EX-99 2 eightkexh99072005.txt EXHIBIT 99.1 - PRESS RELEASE DATED JULY 20, 2005 Exhibit 99.1 News Release -------------------------------------------------------------------------------- FOR RELEASE WEDNESDAY, JULY 20, 2005 AT&T Announces Second-Quarter 2005 Earnings o Second-quarter earnings per diluted share of $0.38 o Consolidated revenue of $6.8 billion o Operating income of $819 million BEDMINSTER, N.J. -- AT&T (NYSE: T) today reported net income of $307 million, or earnings per diluted share of $0.38, for the second quarter of 2005. This performance includes the following pretax items: o a loss of $206 million, or $0.15 per diluted share, related to debt repurchases completed in the quarter o "deal costs" of $59 million, or $0.06 per diluted share, related to AT&T's pending merger with SBC Communications o net restructuring and other charges of $36 million, or $0.03 per diluted share, primarily related to facilities closings When compared to last year, current quarter performance also reflects lower pretax depreciation expense of $548 million, or $0.42 per diluted share, resulting from asset impairment charges taken in the third quarter of 2004. The company's current-quarter net income compares to net income of $108 million, or earnings per diluted share of $0.14, in the second quarter of 2004, which included a pretax restructuring charge of $54 million, or $0.04 per diluted share. "AT&T's second quarter results demonstrate our continued focus on executing in the marketplace, managing costs, and strengthening our competitive position with enterprise customers," said AT&T Chairman and Chief Executive Officer David W. Dorman. "Given the overwhelming shareholder support we received for our merger with SBC, we look forward to securing all appropriate regulatory approvals and completing this transaction in a timely manner." AT&T reported second-quarter 2005 consolidated revenue of $6.8 billion, which included $5.2 billion from AT&T Business and $1.6 billion from AT&T Consumer. Consolidated revenue declined 11.5 percent versus the second quarter of 2004, primarily due to continued declines in long distance (LD) voice and data revenue. The company reported consolidated EBITDA, excluding $36 million of net restructuring and other charges, of $1.5 billion in the second quarter of 2005, for an EBITDA margin of 22.0 percent. EBITDA was negatively impacted by the $59 million of deal costs relating to the pending merger with SBC Communications. This compares to consolidated EBITDA of $1.6 billion and an EBITDA margin of 21.4 percent in the prior-year second quarter, excluding net restructuring and other charges of $54 million. The company noted that ongoing efforts to reduce costs, including process improvement and related headcount reduction efforts, as well as strategic reductions in marketing expenses within AT&T Consumer, contributed to its improved EBITDA margin performance for the quarter. AT&T's second-quarter 2005 operating income totaled $819 million, yielding a consolidated operating margin of 12.1 percent. The operating margin was negatively impacted by $59 million of deal costs related to the pending merger with SBC Communications and $36 million of net restructuring and other charges, and positively impacted by a benefit from lower depreciation of $548 million, resulting from asset impairment charges taken during the third quarter of 2004. The company's current-quarter performance compares to consolidated operating income of $348 million and a margin of 4.6 percent in the prior-year second quarter, which included $54 million of net restructuring and other charges. AT&T UNIT HIGHLIGHTS AT&T Business o Revenue was $5.2 billion, a decline of 8.1 percent from the prior-year second quarter, primarily driven by ongoing pricing pressure in traditional voice and data services. Revenue was positively impacted by strong year-over-year growth in IP&E services. o Long distance voice revenue decreased 12.8 percent from the prior-year second quarter. Growth rates were negatively affected by continued pricing pressure, partially offset by a slight increase in overall volumes, as growth in wholesale volumes more than offset the decline in retail volumes. o Local voice revenue declined 9.9 percent from the prior-year second quarter, reflecting declines in reciprocal compensation revenue, as well as lower payphone-related revenue as a result of the sale of the company's National Public Markets business. The decline also reflects the company's ongoing strategy of selectively approaching the small business market, placing a greater focus on profitability than overall market share. AT&T continued to see the impact of this