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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 8-K/A#4
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: August 16, 1993
AT&T Corp.
A New York Commission File I.R.S. Employer
Corporation No. 1-1105 No. 13-4924710
32 Avenue of the Americas, New York, New York 10013-2412
Telephone Number (212) 387-5400
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Form 8-K/A#4 AT&T Corp.
August 16, 1993
Item 5. Other Events.
On August 16, 1993, AT&T Corp. ("AT&T") and McCaw Cellular
Communications, Inc. ("McCaw") entered into a definitive merger agreement
(the "Merger Agreement"). The Merger Agreement provides for the merger of
McCaw and a subsidiary of AT&T (the "Merger"), as a result of which McCaw
will become a wholly owned subsidiary of AT&T. (See Item 5. Other
Information in Part II of the registrant's Form 10-Q for the period ended
June 30, 1993.)
AT&T has the following effective registration statements on Form S-3
for continuous offerings under Rule 415 of the Securities Act of 1933:
(1) Shareowner Dividend Reinvestment and Stock Purchase Plan (R.S.
No. 33-49093); and
(2) $2,600,000,000 Notes and Warrants (R.S. No. 33-49589)
AT&T is filing the following information as required by Item 11(b)of
Form S-3.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(b) Pro Forma Financial Information.
Page
(1) Unaudited Pro Forma Combined Financial Statements 3
(2) Unaudited Pro Forma Combined Statement of Income for 4
the Three Months Ended March 31, 1994
(3) Unaudited Pro Forma Combined Statement of Income for 5
the Three Months Ended March 31, 1993
(4) Unaudited Pro Forma Combined Balance Sheet at March 6
31, 1994
(5) Notes to Unaudited Pro Forma Combined Financial 8
Statements
2
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Form 8-K/A#4 AT&T Corp.
August 16, 1993
AT&T AND SUBSIDIARIES AND McCAW AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following Unaudited Pro Forma Combined Statements of Income and
Balance Sheet give effect to the Merger on a pooling-of-interests basis of
accounting. These Unaudited Pro Forma Combined Financial Statements have
been prepared from the historical consolidated financial statements of AT&T
and McCaw and should be read in conjunction therewith.
This pro forma combined information is not necessarily indicative of
actual or future operating results or financial position that would have
occurred or will occur upon consummation of the Merger.
The Unaudited Pro Forma Combined Balance Sheet gives effect to the
Merger as if it had occurred on March 31, 1994, combining the balance
sheets of AT&T and McCaw at March 31, 1994. The Unaudited Pro Forma
Combined Statements of Income give effect to the Merger as if it had
occurred at the beginning of each of the periods presented, combining the
results of AT&T and McCaw for the three month periods ended March 31, 1994
and 1993.
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Form 8-K/A#4 AT&T Corp.
August 16, 1993
AT&T AND SUBSIDIARIES AND McCAW AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
Three Months Ended March 31, 1994
(Dollars in Millions, Except Per Share Amounts)
Historical Pro Forma
AT&T McCaw Adjustments Combined
Sales and Revenues
Telecommunications services........... $10,224 $506 $10,730
Sales of products and systems......... 4,070 - 4,070
Rentals and other services............ 1,575 125 1,700
Financial services and leasing........ 691 - 691
Total revenues................... 16,560 631 17,191
Costs
Telecommunications services........... 6,260 195 6,455
Products and systems.................. 2,440 - 2,440
Rentals and other services............ 774 76 850
Financial services and leasing........ 452 - 452
Total costs...................... 9,926 271 10,197
Gross margin.......................... 6,634 360 6,994
Operating Expenses
Selling, general and administrative
expenses............................ 4,102 280 4,382
Research and development expenses..... 758 - 758
Total operating expenses......... 4,860 280 5,140
Operating income...................... 1,774 80 1,854
Other income, net..................... 119 33 152
Interest expense...................... 129 67 196
Income before income taxes and
preferred stock dividend of a
subsidiary.......................... 1,764 46 1,810
Provision for income taxes ........... 670 20 690
Provision for preferred stock
dividend of a subsidiary............ - 34 34
Net Income (Loss)..................... $ 1,094 $ (8) $ 1,086
Weighted average common shares
outstanding......................... 1,360 209 (14)(3B) 1,555
Earnings per common share............. $ 0.80 $ 0.70
Dividends declared per common share... $ 0.33 $ 0.33
See accompanying notes to unaudited pro forma combined financial
statements.
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Form 8-K/A#4 AT&T Corp.
