AT&T (T) 8-K Record Wireless Sales, Strong Revenue and Earnings Growth Highlight At&t’s Third-quarter Results

Financial Data
AT&T Inc.
Consolidated Statements of Income
Dollars in millions except per share amounts
Unaudited	Three Months Ended										Nine Months Ended
		9/30/2010			9/30/2009			% Chg			9/30/2010			9/30/2009			% Chg
Operating Revenues
Wireless service		$	13,675		$	12,372			10.5	%	$	39,711		$	35,978			10.4	%
Voice			6,973			7,943			-12.2	%		21,671			24,701			-12.3	%
Data			6,928			6,448			7.4	%		20,407			19,053			7.1	%
Directory			961			1,162			-17.3	%		3,009			3,622			-16.9	%
Other			3,044			2,809			8.4	%		8,121			8,451			-3.9	%
Total Operating Revenues			31,581			30,734			2.8	%		92,919			91,805			1.2	%
Operating Expenses
Cost of services and sales (exclusive of
depreciation and amortization shown separately below)			13,519			12,907			4.7	%		38,235			37,665			1.5	%
Selling, general and administrative			7,707			7,574			1.8	%		22,570			22,914			-1.5	%
Depreciation and amortization			4,891			4,881			0.2	%		14,529			14,614			-0.6	%
Total Operating Expenses			26,117			25,362			3.0	%		75,334			75,193			0.2	%
Operating Income			5,464			5,372			1.7	%		17,585			16,612			5.9	%
Interest Expense			729			851			-14.3	%		2,248			2,573			-12.6	%
Equity in Net Income of Affiliates			217			181			19.9	%		629			549			14.6	%
Other Income (Expense) - Net			125			29			-			825			44			-
Income from Continuing Operations Before Income Taxes			5,077			4,731			7.3	%		16,791			14,632			14.8	%
Income Tax (Benefit) Expense			(6,560	)		1,463			-			(1,512	)		4,886			-
Income from Continuing Operations			11,637			3,268			-			18,303			9,746			87.8	%
Income from Discontinued Operations, net of tax			780			7			-			777			6			-
Net Income			12,417			3,275			-			19,080			9,752			95.7	%
Less: Net Income Attributable to Noncontrolling Interest			(78	)		(83	)		6.0	%		(243	)		(236	)		-3.0	%
Net Income Attributable to AT&T		$	12,339		$	3,192			-		$	18,837		$	9,516			98.0	%
Basic Earnings Per Share from Continuing
Operations Attributable to AT&T		$	1.96		$	0.54			-		$	3.06		$	1.61			90.1	%
Basic Earnings Per Share from Discontinued
Operations Attributable to AT&T			0.13			-			-			0.13			-			-
Basic Earnings Per Share Attributable to AT&T		$	2.09		$	0.54			-		$	3.19		$	1.61			98.1	%
Weighted Average Common
Shares Outstanding (000,000)			5,909			5,901			0.1	%		5,908			5,899			0.2	%
Diluted Earnings Per Share from Continuing
Operations Attributable to AT&T		$	1.95		$	0.54			-		$	3.04		$	1.61			88.8	%
Diluted Earnings Per Share from Discontinued
Operations Attributable to AT&T			0.13			-			-			0.13			-			-
Diluted Earnings Per Share Attributable to AT&T		$	2.08		$	0.54			-		$	3.17		$	1.61			96.9	%
Weighted Average Common
Shares Outstanding with Dilution (000,000)			5,938			5,922			0.3	%		5,937			5,922			0.3	%

