8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of report (Date of earliest event reported) April 25, 2006

AT&T INC.

(Exact Name of Registrant as Specified in Charter)

Delaware	1-8610	43-1301883
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

175 E. Houston, San Antonio, Texas	78205
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code (210) 821-4105

__________________________________

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[X]Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ]   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ]   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240-14d-2(b))

[ ]   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Items 2.02 Results of Operations and Financial Condition.

The registrant announced on April 25, 2006, its results of operations for the first quarter of 2006. The text of the press release and accompanying financial information are attached as exhibits and incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

The following exhibits are furnished as part of this report:

(c)   Exhibits

99.1 Press release dated April 25, 2006 reporting financial results for the first quarter ended March 31, 2006.

99.2 AT&T Inc. selected financial statements and operating data.

Signature

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 hereunto duly authorized.

	AT&T INC.
Date: April 25, 2006	By: /s/ John J. Stephens John J. Stephens Vice President and Controller

EX-99

News Release

For more information, contact:

Anne Vincent

(210) 352-6958

avincent@attnews.us

AT&T Delivers Strong First-Quarter Earnings Growth,

with Progress in Wireless, Broadband and Business Services

• Reported earnings per diluted share of $0.37, up 37.0 percent versus the year-earlier first quarter

• Before merger-related costs, earnings per diluted share of $0.52, up 52.9 percent versus comparable results in the first quarter of 2005

• 1.7 million net subscriber gain at Cingular Wireless, with 1.9 percent monthly subscriber churn overall, 1.6 percent postpaid churn; net gain in postpaid subscribers up 41.5 percent versus preceding quarter

• 511,000 regional DSL Internet lines added in the quarter to reach more than 7.4 million in service

• SBC/AT&T merger integration projects off to solid start, on track to achieve previously targeted cost synergies

Note: AT&T's first-quarter earnings conference call will be broadcast live via the Internet

at 10 a.m. EDT on Tuesday, April. 25, 2006, at www.att.com/investor.relations.

SAN ANTONIO, April 25, 2006 – AT&T Inc. (NYSE: T) today reported strong first-quarter results that reflect advances in wireless, broadband and business services, along with solid progress in merger integration.

On a reported basis, earnings per diluted share totaled $0.37, up 37.0 percent versus the year-earlier first quarter. Before merger-related costs, earnings per diluted share totaled $0.52, up 52.9 percent versus comparable adjusted results in the first quarter of 2005.

“AT&T executed well and delivered a strong quarter,” said Edward E. Whitacre Jr., AT&T chairman and chief executive officer. “Cingular Wireless had outstanding results, as it further reduced churn, expanded margins and recorded its best-ever first-quarter subscriber growth. Our regional wireline operations posted revenue growth in consumer as well as small and medium business. And in the large-business space, customer response to the new AT&T continues to be very positive.

AT&T Inc. 1Q 2006 Earnings - 2

"I am also very pleased to report that merger integration is moving forward on plan,” Whitacre said. “Immediately after the SBC/AT&T merger closed in November, we started the process of combining operations, and we’ve made good progress. At this point, detailed network transition plans are in place, our front-line enterprise sales force consolidation is complete, and we are now able to sell our high-end enterprise portfolio to the small- and medium-business space. We are very much on track to achieve our previously announced merger synergies of $600 million to $800 million this year, growing to approximately $2 billion next year.

“To further expand our opportunities, in early March, we agreed to merge with BellSouth," Whitacre said. "This combination will benefit customers and create value for the shareowners of both companies. The new company will have 100-percent ownership of Cingular Wireless, a single brand, a stronger platform for next-generation services and an improved financial outlook for the years ahead. And the timing is right, as we move to a single broadband backbone and a future of converged services.”

Consolidated Financial Results

On Nov. 18, 2005, SBC Communications Inc. completed its acquisition of AT&T Corp. and adopted AT&T Inc. as its name. Reported results for the first quarter of 2006 include costs related to this acquisition as well as to Cingular Wireless’ fourth-quarter 2004 acquisition of AT&T Wireless. AT&T owns 60 percent of Cingular Wireless.

