AT&T (T) 8-K AT&T’s First-Quarter Results Highlighted by Wireless Gains, U-verse TV Growth, Double-Digit Increase

Financial Data
AT&T Inc.
Consolidated Statements of Income
Dollars in millions except per share amounts
Unaudited	Three Months Ended
	3/31/2009			3/31/2008			% Ch		g
Operating Revenues
Wireless service	$	11,646		$	10,605			9.8	%
Voice		8,506			9,693			-12.2	%
Data		6,250			5,972			4.7	%
Directory		1,249			1,398			-10.7	%
Other		2,920			3,076			-5.1	%
Total Operating Revenues		30,571			30,744			-0.6	%
Operating Expenses
Cost of services and sales (exclusive of
depreciation and amortization shown separately below)		12,242			11,995			2.1	%
Selling, general and administrative		7,706			7,866			-2.0	%
Depreciation and amortization		4,886			4,903			-0.3	%
Total Operating Expenses		24,834			24,764			0.3	%
Operating Income		5,737			5,980			-4.1	%
Interest Expense		849			865			-1.8	%
Equity in Net Income of Affiliates		137			243			-43.6	%
Other Income (Expense) - Net		(15	)		91			-
Income Before Income Taxes		5,010			5,449			-8.1	%
Income Taxes		1,809			1,930			-6.3	%
Net Income		3,201			3,519			-9.0	%
Noncontrolling Interest		(75	)		(58	)		-29.3	%
Net Income Attributable to AT&T	$	3,126		$	3,461			-9.7	%
Basic Earnings Per Share	$	0.53		$	0.58			-8.6	%
Weighted Average Common
Shares Outstanding (000,000)		5,896			5,997			-1.7	%
Diluted Earnings Per Share	$	0.53		$	0.57			-7.0	%
Weighted Average Common
Shares Outstanding with Dilution (000,000)		5,896			6,033			-2.3	%

Financial Data
AT&T Inc.
Statements of Segment Income
Dollars in millions
Unaudited
	Three Months Ended
Wireless	3/31/2009			3/31/2008			% Ch		g
Segment Operating Revenues
Service	$	11,668		$	10,645			9.6	%
Equipment		1,192			1,180			1.0	%
Total Segment Operating Revenues		12,860			11,825			8.8	%
Segment Operating Expenses
Operations and Support		8,085			7,389			9.4	%
Depreciation and amortization		1,434			1,480			-3.1	%
Total Segment Operating Expenses		9,519			8,869			7.3	%
Segment Operating Income		3,341			2,956			13.0	%
Equity in Net Income of Affiliates		-			2			-
Segment Income	$	3,341		$	2,958			12.9	%
Segment Operating Income Margin		26.0	%		25.0	%
Wireline
Segment Operating Revenues
Voice	$	8,708		$	9,919			-12.2	%
Data		6,536			6,205			5.3	%
Other		1,434			1,500			-4.4	%
Total Segment Operating Revenues		16,678			17,624			-5.4	%
Segment Operating Expenses
Operations and Support		11,297			11,493			-1.7	%
Depreciation and amortization		3,240			3,181			1.9	%
Total Segment Operating Expenses		14,537			14,674			-0.9	%
Segment Operating Income		2,141			2,950			-27.4	%
Equity in Net Income of Affiliates		4			6			-33.3	%
Segment Income	$	2,145		$	2,956			-27.4	%
Segment Operating Income Margin		12.8	%		16.7	%
Advertising Solutions
Segment Operating Revenues	$	1,269		$	1,417			-10.4	%
Segment Operating Expenses
Operations and Support		749			787			-4.8	%
Depreciation and amortization		176			212			-17.0	%
Total Segment Operating Expenses		925			999			-7.4	%
Segment Income	$	344		$	418			-17.7	%
Segment Income Margin		27.1	%		29.5	%
Other
Segment Operating Revenues	$	437		$	544			-19.7	%
Segment Operating Expenses		526			888			-40.8	%
Segment Operating Income (Loss)		(89	)		(344	)		-74.1	%
Equity in Net Income of Affiliates		133			235			-43.4	%
Segment Income (Loss)	$	44		$	(109	)		-

