Events in the life of AT

Debt-Equity Ratio Computation
P.V. Viswanath

This is an exercise on how the debt-equity ratio can be computed, and how there is frequently no consistency between the number provided on different websites. The data and the computations below were obtained on Feb. 14, 2000.

Computation of the debt-equity ratio
Events in the life of AT&T as of early February 2000
Balance Sheet Information obtained from Disclosure (compiled from 10-K filings): 12/31/94 to 12/31/98
Balance Sheet Information obtained from Disclosure (compiled from 10-K filings): 12/31/89 to 12/31/93
10-Q filings filed on Nov. 3, 1999 (obtained from AT&T Website)

Computation of the debt-equity ratio

According to http://biz.yahoo.com/p/t/t.html, the debt-equity ratio for the most recent quarter is 0.41. According to the Profiles Help, this is defined as "Total Debt for the most recent fiscal quarter divided by Total Shareholder Equity for the same period." However, if we compute the debt-equity ratio (using information from the 10-Q filings posted on the AT&T website) as of Sept. 30, 1999, using D/E ratio = Long Term Debt/Shareholder Equity, we get (in billions) 22.073/74.763 = 0.295.

If we compute D/E ratio = Current plus long-term portion of long-term debt/shareholder equity, we get (in billions) (8.856 + 22.073)/74.763 = 0.414, which is close to the number provided in Yahoo.

The debt-equity ratio provided by msn.com ( http://moneycentral.msn.com/investor/invsub/results/hilite.asp?Symbol=t) is 0.30, which is substantially different from 0.41. However, the site declares: "Computed ratios are based on latest 12 months' results." Can we replicate this? Are the numbers for the end of 1998? For what date are they valid? Here are the ratios computed at various dates using the two different definitions, using data from the 10-Q filings posted at the AT&T website..

	Sept. 30, 1999	June 30, 1999	Mar 30, 1999	Dec. 30, 1998	Sept. 30, 1998
Debt defined excl. current portion	0.295	0.301	0.320	0.218	0.253
Debt defined incl. current portion	0.414	0.398	0.389	0.264	0.295

Clearly, the definition and/or the date used by MSN is unclear, which makes it much more difficult to use.

According to Quicken (http://www.quicken.com/investments/stats/?symbol=T), the ratio is 0.26. According to Quicken, this ratio is defined as follows: The ratio of a company's liabilities to its equity (total value of stock). Long-term debt-equity is the ratio of a company's long-term liabilities (debt that won't be paid off in one year) to its equity. Total debt-equity is the ratio of a company's long-term and current liabilities (debt that will be paid off within one year) to its equity.

Using data from the 10-K filings obtained from Disclosure, the numbers are:

As of date	12/31/98	12/31/97	12/31/96	12/31/95	12/31/94	12/31/93	12/31/92	12/31/91	12/31/90	12/31/89
Debt-Equity Ratio (incl current portion)	0.2636	0.5044	0.5091	1.1994	1.3964	1.5577	0.8564	0.9574	0.9094	0.8298
Debt-Equity Ratio (excl current portion)	0.2177	0.3318	0.3884	0.4945	0.6338	0.8040	0.4547	0.5228	0.5889	0.6393

Plotted over time, this gives us an idea of how AT&T has changed its capital structure over time.

Events in the life of AT&T as of early February 2000.

When a firm acquires another firm, the financial statements for previous years are restated so that it is possible to compare across years. In our case, there was a merger with TCI (renamed AT&T broadband and Internet services or "AB&IS"), which was completed on March 9, 1999, in an all-stock transaction valued at approximately $52 billion. A similar accounting procedure is followed when part of a company is sold.
(From AT&T's 10-Q filings on Nov. 3, 1999) In the first quarter of 1999 in connection with the merger and the formation of Liberty Media Group (LMG) from TCI's former programming business and technology investments business, AT&T issued a separate tracking stock designed to reflect the separate economic performance of LMG. A total of 1,080 million shares of Class A Liberty Media Group Tracking Stock and 110 million shares of Class B Liberty Media Group Tracking Stock were issued by AT&T. AT&T also issued an additional 60 million shares of Class A Liberty Media Group Tracking Stock in connection with the conversion of certain convertible notes. AT&T does not have a controlling financial interest for financial accounting purposes in LMG, therefore AT&T's investment in LMG has been reflected as an equity method investment in the accompanying consolidated financial statements. The amounts attributable to LMG are reflected in separate line items "Equity losses from Liberty Media Group" and "Investment in Liberty Media Group and related receivables, net", in the accompanying consolidated financial statements. As a separate tracking stock, all of the earnings or losses related to LMG are excluded from the earnings available to the holders of AT&T common stock. AB&IS' cable and certain other operations, including its ownership interest in At Home Corporation were combined with the existing AT&T operations to form the AT&T common stock group (AT&T Group).

