|
|
 | | | |
- close
- close
- close
- close
AT&T 10-K 2009 Documents found in this filing:
FORM
10-K> UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
For the transition period
from
to
Commission
File Number: 1-8610
Incorporated
under the laws of the State of Delaware
I.R.S.
Employer Identification Number 43-1301883
208 S.
Akard St., Dallas, Texas, 75202
Telephone
Number 210-821-4105
Securities
registered pursuant to Section 12(b) of the Act: (See attached Schedule
A)
Securities
registered pursuant to Section 12(g) of the Act: None.
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes [X] No
[ ]
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes
[ ] No [X]
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes [X] No [ ]
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
definition of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12-b2 of the Exchange Act.
(Do not
check if a smaller reporting company)
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes [ ] No
[X]
Based on
the closing price of $33.69 per share on June 30, 2008, the aggregate market
value of our voting and non-voting common stock held by non-affiliates was
$198.5 billion.
At
January 31, 2009, common shares outstanding were 5,893,307,211.
DOCUMENTS
INCORPORATED BY REFERENCE
SCHEDULE
A
Securities
Registered Pursuant To Section 12(b) Of The Act:
TABLE
OF CONTENTS
PART
I
ITEM
1. BUSINESS
GENERAL
AT&T
Inc. (“AT&T,” “we” or the “Company”) is a holding company incorporated under
the laws of the State of Delaware in 1983 and has its principal executive
offices at 208 S. Akard St.,
Dallas Texas, 75202 (telephone number 210-821-4105). We maintain an
Internet website at www.att.com. (This website address is for information only
and is not intended to be an active link or to incorporate any website
information into this document.) We make available, free of charge,
on our website our annual report on Form 10-K, our quarterly reports on Form
10-Q, current reports on Form 8-K and all amendments to those reports as soon as
reasonably practicable after such reports are electronically filed with, or
furnished to, the Securities and Exchange Commission (SEC). We also make
available on that website, and in print, if any stockholder or other person so
requests, our code of business conduct and ethics entitled “Code of Ethics”
applicable to all employees and Directors, our “Corporate Governance
Guidelines,” and the charters for all committees of our Board of Directors,
including the Audit, Human Resources and Corporate Governance and Nominating.
Any changes to our Code of Ethics or waiver of our Code of Ethics for senior
financial officers, executive officers or Directors will be posted on that
website.
History
AT&T,
formerly known as SBC Communications Inc. (SBC), was formed as one of several
regional holding companies created to hold AT&T Corp.’s (ATTC) local
telephone companies. On January 1, 1984, we were spun-off from ATTC pursuant to
an anti-trust consent decree, becoming an independent publicly traded
telecommunications services provider. At formation, we primarily operated in
five southwestern states. Our subsidiaries merged with Pacific Telesis Group in
1997, Southern New England Telecommunications Corporation in 1998 and Ameritech
Corporation in 1999, thereby expanding our wireline operations as the incumbent
local exchange carrier (ILEC) into a total of 13 states. In November 2005, one
of our subsidiaries merged with ATTC, creating one of the world’s leading
telecommunications providers. In connection with the merger, we changed the name
of our company from “SBC Communications Inc.” to “AT&T Inc.” In
December 2006, one of our subsidiaries merged with BellSouth Corporation
(BellSouth) making us the ILEC in an additional nine states. With the BellSouth
acquisition, we thereby acquired BellSouth’s 40 percent economic interest in
AT&T Mobility LLC (AT&T Mobility), formerly Cingular Wireless LLC, and
BellSouth’s 34 percent economic interest in YELLOWPAGES.COM (YPC), resulting in
100 percent ownership of AT&T Mobility and YPC. Our services and products
are marketed under the AT&T brand name, including alliances such as AT&T
Yahoo! and AT&T | DIRECT TV.
Scope
We rank
among the leading providers of telecommunications services in the United States
and the world. We offer our services and products to consumers in the U.S. and
services and products to businesses and other providers of telecommunications
services worldwide.