In the first quarter, AT&T's portion of Cingular’s $593 million of merger integration and noncash intangible amortization costs amounted to $0.06 per diluted share, and SBC/AT&T Corp. merger integration and noncash intangible amortization costs amounted to $529 million, or $0.09 per diluted share.

• On a reported basis, AT&T's first-quarter earnings per diluted share were $0.37, up 37.0 percent from $0.27 in the first quarter of 2005.

• Excluding the items noted above, first-quarter earnings were $0.52 per diluted share, up 52.9 percent versus first-quarter 2005 earnings per diluted share of $0.34, before Cingular merger-related costs.

Major drivers of this improvement were revenue growth and margin expansion at Cingular Wireless, along with increased contributions from wireline operations, offset by an increased number of shares outstanding due to the acquisition of AT&T Corp.

AT&T Inc. 1Q 2006 Earnings - 3

AT&T's reported first-quarter 2006 net income was $1.4 billion, versus $885 million in the year-earlier first quarter. Excluding the items noted above, first-quarter earnings were $2.0 billion, compared with 2005 first-quarter earnings before Cingular merger-related costs of $1.1 billion.

Revenues totaled $15.8 billion, up 54.5 percent from $10.2 billion in the first quarter

of 2005. Operating expenses totaled $13.6 billion on a reported basis and $13.1 billion before merger-related costs. Operating expenses in the first quarter of 2005 totaled $8.7 billion.

Operating income totaled $2.2 billion on a reported basis, up 40.8 percent versus first-quarter 2005 results. Before merger-related costs, AT&T’s first-quarter operating income was $2.7 billion.

AT&T’s first-quarter operating income margin was 13.8 percent on a reported basis and 17.2 percent before merger-related expenses. The company’s operating income margin in the year-earlier first quarter was 15.2 percent.

Wireline Results, Pro Forma Comparisons

To provide investors with additional background on business trends, in addition to reported results, AT&T also has made available quarterly pro forma results for 2005 and 2004. Pro forma results combine results from the former SBC and the former AT&T Corp., with segments and revenue categories consistent in all periods.

First-quarter 2006 revenues for the wireline segment, which includes former SBC and former AT&T wireline operations, totaled $14.7 billion, down 5.5 percent versus pro forma revenues of $15.6 billion for the first quarter of 2005. This reflects:

• AT&T’s best growth over the past five quarters in regional small/medium-business revenues, up 7.0 percent, driven by strength in transport and IP-based data services.

• Solid growth in regional consumer revenues, up 2.1 percent, in line with increases in recent quarters. Growth was driven by strong consumer demand for bundled and broadband services, offsetting declines in retail access lines. Total consumer connections in service – retail lines, DSL lines and video connections – increased by 224,000 in the quarter. Regional retail consumer lines declined by 267,000 in the first quarter, generally in line with recent quarters.

• A significantly smaller decline in enterprise revenues than in the preceding quarter – 6.9 percent versus a 9.0 percent decline in this category for the fourth quarter of 2005.

AT&T Inc. 1Q 2006 Earnings - 4

• Expected declines for former AT&T Corp. national mass market revenues, which are composed of standalone long distance and local bundled services for consumers and small businesses. First-quarter revenues in this category were down 27.3 percent, generally consistent with results in recent quarters, reflecting the former AT&T’s pre-merger decision to discontinue proactive marketing in this space.

AT&T’s data revenues, which include results from several customer categories, totaled $4.4 billion in the first quarter of 2006, up 2.6 percent versus pro forma results for the year-earlier quarter. This increase reflects solid overall volume growth combined with customers’ transition from traditional packet-based to IP-based services.

Wireline data growth was led by a 14.0 percent increase in IP data revenues, which include DSL Internet, dedicated Internet access, virtual private networks and hosting services. AT&T posted a total net gain of 511,000 regional DSL lines during the quarter to reach more than 7.4 million in service. Data transport revenues were up 1.6 percent, and revenues from packet-switched data, which includes Frame Relay and ATM services, were down 12.5 percent, in line with industry trends.

