115 27 (35) (161)
Churn - Cellular/PCS (4) 3.2% 3.0% 3.2% 2.6%
ARPU - Cellular/PCS (5) $51.26 $53.42 $52.38 $49.97
Reconciliations of Non-GAAP Financial Measures to GAAP Financial Measures
- amounts in millions (unaudited)
Pro Forma
(Restated)
3/31/03 6/30/03 9/30/03 12/31/03
Income (loss) before cumulative
effect of accounting change 293 446 194 (118)
Plus: Interest expense 348 369 341 346
Plus: Minority interest expense 28 37 28 16
Plus: Equity in net (income) loss
of affiliates (27) (39) 20 (176)
Plus: Other, net - (59) (23) 1
Plus: Provision for income taxes 75 133 50 38
Operating income 717 887 610 107
Plus: Depreciation and
amortization 1,515 1,469 1,589 1,551
OIBDA (1) 2,232 2,356 2,199 1,658
Service revenues (Proforma) 6,921 7,318 7,509 7,232
Less: Mobitex data revenues 55 53 54 58
Service revenues used to calculate
ARPU (Pro Forma) $6,866 $7,265 $7,455 $7,174
Reconciliations of Non-GAAP Financial Measures to GAAP Financial Measures
- amounts in millions (unaudited)
Pro Forma
3/31/04 6/30/04 9/30/04 12/31/04
(Restated)(Restated)(Restated)
Income (loss) before cumulative
effect of accounting change 99 348 187
Plus: Interest expense 340 342 354
Plus: Minority interest expense 27 41 20
Plus: Equity in net (income) loss
of affiliates 20 (28) (37)
Plus: Other, net (46) (25) 27
Plus: Provision for income taxes 30 77 48
Operating income 470 755 599
Plus: Depreciation and
amortization 1,515 1,510 1,476
OIBDA (1) 1,985 2,265 2,075
Service revenues (Proforma) 7,093 7,452 7,401 7,196
Less: Mobitex data revenues 58 59 54 36
Service revenues used to calculate
ARPU (Pro Forma) $7,035 $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 that 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.
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