The
services and products that we offer vary by market, and include: wireless
communications, local exchange services, long-distance services, data/broadband
and Internet services, video services, telecommunications equipment, managed
networking, wholesale services and directory advertising and publishing. We
group our operating subsidiaries as follows, corresponding to our operating
segments for financial reporting purposes:
Our
traditional wireline local exchange subsidiaries operate in 22 states: Alabama,
Arkansas, California, Connecticut, Illinois, Indiana, Florida, Georgia,
Kentucky, Louisiana, Kansas, Michigan, Mississippi, Missouri, Nevada, North
Carolina, Ohio, Oklahoma, South Carolina, Tennessee, Texas and Wisconsin
(22-state area). Our wireline local exchange services are provided through
regulated subsidiaries which operate within authorized regions subject to
regulation by each state in which they operate and by the Federal Communications
Commission (FCC). Wireless service providers are regulated by the FCC.
Additional information relating to regulation is contained under the heading
“Government Regulation” below and in the Annual Report under the heading
“Operating Environment and Trends of the Business,” and is incorporated herein
by reference pursuant to General Instruction G(2).
1
With the
expansion of our company through acquisitions and the resulting ownership
consolidation of AT&T Mobility, and with continuing advances in technology,
we plan to offer new services that combine our traditional wireline and wireless
services, thereby making our customers’ lives more convenient and productive and
fostering competition and further innovation in the communications and
entertainment industry. In 2009, we plan to focus on the areas discussed
below.
Wireless
AT&T
Mobility began operations in October 2000 as a joint venture between us and
BellSouth and, in 2004, acquired AT&T Wireless Services, Inc. Upon our
acquisition of BellSouth, AT&T Mobility became a wholly-owned
subsidiary.
Our
Universal Mobile Telecommunications System/ High-Speed Downlink Packet Access
third generation (3G) network technology covers most major metropolitan areas of
the U.S. This technology provides superior speeds for data and video services,
as well as operating efficiencies, using the same spectrum and infrastructure
for voice and data on an IP-based platform. Our wireless networks also rely on
digital transmission technologies known as Global System for Mobile
Communication, General Packet Radio Services and Enhanced Data Rates for GSM
Evolution for data communications. As of December 31, 2008, we served
approximately 77 million customers and were a leading provider of mobile
wireless voice and data communications services in the U.S.
As the
wireless industry continues to mature, we believe that future wireless growth
will become increasingly dependent on our ability to offer innovative services
that will encourage existing customers to upgrade their services and will
attract customers from other providers as well as our ability to minimize
turnover of our existing customer base (customer churn). We intend to accomplish
these goals by continuing to expand our network coverage, improve our network
quality and offer a broad array of products and services, including exclusive
devices such as the Apple iPhone and free mobile-to-mobile calling among our
wireless customers. The effective management of customer churn is critical to
our ability to maximize revenue growth and to maintain and improve our operating
margins.
Business
Customers
As we
continue to integrate the operations of BellSouth and ATTC, we expect to
continue to strengthen the reach and sophistication of our network facilities
and our ability to offer a variety of communications services, both wireless and
wireline, to large businesses and wholesale customers worldwide. We expect to
offer similar services to small- and medium-businesses and to increase the
attractiveness of our services to governmental customers. We also expect to
extend our wholesale business offerings to other service products and systems
integration services.
Data/Broadband
As the
communications industry continues to move toward internet-based technologies
that are capable of blending traditional wireline and wireless services, we plan
to offer services to take advantage of these new and more sophisticated
technologies. In particular, we intend to continue to focus on deploying our
AT&T U-verse sm
high-speed broadband and TV services and on developing internet protocol-based
services that allow customers to unite their home or business wireline services
with their wireless service.
We
believe that our U-verse TV service is subject to federal oversight as a “video
service” under the Federal Communications Act. However, some cable providers and
municipalities have claimed that certain IP services should be treated as a
traditional cable service and therefore subject to the applicable state and
local cable regulation. Certain municipalities have delayed our request or have
refused us permission to use our existing right-of-ways to deploy or activate
our U-verse-related services and products, resulting in litigation. Pending
negotiations and current or threatened litigation involving municipalities could
delay our deployment plans in those areas. In July 2008, the U.S. District Court
for Connecticut affirmed its October 2007 ruling that AT&T’s U-verse TV
service is a cable service in Connecticut. We have appealed that decision on the
basis that state legislation rendered the case moot. If the courts having
jurisdiction where we have significant deployments of our U-verse services were
to decide that federal, state and/or local cable regulation were applicable to
our U-verse services, it could have a material adverse effect on the cost,
timing and extent of our deployment plans.