August 16, 1993
AT&T AND SUBSIDIARIES AND McCAW AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
Three Months Ended March 31, 1993
(Dollars in Millions, Except Per Share Amounts)
Historical Pro Forma
AT&T McCaw Adjustments Combined
Sales and Revenues
Telecommunications services......... $ 9,967 $393 $10,360
Sales of products and systems....... 3,554 - 3,554
Rentals and other services.......... 1,628 87 1,715
Financial services and leasing...... 570 - 570
Total revenues................. 15,719 480 16,199
Costs
Telecommunications services......... 6,293 164 6,457
Products and systems................ 2,069 - 2,069
Rentals and other services.......... 788 42 830
Financial services and leasing...... 377 - 377
Total costs.................... 9,527 206 9,733
Gross margin........................ 6,192 274 6,466
Operating Expenses
Selling, general and administrative
expenses.......................... 3,917 195 4,112
Research and development expenses... 747 - 747
Total operating expenses....... 4,664 195 4,859
Operating income.................... 1,528 79 1,607
Other income, net................... 143 75 218
Interest expense.................... 202 109 311
Income before income taxes,
preferred stock dividend of a
subsidiary and cumulative effects
of accounting changes............. 1,469 45 1,514
Provision for income taxes ......... 533 25 558
Provision for preferred stock
dividend of a subsidiary.......... - 34 34
Income (loss) before cumulative
effects of accounting changes..... 936 (14) 922
Cumulative effects on prior years of
changes in accounting for:
Postretirement benefits, net... (7,023) - (7,023)
Postemployment benefits, net... (1,128) - (1,128)
Income taxes................... 383 - $(1,840)(3C)(1,457)
Net Loss............................ $(6,832) $(14) $(1,840) $(8,686)
Weighted average common shares
outstanding.......... ............ 1,347 192 (6)(3B) 1,533
Per common share:
Income before cumulative effects of
accounting changes................ $ 0.69 $ 0.60
Cumulative effects of accounting
changes........................... (5.76) (6.27)
Net loss............................ $ (5.07) $ (5.67)
Dividends declared per common share. $ 0.33 $ 0.33
See accompanying notes to unaudited pro forma combined financial statements
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Form 8-K/A#4 AT&T Corp.
August 16, 1993
AT&T AND SUBSIDIARIES AND McCAW AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
March 31, 1994
(Dollars in millions)
Historical Pro Forma
AT&T McCaw Adjustments Combined
ASSETS
Cash and temporary cash
investments ................. $ 793 $ 216 $ 1,009
Receivables, net of allowances
Accounts receivable ......... 11,814 354 12,168
Finance receivables ......... 11,314 - 11,314
Inventories ................... 3,857 60 3,917
Deferred income taxes ......... 2,258 - 2,258
Other current assets .......... 623 93 716
Total current assets ..... 30,659 723 31,382
Property, plant and
equipment, net .............. 19,229 1,680 20,909
Licensing costs, net .......... - 4,008 4,008
Investments ................... 1,428 1,948 $(400)(3B) 2,976
Finance receivables ........... 3,972 - 3,972
Prepaid pension costs ......... 3,738 - 3,738
Other assets, net ............. 2,983 857 (39)(3C) 3,801
TOTAL ASSETS .................. $62,009 $9,216 $(439) $70,786
LIABILITIES and
DEFERRED CREDITS
Accounts payable .............. $ 5,156 $ 107 $ 5,263
Payroll and benefit-related
liabilities ................. 2,988 51 3,039
Postretirement and postemploy-
ment benefit liabilities .... 1,096 - 1,096
Debt maturing within one year . 9,671 173 9,844
Dividends payable ............. 448 - 448
Other current liabilities ..... 5,196 363 5,559
Total current liabilities. 24,555 694 25,249
Long-term debt, including
capital leases .............. 7,387 5,098 12,485
Postretirement and postemploy-
ment benefit liabilities..... 9,318 - 9,318
Other liabilities ............. 4,481 64 4,545
Deferred income taxes ......... 206 1,973 2,179
Unamortized investment tax ....
credits ..................... 256 - 256
Other deferred credits......... 386 - 386
Total liabilities and
deferred credits ....... 46,589 7,829 54,418
Minority interests............. 618 71 689
Redeemable preferred stock
of a subsidiary ............. - 1,339 1,339
(continued)
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Form 8-K/A#4 AT&T Corp.
August 16, 1993
AT&T AND SUBSIDIARIES AND McCAW AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
(continued)
March 31, 1994
(Dollars in millions)
Historical Pro Forma
AT&T McCaw Adjustments Combined
SHAREOWNERS' EQUITY
Common stock ............... $ 1,357 $ 2 $ 193 (3A) $ 1,552
Additional paid-in capital . 12,269 2,912 (193)(3A) 14,588
(400)(3B)
Guaranteed ESOP
obligation ............... (331) - (331)
Foreign currency translation
adjustments .............. 20 - 20
Retained earnings (deficit). 1,487 (2,937) (39)(3C) (1,489)
Total shareowners'
equity (deficiency).. 14,802 (23) (439) 14,340
TOTAL LIABILITIES
& SHAREOWNERS' EQUITY .... $62,009 $9,216 $(439) $70,786
See accompanying notes to unaudited pro forma combined financial
statements.
