EX-99 4 ex99_2.htm 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   Six Months Ended  
    6/30/20 06 6/30/20 05 % C hg 6/30/20 06 6/30/20 05 % C hg
Operating Revenues  
  Voice   $  8,618   $  5,760   49 .6% $17,340   $11,612   49 .3%
  Data   4,477   2,438   83 .6% 8,919   4,829   84 .7%
  Directory   909   901   0 .9% 1,810   1,806   0 .2%
  Other   1,806   1,218   48 .3% 3,536   2,304   53 .5%
    Total Operating Revenues   15,810   10,317   53 .2% 31,605   20,551   53 .8%
Operating Expenses  
  Cost of sales (exclusive of depreciation  
    and amortization shown separately below)   6,928   4,401   57 .4% 14,056   8,789   59 .9%
  Selling, general and administrative   3,792   2,589   46 .5% 7,776   5,054   53 .9%
  Depreciation and amortization   2,486   1,809   37 .4% 4,978   3,634   37 .0%
    Total Operating Expenses   13,206   8,799   50 .1% 26,810   17,477   53 .4%
Operating Income   2,604   1,518   71 .5% 4,795   3,074   56 .0%
Interest Expense   472   349   35 .2% 936   702   33 .3%
Interest Income   95   100   -5 .0% 180   209   -13 .9%
Equity in Net Income of Affiliates   455   181   - 789   123   -
Other Income (Expense) - Net   15   34   -55 .9% 26   81   -67 .9%
Income Before Income Taxes   2,697   1,484   81 .7% 4,854   2,785   74 .3%
Income Taxes   889   484   83 .7% 1,601   900   77 .9%
Net Income   $  1,808   $  1,000   80 .8% $  3,253   $  1,885   72 .6%

Basic Earnings Per Share:		  
Net Income   $    0.47   $    0.30   56 .7% $    0.84   $    0.57   47 .4%
Weighted Average Common  
  Shares Outstanding (000,000)   3,886   3,302   17 .7% 3,884   3,303   17 .6%

Diluted Earnings Per Share:		  
Net Income   $    0.46   $    0.30   53 .3% $    0.83   $    0.57   45 .6%
Weighted Average Common  
  Shares Outstanding with Dilution (000,000)   3,905   3,312   17 .9% 3,903   3,314   17 .8%




Financial Data
AT&T Inc.
Statements of Segment Income
Dollars in millions
Unaudited        
  Three Months Ended   Six Months Ended  
Wireline   6/30/200 6 6/30/200 5 % Chg 6/30/200 6 6/30/200 5 % Chg
Segment Operating Revenues  
  Voice   $   8,618   $ 5,760   49 .6% $ 17,340   $ 11,612   49 .3%
  Data   4,477   2,438   83 .6% 8,919   4,829   84 .7%
  Other   1,655   1,059   56 .3% 3,230   1,998   61 .7%
    Total Segment Operating Revenues   14,750   9,257   59 .3% 29,489   18,439   59 .9%
Segment Operating Expenses  
  Cost of sales   6,655   4,139   60 .8% 13,511   8,262   63 .5%
  Selling, general and administrative   3,534   2,314   52 .7% 7,235   4,484   61 .4%
  Depreciation and amortization   2,427   1,757   38 .1% 4,857   3,530   37 .6%
    Total Segment Operating Expenses   12,616   8,210   53 .7% 25,603   16,276   57 .3%
Segment Income   $   2,134   $ 1,047   - $   3,886   $   2,163   79 .7%
Cingular *  
Segment Operating Revenues  
  Service revenues   $   8,295   $ 7,719   7 .5% $ 16,300   $ 15,138   7 .7%
  Equipment sales   923   890   3 .7% 1,898   1,700   11 .6%
    Total Segment Operating Revenues   9,218   8,609   7 .1% 18,198   16,838   8 .1%
Segment Operating Expenses  
  Cost of services and equipment sales   3,846   3,523   9 .2% 7,493   6,962   7 .6%
  Selling, general and administrative   2,757   2,953   -6 .6% 5,603   5,954   -5 .9%
  Depreciation and amortization   1,598   1,629   -1 .9% 3,278   3,304   -0 .8%
    Total Segment Operating Expenses   8,201   8,105   1 .2% 16,374   16,220   0 .9%
Segment Operating Income   1,017   504   - 1,824   618   -
Other Income (Expense) - Net   (335 ) (333 ) -0 .6% (664 ) (665 ) 0 .2%
Segment Income (Loss)   $      682   $    171   - $   1,160   $     (47 ) -