2
BUSINESS
OPERATIONS
Operating
Segments
Our
segments are strategic business units that offer different products and services
and are managed accordingly. We analyze our various operating segments based on
segment income. Interest expense, interest income and other income (expense) –
net, are managed only on a total company basis and are, accordingly, reflected
only in consolidated results. Therefore, these items are not included in the
calculation of each segment’s percentage of our total segment income. We have
four reportable segments: (1) wireless; (2) wireline;
(3) advertising & publishing; and (4) other.
Additional
information about our segments, including financial information, is included
under the heading “Segment Results” on pages 25 through 33 and in Note 4 of the
Annual Report and is incorporated herein by reference pursuant to General
Instruction G(2).
Wireless
Wireless
consists of our subsidiary, AT&T Mobility, which operates as a wireless
provider to both business and consumer customers. Our wireless segment provided
approximately 39% of 2008 total segment operating revenues and 46% of our 2008
total segment income. At December 31, 2008, we had more than 77 million wireless
subscribers.
Services
and Products
We offer
a comprehensive range of high-quality nationwide wireless voice communications
services in a variety of pricing plans, including postpaid and prepaid service
plans. Our voice offerings are tailored to meet the communications needs of
targeted customer segments, including youth, family, active professionals, small
businesses, government and major national corporate accounts.
Wireless
data revenues continue to be a growing area of our business, representing an
increasing share of our overall subscriber revenue. We are experiencing solid
growth from both consumer and enterprise wireless data services, as an
increasing number of our subscribers have upgraded their handsets to more
advanced handsets, including the Apple iPhone. We continue to upgrade our
network and coordinate with equipment manufacturers and applications developers
in order to further capitalize on the continued growth in the demand for
wireless data services. At December 31, 2008 we were a leading provider of
wireless data in the U.S. wireless industry based on subscribers.
3
Additional
information on our wireless segment is contained in the Annual Report in the
“Operating Environment Overview” section under the heading “Expected Growth
Areas,” “Wireless” beginning on page 34 and is incorporated herein by reference
pursuant to General Instruction G(2).
Wireline
Our
Wireline subsidiaries provide both retail and wholesale communication services
domestically and internationally. Our wireline segment provided approximately
55% of 2008 segment operating revenues and 47% of our 2008 total segment income.
We divide our wireline services into three product-based categories: voice, data
and other. Revenues from our traditional voice services have been
declining as customers have been switching to wireless, cable and other
internet-based providers. In addition, the deteriorating U.S. economy has caused
wireline customers to terminate their residential phone service and rely instead
on their wireless service for voice communication. We have responded
by offering packages of combined voice and data services, including broadband
and video and intend to continue this strategy during 2009.
Services
and Products
Long
distance consists of traditional long distance and international long distance
for customers that select us as their primary long-distance carrier. Long
distance also includes services provided by calling card, 1-800 services and
conference calling. These services are used in a wide variety of business
applications, including sales, reservation centers or customer service centers.
We also provide wholesale switched access service to other service
providers.
Voice
also includes calling features, fees to maintain wire located inside customer
premises and other miscellaneous voice products. Calling features are
enhanced telephone services available to retail customers such as Caller ID,
Call Waiting and voice mail. These calling features services are generally more
profitable than basic local phone service.
Private
line uses high-capacity digital circuits to transmit from point-to-point in
multiple configurations and allows customers to create internal data networks
and to access external data networks.
Switched
Transport services transmit data using switching equipment to transfer the data
between multiple lines before reaching its destination. Dedicated Transport
services use a single direct line to transmit data between destinations. DSL is
a digital modem technology that converts existing twisted-pair telephone lines
into access paths for multimedia and high-speed data communications to the
Internet or private networks. DSL allows customers to simultaneously make a
phone call and access information via the Internet or an office local area
network. Digital Services use dedicated digital circuits to transmit digital
data at various high rates of speed.
