AT&T (T) 8-K March 31, 2004 Earnings Release

Financial Data

SBC COMMUNCIATIONS INC.

CONSOLIDATED STATEMENTS OF INCOME

Dollars in millions except per share amounts

Unaudited Three Months Ended

3/31/04 3/31/03 % Chg

Operating Revenues

    Voice $ 5,232 $ 5,751 -9.0%

    Data 2,647 2,479 6.8%

    Long-distance voice 749 578 29.6%

    Directory advertising 1,060 1,076 -1.5%

    Other 440 491 -10.4%

      Total Operating Revenues 10,128 10,375 -2.4%

Operating Expenses

    Cost of sales (exclusive of depreciation
        and amortization shown separately below) 4,227 4,083 3.5%

    Selling, general and administrative

      Selling 1,809 1,717 5.4%

      General and administrative 599 681 -12.0%

    Selling, general and administrative 2,408 2,398 0.4%

    Depreciation and amortization 1,923 1,996 -3.7%

    Total Operating Expenses 8,558 8,477 1.0%

Operating Income 1,570 1,898 -17.3%

Interest Expense 231 317 -27.1%

Interest Income 116 136 -14.7%

Equity in Net Income of Affiliates 592 365 62.2%

Other Income (Expense) - Net 861 1,581 -45.5%

Income Before Income Taxes 2,908 3,663 -20.6%

Income Taxes 960 1,208 -20.5%

Income Before Cumulative Effect
    of Accounting Change 1,948 2,455 -20.7%

Cumulative Effect of Accounting Change, net
     of tax     - 2,541          -

Net Income $ 1,948 $ 4,996 -61.0%

Basic Earnings Per Share:

Income Before Cumulative Effect
    of Accounting Changes $ 0.59 $ 0.74 -20.3%

Net Income $ 0.59 $ 1.50 60.7%

Weighted Average Common
     Shares Outstanding (000,000) 3,308 3,320 -0.4%

Diluted Earnings Per Share:

Income Before Cumulative Effect
     of Accounting Changes $ 0.59 $ 0.74 -20.3%

Net Income $ 0.59 $ 1.50 60.7%

Weighted Average Common
     Shares Outstanding with Dilution (000,000) 3,323 3,333 -0.3%

Financial Data

SBC COMMUNCIATIONS INC.

Statements of Segment Income

Dollars in millions

Unaudited

Three Months Ended

Wireline 3/31/04 3/31/03 % Chg

Segment Operating Revenues

    Voice $ 5,213 $ 5,739 -9.2%

    Data 2,647 2,479 6.8%

    Long-distance voice 749 578 29.6%

    Other 431 477 -9.6%

      Total Segment Operating Revenues 9,040 9,273 -2.5%

Segment Operating Expenses

    Cost of sales 4,010 3,879 3.4%

    Selling, general and administrative

      Selling 1,663 1,532 8.6%

      General and administrative 520 534 -2.6%

    Selling, general and administrative 2,183 2,066 5.7%

    Depreciation and amortization 1,898 1,969 -3.6%

      Total Segment Operating Expenses 8,091 7,914 2.2%

Segment Income $ 949 $ 1,359 -30.2%

Cingular *

Segment Operating Revenues

    Service revenues $ 3,558 $ 3,394 4.8%

    Equipment sales 384 244 57.4%

      Total Segment Operating Revenues 3,942 3,638 8.4%

Segment Operating Expenses

    Cost of service and equipment sales 1,459 1,217 19.9%

    Selling, general and administrative 1,372 1,217 12.7%

    Depreciation and amortization 552 488 13.1%

      Total Segment Operating Expenses 3,383 2,922 15.8%

Segment Operating Income 559 716 -21.9%

Other Income (Expense) - Net (326) (295) -10.5%

Segment Income $ 233 $ 421 -44.7%

* Results reflect 100% of Cingular Wireless' actual results

Directory

Segment Operating Revenues $ 1,054 $ 1,062 -0.8%

Segment Operating Expenses

    Cost of sales 239 216 10.6%

    Selling, general and administrative

      Selling 142 154 -7.8%

      General and administrative 102 103 -1.0%

    Selling, general and administrative 244 257 -5.1%

    Depreciation and amortization 3 7 -57.1%

      Total Segment Operating Expenses 486 480 1.3%

Segment Income $ 568 $ 582 -2.4%

International

Segment Operating Revenues $ 5 $ 6 -16.7%

Segment Operating Expenses 12 21 -42.9%

Segment Operating Income (Loss) (7) (15) 53.3%

Equity in Net Income of Affiliates 452 112         -

Segment Income $ 445 $ 97         -

Financial Data

SBC COMMUNCIATIONS INC.

CONSOLIDATED BALANCE SHEETS

Dollars in millions except per share amounts

Unaudited 3/31/04 12/31/03

Assets
Current Assets
Cash and cash equivalents	$	7,081	$	4,806
Accounts receivable - net of allowances for   uncollectibles of $981 and $914		5,793		6,178
Short-term investments		378		378
Prepaid expenses		810		760
Deferred income taxes		644		712
Other current assets		1,112		1,134

  Total current assets 15,818 13,968

Property, plant and equipment - at cost	134,324	133,923
Less: accumulated depreciation and amortization	83,122	81,795

Property, Plant and Equipment - Net 51,202 52,128

Goodwill - Net	1,621	1,611
Investments in Equity Affiliates	6,021	6,947
Investments in and Advances to Cingular Wireless	11,142	11,003
Other Assets	14,615	14,509

  Total Assets $ 100,419 $ 100,166

Liabilities and Shareowners' Equity
Current Liabilities
Debt maturing within one year	$	2,070	$	1,879
Accounts payable and accrued liabilities		9,471		10,870
Accrued taxes		895		478
Dividends payable		1,035		1,033

