EX-99 2 eightk072204exh99.htm AT&T PRESS RELEASE DATED JULY 22, 2004

News Release

FOR RELEASE THURSDAY, July 22, 2004

AT&T Announces Second-Quarter 2004 Earnings,Company
to Stop Investing in Traditional Consumer Services;
Concentrate Efforts on Business Markets

o Second-quarter earnings per diluted share of $0.14

o Consolidated revenue of $7.6 billion

o Operating income of $348 million

o Second-quarter cash from operating activities of $1.1 billion

BEDMINSTER, N.J. — AT&T (NYSE: T) today reported net income of $108 million, or earnings per diluted share of $0.14, for the second quarter of 2004. This compares to net income of $536 million, or earnings per diluted share of $0.68, in the second quarter of 2003.

The company also announced that it is shifting its focus away from traditional consumer services such as wireline residential telephone services, and concentrating its growth efforts going forward on business markets and emerging technologies, such as Voice over Internet Protocol (VoIP), that can serve businesses as well as consumers. The shift plays to AT&T’s strength as an innovator in communications and a leader in serving the complex networking and technology needs of businesses.

“AT&T is the leading provider of communications services to business customers, offering a full range of leading-edge networking and communications solutions on a global basis,” said David W. Dorman, AT&T’s Chairman and CEO, who noted that nearly 75% of AT&T’s revenue is now generated by AT&T Business. “We intend to widen the gap between AT&T and our competitors in the business market, while also improving our industry-leading cost structure and financial strength.”

As a result of recent changes in regulatory policy governing local telephone service, AT&T will no longer be competing for residential local and standalone long distance (LD) customers. The company stressed that existing residential customers will continue to receive the quality service they expect from AT&T; however, the company will no longer be investing to acquire new customers in this segment.

“This decision means that AT&T will focus on lines of business where we are a clear leader, where we control our own destiny and where we have distinct competitive advantages,” said Dorman. “Despite the near-term challenges associated with a difficult industry environment, we are confident that AT&T’s cost structure, customer base, strong balance sheet and cash flow give us the flexibility to continue investing for success in the long run.”

AT&T reported second-quarter 2004 consolidated revenue of $7.6 billion, which included $5.6 billion from AT&T Business and $2.0 billion from AT&T Consumer. Consolidated revenue declined 13.2 percent versus the second quarter of 2003, primarily due to continued declines in LD voice revenue.

AT&T’s second-quarter 2004 operating income totaled $348 million, resulting in a consolidated operating margin of 4.6 percent. Operating income included $54 million of net restructuring and other charges taken during the quarter primarily related to employee separations. This quarter the company also reported that it generated $1.1 billion in cash from operations while spending $0.5 billion on capital expenditures.

AT&T UNIT HIGHLIGHTS

AT&T Business

o Revenue was $5.6 billion, a decline of 12.7 percent from the prior-year second quarter.  Pricing pressure and mix shift from retail to wholesale negatively affected the unit’s revenue performance.

o Long distance voice revenue decreased 17.6 percent from the prior-year second quarter, driven by continued pricing pressure as well as a continued mix shift in volume from retail to wholesale. Volumes were flat on a quarter-over-quarter basis, with growth in wholesale volumes offset by a decline in retail volumes.

o Local voice revenue grew 5.0 percent from the prior-year second quarter. Local access lines totaled more than 4.6 million at the end of the current period, representing an increase of over 85,000 lines from the end of the first quarter of 2004.

o Data revenue declined 10.4 percent from the prior-year second quarter. Revenue was negatively affected by pricing pressure, weak demand and technology migration.

o IP&E-services revenue grew 2.3 percent over the prior-year second quarter. The quarter-over-quarter growth was primarily driven by strength in advanced services, including Enhanced Virtual Private Network and IP-enabled frame.

o Outsourcing, professional services and other revenue declined 18.9 percent from the prior-year second quarter, due to customers reducing scope and terminating outsourcing contracts.