The merger was recorded as a purchase. Accordingly, the operating results of AB&IS have been included in the accompanying consolidated financial statements since the date of acquisition. For accounting purposes the deemed effective date of the acquisition is March 1, 1999, since the impact of the results from March 1, 1999, through March 9, 1999, is deemed immaterial to our consolidated results. AB&IS' cable and certain other operations, including its ownership interest in At Home Corporation (Excite@Home), but excluding LMG, were combined with the existing operations of AT&T to form the AT&T Common Stock Group (AT&T Group).

Balance Sheet Information obtained from Disclosure (compiled from 10-K filings): 12/31/94 to 12/31/98

ANNUAL ASSETS (000s)
FISCAL YEAR ENDING	12/31/98	12/31/97	12/31/96	12/31/95	12/31/94
CASH	3,160,000	318,000	NA	129,000	1,208,000
MRKTABLE SECURITIES	NA	307,000	NA	NA	NA
RECEIVABLES	8,652,000	8,675,000	8,969,000	19,024,000	28,623,000
INVENTORIES	NA	NA	NA	NA	3,633,000
OTHER CURRENT ASSETS	2,306,000	7,477,000	8,104,000	2,935,000	4,147,000
TOTAL CURRENT ASSETS	14,118,000	16,777,000	17,073,000	22,088,000	37,611,000
PROP, PLANT & EQUIP	26,903,000	24,203,000	19,736,000	16,083,000	22,035,000
NET PROP & EQUIP	26,903,000	24,203,000	19,736,000	16,083,000	22,035,000
INVEST & ADV TO SUBS	4,434,000	3,866,000	3,875,000	3,646,000	2,708,000
OTHER NON-CUR ASSETS	670,000	2,895,000	2,382,000	8,194,000	4,513,000
DEFERRED CHARGES	2,074,000	2,156,000	10,004,000	1,793,000	8,402,000
INTANGIBLES	7,948,000	8,368,000	NA	8,056,000	NA
DEPOSITS & OTH ASSET	3,403,000	2,830,000	2,312,000	2,535,000	3,993,000
TOTAL ASSETS	59,550,000	61,095,000	55,382,000	62,395,000	79,262,000

ANNUAL LIABILITIES (000S)
FISCAL YEAR ENDING	12/31/98	12/31/97	12/31/96	12/31/95	12/31/94
ACCOUNTS PAYABLE	6,226,000	6,402,000	6,157,000	5,089,000	6,011,000
CUR LONG TERM DEBT	1,171,000	4,085,000	2,449,000	12,176,000	13,666,000
ACCRUED EXPENSES	1,986,000	2,390,000	2,614,000	2,908,000	4,105,000
OTHER CURRENT LIAB	6,059,000	4,440,000	4,931,000	4,407,000	7,148,000
TOTAL CURRENT LIAB	15,442,000	17,317,000	16,151,000	24,580,000	30,930,000
DEFERRED CHARGES/INC	5,453,000	8,853,000	4,827,000	5,446,000	4,921,000
LONG TERM DEBT	5,556,000	7,857,000	7,883,000	8,542,000	11,358,000
OTHER LONG TERM LIAB	7,577,000	3,390,000	6,226,000	6,553,000	13,039,000
TOTAL LIABILITIES	34,028,000	37,417,000	35,087,000	45,121,000	60,248,000
MINORITY INT (LIAB)	NA	NA	NA	NA	1,093,000
COMMON STOCK NET	1,754,000	1,789,000	1,623,000	1,596,000	1,569,000
CAPITAL SURPLUS	15,195,000	17,121,000	15,697,000	16,614,000	15,825,000
RETAINED EARNINGS	8,676,000	4,876,000	3,078,000	-687,000	687,000
OTHER EQUITIES	-103,000	-108,000	-103,000	-249,000	-160,000
SHAREHOLDER EQUITY	25,522,000	23,678,000	20,295,000	17,274,000	17,921,000
TOT LIAB & NET WORTH	59,550,000	61,095,000	55,382,000	62,395,000	79,262,000

