AT&T (T) 8-K Reported earnings per diluted share of $0.37, up 37.0 percent versus the year-earlier first quarter

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-Region1
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
Wholesale2	4,667		6,503
Coin3	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 Wireless4, 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