AT&T Inc. reported solid fourth-quarter results. Q4 consolidated revenues totaled $34.4 billion, up 3.8 percent versus the year-earlier period.
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When excluding the divested Connecticut wireline properties, revenues were up 4.5 percent. Compared with results for the fourth quarter of 2013, operating expenses were $40 billion versus $20.9 billion; operating loss was $5.6 billion versus operating income of $12.2 billion; and operating income margin was (16.1) percent versus 36.9 percent.
On an adjusted basis, operating expenses were $29.5 billion, compared to $28.0 billion in the year-ago quarter; operating income was $4.9 billion versus $5.2 billion a year ago; and operating income margin was 14.2 percent versus 15.5 percent a year ago.
Fourth-quarter 2014 net loss attributable to AT&T totaled $4.0 billion, or $0.77 per diluted share, compared to net income of $6.9 billion, or $1.31 per diluted share in the year-ago quarter.
Adjusting for $(0.94) from the non-cash actuarial loss on benefit plans, $(0.25) non-cash write-off of certain network assets, and $(0.13) for merger and integration-related expenses, the loss on the sale of Connecticut wireline operations, and other asset impairments, earnings per share was $0.55 compared to an adjusted $0.53 in the year-ago quarter.
The actuarial loss on benefit plans was driven primarily by a reduction in the combined discount rates from 5.0 percent to 4.2 percent. While investment returns were better than assumptions, they were not enough to offset the actuarial losses.
Cash from operating activities totaled $5.7 billion in the fourth quarter and capital expenditures totaled $4.4 billion. Free cash flow — cash from operating activities minus capital expenditures — totaled $1.3 billion. Asset monetization totaled $2.0 billion with free cash flow and asset monetization of $3.3 billion in the fourth quarter.
For full-year 2014, compared with 2013 results, AT&T's consolidated revenues totaled $132.4 billion versus $128.8 billion; when excluding the divested Connecticut wireline properties, revenues were up 3.1 percent for the year.
Operating expenses reflect actuarial gains and losses on benefit plans and were $120.7 billion compared with $98.3 billion, up 22.8 percent; net income attributable to AT&T was $6.2 billion versus $18.2 billion; and earnings per diluted share was $1.19, compared with $3.39 in the prior year. With adjustments for both years, earnings per share totaled $2.51, compared with $2.50.
AT&T's full-year cash from operating activities was $31.3 billion and capital expenditures, including capitalized interest, totaled $21.4 billion.
Full-year free cash flow was $9.9 billion including $560 million of impact from pension funding. Asset monetization for the year totaled $8.1 billion with free cash flow and asset monetization of $18.0 billion for the full year. ■