Balance Sheet Information obtained from Disclosure (compiled from 10-K filings): 12/31/89 to 12/31/93

ANNUAL ASSETS (000s)
FISCAL YEAR ENDING	12/31/93	12/31/92	12/31/91	12/31/90	12/31/89
CASH	671,000	1,310,000	2,148,000	1,875,000	1,183,000
RECEIVABLES	23,664,000	19,609,000	16,526,000	13,413,000	9,555,000
INVENTORIES	3,222,000	2,659,000	3,125,000	3,125,000	3,206,000
OTHER CURRENT ASSETS	2,811,000	2,936,000	2,814,000	1,933,000	1,347,000
TOTAL CURRENT ASSETS	30,368,000	26,514,000	24,613,000	20,346,000	15,291,000
PROP, PLANT & EQUIP	21,015,000	19,358,000	18,689,000	18,661,000	15,919,000
NET PROP & EQUIP	21,015,000	19,358,000	18,689,000	18,661,000	15,919,000
INVEST & ADV TO SUBS	3,060,000	864,000	976,000	1,471,000	1,187,000
OTHER NON-CUR ASSETS	3,815,000	3,643,000	3,180,000	2,658,000	1,709,000
DEFERRED CHARGES	7,570,000	3,480,000	3,084,000	NA	NA
DEPOSITS & OTH ASSET	3,565,000	3,329,000	2,813,000	5,186,000	3,581,000
TOTAL ASSETS	69,393,000	57,188,000	53,355,000	48,322,000	37,687,000

ANNUAL LIABILITIES (000S)
FISCAL YEAR ENDING	12/31/93	12/31/92	12/31/91	12/31/90	12/31/89
ACCOUNTS PAYABLE	4,853,000	5,045,000	4,989,000	4,846,000	4,763,000
CUR LONG TERM DEBT	11,063,000	7,600,000	7,053,000	5,090,000	2,426,000
ACCRUED EXPENSES	3,802,000	3,336,000	3,259,000	2,896,000	2,571,000
OTHER CURRENT LIAB	6,336,000	5,405,000	5,690,000	4,200,000	2,477,000
TOTAL CURRENT LIAB	26,054,000	21,386,000	20,991,000	17,032,000	12,237,000
DEFERRED CHARGES/INC	2,764,000	5,191,000	4,333,000	4,139,000	3,178,000
LONG TERM DEBT	11,802,000	8,604,000	8,484,000	9,354,000	8,144,000
OTHER LONG TERM LIAB	13,446,000	2,634,000	2,902,000	1,599,000	1,390,000
TOTAL LIABILITIES	54,066,000	37,815,000	36,710,000	32,124,000	24,949,000
MINORITY INT (LIAB)	648,000	452,000	417,000	315,000	NA
PREFERRED STOCK	1,305,000	NA	NA	NA	NA
COMMON STOCK NET	1,547,000	1,340,000	1,309,000	1,275,000	1,076,000
CAPITAL SURPLUS	14,324,000	11,425,000	10,624,000	9,497,000	8,700,000
RETAINED EARNINGS	-2,110,000	6,498,000	4,599,000	5,580,000	2,962,000
OTHER EQUITIES	-387,000	-342,000	-304,000	-469,000	NA
SHAREHOLDER EQUITY	14,679,000	18,921,000	16,228,000	15,883,000	12,738,000
TOT LIAB & NET WORTH	69,393,000	57,188,000	53,355,000	48,322,000	37,687,000