o Operating income totaled $152 million in the period, yielding an operating margin of 2.7 percent. Second-quarter 2004 operating income included net restructuring and other charges of $52 million related to employee separations. The operating margin declined from the prior-year second quarter, reflecting the ongoing mix shift from retail LD products toward advanced and wholesale services.

o The sequential increase in second-quarter operating margin was primarily driven by favorable access settlements. In the second half of 2004, we expect the operating margin to be eroded by continuing pricing pressure in the enterprise segment, RBOC share gains in the small and medium business markets and the customary impact of seasonality.

o Capital expenditures were $463 million as AT&T Business continued to invest in its network and systems to drive continued cost efficiencies and expand its customer-focused networking capabilities.

o AT&T Business showed an improvement in market share trends at the high end of the market, consistent with its strategy of keeping and building its enterprise customer base.

o During the second quarter, a number of sizable customer wins and contract extensions were signed with companies including Lockheed Martin, Deutsche Bank and Providea, as well as The United States Army and The Internal Revenue Service, among many others.

AT&T Consumer

o Revenue was $2.0 billion, a decline of 14.6 percent versus the prior-year second quarter, driven by lower standalone LD voice revenue as a result of the continued impact of competition, wireless and Internet substitution and customer migration to lower-priced products and calling plans, partially offset by targeted price increases.

o Operating income totaled $240 million, yielding an operating margin of 11.9 percent. The margin decline from the prior-year second quarter was largely due to ongoing substitution and competition. In addition, increased spending for marketing and new initiatives such as VoIP contributed to the margin decline. Such declines were partially offset by the effects of pricing actions.

o According to industry estimates, more than 40% of American households have now migrated to some combination of bundled communications services. Recent regulatory decisions make it financially infeasible for AT&T to offer a competitive bundle of services to consumers. AT&T has determined that it cannot effectively compete against bundled competition by selling only standalone LD.

o As of June 30, 2004 AT&T Consumer offered its residential VoIP AT&T CallVantageSM Service in 72 major markets throughout the U.S. Recently, the company expanded the availability of its offer to 100 major markets in 32 states and Washington D.C.

OTHER CONSOLIDATED FINANCIAL HIGHLIGHTS

o Free cash flow was $0.6 billion for the quarter. Free cash flow is defined as cash flow provided by operating activities of $1.1 billion less cash used for capital expenditures and other additions of $0.5 billion.

o AT&T ended the quarter with net debt of $7.9 billion, a $0.5 billion decrease from the end of the first quarter of 2004. Net debt is defined as total debt of $11.2 billion less cash of $2.5 billion, restricted cash of $0.5 billion and net foreign debt fluctuations of $0.3 billion.

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 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 that subscribe to AT&T local service.

Other Definitions and Notes

Restricted cash — $0.5 billion of cash that collateralizes a portion of private debt and is included in “other current assets” on the balance sheet.

Foreign currency fluctuations — represents mark-to-market adjustments, net of cash collateral collected, that increased the debt balance by approximately $0.3 billion at June 30, 2004, on non-U.S. denominated debt of about $1.8 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)

Three Months Ended
June 30,		 Six Months Ended
June 30,
2004 2003 2004 2003
REVENUE (1)                    
AT&T Business   $ 5,611   $ 6,428   $ 11,483   $ 12,887  
AT&T Consumer    2,011    2,354    4,118    4,868  
Corporate and Other    14    13    25    26  
Total Revenue    7,636    8,795    15,626    17,781  

OPERATING EXPENSES		  
Access and other connection    2,481    2,708    5,119    5,406  
Costs of services and products    1,759    1,958    3,623    3,969  
Selling, general and administrative    1,763    1,837    3,507    3,758  
Depreciation and amortization    1,231    1,197    2,481    2,383  
Net restructuring and other charges    54    66    267    70  
Total operating expenses    7,288    7,766    14,997    15,586  