strategic change as the number of local access lines declined. o Data revenue declined 10.2 percent from the prior-year second quarter as a result of pricing pressure and technology migration. o IP&E-services revenue grew 9.5 percent over the prior-year second quarter, reflecting AT&T's ongoing transformation to next-generation networking services such as Enhanced Virtual Private Network (E-VPN) and IP-enabled frame relay services, partially offset by declines in Managed Internet Access. o Operating income totaled $528 million for the second quarter of 2005, yielding an operating margin of 10.2 percent, compared with operating income of $152 million and an operating margin of 2.7 percent in the prior year second quarter. Operating income was positively impacted in the second quarter of 2005 by a $513 million net benefit from lower depreciation as a result of asset impairment charges taken during the third quarter of 2004, as well as an $18 million benefit from the reversal of net restructuring and other charges, and was negatively impacted in the second quarter of 2004 by $52 million of net restructuring and other charges. Exclusive of these items, the decline in operating income in the second quarter of 2005 reflects decreased long distance voice and data services revenue resulting from continued competitive pricing pressures and favorable access expense settlements in the second quarter of 2004. o EBITDA, excluding net restructuring and other charges, was $1.1 billion during the quarter, yielding a margin of 21.5 percent. This compares with EBITDA, excluding net restructuring and other charges, of $1.4 billion in the prior year second quarter, which yielded a margin of 24.6 percent. o Capital expenditures were $387 million as AT&T Business continues to upgrade its network and integrate its systems to further rationalize the company's cost structure, improve the customer experience and support growth in next-generation products and services. o During the quarter, a number of sizable customer wins and contract extensions were signed with such leading companies as Toyota Industries Corporation, Bridgestone Group, Whirlpool, Prudential and Blue Cross Blue Shield Association. o According to a recent study of U.S.-based multinational corporations (MNCs) published by the Yankee Group, AT&T is clearly the industry's leading primary provider for business voice and data services, and cited as the best-positioned global network provider by 60 percent of 270 U.S. based MNCs polled. AT&T Consumer o Revenue was $1.6 billion, a decline of 20.8 percent versus the prior-year second quarter, largely driven by a decline in standalone long distance revenue due to volume declines associated with competitive customer losses and the continued impact of wireless and Internet substitution, partially offset by targeted price increases. Decreased bundled revenue also contributed to the revenue decline. o Operating income totaled $489 million, yielding an operating margin of 30.7 percent, compared with operating income of $240 million and an operating margin of 11.9 percent in the prior-year second quarter. Current-quarter operating income was negatively impacted by net restructuring and other charges of $10 million and was positively impacted by a $35 million net benefit from lower depreciation as a result of asset-impairment charges taken during the third quarter of 2004. o The year-over-year increase in operating income and margin reflects a significant reduction in selling, general and administrative expenses, primarily attributable to the strategic decision to discontinue marketing for residential local and standalone long distance (LD) customers. OTHER CONSOLIDATED FINANCIAL HIGHLIGHTS o Based on the trends experienced through the first half of 2005, AT&T now expects consolidated revenue for the full year to be at or slightly above the high end of its original range of $25.0 - $26.0 billion. o Free cash flow was $176 million for the quarter. Free cash flow is defined as cash flows provided by operating activities of $548 million less cash used for capital expenditures and other additions of $372 million. o AT&T ended the quarter with net debt of $5.6 billion. Net debt is defined as total debt of $7.7 billion less cash of $1.9 billion and net foreign debt fluctuations of $0.2 billion. o AT&T redeemed $1.25 billion in bonds tendered in a buyback offer that the company completed in early April 2005. The buyback will reduce interest expense by $0.1 billion throughout 2005 and resulted in a second quarter pretax loss of $0.2 billion recorded in other (expense) income. o Consolidated capital expenditures for the quarter were $393 