* Results reflect 100% of Cingular Wireless' actual results

Directory		  
Segment Operating Revenues   $      925   $    925   - $   1,848   $   1,854   -0 .3%
Segment Operating Expenses  
  Cost of sales   288   276   4 .3% 576   556   3 .6%
  Selling, general and administrative   147   156   -5 .8% 306   320   -4 .4%
  Depreciation and amortization   -   1   - 1   3   -66 .7%
    Total Segment Operating Expenses   435   433   0 .5% 883   879   0 .5%
Segment Operating Income   490   492   -0 .4% 965   975   -1 .0%
Equity in Net Income (Loss) of Affiliates   (6 ) -   - (11 ) (1 ) -
Segment Income   $      484   $    492   -1 .6% $      954   $      974   -2 .1%
Other **  
Segment Operating Revenues   $      197   $    178   10 .7% $      400   $      347   15 .3%
Segment Operating Expenses   218   198   10 .1% 457   410   11 .5%
Segment Operating Income (Loss)   (21 ) (20 ) -5 .0% (57 ) (63 ) 9 .5%
Equity in Net Income of Affiliates   461   182   - 800   124   -
Segment Income   $      440   $    162   - $      743   $        61   -

** Equity in Net Income 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
    6/30/06
Unaudited 		   12/31/05  

Assets		      
Current Assets  
 Cash and cash equivalents   $     1,097   $     1,224  
 Accounts receivable - net of allowances for  
     uncollectibles of $1,039 and $1,176   8,484   9,351  
 Prepaid expenses   1,144   1,029  
 Deferred income taxes   1,876   2,011  
 Other current assets   1,034   1,039  
  Total current assets   13,635   14,654  
 Property, plant and equipment - at cost   151,716   149,238  
  Less: accumulated depreciation and amortization   93,365   90,511  
Property, Plant and Equipment - Net   58,351   58,727  
Goodwill   13,433   14,055  
Intangible Assets - Net   7,978   8,503  
Investments in Equity Affiliates   2,147   2,031  
Investments in and Advances to Cingular Wireless   32,656   31,404  
Other Assets   16,150   16,258  
   Total Assets   $ 144,350   $ 145,632  

Liabilities and Stockholders' Equity		  
Current Liabilities  
 Debt maturing within one year   $     3,314   $     4,455  
 Accounts payable and accrued liabilities   15,472   17,088  
 Accrued taxes   2,955   2,586  
 Dividends payable   1,291   1,289  
  Total current liabilities   23,032   25,418  
Long-Term Debt   27,159   26,115  
Deferred Credits and Other Noncurrent Liabilities  
 Deferred income taxes   14,886   15,713  
 Postemployment benefit obligation   18,461   18,133  
 Unamortized investment tax credits   195   209  
 Other noncurrent liabilities   5,148   5,354  
  Total deferred credits and other noncurrent liabilities   38,690   39,409  

Stockholders' Equity		  
 Common shares issued ($1 par value)   4,065   4,065  
 Capital in excess of par value   27,217   27,499  
 Retained earnings   29,771   29,106  
 Treasury shares (at cost)   (5,002 ) (5,406 )
 Additional minimum pension liability adjustment   (218 ) (218 )
 Accumulated other comprehensive income   (364 ) (356 )
  Total stockholders' equity   55,469   54,690  
   Total Liabilities and Stockholders' Equity   $ 144,350   $ 145,632  




Financial Data
AT&T Inc.
Consolidated Statements of Cash Flows
Dollars in millions, increase (decrease) in cash and cash equivalents
Unaudited          Six Months Ended
    6/30/06   6/30/05  
Operating Activities  
Net income   $ 3,253   $ 1,885  
Adjustments to reconcile net income to  
  net cash provided by operating activities:  
 Depreciation and amortization   4,978   3,634  
 Undistributed earnings from investments in equity affiliates   (752 ) (87 )
 Provision for uncollectible accounts   320   413  
 Amortization of investment tax credits   (14 ) (11 )
 Deferred income tax (benefit) expense   65   (264 )
 Net gain on sales of investments   (10 ) (75 )
Changes in operating assets and liabilities:  
   Accounts receivable   545   217  
   Other current assets   (84 ) (14 )
   Accounts payable and accrued liabilities   (1,431 ) (1,123 )
   Stock-based compensation tax benefit   (5 ) (3 )
Other - net   288   465  
Total adjustments   3,900   3,152  
Net Cash Provided by Operating Activities   7,153   5,037  
Investing Activities  
Construction and capital expenditures   (4,042 ) (2,329 )
Receipts from (investments in) affiliates - net   (717 ) 1,179  
Maturities of held-to-maturity securities   3   98  
Dispositions   55   86  
Acquisitions   (115 ) (169 )
Proceeds from note repayment   -   37  
Other   4   -  
Net Cash Used in Investing Activities   (4,812 ) (1,098 )
Financing Activities  
Net change in short-term borrowings with  
 original maturities of three months or less   1,020   (882 )
Repayment of other short-term borrowings   (3 ) -  
Issuance of long-term debt   1,491   -  
Repayment of long-term debt   (2,540 ) (1,037 )
Purchase of treasury shares   (148 ) (235 )
Issuance of treasury shares   236   298  
Dividends paid   (2,581 ) (2,130 )
Stock-based compensation tax benefit   5   3  
Other   52   -  
Net Cash Used in Financing Activities   (2,468 ) (3,983 )
Net increase (decrease) in cash and cash equivalents  
  from continuing operations   (127 ) (44 )
Net Cash Used in Operating Activities from Discontinued Operations   -   (310 )
Net increase (decrease) in cash and cash equivalents   (127 ) (354 )
Cash and cash equivalents beginning of year   1,224   760  
Cash and Cash Equivalents End of Period   $ 1,097   $    406  