Network
integration services include installation of business data systems, local area
networking and other data networking offerings. Internet access services include
a wide range of products for residences and businesses,. Internet services
offered include basic dial-up access service, dedicated access, web hosting,
e-mail and high-speed access services.
Packet
services consist of data networks using packet switching and transmission
technologies, including traditional circuit-based, and IP connectivity services.
Packet services enable customers to transmit large volumes of data economically
and securely and are used for local area network interconnection, remote site,
point of sale and branch office communications. High speed packet services are
used extensively by enterprise (large business) customers.
4
Dedicated
Internet services are designed to meet the needs of all types of commercial and
governmental enterprises, including small and medium sized businesses. Our
managed Internet services provide customers with dedicated high speed access to
the Internet managed by us.
Enterprise
networking services provide comprehensive support from network design,
implementation and installation to ongoing network operations and management for
networks of varying scales, including local area networks, wide area networks,
and virtual private networks. These services include applications such as
e-mail, order entry systems, employee directories, human resource transactions
and other database applications.
We also
provide local, interstate and international wholesale networking capacity to
other service providers. We offer a combination of high volume transmission
capacity and conventional dedicated line services on a regional, national and
international basis to wireless carriers, interexchange carriers, Internet
service providers (ISPs) and facility-based and switchless resellers. Our
wholesale customers are primarily large ISPs, wireless carriers, competitive
local exchange carriers, regional phone companies, interexchange carriers, cable
companies and systems integrators. We also have sold dedicated network capacity
through indefeasible rights-of-use agreements under which capacity is furnished
for contract terms as long as 25 years.
Our
managed web-hosting services for businesses provide network, server and security
infrastructure as well as built-in data storage and include application
performance management, database management, hardware and operating system
management. Our hosting services also provide customers with secure access to
detailed reporting information about their infrastructure and applications.
Security services include business continuity and disaster recovery services as
well as premise and network based security products.
Customer
premises equipment and other equipment sales range from single-line and cordless
telephones to sophisticated digital PBX systems. PBX is a private telephone
switching system, typically used by businesses and usually located on a
customer’s premises, which provides intra-premise telephone services as well as
access to our network.
Advertising
& Publishing
Advertising
& Publishing includes our directory operations, which publish Yellow and
White Pages directories and sell directory advertising and Internet-based
advertising and local search. The advertising & publishing segment provided
approximately 4% of total segment operating revenues and 7% of our 2008 total
segment income. This segment sells advertising services throughout the United
States, with our print directory operations primarily covering our 22-state
area.
Other
Our other
segment includes operations from Sterling, our business integration software and
services subsidiary, corporate and other operations. The other segment provided
approximately 2% of total segment operating revenues and less than 1% of our
2008 total segment income. We also include in this segment the equity
income (loss) from our investments in Telmex, America Movil and Telmex
Internaccional.
Sterling
provides “multi-enterprise collaboration” services to businesses in various
industries, including retail, financial services, manufacturing, healthcare and
telecom. In recent years, Sterling has completed a number of acquisitions in
order to provide end-to-end order fulfillment for customers.
5
MAJOR
CLASSES OF SERVICE
The
following table sets forth the percentage of consolidated total reported
operating revenues by any class of service that accounted for 10% or more of our
consolidated total operating revenues in any of the last three fiscal
years.
Prior to
our December 2006 acquisition of BellSouth, our wireless segment revenues were
reported in equity in net income of affiliates in our consolidated financial
statements due to our equity accounting for the joint venture. We accounted for
our 60 percent economic interest in AT&T Mobility under the equity method of
accounting since we shared control equally with our 40 percent economic partner
in the joint venture. We held equal voting rights and representation on the
board of directors that controlled AT&T Mobility. Accordingly, our
consolidated results included wireless results in the “Equity in Net Income of
Affiliates” line. We did not report wireless revenues in our consolidated
financial statements. However, when analyzing our segment results, we evaluated
wireless results on a stand-alone basis. The table below shows the effect on our
other classes of services (shown in the above table) if we include 100% of
AT&T Mobility’s revenues added to our total segment operating
revenues.