Financial Data
AT&T Inc.
Statements of Segment Income
Dollars in millions
Unaudited
	Three Months Ended									Nine Months Ended
Wireless	9/30/2010			9/30/2009			% Chg			9/30/2010			9/30/2009			% Chg
Segment Operating Revenues
Service	$	13,675		$	12,372			10.5	%	$	39,711		$	35,978			10.4	%
Equipment		1,505			1,255			19.9	%		3,608			3,709			-2.7	%
Total Segment Operating Revenues		15,180			13,627			11.4	%		43,319			39,687			9.2	%
Segment Operating Expenses
Operations and support		10,040			8,645			16.1	%		26,785			24,959			7.3	%
Depreciation and amortization		1,640			1,490			10.1	%		4,776			4,493			6.3	%
Total Segment Operating Expenses		11,680			10,135			15.2	%		31,561			29,452			7.2	%
Segment Operating Income		3,500			3,492			0.2	%		11,758			10,235			14.9	%
Equity in Net Income of Affiliates		(6	)		-			-			14			-			-
Segment Income	$	3,494		$	3,492			0.1	%	$	11,772		$	10,235			15.0	%
Segment Operating Income Margin		23.1	%		25.6	%					27.1	%		25.8	%
Wireline
Segment Operating Revenues
Voice	$	6,973		$	7,943			-12.2	%	$	21,671		$	24,701			-12.3	%
Data		6,928			6,448			7.4	%		20,407			19,053			7.1	%
Other		1,374			1,358			1.2	%		4,014			4,146			-3.2	%
Total Segment Operating Revenues		15,275			15,749			-3.0	%		46,092			47,900			-3.8	%
Segment Operating Expenses
Operations and support		10,318			10,762			-4.1	%		31,324			32,618			-4.0	%
Depreciation and amortization		3,118			3,226			-3.3	%		9,337			9,594			-2.7	%
Total Segment Operating Expenses		13,436			13,988			-3.9	%		40,661			42,212			-3.7	%
Segment Operating Income		1,839			1,761			4.4	%		5,431			5,688			-4.5	%
Equity in Net Income of Affiliates		2			9			-77.8	%		7			16			-56.3	%
Segment Income	$	1,841		$	1,770			4.0	%	$	5,438		$	5,704			-4.7	%
Segment Operating Income Margin		12.0	%		11.2	%					11.8	%		11.9	%
Advertising Solutions
Segment Operating Revenues	$	961		$	1,162			-17.3	%	$	3,009		$	3,622			-16.9	%
Segment Operating Expenses
Operations and support		640			686			-6.7	%		1,988			2,113			-5.9	%
Depreciation and amortization		123			159			-22.6	%		393			501			-21.6	%
Total Segment Operating Expenses		763			845			-9.7	%		2,381			2,614			-8.9	%
Segment Income	$	198		$	317			-37.5	%	$	628		$	1,008			-37.7	%
Segment Income Margin		20.6	%		27.3	%					20.9	%		27.8	%
Other
Segment Operating Revenues	$	165		$	196			-15.8	%	$	499		$	596			-16.3	%
Segment Operating Expenses		238			394			-39.6	%		731			915			-20.1	%
Segment Operating Loss		(73	)		(198	)		63.1	%		(232	)		(319	)		27.3	%
Equity in Net Income of Affiliates		221			172			28.5	%		608			532			14.3	%
Segment Income (Loss) from Continuing Operations	$	148		$	(26	)		-		$	376		$	213			76.5	%
Segment Income Margin		89.7	%		-						75.4	%		35.7	%

Financial Data
AT&T Inc.
Consolidated Balance Sheets
Dollars in millions except per share amounts
	9/30/10			12/31/09
	Unaudited
Assets
Current Assets
Cash and cash equivalents	$	3,246		$	3,741
Accounts receivable - net of allowances for
doubtful accounts of $978 and $1,202		13,606			14,845
Prepaid expenses		1,686			1,562
Deferred income taxes		1,059			1,247
Other current assets		2,380			3,792
Total current assets		21,977			25,187
Property, plant and equipment		240,466			230,295
Less: accumulated depreciation and amortization		(138,991	)		(130,242	)
Property, Plant and Equipment - Net		101,475			100,053
Goodwill		73,447			72,782
Licenses		50,113			48,741
Customer Lists and Relationships - Net		5,369			7,393
Other Intangible Assets - Net		5,525			5,494
Investments in Equity Affiliates		4,544			2,921
Other Assets		6,802			6,275
Total Assets	$	269,252		$	268,846
Liabilities and Stockholders' Equity
Current Liabilities
Debt maturing within one year	$	6,426		$	7,361
Accounts payable and accrued liabilities		18,417			21,260
Advanced billing and customer deposits		3,933			4,170
Accrued taxes		1,416			1,681
Dividends payable		2,482			2,479
Total current liabilities		32,674			36,951
Long-Term Debt		62,540			64,720
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes		20,651			23,781
Postemployment benefit obligation		27,071			27,847
Other noncurrent liabilities		13,023			13,226
Total deferred credits and other noncurrent liabilities		60,745			64,854
Stockholders' Equity
Common stock ($1 par value, 14,000,000,000 authorized
at September 30, 2010 and December 31, 2009: issued
6,495,231,088 at September 30, 2010 and December 31, 2009)		6,495			6,495
Additional paid-in capital		91,748			91,707
Retained earnings		50,751			39,366
Treasury stock (585,370,749 at September 30, 2010 and
593,300,187 at December 31, 2009, at cost)		(21,112	)		(21,260	)
Accumulated other comprehensive loss		(14,888	)		(14,412	)
Noncontrolling interest		299			425
Total stockholders' equity		113,293			102,321
Total Liabilities and Stockholders' Equity	$	269,252		$	268,846