million. DEFINITIONS and NOTES AT&T Business LD Voice - includes all of AT&T's domestic and international LD revenue, including Intralata toll when purchased as part of an LD calling plan. Local Voice - includes all local calling and feature revenue, Intralata toll when purchased as part of a local calling plan, as well as Inter-carrier local revenue. Data Services- includes bandwidth services (dedicated private line services through high-capacity optical transport), frame relay and asynchronous transfer mode (ATM) revenue for LD and local, as well as revenue for managed data services. Internet Protocol & Enhanced Services (IP&E-services) - includes all services that ride on the IP common backbone or that use IP technology, including managed IP services, as well as application services (e.g., hosting, security). Outsourcing, Professional Services & Other - includes complex bundled solutions primarily in the wide area/local area network space, AT&T's professional services revenue associated with the company's federal government customers, as well as all other Business Services revenue (and eliminations) not previously defined. Data, IP&E-Services - Percent Managed - managed services refers to AT&T's management of a client's network or network and applications including applications that extend to the customer premise equipment. Data, IP&E-Services - Percent International - a data service that either originates or terminates outside of the United States, or an IP&E-service installed or wholly delivered outside the United States. AT&T Consumer Bundled Services - includes any customer with a local relationship as a starting point, and all other AT&T subscription-based voice products provided to that customer. Standalone LD, Transactional & Other Services - includes any customer with solely a long distance relationship, non-voice products, or a non subscription-based relationship. Local Customers - residential customers who subscribe to AT&T local service. Other Definitions and Notes EBITDA - represents operating income plus depreciation and amortization. Foreign currency fluctuations - represents mark-to-market adjustments, net of cash collateral collected, that increased the debt balance by approximately $0.2 billion at June 30, 2005, from December 31, 2004, on non-U.S. denominated debt of about $0.6 billion. AT&T has entered into foreign exchange hedges that substantially offset the fluctuations in the debt balance. The offsetting mark-to-market adjustments of the hedges are included in "other current assets" and "other assets" on the balance sheet. ------------------------------------------------------------------------------------------------------------------------------------

AT&T Corp. Consolidated Statements of Income (Unaudited) Dollars in millions (except per share amounts) For the Three Months Ended For the Six Months Ended June 30, June 30, 2005 2004 2005 2004 REVENUE AT&T Business $ 5,155 $ 5,611 $ 10,474 $ 11,483 AT&T Consumer 1,593 2,011 3,278 4,118 Corporate and Other 12 14 23 25 ------------------------------- ------------------------------- Total Revenue 6,760 7,636 13,775 15,626 OPERATING EXPENSES Access and other connection 2,390 2,481 4,794 5,119 Costs of services and products 1,560 1,759 3,188 3,623 Selling, general and administrative 1,325 1,763 2,602 3,507 Depreciation and amortization 630 1,231 1,266 2,481 Asset impairment and net restructuring and other charges 36 54 36 267 ------------------------------- ------------------------------- Total operating expenses 5,941 7,288 11,886 14,997 Operating income 819 348 1,889 629 Other (expense) income, net (153) 36 (123) (138) Interest (expense) (169) (191) (372) (419) ------------------------------- ------------------------------- Income before income taxes and net income related to equity investments 497 193 1,394 72 (Provision) benefit for income taxes (198) (87) (566) 339 Minority interest income - 1 - 1 Net income related to equity investments 8 1 8 - ------------------------------- ------------------------------- Net income $ 307 $ 108 $ 836 $ 412 =============================== =============================== Weighted-average common shares (millions) 801 794 801 794 Weighted-average common shares and potential common shares (millions) 809 797 807 796 Earnings per basic and diluted share $ 0.38 $ 0.14 $ 1.04 $ 0.52 Dividends declared per share $0.2375 $0.2375 $ 0.4750 $ 0.4750 ------------------------------------------------------------------------------------------------------------------------------------