6
GOVERNMENT
REGULATION
Wireless
communications providers must be licensed by the FCC to provide communications
services at specified spectrum frequencies within specified geographic areas and
must comply with the rules and policies governing the use of the spectrum as
adopted by the FCC. Additionally, while wireless communications providers’
prices and service offerings are generally not subject to regulation, the
federal government and an increasing number of states are considering new
regulations and legislation relating to various aspects of wireless
services.
Our
wireline subsidiaries are subject to regulation by state commissions which have
the power to regulate intrastate rates and services, including local,
long-distance and network access services. These subsidiaries are also subject
to the jurisdiction of the FCC with respect to interstate and international
rates and services, including interstate access charges. Access charges are
designed to compensate our wireline subsidiaries for the use of their networks
by other carriers.
Our
subsidiaries operating outside the U.S. are subject to the jurisdiction of
national and supranational regulatory authorities in the market where service is
provided. Regulation is generally limited to operational licensing authority for
the provision of enterprise services.
Additional
information relating to regulation of our subsidiaries is contained in the
Annual Report under the heading “Operating Environment Overview” beginning on
page 34 and is incorporated herein by reference pursuant to General Instruction
G(2).
IMPORTANCE,
DURATION AND EFFECT OF LICENSES
Certain
of our subsidiaries own or have licenses to various patents, copyrights,
trademarks and other intellectual property necessary to conduct business. We
actively pursue patents, trademarks and service marks to protect our
intellectual property within the U.S. and abroad. We maintain a global portfolio
of more than 5,000 trademark and service mark registrations. We have also
entered into agreements that permit other companies, in exchange for fees and
subject to appropriate safeguards and restrictions, to utilize certain of our
trademarks and service marks. We periodically receive offers from third parties
to obtain licenses for patent and other intellectual rights in exchange for
royalties or other payments. We also receive notices asserting that our products
or services infringe on their patents and other intellectual property rights.
These claims, whether against us directly or against third-party suppliers of
products or services that we, in turn, sell to our customers, such as wireless
handsets, could require us to pay damages, royalties, stop offering the relevant
products or services and/or cease other activities. While the outcome of any
litigation is uncertain, we do not believe that the resolution of any of these
infringement claims or the expiration or non-renewal of any of our intellectual
property rights would have a material adverse effect on our results of
operations.
MAJOR
CUSTOMER
No
customer accounted for 10% or more of our consolidated revenues in 2008, 2007 or
2006.
COMPETITION
Information
relating to competition in each of our operating segments is contained in the
Annual Report under the heading “Competition” beginning on page 36, and is
incorporated herein by reference pursuant to General Instruction
G(2).
7
RESEARCH
AND DEVELOPMENT
The
majority of our research activities are related to our wireline segment,
performed at our subsidiary AT&T Labs. AT&T Labs’ scientists and
engineers conduct research in a variety of areas, including IP; advanced network
design and architecture; network operations support systems; data mining
technologies and advanced speech technologies. The majority of the development
activities are performed by AT&T Services. The developers within AT&T
Services work with our business units and AT&T Labs to create new services
and invent tools and systems to manage secure and reliable networks for us and
our customers. We also have a research agreement with Telcordia Technologies,
formerly Bell Communications Research, Inc. Research and development expenses
were $832 in 2008, $985 in 2007 and $577 million in 2006.
EMPLOYEES
As of
January 31, 2009, we employed approximately 301,000 persons. Approximately
60 percent of our employees are represented by the Communications Workers of
America (CWA), the International Brotherhood of Electrical Workers (IBEW) or
other unions. The five largest collective bargaining agreements between the CWA
and our subsidiaries, covering approximately 80,000 Wireline
employees, expire April 4, 2009. A separate collective bargaining agreement
between the CWA and our Wireless subsidiary covering 21,000 employees expired
February 7, 2009.
8
ITEM
1A. RISK FACTORS
Information
required by this Item is included in the Annual Report under the heading “Risk
Factors” on page 46 through page 47 which is incorporated herein by reference
pursuant to General Instruction G(2).
