EX-99 4 ex99_2.htm AT&T INC. FINANCIAL STATEMENTS AND OPERATING DATA
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