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AT&T Corp. Consolidated Statements of Operations (Unaudited) Dollars in millions (except per share amounts) 2Q05 1Q05 4Q04 3Q04 2Q04 1Q04 2004 REVENUE AT&T Business $ 5,155 $ 5,319 $ 5,454 $ 5,645 $ 5,611 $ 5,872 $ 22,582 AT&T Consumer 1,593 1,685 1,806 1,980 2,011 2,107 7,904 Corporate and Other 12 11 13 13 14 11 51 Total revenue 6,760 7,015 7,273 7,638 7,636 7,990 30,537 OPERATING EXPENSES Access and other connection 2,390 2,404 2,924 2,411 2,481 2,638 10,454 Costs of services and products 1,560 1,628 1,668 1,783 1,759 1,864 7,074 Selling, general and administrative 1,325 1,277 1,397 1,653 1,763 1,744 6,557 Depreciation and amortization 630 636 640 647 1,231 1,250 3,768 Asset impairment and net restructuring and other charges 36 - 36 12,469 54 213 12,772 Total operating expenses 5,941 5,945 6,665 18,963 7,288 7,709 40,625 Operating income (loss) 819 1,070 608 (11,325) 348 281 (10,088) Other (expense) income, net (153) 30 28 (34) 36 (174) (144) Interest (expense) (169) (203) (192) (192) (191) (228) (803) Income (loss) before income taxes, minority interest income and net earnings (losses) related to equity investments 497 897 444 (11,551) 193 (121) (11,035) (Provision) benefit for income taxes (198) (368) (181) 4,402 (87) 426 4,560 Minority interest income - - - - 1 - 1 Net earnings (losses) related to equity investments 8 - 3 2 1 (1) 5 Net income (loss) $ 307 $ 529 $ 266 $ (7,147) $ 108 $ 304 $ (6,469) Weighted-average common shares (millions) 801 800 797 795 794 793 795 Weighted-average common shares and potential common shares (millions) 809 806 803 795 797 796 795 Earnings (loss) per basic and diluted share $ 0.38 $ 0.66 $ 0.33 $ (8.99) $ 0.14 $ 0.38 $ (8.14) ------------------------------------------------------------------------------------------------------------------------------------

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AT&T Corp. Historical Segment Data (Unaudited) Dollars in millions 2Q05 1Q05 4Q04 3Q04 2Q04 1Q04 2004 AT&T Business LD Voice $ 2,080 $ 2,168 $ 2,163 $ 2,364 $ 2,386 $ 2,613 $ 9,526 Local Voice 364 371 490 390 404 389 1,673 Total Voice 2,444 2,539 2,653 2,754 2,790 3,002 11,199 Data Services 1,518 1,585 1,595 1,693 1,690 1,715 6,693 IP&E-Services 619 589 625 587 565 553 2,330 Total Data and IP&E-Services 2,137 2,174 2,220 2,280 2,255 2,268 9,023 Outsourcing, Professional Services & Other 574 606 581 611 566 602 2,360 Total revenue 5,155 5,319 5,454 5,645 5,611 5,872 22,582 Operating income (loss)(1)(5) 528 588 781 (11,095) 152 83 (10,079) Operating margin 10.2% 11.0% 14.3% (196.5%) 2.7% 1.4% (44.6%) Capital expenditures 387 332 377 391 463 470 1,701 Depreciation & amortization (5) 596 601 607 610 1,176 1,192 3,585 Total Data and IP&E-Services - % managed 32% 32% 33% 32% 32% 32% 32% Total Data and IP&E-Services - % international 16% 16% 16% 15% 15% 15% 15% LD volume growth - yr/yr 1% -3% -2% -2% 0% 2% 0% LD volume % wholesale 59% 57% 57% 56% 54% 54% 55% AT&T Consumer Standalone LD, Transactional and Other Services $ 974 $ 1,025 $ 1,116 $ 1,256 $ 1,327 $ 1,462 $ 5,161 Bundled Services 619 660 690 724 684 645 2,743 Total revenue 1,593 1,685 1,806 1,980 2,011 2,107 7,904 Operating income (loss)(2)(5)(6) 489 575 (60) 281 240 371 832 Operating margin 30.7% 34.1% (3.3%) 14.2% 11.9% 17.6% 10.5% Capital expenditures - - 5 9 15 13 42 Depreciation & amortization (5) 14 12 13 15 33 32 93 Local customers (in thousands) 3,565 3,859 4,156 4,477 4,677 4,364 4,156 Corporate and Other Revenue $ 12 $ 11 $ 13 $ 13 $ 14 $ 11 $ 51 Operating (loss)(3) (198) (93) (113) (511) (44) (173) (841) Capital expenditures 6 3 14 6 2 2 24 Depreciation & amortization 20 23 20 22 22 26 90 Total AT&T Revenue $ 6,760 $ 7,015 $ 7,273 $ 7,638 $ 7,636 $ 7,990 $ 30,537 Operating income (loss)(4)(6) 819 1,070 608 (11,325) 348 281 (10,088) Operating margin 12.1% 15.3% 8.4% (148.3%) 4.6% 3.5% (33.0%) Capital expenditures 393 335 396 406 480 485 1,767 Depreciation & amortization (5) 630 636 640 647 1,231 1,250 3,768 (1) Includes asset impairment and net restructuring and other charges of $(18M) in 2Q05, $9M in 4Q04, $11,859M in 3Q04, $52M in 2Q04 and $91M in 1Q04, totaling $12,011M in 2004. (2) Includes asset impairment and net restructuring and other charges of $10M in 2Q05, $188M in 3Q04 and $1M in 1Q04, totaling $189M in 2004. (3) Includes asset impairment and net restructuring and other charges of $44M in 2Q05, $27M in 4Q04, $422M in 3Q04, $2M in 2Q04 and $121M in 1Q04, totaling $572M in 2004. (4) Includes asset impairment and net restructuring and other charges of $36M in 2Q05, $36M in 4Q04, $12,469M in 3Q04, $54M in 2Q04 and $213M in 1Q04, totaling $12,772M in 2004. (5) As a result of the third-quarter 2004 asset impairment charge, second-quarter 2005, first-quarter 2005, fourth-quarter 2004 