CAUTIONARY
LANGUAGE CONCERNING FORWARD-LOOKING STATEMENTS
The
following factors could cause our future results to differ materially from those
expressed in the forward-looking statements:
Readers
are cautioned that other factors discussed in this report, although not
enumerated here, also could materially affect our future earnings.
9
ITEM
2. PROPERTIES
Our
properties do not lend themselves to description by character and location of
principal units. At December 31, 2008, approximately 85% of our property, plant
and equipment was owned by our wireline subsidiaries and approximately 14% was
owned by our wireless subsidiaries. Central office equipment represented 34%;
network access lines represented approximately 33% of our telephone plant; other
equipment, comprised principally of furniture and office equipment and vehicles
and other work equipment, represented 16%; land and buildings represented 12%;
and other miscellaneous property represented 5%.
Substantially
all of the installations of central office equipment are located in buildings
and on land we own. Many garages, administrative and business offices, and
telephone centers and retail stores are in leased quarters.
ITEM
3. LEGAL PROCEEDINGS
We are a
party to numerous lawsuits, regulatory proceedings and other matters arising in
the ordinary course of business. Additional information regarding litigation is
included in the Annual Report under the headings “Retiree Phone
Concession Litigation,” “NSA Litigation” and “Prepaid Calling Card
Patent Litigation” on pages 39 through 40, which is incorporated herein by
reference pursuant to General Instruction G(2). As of the date of this report,
we do not believe any pending legal proceedings to which we or our subsidiaries
are subject are required to be disclosed as material legal proceedings pursuant
to this item.
We
are subject from time to time to judicial and administrative proceedings
brought by various governmental authorities under federal, state or
local environmental laws. We are required to discuss
in our Forms 10-Q and 10-K two of these proceedings, (which are listed
below), because each could result in monetary sanctions (exclusive of interest
and costs) of one hundred thousand dollars or more. However, we do
not believe that any of them currently pending will have a material adverse
effect on our results of operations.
(a) The
City of Philadelphia notified AT&T Corp. on December 12, 2008 that it would
seek civil penalties for alleged violations of state and local air emissions
control requirements and permit terms applicable to back-up power generators at
an AT&T Corp. facility. AT&T Corp. expects to settle this matter on
terms that would include civil penalties of less than one hundred twenty-five
thousand dollars.
(b) The
U.S. Environmental Protection Agency (EPA) is seeking civil penalties from
AT&T Mobility in connection with alleged
violations of federal environmental statutes in connection with management of
back-up power systems at AT&T Mobility
facilities. The EPA’s allegations include noncompliance with requirements to
obtain air emission permits for
generators
and to prepare spill prevention plans for fuel storage tanks. We expect to
settle this matter on terms that
would include civil penalties in the range of 1 to 3 million
dollars.
ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter
was submitted to a vote of stockholders in the fourth quarter of the fiscal year
covered by this report.
10
All of
the above executive officers have held high-level managerial positions with
AT&T or its subsidiaries for more than the past five years. Executive
officers are not appointed to a fixed term of office.
11
PART
II
ITEM
5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
Our
common stock is listed on the New York Stock Exchange. The number of
stockholders of record as of December 31, 2008 and 2007 was 1,541,767 and
1,663,676. The number of stockholders of record as of February 20, 2009 was
1,531,236. We declared dividends, on a quarterly basis, totaling $1.61 per share
in 2008 and $1.47 per share in 2007.
During
2008, non-employee directors acquired shares of common stock pursuant to the
Non-Employee Director Stock and Deferral Plan. Under the plan, a director may
make an annual election to receive all or part of his or her annual retainer or
fees in the form of shares or deferred stock units (DSUs) that are convertible
into cash or shares. Each director also receives an annual grant of DSUs. The
plan provides that DSUs (and dividends earned thereon) acquired during 2007 and
thereafter would be convertible in the form of cash only. During 2008, an
aggregate of 24,802 shares and DSUs (from pre-2007 accruals) were acquired by
non-employee directors at prices ranging from $26.77 to $39.90, in each case the
fair market value of the shares on the date of acquisition. The issuances of
shares and DSUs were exempt from registration pursuant to Section 4(2) of the
Securities Act.