Operating income		    348    1,029    629    2,195  

Other income (expense), net		    36    86    (138 )  96  
Interest (expense)    (191 )  (296 )  (419 )  (628 )
Income before income taxes, minority interest income, net earnings  
  related to equity investment and cumulative effect of accounting change    193    819    72    1,663  
(Provision) benefit for income taxes    (87 )  (308 )  339    (605 )
Minority interest income    1    --    1    1  
Net earnings related to equity investments    1    25    --    6  
Income before cumulative effect of accounting change    108    536    412    1,065  
Cumulative effect of accounting change - net of taxes    --    --    --    42  
Net income   $ 108   $ 536   $ 412   $ 1,107  
Weighted-average common shares (millions)    794    787    794    786  
Weighted-average common shares and potential common shares (millions)    797    787    796    786  

PER BASIC AND DILUTED SHARE:		  
Earnings before cumulative effect of accounting change   $ 0.14   $ 0.68   $ 0.52   $ 1.36  
Cumulative effect of accounting change   $ --   $ --   $ --   $ 0.05  
Earnings per basic and diluted share   $ 0.14   $ 0.68   $ 0.52   $ 1.41  
Dividends declared per share   $ 0.2375   $ 0.1875   $ 0.4750   $ 0.3750  

(1)    Prior period amounts have been restated to reflect the transfer of the remaining payphone business from AT&T Consumer to AT&T Business.

AT&T Corp. Consolidated Statements of Income (Unaudited)
Dollars in millions (except per share amounts)

2Q04 1Q04 4Q03 3Q03 2Q03 1Q03 2003
REVENUE (1)                                
AT&T Business   $ 5,611   $ 5,872   $ 5,887   $ 6,301   $ 6,428   $ 6,459   $ 25,075  
AT&T Consumer    2,011    2,107    2,198    2,334    2,354    2,514    9,400  
Corporate and Other    14    11    14    14    13    13    54  
Total revenue    7,636    7,990    8,099    8,649    8,795    8,986    34,529  

OPERATING EXPENSES		  
Access and other connection    2,481    2,638    2,606    2,785    2,708    2,698    10,797  
Costs of services and products    1,759    1,864    1,702    1,954    1,958    2,011    7,625  
Selling, general and administrative    1,763    1,744    1,828    1,793    1,837    1,921    7,379  
Depreciation and amortization    1,231    1,250    1,263    1,224    1,197    1,186    4,870  
Net restructuring and other charges    54    213    67    64    66    4    201  
Total operating expenses    7,288    7,709    7,466    7,820    7,766    7,820    30,872  

Operating income		    348    281    633    829    1,029    1,166    3,657  

Other income (expense), net		    36    (174 )  102    (7 )  86    10    191  
Interest (expense)    (191 )  (228 )  (241 )  (289 )  (296 )  (332 )  (1,158 )
Income (loss) from continuing operations before income  
  taxes, minority interest income and net earnings(losses)  
  related to equity investments    193    (121 )  494    533    819    844    2,690  

(Provision) benefit for income taxes		    (87 )  426    (139 )  (72 )  (308 )  (297 )  (816 )
Minority interest income    1    --    --    --    --    1    1  
Net earnings (losses) related to equity investments    1    (1 )  (15 )  (3 )  25    (19 )  (12 )
Income from continuing operations    108    304    340    458    536    529    1,863  
(Loss) from discontinued operations - net of taxes    --    --    --    (13 )  --    --    (13 )

Income before cumulative effect of accounting changes		    108    304    340    445    536    529    1,850  
Cumulative effect of accounting changes, net of taxes    --    --    --    (27 )  --    42    15  
Net income   $ 108   $ 304   $ 340   $ 418   $ 536   $ 571   $ 1,865  

Weighted-average common shares (millions)		    794    793    791    789    787    784    788  
Weighted-average common shares and potential common shares  
  millions    797    796    793    791    787    785    789  