AT&T’s first-quarter wireline voice revenues totaled $8.7 billion, representing a decline of 8.7 percent versus pro forma results for the first quarter of 2005, primarily driven by declines in the national mass market category.

Wireless Results

Cingular Wireless reported strong first-quarter results, driven by its lowest-ever churn levels and strong customer growth.

Cingular posted a net subscriber gain of 1.7 million and ended the first quarter with 55.8 million subscribers, an increase of 5.5 million over the past four quarters. First-quarter retail subscriber additions totaled more than 1 million, and total postpaid additions were up more than 41 percent versus the preceding quarter.

Average monthly churn was 1.9 percent overall, down 30 basis points versus the year-earlier first quarter and down 20 basis points sequentially. Postpaid churn improved to 1.6 percent, down 30 basis points both year over year and sequentially.

Driven by strong subscriber gains and strong growth in data revenues, Cingular’s total revenues grew to $9.0 billion, up 9.1 percent versus the year-earlier first quarter.

AT&T Inc. 1Q 2006 Earnings - 5

Reported operating expenses were $8.2 billion, compared with $8.1 billion in the year-earlier first quarter. Before merger-related costs of $593 million, first-quarter 2006 operating expenses were $7.6 billion versus $7.5 billion, excluding $596 million of merger-related costs in the first quarter of 2005.

On a reported basis, Cingular’s operating income was $807 million, compared with

$114 million in the year-earlier first quarter. Before merger-related costs, operating income was $1.4 billion, up from a comparable $710 million in the first quarter of 2005.

As required by Generally Accepted Accounting Principles for joint ventures, AT&T includes Cingular Wireless' results in the Equity in Net Income of Affiliates line of its Consolidated Statements of Income rather than in consolidated revenues and expenses. Cingular’s detailed financial results are shown in AT&T’s Statements of Segment Income.

BellSouth Merger Agreement, Expanded Share Repurchase

On March 5, 2006, AT&T Inc. and BellSouth Corporation announced an agreement to merge to create a more effective and efficient provider in the wireless, broadband, video, voice and data markets. Under terms of the agreement, which were approved by the boards of directors of both companies, shareholders of BellSouth will receive 1.325 shares of AT&T common stock for each common share of BellSouth. The merger is subject to approval by shareholders of both companies as well as regulatory authorities and to other customary closing conditions. AT&T expects to receive approvals to allow for completion of the transaction by the end of this year.

AT&T also announced in March an expanded share repurchase authorization of 400 million shares through 2008, replacing the existing program. Under this authorization, the company expects to buy back at least $10 billion of its common shares over the next 20 months. It expects at least $2 billion in repurchases during 2006, consistent with its previous guidance, and an additional $8 billion in repurchases in 2007. This repurchase authorization is intended to approximate the share premium paid to BellSouth stockholders as part of this merger transaction. The timing and nature of these repurchases will depend on market conditions and applicable securities laws.

AT&T Inc. 1Q 2006 Earnings - 6

AT&T Inc. is one of the world's largest telecommunications holding companies and is the largest in the United States. Operating globally under the AT&T brand, AT&T companies are recognized as the leading worldwide providers of IP-based communications services to business and as leading U.S. providers of high-speed DSL Internet, local and long distance voice, and directory publishing and advertising services. AT&T Inc. holds a 60 percent ownership interest in Cingular Wireless, which is the No. 1 U.S. wireless services provider with 55.8 million wireless customers. Additional information about AT&T Inc. and AT&T products and services is available at www.att.com.

Cautionary Language Concerning Forward-Looking Statements

We have included or incorporated by reference in this document financial estimates and other forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These estimates and statements are subject to risks and uncertainties, and actual results might differ materially from these estimates and statements. Such estimates and statements include, but are not limited to, statements about the benefits of the merger, including future financial and operating results, the combined company's plans, objectives, expectations and intentions, and other statements that are not historical facts. Such statements are based upon the current beliefs and expectations of the management of AT&T Inc. and BellSouth Corporation and are subject to significant risks and uncertainties and outside of our control.