Other
information required by this Item is included in the Annual Report under the
headings “Quarterly Financial Information” on page 75, “Selected Financial and
Operating Data” on page 22, “Issuer Equity Repurchases” on page 45, and “Stock
Trading Information” on the back cover, which are incorporated herein by
reference pursuant to General Instruction G(2).
ITEM
6. SELECTED FINANCIAL DATA
Information
required by this Item is included in the Annual Report under the heading
“Selected Financial and Operating Data” on page 22, which is incorporated herein
by reference pursuant to General Instruction G(2).
ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION
Information
required by this Item is included in the Annual Report on pages 23 through 48,
which is incorporated herein by reference pursuant to General Instruction
G(2).
ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information
required by this Item is included in the Annual Report under the heading “Market
Risk” on page 43 through page 45, which is incorporated herein by reference
pursuant to General Instruction G(2).
ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information
required by this Item is included in the Annual Report on pages 49 through 75,
which is incorporated herein by reference pursuant to General Instruction
G(2).
12
ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
During
our two most recent fiscal years, there has been no change in the independent
accountant engaged as the principal accountant to audit our financial statements
and the independent accountant has not expressed reliance on other independent
accountants in its reports during such time period.
ITEM
9A. CONTROLS AND PROCEDURES
Disclosure
Controls and Procedures
The
registrant maintains disclosure controls and procedures that are designed to
ensure that information required to be disclosed by the registrant is recorded,
processed, summarized, accumulated and communicated to its management, including
its principal executive and principal financial officers, to allow timely
decisions regarding required disclosure, and reported within the time periods
specified in the SEC’s rules and forms. The Chief Executive Officer and Chief
Financial Officer have performed an evaluation of the effectiveness of the
design and operation of the registrant’s disclosure controls and procedures as
of December 31, 2008. Based on that evaluation, the Chief Executive Officer and
Chief Financial Officer concluded that the registrant’s disclosure controls and
procedures were effective as of December 31, 2008.
Internal
Control Over Financial Reporting
(a) Management’s
Annual Report on Internal Control over Financial Reporting
The
management of AT&T is responsible for establishing and maintaining adequate
internal control over financial reporting. AT&T’s internal control system
was designed to provide reasonable assurance as to the integrity and reliability
of the published financial statements. AT&T management assessed the
effectiveness of the company’s internal control over financial reporting as of
December 31, 2008. In making this assessment, it used the criteria set forth by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in
Internal Control – Integrated
Framework. Based on its assessment, AT&T management believes that, as
of December 31, 2008, the Company’s internal control over financial reporting is
effective based on those criteria.
(b) Attestation
Report of the Registered Public Accounting Firm
The
registered public accounting firm that audited the financial statements included
in the annual report containing the disclosure required by this Item, Ernst
& Young LLP, has issued an attestation report on the Company’s internal
control over financial reporting. The attestation report issued by Ernst &
Young LLP is included in the Annual Report on page 78, which is incorporated
herein by reference pursuant to General Instruction G(2).
ITEM 9B. OTHER
INFORMATION
There is
no information that was required to be disclosed in a report on Form 8-K during
the fourth quarter of 2008 but was not reported. 13
PART
III
ITEM
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information
regarding executive officers required by Item 401 of Regulation S-K is furnished
in a separate disclosure at the end of Part I of this report since the
registrant did not furnish such information in its definitive proxy statement
prepared in accordance with Schedule 14A. Information regarding directors
required by Item 401 of Regulation S-K is incorporated herein by reference
pursuant to General Instruction G(3) from the registrant’s definitive proxy
statement, dated on or about March 11, 2009 (Proxy Statement) under the heading
“Election of Directors.”
There is
no disclosure in this Form 10-K of reporting person delinquencies in response to
Item 405 and the registrant, at the time of filing this Form 10-K, has reviewed
the information necessary to ascertain, and has determined that Item 405
disclosure is not expected to be contained in this Form 10-K or incorporated by
reference.
The
registrant has a separately-designated standing audit committee established in
accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934. The
members of the committee are Messrs. Aldinger, Chico Pardo, Kelly, Madonna and
Ms. Martin. The additional information required by Item 407(d)(5) of Regulation
S-K is incorporated herein by reference pursuant to General Instruction G(3)
from the registrant’s Proxy Statement under the heading “Audit
Committee.”