Financial Data
AT&T Inc.
Consolidated Balance Sheets
Dollars in millions except per share amounts
	3/31/09			12/31/08
	Unaudited
Assets
Current Assets
Cash and cash equivalents	$	3,812		$	1,792
Accounts receivable - net of allowances for
uncollectibles of $1,271 and $1,270		14,965			16,047
Prepaid expenses		1,704			1,538
Deferred income taxes		957			1,014
Other current assets		2,083			2,165
Total current assets		23,521			22,556
Property, Plant and Equipment - Net		98,339			99,088
Goodwill		71,694			71,829
Licenses		47,461			47,306
Customer Lists and Relationships - Net		9,605			10,582
Other Intangible Assets - Net		5,797			5,824
Investments in Equity Affiliates		2,413			2,332
Other Assets		5,528			5,728
Total Assets	$	264,358		$	265,245
Liabilities and Stockholders' Equity
Current Liabilities
Debt maturing within one year	$	10,790		$	14,119
Accounts payable and accrued liabilities		17,359			20,032
Advanced billing and customer deposits		4,065			3,849
Accrued taxes		2,399			1,874
Dividends payable		2,419			2,416
Total current liabilities		37,032			42,290
Long-Term Debt		63,560			60,872
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes		19,376			19,196
Postemployment benefit obligation		32,032			31,930
Other noncurrent liabilities		14,663			14,207
Total deferred credits and other noncurrent liabilities		66,071			65,333
Stockholders' Equity
Common shares issued ($1 par value)		6,495			6,495
Capital in excess of par value		91,638			91,728
Retained earnings		37,296			36,591
Treasury shares (at cost)		(21,283	)		(21,410	)
Noncontrolling interest		404			403
Accumulated other comprehensive income (loss)		(16,855	)		(17,057	)
Total stockholders' equity		97,695			96,750
Total Liabilities and Stockholders' Equity	$	264,358		$	265,245

Financial Data
AT&T Inc.
Consolidated Statements of Cash Flows
Dollars in millions, increase (decrease) in cash and cash equivalents
Unaudited	Three months ended
	March 31,
	2009			2008
Operating Activities
Net income	$	3,126		$	3,461
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		4,886			4,903
Undistributed earnings from investments in equity affiliates		(137	)		(220	)
Provision for uncollectible accounts		509			480
Deferred income tax expense (benefit)		126			569
Net (gain) loss from impairment and sale of investments		82			(46	)
Changes in operating assets and liabilities:
Accounts receivable		573			(150	)
Other current assets		(108	)		159
Accounts payable and accrued liabilities		(1,347	)		(4,654	)
Stock-based compensation tax benefit		-			(7	)
Other - net		205			462
Total adjustments		4,789			1,496
Net Cash Provided by Operating Activities		7,915			4,957
Investing Activities
Construction and capital expenditures
Capital expenditures		(3,173	)		(4,178	)
Interest during construction		(185	)		(70	)
Acquisitions, net of cash acquired		-			(3,662	)
Dispositions		181			47
Proceeds from sale of securities, net of investments		(10	)		131
Sale of other investments		-			-
Other		30			33
Net Cash Used in Investing Activities		(3,157	)		(7,699	)
Financing Activities
Net change in short-term borrowings with original maturities of three months or less		(3,909	)		5,786
Issuance of long-term debt		5,450			3,972
Repayment of long-term debt		(1,261	)		(613	)
Purchase of treasury shares		-			(4,071	)
Issuance of treasury shares		1			103
Dividends paid		(2,416	)		(2,422	)
Stock-based compensation tax benefit		-			7
Other		(603	)		(27	)
Net Cash Used in Financing Activities		(2,738	)		2,735
Net increase (decrease) in cash and cash equivalents		2,020			(7	)
Cash and cash equivalents beginning of year		1,792			1,970
Cash and Cash Equivalents End of Period	$	3,812		$	1,963