The following factors, among others, could cause actual results to differ from those described in the forward-looking statements in this document: the ability to obtain governmental approvals of the merger on the proposed terms and schedule; the failure of AT&T shareholders to approve the issuance of AT&T common shares or the failure of BellSouth shareholders to approve the merger; the risk that the businesses of AT&T and BellSouth will not be integrated successfully or as quickly as expected; the risk that the cost savings and any other synergies from the merger, including any savings and other synergies relating to the resulting sole ownership of Cingular Wireless LLC may not be fully realized or may take longer to realize than expected; disruption from the merger making it more difficult to maintain relationships with customers, employees or suppliers; and competition and its effect on pricing, spending, third-party relationships and revenues. Additional factors that may affect future results are contained in AT&T's, BellSouth's, and Cingular Wireless LLC's filings with the Securities and Exchange Commission ("SEC"), which are available at the SEC's Web site (http://www.sec.gov). Neither AT&T nor BellSouth is under any obligation, and expressly disclaim any obligation, to update, alter or otherwise revise any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future events or otherwise.

This news release may contain certain non-GAAP financial measures. Reconciliations between

the non-GAAP financial measures and the GAAP financial measures are available on the company’s website at www.att.com/investor.relations.

NOTE: In connection with the proposed merger, AT&T Inc. (“AT&T”) filed a registration statement on Form S-4 (Registration No. 333-132904), containing a joint proxy statement/prospectus of AT&T and BellSouth Corporation (“BellSouth”), with the Securities and Exchange Commission (the “SEC”) on March 31, 2006. Investors are urged to read the registration statement and the joint proxy statement/prospectus contained therein (including all amendments and supplements to it) because it contains important information. Investors may obtain free copies of the registration statement and joint proxy statement/prospectus, as well as other filings containing information about AT&T and BellSouth, without charge, at the SEC’s Web site (www.sec.gov). Copies of AT&T’s filings may also be obtained without charge from AT&T at AT&T’s Web site (www.att.com) or by directing a request to AT&T Inc. Stockholder Services, 175 E. Houston, San Antonio, Texas 78205. Copies of BellSouth’s filings may be obtained without charge from

AT&T Inc. 1Q 2006 Earnings - 7

BellSouth at BellSouth’s Web site (www.bellsouth.com) or by directing a request to BellSouth at Investor Relations, 1155 Peachtree Street, N.E., Atlanta, Georgia 30309.

AT&T, BellSouth and their respective directors and executive officers and other members of management and employees are potential participants in the solicitation of proxies in respect of the proposed merger. Information regarding AT&T’s directors and executive officers is available in AT&T’s 2005 Annual Report on Form 10-K filed with the SEC on March 1, 2006 and AT&T’s proxy statement for its 2006 annual meeting of stockholders, filed with the SEC on March 10, 2006, and information regarding BellSouth’s directors and executive officers is available in BellSouth’s 2005 Annual Report on Form 10-K filed with the SEC on February 28, 2006 and BellSouth’s proxy statement for its 2006 annual meeting of shareholders, filed with the SEC on March 3, 2006. Additional information regarding the interests of such potential participants is included in the registration statement and joint proxy statement/prospectus contained therein, and other relevant documents filed with the SEC.

EX-99

Financial Data

AT&T Inc.

Consolidated Statements of Income

Dollars in millions except per share amounts

Unaudited

Three Months Ended

3/31/06 3/31/05 % Chg

Operating Revenues
Voice	$  8,722	$   5,852		49	.0%
Data	4,442	2,391		85	.8%
Directory	901	905		-0	.4%
Other	1,770	1,100		60	.9%
Total Operating Revenues	15,835	10,248		54	.5%
Operating Expenses
Cost of sales (exclusive of depreciation
and amortization shown separately below)	7,128	4,388		62	.4%
Selling, general and administrative	4,024	2,479		62	.3%
Depreciation and amortization	2,492	1,825		36	.5%
Total Operating Expenses	13,644	8,692		57	.0%
Operating Income	2,191	1,556		40	.8%
Interest Expense	464	353		31	.4%
Interest Income	85	109		-22	.0%
Equity in Net Income (Loss) of Affiliates	334	(58	)		-
Other Income (Expense) - Net	11	47		-76	.6%
Income Before Income Taxes	2,157	1,301		65	.8%
Income Taxes	712	416		71	.2%
Net Income	$  1,445	$      885		63	.3%
Basic Earnings Per Share:
Net Income	$    0.37	$     0.27		37	.0%
Weighted Average Common
Shares Outstanding (000,000)	3,882	3,303		17	.5%
Diluted Earnings Per Share:
Net Income	$    0.37	$     0.27		37	.0%
Weighted Average Common
Shares Outstanding with Dilution (000,000)	3,902	3,315		17	.7%

Financial Data

AT&T Inc.