Total current liabilities	13,471	14,260
Long-Term Debt	15,854	16,060

Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes	15,526	15,079
Postemployment benefit obligation	12,472	12,692
Unamortized investment tax credits	212	220
Other noncurrent liabilities	3,475	3,607

   Total deferred credits and other noncurrent liabilities 31,685 31,598

Shareowners' Equity
Common shares issued ($1 par value)	3,433	3,433
Capital in excess of par value	12,955	13,010
Retained earnings	28,548	27,635
Treasury shares (at cost)	(4,460)	(4,698)
Additional minimum pension liability adjustment	(1,132)	(1,132)
Accumulated other comprehensive loss	65	-

Total shareowners' equity		39,409		38,248
Total Liabilities and Shareowners' Equity	$	100,419	$	100,166

Financial Data

SBC COMMUNCIATIONS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

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

(Unaudited) Three months ended

3/31/04 3/31/03

Operating Activities
Net income	$	1,948	$	4,996
Adjustments to reconcile net income       to net cash provided by operating activities:
Depreciation and amortization		1,923		1,996
Undistributed earnings from investments        in equity affiliates		(496)		(345)
Provision for uncollectible accounts		236		282
Amortization of investment tax credits		(8)		(9)
Deferred income tax expense		466		215
Gain on sales of investments		(889)		(1,574)
Cumulative effect of accounting change, net of tax		-		(2,541)
Retirement benefit funding		(232)		(445)
Changes in operating assets and liabilities:
Accounts receivable		149		311
Other current assets		(29)		(126)
Accounts payable and accrued liabilities		(975)		(276)

Other - net (49) 151

Total adjustments 96 (2,361)

Net Cash Provided by Operating Activities 2,044 2,635

Investing Activities
Construction and capital expenditures	(936)	(897)
Purchase of held-to-maturity securities	(79)	(5)
Maturities of held-to-maturity securities	130	-
Dispositions	2,179	2,270

Proceeds from note repayment 50 -

Net Cash Provided by Investing Activities 1,344 1,368

Financing Activities
Net change in short-term borrowings with   original maturities of three months or less	-	49
Repayment of other short-term borrowings	-	(1,070)
Repayment of long-term debt	(142)	(841)
Issuance of treasury shares	63	21

Dividends paid (1,034) (897)

Net Cash Used in Financing Activities (1,113) (2,738)

Net increase in cash and cash equivalants 2,275 1,265

Cash and cash equivalents beginning of year 4,806 3,567

Cash and Cash Equivalents End of Period $ 7,081 $ 4,832

The following tables present the prior eight quarters of Consolidated and Wireline Segment operating revenues and expenses reclassified to conform with the current year presentation for certain universal service fund payments and gross receipts taxes. Operating Income was not affected.

SBC COMMUNICATIONS INC.
Consolidated Financial Data
Dollars in Millions
(Unaudited)

	Quarter Ended
	3/31/2002	6/30/2002	9/30/2002	12/31/2002	3/31/2003	6/30/2003	9/30/2003	12/31/2003
Operating Revenues
Voice	$  6,348	$  6,267	$  6,139	$  5,918	$  5,751	$  5,579	$  5,462	$  5,251
Data	2,391	2,425	2,441	2,382	2,479	2,491	2,576	2,604
Long-distance voice	591	588	594	551	578	612	668	703
Directory advertising	705	1,067	868	1,864	1,076	1,080	1,077	1,084
Other	540	543	550	534	491	474	487	456
Total Operating Revenues	10,575	10,890	10,592	11,249	10,375	10,236	10,270	10,098
Operating Expenses
Cost of sales	3,965	4,141	4,172	4,252	4,083	4,067	4,275	4,364
Selling, general and administrative
Selling	1,572	1,750	1,555	1,731	1,717	1,765	1,715	1,843
General and administrative	720	679	688	880	681	678	718	734
Selling, general and administrative	2,292	2,429	2,243	2,611	2,398	2,443	2,433	2,577
Depreciation and amortization	2,136	2,156	2,148	2,138	1,996	1,977	1,952	1,945
Total Operating Expenses	$  8,393	$  8,726	$  8,563	$  9,001	$  8,477	$  8,487	$  8,660	$  8,886

SBC COMMUNICATIONS INC.
Wireline Segment Financial Data
Dollars in Millions
(Unaudited)

	Quarter Ended
	3/31/2002	6/30/2002	9/30/2002	12/31/2002	3/31/2003	6/30/2003	9/30/2003	12/31/2003
Operating Revenues
Voice	$6,341	$6,260	$6,128	$5,907	$5,739	$5,566	$5,447	$5,234
Data	2,391	2,425	2,441	2,382	2,479	2,491	2,576	2,604
Long-distance voice	591	588	594	551	578	612	668	703
Other	511	511	522	416	477	461	466	439
Total Operating Revenues	9,834	9,784	9,685	9,256	9,273	9,130	9,157	8,980
Operating Expenses
Cost of sales	3,817	3,948	3,994	3,944	3,879	3,862	4,055	4,145
Selling, general and administ	ive
Selling	1,451	1,563	1,450	1,385	1,532	1,614	1,499	1,631
General and administrative	581	591	616	808	534	654	645	685
Selling, general and administrative	2,032	2,154	2,066	2,193	2,066	2,268	2,144	2,316
Depreciation and amortization	2,099	2,119	2,117	2,107	1,969	1,953	1,928	1,913
Total Operating Expenses	$7,948	$8,221	$8,177	$8,244	$7,914	$8,083	$8,127	$8,374