10-Q filings filed on Nov. 3, 1999 (obtained from AT&T Website)

                           CONSOLIDATED BALANCE SHEETS
                   (Dollars in Millions Except Share Amounts)
                                   (Unaudited)

                                                    September 30,   December 31,
                                                           1999           1998
ASSETS

Cash and cash equivalents ...........................  $      -        $ 3,160

Receivables, less allowances of $1,488 and $1,060....    10,629          9,055

Deferred income taxes................................     1,638          1,310

Other current assets.................................       773            593

TOTAL CURRENT ASSETS.................................    13,040         14,118

Property, plant and equipment, net of accumulated
  depreciation of $28,886 and $25,374................    36,475         26,903

Franchise costs, net of accumulated amortization
  of $509............................................    32,122              -

Licensing costs, net of accumulated amortization
  of $1,430 and $1,266...............................     8,353          7,948

Goodwill, net of accumulated amortization of
  $304 and $226......................................     7,214          2,205

Investment in Liberty Media Group and related
  receivables, net...................................    35,519              -

Other investments....................................    20,211          4,434

Prepaid pension costs................................     2,364          2,074

Other assets.........................................     6,508          1,868

TOTAL ASSETS.........................................  $161,806        $59,550

                                    (CONT'D)

                                                         AT&T Form 10-Q - Part I

                       CONSOLIDATED BALANCE SHEETS (CONT'D)
                   (Dollars in Millions Except Share Amounts)
                                   (Unaudited)

                                                    September 30,   December 31,
                                                           1999         1998
LIABILITIES

Accounts payable.....................................  $  5,915      $ 6,226
Payroll and benefit-related liabilities..............     2,278        1,986
Debt maturing within one year........................     8,856        1,171
Dividends payable....................................       703          581
Other current liabilities............................     5,763        5,478

TOTAL CURRENT LIABILITIES............................    23,515       15,442

Long-term debt.......................................    22,073        5,556
Long-term benefit-related liabilities................     4,248        4,255
Deferred income taxes................................    24,708        5,453
Other long-term liabilities and deferred credits.....     3,752        3,213

TOTAL LIABILITIES ...................................    78,296       33,919

Minority Interest in Equity of Consolidated
  Subsidiaries.......................................     2,401          109

Company-Obligated Convertible Quarterly Income
  Preferred Securities of Subsidiary Trust Holding
  Solely Subordinated Debt Securities of AT&T........     4,697            -

Subsidiary-Obligated Mandatorily Redeemable Preferred
  Securities of Subsidiary Trusts Holding Solely
  Subordinated Debt Securities of an AT&T
  Subsidiary.........................................     1,649            -

SHAREOWNERS' EQUITY
Common Stock:
AT&T Common Stock, $1 par value,  authorized
  6,000,000,000  shares;  issued and outstanding
  3,195,633,438  shares  (net of  287,528,136  treasury
  shares) at September  30,  1999 and  2,630,391,784
  shares (net of  80,222,341 treasury shares) at
  December 31, 1998..................................     3,196        2,630
Liberty Media Group Class A Tracking Stock, $1 par
  value, authorized 2,500,000,000 shares; issued
  and outstanding 1,156,751,950 shares at
  September 30, 1999.................................     1,157            -
Liberty Media Group Class B Tracking Stock, $1 par
  value, authorized 250,000,000 shares; issued
  and outstanding 108,421,708 shares at
  September 30, 1999.................................       108            -
Additional Paid-in Capital:
  AT&T Common Stock..................................    27,506       15,195
  Liberty Media Group Stock..........................    32,663            -
Guaranteed ESOP obligation...........................       (17)         (44)
Retained Earnings (Accumulated Deficit):
  AT&T Common Stock..................................     8,409        7,800
  Liberty Media Group Stock..........................      (818)           -
Accumulated other comprehensive income...............     2,559          (59)
TOTAL SHAREOWNERS' EQUITY............................    74,763       25,522

TOTAL LIABILITIES & SHAREOWNERS' EQUITY..............  $161,806      $59,550