Statements of Segment Income

Dollars in millions

Unaudited

Three Months Ended

Wireline	3/31/06	3/31/05	% Ch	g
Segment Operating Revenues
Voice	$  8,722	$  5,852	49	.0%
Data	4,442	2,391	85	.8%
Other	1,575	939	67	.7%
Total Segment Operating Revenues	14,739	9,182	60	.5%
Segment Operating Expenses
Cost of sales	6,856	4,123	66	.3%
Selling, general and administrative	3,701	2,170	70	.6%
Depreciation and amortization	2,430	1,773	37	.1%
Total Segment Operating Expenses	12,987	8,066	61	.0%
Segment Income	$  1,752	$  1,116	57	.0%

Cingular *
Segment Operating Revenues
Service revenues	$  8,005		$  7,419		7	.9%
Equipment sales	975		810		20	.4%
Total Segment Operating Revenues	8,980		8,229		9	.1%
Segment Operating Expenses
Cost of services and equipment sales	3,647		3,439		6	.0%
Selling, general and administrative	2,846		3,001		-5	.2%
Depreciation and amortization	1,680		1,675		0	.3%
Total Segment Operating Expenses	8,173		8,115		0	.7%
Segment Operating Income	807		114			-
Other Income (Expense) - Net	(329	)	(332	)	0	.9%
Segment Income (Loss)	$  478		$  (218	)		-

* Results reflect 100% of Cingular Wireless' actual results

Directory
Segment Operating Revenues	$  923		$  929		-0	.6%
Segment Operating Expenses
Cost of sales	288		280		2	.9%
Selling, general and administrative	159		164		-3	.0%
Depreciation and amortization	1		2		-50	.0%
Total Segment Operating Expenses	448		446		0	.4%
Segment Operating Income	475		483		-1	.7%
Equity in Net Income (Loss) of Affiliates	(5	)	(1	)		-
Segment Income	$  470		$  482		-2	.5%

Other **
Segment Operating Revenues	$ 203		$ 169		20	.1%
Segment Operating Expenses	239		212		12	.7%
Segment Operating Income (Loss)	(36	)	(43	)	16	.3%
Equity in Net Income (Loss) of Affiliates	339		(58	)		-
Segment Income (Loss)	$ 303		$(101	)		-

** Equity in Net Income (Loss) of Affiliates includes our 60% proportionate share of Cingular's results

Financial Data
 

AT&T Inc.

Consolidated Balance Sheets

Dollars in millions except per share amounts

3/31/06
Unaudited 12/31/05

Assets
Current Assets
Cash and cash equivalents	$	1,057		$	1,224
Accounts receivable - net of allowances for
uncollectibles of $1,131 and $1,176		8,647			9,351
Prepaid expenses		1,215			1,029
Deferred income taxes		1,874			2,011
Other current assets		1,057			1,039
Total current assets		13,850			14,654
Property, plant and equipment - at cost		150,516			149,238
Less: accumulated depreciation and amortization		92,149			90,511
Property, Plant and Equipment - Net		58,367			58,727
Goodwill		13,402			14,055
Intangible Assets - Net		8,214			8,503
Investments in Equity Affiliates		2,090			2,031
Investments in and Advances to Cingular Wireless		32,316			31,404
Other Assets		16,198			16,258
Total Assets	$	144,437		$	145,632
Liabilities and Stockholders' Equity
Current Liabilities
Debt maturing within one year	$	5,712		$	4,455
Accounts payable and accrued liabilities		15,510			17,088
Accrued taxes		2,240			2,586
Dividends payable		1,293			1,289
Total current liabilities		24,755			25,418
Long-Term Debt		25,829			26,115
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes		14,902			15,713
Postemployment benefit obligation		18,278			18,133
Unamortized investment tax credits		202			209
Other noncurrent liabilities		5,382			5,354
Total deferred credits and other noncurrent liabilities		38,764			39,409
Stockholders' Equity
Common shares issued ($1 par value)		4,065			4,065
Capital in excess of par value		27,262			27,499
Retained earnings		29,257			29,106
Treasury shares (at cost)		(4,927	)		(5,406	)
Additional minimum pension liability adjustment		(218	)		(218	)
Accumulated other comprehensive income		(350	)		(356	)
Total stockholders' equity		55,089			54,690
Total Liabilities and Stockholders' Equity	$	144,437		$	145,632