Financial Data
AT&T Inc.
Supplementary Operating Data
Dollars in millions
Unaudited Three Months Ended   Six Months Ended
    6/30/2006   6/30/2005   6/30/20 06 6/30/20 05
In-Region 1  
      Total Consumer Retail Connections (000)  
          Retail Consumer Access Lines           25,990   27,144  
          Consumer DSL Lines           6,570   4,908  
          Video Subscribers 2           533   404  
                     Total Consumer Retail Connections (000)           33,093   32,456  
      Switched Access Lines (000)  
              Retail Consumer - Primary           22,310   23,036  
              Retail Consumer - Additional           3,680   4,108  
              Retail Business           17,282   17,513  
          Retail           43,272   44,657  

          Wholesale 3		           4,358   5,977  
          Coin 4           281   398  
                     Total Switched Access Lines (000)           47,911   51,032  
      Unbundled Loops (000)           1,640   1,526  
      DSL Lines in Service (000)           7,774   5,968  
          Net DSL Line Additions (000)   342   360   853   864  
      Video Subscribers (000) 2           533   404  
          Net Video Subscriber Additions (000) 2   42   10   76   81  
Cingular Wireless 5, 6  
      Wireless Voice Customers (000)           57,308   51,442  
      Net Customer Additions (000)   1,498   952   3,177   2,319  
      M&A Activity, Partitioned Customers and Other Adjs.   -   140   (13 ) (9 )
      POPs (000,000)           296   294  
1  In-region represents access lines served by AT&T's incumbent local exchange companies.
2  Video Subscribers include sales under agency agreement with EchoStar.
3  Wholesale lines at 6-30-06 include approximately 1.39 million lines purchased by AT&T Corp.
4  Coin includes both retail and wholesale access lines.
5  Amounts represent 100% of the results from Cingular Wireless.
6  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       Six Months Ended  
    6/30/06   6/30/05   % C hg 6/30/06   6/30/05   % C hg
Total Operating Revenues   $ 24,663   $ 18,721   31 .7% $ 49,056   $ 37,002   32 .6%
Operating Expenses  
  Cost of sales (exclusive of depreciation  
    and amortization shown separately below)   10,409   7,719   34 .8% 20,802   15,364   35 .4%
  Selling, general and administrative   6,549   5,542   18 .2% 13,379   11,008   21 .5%
  Depreciation and amortization   4,084   3,438   18 .8% 8,256   6,938   19 .0%
    Total Operating Expenses   21,042   16,699   26 .0% 42,437   33,310   27 .4%
Operating Income   3,621   2,022   79 .1% 6,619   3,692   79 .3%
Interest Expense   695   586   18 .6% 1,389   1,186   17 .1%
Interest Income   23   29   -20 .7% 45   65   -30 .8%
Minority Interest   (358 ) (111 ) - (550 ) (40 ) -
Equity in Net Income of Affiliates   131   94   39 .4% 253   182   39 .0%
Other Income (Expense) - Net   19   50   -62 .0% 36   99   -63 .6%
Income Before Income Taxes   2,741   1,498   83 .0% 5,014   2,812   78 .3%
Income Taxes   933   498   87 .3% 1,761   927   90 .0%
Net Income   $   1,808   $   1,000   80 .8% $   3,253   $   1,885   72 .6%

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 6/30/06
Dollars in millions
Unaudited Reported   Non-GAAP