PER BASIC SHARE:		  
Earnings from continuing operations   $ 0.14   $ 0.38   $ 0.43   $ 0.58   $ 0.68   $ 0.67   $ 2.37  
(Loss) from discontinued operations    --    --    --    (0.02 )  --    --    (0.02 )
Cumulative effect of accounting changes    --    --    --    (0.03 )  --    0.06    0.02  
Earnings per basic share   $ 0.14   $ 0.38   $ 0.43   $ 0.53   $ 0.68   $ 0.73   $ 2.37  

PER DILUTED SHARE:		  
Earnings from continuing operations   $ 0.14   $ 0.38   $ 0.43   $ 0.58   $ 0.68   $ 0.67   $ 2.36  
(Loss) from discontinued operations    --    --    --    (0.02 )  --    --    (0.02 )
Cumulative effect of accounting changes    --    --    --    (0.03 )  --    0.06    0.02  
Earnings per diluted share   $ 0.14   $ 0.38   $ 0.43   $ 0.53   $ 0.68   $ 0.73   $ 2.36  

(1)    Prior period amounts have been restated to reflect the transfer of the remaining payphone business from AT&T Consumer to AT&T Business.

AT&T Corp. Historical Segment Data (Unaudited)
Dollars in millions

2Q04 1Q04 4Q03 3Q03 2Q03 1Q03 2003
AT&T Business (1)                                
LD Voice   $ 2,386   $ 2,613   $ 2,501   $ 2,820   $ 2,895   $ 2,983   $ 11,199  
Local Voice    404    389    386    379    384    335    1,484  
Total Voice    2,790    3,002    2,887    3,199    3,279    3,318    12,683  

Data Services		    1,785    1,797    1,940    1,949    1,993    2,000    7,882  
IP&E-Services    470    471    460    476    459    445    1,840  
Total Data and IP&E-Services    2,255    2,268    2,400    2,425    2,452    2,445    9,722  

Outsourcing, Professional Services & Other		    566    602    600    677    697    696    2,670  

Total Revenue		    5,611    5,872    5,887    6,301    6,428    6,459    25,075  
Operating Income(2)    152    83    282    413    601    599    1,895  
Operating Margin    2.7 %  1.4 %  4.8 %  6.6 %  9.3 %  9.3 %  7.6 %
Capital Expenditures(6)    463    470    740    995    763    636    3,134  
Depreciation & Amortization    1,176    1,192    1,200    1,162    1,133    1,126    4,621  

Total Data and IP&E-Services - % managed		    34 %  33 %  33 %  33 %  31 %  30 %  32 %
Total Data and IP&E-Services - % international    15 %  15 %  14 %  14 %  14 %  14 %  14 %
LD Volume Growth - Yr/Yr    0 %  2 %  7 %  15 %  12 %  12 %  11 %
LD Volume % Wholesale    54 %  54 %  53 %  51 %  47 %  45 %  50 %

AT&T Consumer (1)		  
Standalone LD, Transactional and Other Services   $ 1,327   $ 1,462   $ 1,604   $ 1,813   $ 1,894   $ 2,090   $ 7,401  
Bundled Services    684    645    594    521    460    424    1,999  
Total Revenue    2,011    2,107    2,198    2,334    2,354    2,514    9,400  
Operating Income(3)    240    371    435    503    485    633    2,056  
Operating Margin    11.9 %  17.6 %  19.8 %  21.6 %  20.6 %  25.2 %  21.9 %
Capital Expenditures    15    13    19    14    19    22    74  
Depreciation & Amortization    33    32    35    35    36    35    141  

Local Customers (in thousands)		    4,677    4,364    3,950    3,547    3,130    2,778    3,950  

Corporate and Other (1)		  
Revenue   $ 14   $ 11   $ 14   $ 14   $ 13   $ 13   $ 54  
Operating (Loss)(4)    (44 )  (173 )  (84 )  (87 )  (57 )  (66 )  (294 )
Capital Expenditures(6)    2    2    13    198    8    4    223  
Depreciation & Amortization    22    26    28    27    28    25    108  

Total AT&T		  
Revenue   $ 7,636   $ 7,990   $ 8,099   $ 8,649   $ 8,795   $ 8,986   $ 34,529  
Operating Income(5)    348    281    633    829    1,029    1,166    3,657  
Operating Margin    4.6 %  3.5 %  7.8 %  9.6 %  11.7 %  13.0 %  10.6 %
Capital Expenditures(6)    480    485    772    1,207    790    662    3,431  
Depreciation & Amortization    1,231    1,250    1,263    1,224    1,197    1,186    4,870  

(1)    Prior period amounts have been restated to reflect the transfer of the remaining payphone business from AT&T Consumer to AT&T Business.