Financial Data
 

AT&T Inc.

Consolidated Statements of Cash Flow

Dollars in millions, increase (decrease) in cash and cash equivalents

Unaudited Three Months Ended

3/31/06 3/31/05

Operating Activities
Net income	$ 1,445		$    885
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization	2,492		1,825
Undistributed earnings from investments in equity affiliates	(313	)	74
Provision for uncollectible accounts	193		239
Amortization of investment tax credits	(7	)	(6	)
Deferred income tax (benefit) expense	66		(37	)
Net gain on sales of investments	(8	)	(66	)
Changes in operating assets and liabilities:
Accounts receivable	509		128
Other current assets	(189	)	(97	)
Accounts payable and accrued liabilities	(2,057	)	(1,624	)
Stock-based compensation tax benefit	(8	)	(3	)
Other - net	335		(65	)
Total adjustments	1,013		368
Net Cash Provided by Operating Activities	2,458		1,253
Investing Activities
Construction and capital expenditures	(1,821	)	(1,050	)
Receipts from (investments in) affiliates - net	(699	)	596
Maturities of held-to-maturity securities	-		64
Dispositions	27		73
Acquisitions	(62	)	(169	)
Proceeds from note repayment	-		37
Net Cash Used in Investing Activities	(2,555	)	(449	)
Financing Activities
Net change in short-term borrowings with
original maturities of three months or less	1,271		761
Repayment of other short-term borrowings	(2	)	-
Repayment of long-term debt	(259	)	(572	)
Issuance of treasury shares	201		47
Dividends paid	(1,289	)	(1,066	)
Stock-based compensation tax benefit	8		3
Net Cash Used in Financing Activities	(70	)	(827	)
Net increase (decrease) in cash and cash equivalents
from continuing operations	(167	)	(23	)
Net Cash Used in Operating Activities from Discontinued Operations	-		(310	)
Net increase (decrease) in cash and cash equivalents	(167	)	(333	)
Cash and cash equivalents beginning of year	1,224		760
Cash and Cash Equivalents End of Period	$ 1,057		$    427

Financial Data
 

AT&T Inc.

Supplementary Operating Data

Unaudited Three Months Ended

3/31/06 3/31/05

In-Region 1
Switched Access Lines (000)
Retail Consumer - Primary	22,630		23,222
Retail Consumer - Additional	3,786		4,218
Retail Business	17,377		17,507
Retail	43,793		44,947
Wholesale 2	4,667		6,503
Coin 3	308		418
Total Switched Access Lines (000)	48,768		51,868
Unbundled Loops (000)	1,664		1,502
DSL Lines in Service (000)	7,432		5,608
Net DSL Line Additions (000)	511		504
Video Subscribers (000)	491		394
Net Video Subscriber Additions (000)	34		71
Cingular Wireless 4, 5
Wireless Voice Customers (000)	55,810		50,350
Net Customer Additions (000)	1,679		1,367
M&A Activity, Partitioned Customers and Other Adjs.	(13	)	(149	)
POPs (000,000)	296		293

¹  In-Region represents access lines served by AT&T's incumbent local exchange companies.

²  Wholesale lines at 3-31-06 include approximately 1.51 million lines purchased by AT&T Corp.

³  Coin includes both retail and wholesale access lines.