    AT&T   Cingular   Consolidat
Adjustme		 ing
nts		 Supplem
Consolid		 ental
ated
Total Operating Revenues   $ 15,810   $ 9,218   $(365 ) $ 24,663  
Operating Expenses  
  Cost of sales (exclusive of depreciation  
    and amortization shown separately below)   6,928   3,846   (365 ) 10,409  
  Selling, general and administrative   3,792   2,757   -   6,549  
  Depreciation and amortization   2,486   1,598   -   4,084  
    Total Operating Expenses   13,206   8,201   (365 ) 21,042  
Operating Income   2,604   1,017   -   3,621  
Interest Expense   472   298   (75 ) 695  
Interest Income   95   3   (75 ) 23  
Minority Interest   (1 ) (43 ) (314 ) (358 )
Equity in Net Income of Affiliates   455   -   (324 ) 131  
Other Income (Expense) - Net   16   3   -   19  
Income Before Income Taxes   2,697   682   (638 ) 2,741  
Income Taxes   889   142   (98 ) 933  
Net Income   $   1,808   $    540   $(540 ) $   1,808  




 
For the Three Months Ended 6/30/05
Dollars in millions
Unaudited Reported   Non-GAAP

    AT&T   Cingular   Consolidat
Adjustme		 ing
nts		 Supplem
Consolid		 ental
ated
Total Operating Revenues   $ 10,317   $ 8,609   $(205 ) $ 18,721  
Operating Expenses  
  Cost of sales (exclusive of depreciation  
    and amortization shown separately below)   4,401   3,523   (205 ) 7,719  
  Selling, general and administrative   2,589   2,953   -   5,542  
  Depreciation and amortization   1,809   1,629   -   3,438  
    Total Operating Expenses   8,799   8,105   (205 ) 16,699  
Operating Income   1,518   504   -   2,022  
Interest Expense   349   326   (89 ) 586  
Interest Income   100   18   (89 ) 29  
Minority Interest   (1 ) (41 ) (69 ) (111 )
Equity in Net Income of Affiliates   181   1   (88 ) 94  
Other Income (Expense) - Net   35   15   -   50  
Income Before Income Taxes   1,484   171   (157 ) 1,498  
Income Taxes   484   24   (10 ) 498  
Net Income   $   1,000   $    147   $(147 ) $   1,000  




Non-GAAP Financial Data Reconciliation
AT&T Inc.
Supplemental Consolidated Income Statements
For the Six Months Ended 6/30/06
Dollars in millions
Unaudited Reported   Non-GAAP

    AT&T   Cingular   Consolidat
Adjustme		 ing
nts		 Supplem
Consolid		 ental
ated
Total Operating Revenues   $ 31,605   $ 18,198   $  (747 ) $ 49,056  
Operating Expenses  
  Cost of sales (exclusive of depreciation  
    and amortization shown separately below)   14,056   7,493   (747 ) 20,802  
  Selling, general and administrative   7,776   5,603   -   13,379  
  Depreciation and amortization   4,978   3,278   -   8,256  
    Total Operating Expenses   26,810   16,374   (747 ) 42,437  
Operating Income   4,795   1,824   -   6,619  
Interest Expense   936   595   (142 ) 1,389  
Interest Income   180   7   (142 ) 45  
Minority Interest   (2 ) (84 ) (464 ) (550 )
Equity in Net Income of Affiliates   789   -   (536 ) 253  
Other Income (Expense) - Net   28   8   -   36  
Income Before Income Taxes   4,854   1,160   (1,000 ) 5,014  
Income Taxes   1,601   266   (106 ) 1,761  
Net Income   $   3,253   $      894   $  (894 ) $   3,253  




 
For the Six Months Ended 6/30/05
Dollars in millions
Unaudited Reported   Non-GAAP

    AT&T   Cingular   Consolidat
Adjustme		 ing
nts		 Supplem
Consolid		 ental
ated
Total Operating Revenues   $ 20,551   $ 16,838   $(387 ) $ 37,002  
Operating Expenses  
  Cost of sales (exclusive of depreciation  
    and amortization shown separately below)   8,789   6,962   (387 ) 15,364  
  Selling, general and administrative   5,054   5,954   -   11,008  
  Depreciation and amortization   3,634   3,304   -   6,938  
    Total Operating Expenses   17,477   16,220   (387 ) 33,310  
Operating Income   3,074   618   -   3,692  
Interest Expense   702   664   (180 ) 1,186  
Interest Income   209   36   (180 ) 65  
Minority Interest   (1 ) (57 ) 18   (40 )
Equity in Net Income of Affiliates   123   3   56   182  
Other Income (Expense) - Net   82   17   -   99  
Income (Loss) Before Income Taxes   2,785   (47 ) 74   2,812  
Income Taxes   900   46   (19 ) 927  
Net Income (Loss)   $   1,885   $     (93 ) $   93   $   1,885