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Form 8-K/A#4 AT&T Corp.
August 16, 1993
AT&T AND SUBSIDIARIES AND McCAW AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
(Dollars in millions, except per share amounts)
Note 1 - McCaw Historical Presentation
Certain amounts reported in McCaw's historical financial statements
have been reclassified to conform to the AT&T presentations in the
accompanying Unaudited Pro Forma Combined Balance Sheet and Statements of
Income. Such reclassifications are not material to the Unaudited Pro Forma
Combined Financial Statements.
Note 2 - Exchange Ratio
As defined in the Merger Agreement, the Exchange Ratio will be one
AT&T Common Share for each share of McCaw Common Stock; provided, however,
that (i) in the event the Closing Date Market Price of one AT&T Common
Share (as such terms are defined in the Merger Agreement) is less than
$53.00, the Exchange Ratio will be equal to $53.00 divided by the Closing
Date Market Price of one AT&T Common Share, but in no event greater than
1.111 AT&T Common Shares, and (ii) in the event the Closing Date Market
Price of one AT&T Common Share is greater than $71.73, the Exchange Ratio
will be equal to $71.73 divided by the Closing Date Market Price of one
AT&T Common Share, but in no event less than .909 of an AT&T Common Share.
For purposes of the Unaudited Pro Forma Combined Financial Statements, an
Exchange Ratio of one AT&T Common Share per share of McCaw Common Stock (as
defined in the Merger Agreement) is assumed.
Note 3 - Other Pro Forma Adjustments
(A) The McCaw Common Stock account has been adjusted to reflect the
assumed exchange of one AT&T Common Share, par value $1.00 per share, for
each of approximately 194.6 million shares of McCaw Common Stock, par value
$.01 per share, outstanding at March 31, 1994 (excluding shares of McCaw
Common Stock held by AT&T - see Note 3(B)). The difference between the par
value of the AT&T Common Shares and the par value of the McCaw Common
Stock, after giving effect to the assumed Exchange Ratio, is reflected as a
reduction to additional paid-in capital of $193.
(B) The $400 investment by AT&T in 14.5 million shares of Class A
Common Stock purchased in February 1993 has been eliminated. The weighted
average common shares outstanding for the three months ended March 31, 1993
and March 31, 1994 have been adjusted to eliminate the impact of this
investment.
(C) McCaw's historical financial statements reflect the adoption of
SFAS No. 109, "Accounting for Income Taxes," retroactive to January 1,
1991. AT&T adopted SFAS No. 109 effective January 1, 1993. For conformity
purposes, the pro forma combined information for AT&T and McCaw has been
adjusted as if McCaw had adopted SFAS No. 109 on January 1, 1993. Such
adoption would result in the use of different tax assumptions related to
intangible assets McCaw acquired in purchase business combinations in 1991
and 1992 that would increase the cumulative effect of adopting SFAS No. 109
by $39. Accordingly, the pro forma combined net income and earnings per
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Form 8-K/A#4 AT&T Corp.
August 16, 1993
common share have been decreased $1,840 and $1.20 for the period ended
March 31, 1993, respectively. Pro forma combined total assets and
shareowners' equity have been decreased $39 at March 31, 1994. Also,
effective January 1, 1993, AT&T adopted SFAS No. 112, "Employers'
Accounting for Postemployment Benefits." McCaw adopted SFAS No. 112
effective January 1, 1994. The impact of this standard on McCaw's
financial statements is immaterial.
(D) No adjustments have been reflected in the Unaudited Pro Forma
Combined Financial Statements for direct expenses related to the Merger.
Direct expenses included in the historical periods presented have not been
adjusted for in the Unaudited Pro Forma Combined Financial Statements.
Such amounts are not material.
(E) No adjustments to eliminate intercompany transactions and balances
have been made in the Unaudited Pro Forma Combined Financial Statements as
such amounts are not material.
(F) The cash dividends per common share in the Unaudited Pro Forma
Combined Financial Statements reflect AT&T's cash dividends declared in the
periods presented. McCaw has never paid cash dividends on the McCaw Common
Stock.
Note 4 - Federal Income Tax Consequences of the Merger
The Unaudited Pro Forma Combined Financial Statements assume that the
Merger qualifies as a "tax-free" reorganization for federal income tax
purposes.
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Form 8-K/A#4 AT&T Corp.
August 16, 1993
SIGNATURES
Pursuant to the requirements 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.
AT&T Corp.
By S. L. Prendergast
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S. L. Prendergast
Vice President and Treasurer
May 19, 1994
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