⁴  Amounts represent 100% of the results from Cingular Wireless.

⁵  Prior year amounts restated to conform to current period reporting methodology.

Non-GAAP Financial Data
 

AT&T Inc.

Supplemental Consolidated Income Statements

Dollars in millions

Unaudited

	Three Months Ended
			3/31/06			3/31/05	% C	hg
Total Operating Revenues		$	24,433		$	18,295	33	.6%
Operating Expenses
Cost of sales (exclusive of depreciation
and amortization shown separately below)			10,393			7,645	35	.9%
Selling, general and administrative			6,870			5,480	25	.4%
Depreciation and amortization			4,172			3,500	19	.2%
Total Operating Expenses			21,435			16,625	28	.9%
Operating Income			2,998			1,670	79	.5%
Interest Expense			694			600	15	.7%
Interest Income			22			36	-38.	9%
Minority Interest			(192	)		71	-
Equity in Net Income (Loss) of Affiliates			122			88	38	.6%
Other Income (Expense) - Net			17			49	-65.	3%
Income Before Income Taxes			2,273			1,314	73	.0%
Income Taxes			828			429	93	.0%
Net Income		$	1,445		$	885	63	.3%

As required by GAAP rules for joint ventures, AT&T reflects Cingular’s results in the Equity in Net Income of Affiliates line of its Consolidated Statements of Income rather than in revenues and expenses. To facilitate peer comparisons, and in recognition of AT&T’s majority economic ownership of the nation’s largest wireless provider and Cingular’s increased significance to AT&T’s overall operations, AT&T provides a supplemental consolidated income statement that includes full consolidation of Cingular’s operating results. This supplemental information also includes reconciliations to AT&T’s Consolidated Statements of Income on the following page.

Certain amounts in prior-period supplemental financial information have been reclassified to conform to the current period's presentation.

Non-GAAP Financial Data Reconciliation

AT&T Inc.

Supplemental Consolidated Income Statements

For the Three Months Ended 3/31/06

Dollars in millions

Unaudited Reported Non-GAAP

AT&T Cingular Consolidating
Adjustments Supplemental
Consolidated

Total Operating Revenues	$	15,835		$	8,980		$	(382	)	$	24,433
Operating Expenses
Cost of sales (exclusive of depreciation
and amortization shown separately below)		7,128			3,647			(382	)		10,393
Selling, general and administrative		4,024			2,846			-			6,870
Depreciation and amortization		2,492			1,680			-			4,172
Total Operating Expenses		13,644			8,173			(382	)		21,435
Operating Income		2,191			807			-			2,998
Interest Expense		464			297			(67	)		694
Interest Income		85			4			(67	)		22
Minority Interest		(1	)		(41	)		(150	)		(192	)
Equity in Net Income (Loss) of Affiliates		334			-			(212	)		122
Other Income (Expense) - Net		12			5			-			17
Income Before Income Taxes		2,157			478			(362	)		2,273
Income Taxes		712			124			(8	)		828
Net Income	$	1,445		$	354		$	(354	)	$	1,445

For the Three Months Ended 3/31/05

Dollars in millions

Unaudited Reported Non-GAAP

AT&T Cingular Consolidating
Adjustments Supplemental
Consolidated

Total Operating Revenues	$	10,248		$	8,229		$	(182	)	$	18,295
Operating Expenses
Cost of sales (exclusive of depreciation
and amortization shown separately below)		4,388			3,439			(182	)		7,645
Selling, general and administrative		2,479			3,001			-			5,480
Depreciation and amortization		1,825			1,675			-			3,500
Total Operating Expenses		8,692			8,115			(182	)		16,625
Operating Income		1,556			114			-			1,670
Interest Expense		353			338			(91	)		600
Interest Income		109			18			(91	)		36
Minority Interest		-			(16	)		87			71
Equity in Net Income (Loss) of Affiliates		(58	)		2			144			88
Other Income (Expense) - Net		47			2			-			49
Income (Loss) Before Income Taxes		1,301			(218	)		231			1,314
Income Taxes		416			22			(9	)		429
Net Income (Loss)	$	885		$	(240	)	$	240		$	885