This excerpt taken from the T 8-K filed Jul 24, 2007.
Ramp in Revenue Growth
In the second quarter of 2007, AT&T reported revenues of $29.5 billion, up from $15.8 billion in the year-earlier quarter, prior to AT&Ts acquisition of BellSouth Corporation and the accompanying consolidation of wireless results.
In addition to historical reported results, to provide further basis for comparison, AT&T provides pro forma results, which combine revenues from AT&T, BellSouth and Cingular Wireless consistently for all periods. On this basis, AT&T's second-quarter 2007 revenues totaled $29.8 billion, up 2.0 percent versus results for the year-earlier quarter. This increase is up from year-over-year pro forma revenue growth of 1.7 percent for the first quarter of 2007 and 1.3 percent for the quarter before that.
This ramp in revenue growth reflects AT&Ts strengthened double-digit gain in wireless revenues along with substantially improved trends in enterprise services. In addition, AT&Ts regional business revenues delivered continued solid growth, regional consumer revenues were up modestly reflecting growth in total
consumer connections, and Advertising & Publishing revenues were stable. These results more than offset anticipated declines in wholesale and national mass markets, where trends were in line with recent quarters.
Continued Strong Growth in Adjusted Earnings Per Share
AT&Ts reported net income for the second quarter totaled $2.9 billion, compared with $1.8 billion in the year-earlier quarter. Reported earnings per diluted share totaled $0.47 versus $0.46 in the second quarter of 2006.
Compared with reported results in the second quarter of 2006, AT&Ts reported operating expenses were $24.5 billion, up from $13.2 billion; reported operating income was $4.9 billion, up from $2.6 billion; and AT&Ts reported operating income margin was 16.8 percent versus 16.5 percent.
AT&Ts adjusted second-quarter earnings, which exclude costs and accounting effects associated with major acquisitions, were $4.3 billion, or $0.70 per diluted share, up from $2.3 billion, or $0.58 per diluted share, in the year-earlier quarter. Second-quarter adjusted earnings per share reflect improved revenue trends combined with solid execution to realize merger synergies, with a one cent benefit from state tax law changes and a one cent benefit from the sale of non-strategic assets.
AT&Ts adjusted operating income for the second quarter of 2007 was $7.1 billion, compared with $3.0 billion in the year-earlier quarter. AT&Ts adjusted operating income margin was 23.9 percent, up from 19.0 percent in the second quarter of 2006. AT&T expects to continue to operate at the top end of its previously provided outlook for a 2007 adjusted operating income margin range of 23 percent to 24 percent.
Costs for AT&Ts U-verse initiative, which delivers advanced television and high speed Internet services, continue to be in line with the companys previous outlook. AT&Ts major merger integration initiatives continue on schedule, and merger synergies continue to run ahead of the companys original outlook. Cost savings from BellSouth and AT&T Corp. merger integration in the first half of 2007 totaled $1.9 billion, approximately one-third capital and two-thirds expense. AT&T continues to expect synergies from these mergers will reach more than $3 billion for the full year 2007, growing to more than $5 billion in 2008.