Financial Data
AT&T Inc.
Supplementary Operating and Financial Data
Dollars in millions except per share amounts
Unaudited	Three Months Ended
	3/31/2009			3/31/2008			% Ch		g
Wireless
Wireless Customers (000)		78,232			71,367			9.6	%
Net Customer Additions (000)		1,223			1,295			-5.6	%
M&A Activity, Partitioned Customers and Other Adjs. (000)		-			20
Postpaid Customers (000)		60,957			56,016			8.8	%
Net Postpaid Customer Additions (000)		875			705			24.1	%
Postpaid Churn		1.2	%		1.2	%	0 B		P
Licensed POPs (000,000)		306			304			0.7	%
In-Region Wireline 1
Total Consumer Revenue Connections (000)
Retail Consumer Voice Connections 2		26,780			30,316			-11.7	%
Retail Consumer Additional Voice Connections 2		3,189			3,866			-17.5	%
Consumer  Wired Broadband Connections 3		13,344			12,547			6.4	%
Video Connections: 4
Satellite Connections		2,205			2,232			-1.2	%
U-verse Video Connections		1,329			379
Total Consumer Revenue Connections (000)		46,847			49,340			-5.1	%
Net Consumer Revenue Connection Changes (000)		(196	)		(98	)
Broadband and Video
Total Broadband Connections (000) 5		16,736			15,419			8.5	%
Net Broadband Connection Changes (000) 5		471			617			-23.7	%
Total Video Connections (000) 4		3,534			2,611			35.4	%
Net Video Connection Changes (000) 4		299			264			13.3	%
AT&T Inc.
Construction and capital expenditures
Capital Expenditures	$	3,173		$	4,178			-24.1	%
Interest during construction	$	185		$	70
Dividends Declared per Share	$	0.4100		$	0.4000			2.5	%
End of Period Common Shares Outstanding (000,000)		5,900			5,939			-0.7	%
Debt Ratio 6		43.2%			39.5%		370 B		P
Total Employees		294,600			310,070			-5.0	%

1	In-region wireline represents access lines served by AT&T's incumbent local exchange companies.
2	Includes consumer U-verse Voice over IP connections.
3	Wireline consumer broadband connections include DSL lines, U-verse high speed Internet access and satellite broadband.
4	Video connections include sales under agency agreements with EchoStar and DirecTV customers and U-verse connections.
5	Total broadband connections include DSL lines, U-verse high speed Internet access, satellite broadband and 3G LaptopConnect cards.
6	Total long-term debt plus debt maturing within one year divided by total debt plus total stockholders' equity.
7	Prior year amounts restated to conform to current period reporting methodology.
Note: For the end of 1Q09, total switched access lines were 53,992, retail business switched access lines totaled 21,364, and wholesale and coin switched access lines totaled 3,053.

Non-GAAP Wireless Reconciliations
Wireless Segment OIBDA
AT&T Inc.
Dollars in Millions
Unaudited
	Three Months Ended
	3/31/2008			6/30/2008			9/30/2008			12/31/2008			3/31/2009
Service Revenues	$	10,645		$	10,951		$	11,273		$	11,541		$	11,668
Equipment Revenues		1,180			1,082			1,345			1,318			1,192
Total Operating Revenues		11,825			12,033			12,618			12,859			12,860
Operating Expenses
Operations and Support		7,389			7,523			8,838			8,731			8,085
Depreciation and Amortization		1,480			1,446			1,401			1,443			1,434
Total Operating Expenses		8,869			8,969			10,239			10,174			9,519
Operating Income		2,956			3,064			2,379			2,685			3,341
Plus: Depreciation and Amortization		1,480			1,446			1,401			1,443			1,434
OIBDA		4,436			4,510			3,780			4,128			4,775
OIBDA as a % of Service Revenue		41.7	%		41.2	%		33.5	%		35.8	%		40.9	%

OIBDA is defined as operating income (loss) before depreciation and amortization. OIBDA differs from segment operating income (loss), as calculated in accordance with generally accepted accounting principles (GAAP), in that it excludes depreciation and amortization. OIBDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. OIBDA is not presented as an alternative measure of operating results or cash flows from operations, as determined in accordance with GAAP. Our calculation of OIBDA, as presented, may differ from similarly titled measures reported by other companies.

Non-GAAP Financial Reconciliations
Free Cash Flow
AT&T Inc.
Dollars in Millions
Unaudited
		Three Months Ended March 31, 2009
Net cash provided by operating activities	$	7,915
Less: Construction and capital expenditures		(3,358)
Free Cash Flow	$	4,557

Free cash flow is defined as cash from operations minus capital expenditures. We believe these metrics provide useful information to our investors because management regularly reviews free cash flow as an important indicator of how much cash is generated by normal business operations, including capital expenditures, and makes decisions based on it. Management also views free cash flow as a measure of cash available to pay debt and return cash to shareowners.