The
registrant has adopted a code of ethics entitled “Code of Ethics” that applies
to the registrant’s principal executive officer, principal financial officer,
principal accounting officer, or controller or persons performing similar
functions. The additional information required by Item 406 of Regulation S-K is
provided in this report under the heading “General” under Part I, Item 1.
Business.
ITEM
11. EXECUTIVE COMPENSATION
Information
required by Item 402(k) of Regulation S-K is incorporated herein by reference
pursuant to General Instruction G(3) from the registrant’s Proxy Statement under
the heading “Compensation of Directors.” Information regarding
officers is included in the registrant’s Proxy Statement on the pages beginning
with the heading “Compensation Discussion and Analysis” and ending with, and
including, the last page under the heading “Potential Payments upon Termination
or Change in Control” which are incorporated herein by reference pursuant to
General Instruction G(3). Information required by Item 407(e)(5) of Regulation
S-K is included in the registrant’s Proxy Statement under the heading
“Compensation Committee Report” and is incorporated herein by reference pursuant
to General Instruction G(3) and shall be deemed furnished in this annual report
on Form 10-K and will not be deemed incorporated by reference into any filing
under the Securities Act of 1933 or the Securities Exchange Act of
1934.
14
ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
Information
required by Item 403 of Regulation S-K is included in the registrant’s Proxy
Statement under the heading “Common Stock Ownership,” which
is incorporated herein by reference pursuant to General Instruction
G(3).
Information
required by Item 201(d) of Regulation S-K is provided below:
Equity
Compensation Plan Information
The
following table provides information as of December 31, 2008, concerning shares
of AT&T common stock authorized for issuance under AT&T’s existing
equity compensation plans.
Equity
Compensation Plan Information (1)
15
ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
Information
required by Item 404 of Regulation S-K is included in the registrant’s Proxy
Statement under the heading “Related Party Transactions,” which is incorporated
herein by reference pursuant to General Instruction G(3). Information required
by Item 407(a) of Regulation S-K is included in the registrant’s Proxy Statement
under the heading “Independence of Directors,” which is incorporated herein by
reference pursuant to General Instruction G(3).
ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Information
required by this Item is included in the registrant’s Proxy Statement under the
heading “Principal Accountant Fees and Services,” which is incorporated herein
by reference pursuant to General Instruction G(3).
Part
IV
ITEM
15. EXHIBITS and FINANCIAL STATEMENT SCHEDULES
(a)
Documents filed as a part of the report:
Financial
statement schedules other than those listed above have been omitted because the
required information is contained in the financial statements and notes thereto,
or because such schedules are not required or applicable.
Exhibits
identified in parentheses below, on file with the SEC, are incorporated herein
by reference as exhibits hereto. Unless otherwise indicated, all exhibits so
incorporated are from File No. 1-8610.
Exhibit
Number
16
17
18
19
31.1 Certification
of Principal Executive Officer
31.2 Certification
of Principal Financial Officer
We will
furnish to stockholders upon request, and without charge, a copy of the annual
report to stockholders and the proxy statement, portions of which are
incorporated by reference in the Form 10-K. We will furnish any other exhibit at
cost.
20
Schedule
II - Sheet 1
AT&T
INC.
SCHEDULE
II - VALUATION AND QUALIFYING ACCOUNTS
Allowance
for Uncollectibles
Dollars
in Millions
__________________
21
Schedule
II - Sheet 2
AT&T
INC.
SCHEDULE
II - VALUATION AND QUALIFYING ACCOUNTS
Accumulated
Amortization of Intangibles
Dollars
in Millions
__________________
SIGNATURES
Pursuant to the requirements of Section
13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized, on the 25th day of
February, 2009.
AT&T
INC.
Pursuant to the requirements of the
Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
date indicated.
Principal
Executive Officer:
Randall Stephenson*
Chairman of the Board, Chief
Executive Officer
and President
Principal
Financial and Accounting Officer:
Richard G. Lindner
Senior Executive Vice
President
and Chief Financial
Officer
* by
power of attorney
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| |||||||