and third-quarter 2004 depreciation and amortization expense decreased by $542 million, $533 million, $538 million and $527 million, respectively, for AT&T Business and $6 million, $7 million, $8 million and $10 million, respectively, for AT&T Consumer. In addition, as a result of the transport service arrangement between AT&T Business and AT&T Consumer, network-related charges from AT&T Business (recorded as contra-expense) to AT&T Consumer were reduced by $29 million, $24 million, $30 million and $28 million in the second-quarter 2005, first-quarter 2005, fourth-quarter 2004 and third-quarter 2004, respectively, as a result of the lower depreciation and amortization expense recorded by AT&T Business. This resulted in a reduction in AT&T Business' operating income and an increase in AT&T Consumer's operating income. (6) Includes $553M prepaid card accrual in 4Q04. ------------------------------------------------------------------------------------------------------------------------------------

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AT&T Corp. Consolidated Balance Sheets (Unaudited) Dollars in millions June 30, December 31, 2005 2004 ASSETS Cash and cash equivalents $ 1,913 $ 3,698 Accounts receivable, less allowances of $429 and $523 2,993 3,195 Deferred income taxes 922 1,111 Other current assets 498 1,383 ------------------------------ Total Current Assets 6,326 9,387 Property, plant and equipment, net of accumulated depreciation of $2,353 and $1,588 11,026 11,509 Goodwill 4,751 4,888 Other purchased intangible assets, net of accumulated amortization of $411 and $428 316 375 Prepaid pension costs 4,099 3,991 Other assets 2,563 2,654 ------------------------------ TOTAL ASSETS $ 29,081 $ 32,804 ============================== LIABILITIES Accounts payable and accrued expenses $ 2,365 $ 2,716 Compensation and benefit-related liabilities 1,661 2,193 Debt maturing within one year 529 1,886 Other current liabilities 2,309 2,293 ------------------------------ Total Current Liabilities 6,864 9,088 Long-term debt 7,175 8,779 Long-term compensation and benefit-related liabilities 3,283 3,322 Deferred income taxes 1,448 1,356 Other long-term liabilities and deferred credits 2,832 3,240 ------------------------------ Total Liabilities 21,602 25,785 ------------------------------ SHAREOWNERS' EQUITY Common Stock, $1 par value, authorized 2,500,000,000 shares; issued and outstanding 801,635,543 shares (net of 171,983,367 treasury shares) at June 30, 2005 and 798,570,623 shares (net of 171,983,367 treasury shares) at December 31, 2004 802 799 Additional paid-in capital 26,911 27,170 Accumulated deficit (20,344) (21,180) Accumulated other comprehensive income 110 230 ------------------------------ Total Shareowners' Equity 7,479 7,019 ------------------------------ TOTAL LIABILITIES & SHAREOWNERS' EQUITY $ 29,081 $ 32,804 ============================== ------------------------------------------------------------------------------------------------------------------------------------

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AT&T Corp. Consolidated Statements of Cash Flows (Unaudited) Dollars in millions For the Six Months Ended June 30, 2005 2004 Operating Activities Net income $ 836 $ 412 Adjustments to reconcile net income to net cash provided by operating activities: Net losses (gains) on sales of businesses and investments 5 (14) Loss on early extinguishment of debt 206 274 Asset impairment and net restructuring and other charges 36 226 Depreciation and amortization 1,266 2,481 Provision for uncollectible receivables 65 265 Deferred income taxes 352 (181) Decrease in receivables 152 98 Decrease in accounts payable and accrued expenses (407) (189) Net change in other operating assets and liabilities (1,097) (770) Other adjustments, net (61) (139) ------------------------- Net Cash Provided by Operating Activities 1,353 2,463 ------------------------- Investing Activities Capital expenditures and other additions (698) (1,018) Proceeds from sale or disposal of property, plant and equipment 134 25 Investment distributions and sales 12 36 Net dispositions of businesses 72 8 Decrease (increase) in restricted cash 546 (1) Other investing activities, net 13 6 ------------------------- Net Cash Provided by (Used in) Investing Activities 79 (944) ------------------------- Financing Activities Retirement of long-term debt, including redemption premiums (2,721) (3,210) Decrease in short-term borrowings, net (310) (195) Issuance of AT&T common shares 44 33 Dividends paid on common stock (380) (377) Other financing activities, net 150 336 ------------------------- Net Cash Used in Financing Activities (3,217) (3,413) ------------------------- Net decrease in cash and cash equivalents (1,785) (1,894) Cash and cash equivalents at beginning of year 3,698 4,353 ------------------------- Cash and Cash Equivalents at End of Period $ 1,913 $ 2,459 ========================= ------------------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------- Reconciliation of Non-GAAP Measures AT&T is providing information on net debt and EBITDA and related margins because these measures are commonly used by the investment community for evaluation purposes. Net debt and EBITDA should be considered in addition to, but not in lieu of, other measures of liquidity, profitability and cash flows reported in accordance with generally accepted accounting principles. Additionally, they may not be comparable to similarly captioned measures reported by other companies. Net Debt -------------------------------------------------------------------------------- Net debt is defined as total debt, less cash and net foreign debt fluctuations: (dollars in millions) June 30, 2005 Total debt $7.7 Less: Cash 1.9 Foreign debt fluctuations 0.2 ------------- Net debt $5.6 ============= -------------------------------------------------------------------------------- AT&T Business EBITDA, Excluding Asset Impairment and Net Restructuring and Other Charges, to Operating Income -------------------------------------------------------------------------------- (dollars in millions) For the three months ended June 30, 2005 June 30, 2004 EBITDA and margin (1) $1,106 21.5% $1,380 24.6% Depreciation and amortization (596) (1,176) Asset impairment and net restructuring and other charges 18 (52) --------------- --------------- Operating income and margin $528 10.2% $152 2.7% =============== =============== (1) Excluding asset impairment and net restructuring and other charges. -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- AT&T Corp. Reconciliation of Non-GAAP Measures, continued EBITDA, Excluding Asset Impairment and Net Restructuring and Other Charges, to Net Income -------------------------------------------------------------------------------- (dollars in millions) For the three months ended June 30, June 30, 2005 2004 EBITDA margin (1) 22.0% 21.4% EBITDA (1) $ 1,485 $ 1,633 Depreciation and amortization (630) (1,231) Asset impairment and net restructuring and other charges (36) (54) -------- -------- Subtotal operating income $ 819 $ 348 -------- -------- Other (expense) income, net (153) 36 Interest (expense) (169) (191) (Provision) for income taxes (198) (87) Minority interest income 0 1 Net income related to equity investments 8 1 -------- -------- Net income $ 307 $ 108 ======== ======== (1) Excluding asset impairment and net restructuring and other charges. -------------------------------------------------------------------------------- NOTE TO FINANCIAL MEDIA: AT&T executives will discuss the company's performance in a two-way conference call for financial analysts at 5:00 p.m. ET today. Reporters are invited to listen to the call. U.S. callers should dial 888-428-4478 to access the call. Callers outside the U.S. should dial + 1-612-332-0630. In addition, Internet rebroadcasts of the call will be available on the AT&T Web site beginning later today. The Web site address is www.att.com/ir. An audio rebroadcast of the conference call will also be available beginning at 9:30 PM on Wednesday, July 20 through 12:00 AM on Wednesday, July 27. To access the audio rebroadcast, U.S. callers can dial 800-475-6701, access code 763284. Callers outside the U.S. should dial +1-320-365-3844, access code 763284. The foregoing contains "forward-looking statements" which are based on management's beliefs as well as on a number of assumptions concerning future events made by and information currently available to management. Readers are cautioned not to put undue reliance on such forward-looking statements, which are not a guarantee of performance and are subject to a number of uncertainties and other factors, many of which are outside AT&T's control, that could cause actual results to differ materially from such statements. These risk factors include the impact of increasing competition, continued capacity oversupply, regulatory uncertainty and the effects of technological substitution, among other risks. For a more detailed description of the factors that could cause such a difference, please see AT&T's10-K, 10-Q, 8-K and other filings with the Securities and Exchange Commission. AT&T disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. This information is presented solely to provide additional information to further understand the results of AT&T. # # #