(2)    Includes net business restructuring and asset impairment (charges) of ($52M) in 2Q04, ($91M) in 1Q04, ($33M) in 4Q03, ($53M) in 3Q03, ($47M) in 2Q03 and ($4M)
        in 1Q03, totaling ($137M) in 2003.

(3)    Includes net business restructuring and asset impairment (charges) of ($1M) in 1Q04, ($17M) in 4Q03, ($4M) in 3Q03 and ($5M) in 2Q03, totaling ($26M) in 2003.

(4)    Includes net business restructuring and asset impairment (charges) of ($2M) in 2Q04, ($121M) in 1Q04, ($17M) in 4Q03, ($7M) in 3Q03 and ($14M) in 2Q03, totaling
        ($38M) in 2003.

(5)    Includes net business restructuring and asset impairment (charges) of ($54M) in 2Q04, ($213M) in 1Q04, ($67M) in 4Q03, ($64M) in 3Q03, ($66M) in 2Q03 and ($4M)
        in 1Q03, totaling ($201M) in 2003.

(6)    Includes $433M in 3Q03 related to the adoption of FIN 46 of which $241M is included in Business and $192M is included in Corporate and Other.

AT&T Corp. Consolidated Balance Sheets (Unaudited)
Dollars in millions

June 30,
2004		 December 31,
2003
ASSETS            
Cash and cash equivalents   $ 2,459   $ 4,353  
Accounts receivable, less allowances of $608 and $579    3,661    4,036  
Deferred income taxes    971    715  
Other current assets    1,397    744  
  Total Current Assets    8,488    9,848  

Property, plant and equipment, net of accumulated		  
  depreciation of $36,191 and $34,300    22,833    24,376  
Goodwill    4,781    4,801  
Other purchased intangible assets, net of accumulated amortization  
   of $381 and $320    437    499  
Prepaid pension costs    4,004    3,861  
Other assets    3,275    4,603  
TOTAL ASSETS   $ 43,818   $ 47,988  
LIABILITIES  
Accounts payable and accrued expenses   $ 2,920   $ 3,256  
Compensation and benefit-related liabilities    1,458    1,783  
Debt maturing within one year    1,913    1,343  
Other current liabilities    2,274    2,501  
  Total Current Liabilities    8,565    8,883  

Long-term debt		    9,299    13,066  
Long-term compensation and benefit-related liabilities    3,449    3,528  
Deferred income taxes    5,452    5,395  
Other long-term liabilities and deferred credits    2,998    3,160  
  Total Liabilities    29,763    34,032  
SHAREOWNERS' EQUITY  
Common Stock, $1 par value, authorized 2,500,000,000 shares;  
  issued and outstanding 794,593,329 shares (net of 171,981,708  
  treasury shares) at June 30, 2004 and 791,911,022 shares (net of  
  172,179,303 treasury shares) at December 31, 2003    795    792  
Additional paid-in capital    27,437    27,722  
Accumulated deficit    (14,299 )  (14,707 )
Accumulated other comprehensive income    122    149  
  Total Shareowners' Equity    14,055    13,956  
TOTAL LIABILITIES & SHAREOWNERS' EQUITY   $ 43,818   $ 47,988  

AT&T Corp. Consolidated Statements of Cash Flows (Unaudited)
Dollar in millions

Six Months Ended
June 30,
2004 2003
Operating Activities            
Net income   $ 412   $ 1,107  
Deduct:  
  Cumulative effect of accounting change - net of income taxes    --    42  
Income before cumulative effect of accounting change    412    1,065  

Adjustments to reconcile income before cumulative effect of accounting		  
 change to net cash provided by operating activities:  
  Net gains on sales of businesses and investments    (14 )  (37 )
  Loss on early extinguishment of debt    274    2  
  Net restructuring and other charges    226    70  
  Depreciation and amortization    2,481    2,383  
  Provision for uncollectible receivables    265    406  
  Deferred income taxes    (181 )  376  
  Net pretax losses related to equity investments    --    (33 )
  Decrease in receivables    98    140  
  (Decrease) in accounts payable and accrued expenses    (189 )  (308 )
  Net change in other operating assets and liabilities    (770 )  336  
  Other adjustments, net    (139 )  (47 )
Net Cash Provided by Operating Activities    2,463    4,353  
Investing Activities  
Capital expenditures and other additions    (1,018 )  (1,629 )
Proceeds from sale or disposal of property, plant and equipment    25    23  
Investment distributions and sales    36    101  
Net dispositions (acquisitions) of businesses, net of cash disposed/acquired    8    (158 )
Increase in restricted cash    (1 )  (30 )
Other investing activities, net    6    (27 )
Net Cash Used in Investing Activities    (944 )  (1,720 )
Financing Activities  
Retirement of long-term debt, including redemption premiums    (3,210 )  (4,039 )
(Decrease) in short-term borrowings, net    (195 )  (1,270 )
Issuance of AT&T common shares    33    64  
Dividends paid on common stock    (377 )  (294 )
Other financing activities, net    336    148  
Net Cash Used in Financing Activities    (3,413 )  (5,391 )
Net (decrease) in cash and cash equivalents   $ (1,894 )  (2,758 )
Cash and cash equivalents at beginning of year    4,353    8,014  
Cash and Cash Equivalents at End of Period   $ 2,459   $ 5,256  

AT&T Corp. Reconciliation of Non-GAAP Measures

Net debt is defined as total debt, less cash, restricted cash and net foreign debt fluctuations:

June 30, 2004

Total Debt		     $ 11,212  
Less: Cash    2,459  
         Restricted cash    503  
         Foreign debt fluctuations    349  
Net Debt   $ 7,901  

Reconciliation of EBITDA to net income for the twelve months ended
June 30, 2004:
(dollars in millions)

Net Debt/EBITDA as of June 30, 2004                                                                                                           1.1x
                                                                                                                                                                                             Margin

EBITDA     $ 7,059    21 .8%
Depreciation and amortization    (4,968 )
Subtotal Operating Income    2,091    6 .5%
Other (expense), net    (43 )
Interest (expense)    (949 )
Benefit (provision) for taxes    128  
Minority interest income    1  
Net (losses) related to equity investments    (18 )
Income from continuing operations    1,210  
(Loss) from discontinued operations, net of taxes    (13 )
Cumulative effect of accounting changes, net of taxes    (27 )
Net income   $ 1,170    3 .6%

This document contains certain financial measures calculated in accordance with generally accepted accounting principles (GAAP), which have been adjusted to result in non-GAAP measures. These non-GAAP financial measures reflect measures of liquidity and profitability commonly used by the investment community for evaluation purposes. These measures should be considered in addition to, but not in lieu of financial measures reported under GAAP.

NOTE TO FINANCIAL MEDIA: AT&T executives will discuss the company’s performance in a two-way conference call for financial analysts at 8:15 a.m. ET today. Reporters are invited to listen to the call. U.S. callers should dial 888-428-4473 to access the call. Callers outside the U.S. should dial + 1-651-291-0561.

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 12:30PM on Thursday, July 22 through 12:00AM on Tuesday, July 27. To access the audio rebroadcast, U.S. callers can dial 800-475-6701, access code 696623. Callers outside the U.S. should dial +1-320-365-3844, access code 696623.

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.

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