Financial Data
AT&T Inc.
Consolidated Statements of Cash Flows
Dollars in millions, increase (decrease) in cash and cash equivalents
Unaudited
	Nine months ended
	September 30,
	2010			2009
Operating Activities
Net income	$	19,080		$	9,752
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization		14,529			14,614
Undistributed earnings from investments in equity affiliates		(531	)		(430	)
Bad debt expense		973			1,383
Deferred income tax expense and noncurrent unrecognized tax benefits		(4,146	)		2,476
Net (gain) loss from impairment and sale of investments		(746	)		98
Income from discontinued operations		(777	)		(6	)
Changes in operating assets and liabilities:
Accounts receivable		266			(270	)
Other current assets		495			(269	)
Accounts payable and accrued liabilities		(2,861	)		(1,551	)
Net income attributable to noncontrolling interest		(243	)		(236	)
Other - net		(689	)		(117	)
Total Adjustments		6,270			15,692
Net Cash Provided by Operating Activities		25,350			25,444
Investing Activities
Construction and capital expenditures
Capital expenditures		(13,170	)		(11,034	)
Interest during construction		(577	)		(553	)
Acquisitions, net of cash acquired		(2,615	)		(184	)
Dispositions		1,821			205
(Purchases) and sales of securities, net		(437	)		11
Other		22			19
Net Cash Used in Investing Activities		(14,956	)		(11,536	)
Financing Activities
Net change in short-term borrowings with
original maturities of three months or less		(33	)		(3,918	)
Issuance of long-term debt		2,235			8,161
Repayment of long-term debt		(5,280	)		(6,169	)
Issuance of treasury stock		24			8
Dividends paid		(7,436	)		(7,252	)
Other		(399	)		(367	)
Net Cash Used in Financing Activities		(10,889	)		(9,537	)
Net increase (decrease) in cash and cash equivalents		(495	)		4,371
Cash and cash equivalents beginning of year		3,741			1,727
Cash and Cash Equivalents End of Period	$	3,246		$	6,098

Financial Data
AT&T Inc.
Supplementary Operating and Financial Data
Dollars in millions except per share amounts
Unaudited	Three Months Ended									Nine Months Ended
	9/30/2010			9/30/2009			% Chg			9/30/2010			9/30/2009			% Chg
Wireless
Wireless Customers (000)											92,761			81,596			13.7	%
Net Customer Additions (000)		2,631			2,026			29.9	%		6,050			4,617			31.0	%
M&A Activity, Partitioned Customers and Other Adjs. (000)		-			(30	)					1,591			(30	)
Total Churn7		1.32	%		1.42	%	-10 BP				1.30	%		1.49	%	-19 BP
Postpaid Customers (000)7											67,688			62,961			7.5	%
Net Postpaid Customer Additions (000)7		745			1,333			-44.1	%		1,753			3,358			-47.8	%
Postpaid Churn7		1.14	%		1.14	%	0 BP				1.08	%		1.12	%	-4 BP
Licensed POPs (000,000)											308			306			0.7	%
Prepaid Customers (000)7											6,209			5,386			15.3	%
Net Prepaid Customer Additions (000)7		321			(176	)					645			(743	)
Connected Devices Customers (000)7											7,843			3,315
Net Connected Devices Customer Additions (000)7		1,159			235						3,107			683
In-Region Wireline 1
Total Consumer Revenue Connections (000)
Retail Consumer Voice Connections 2											24,908			28,098			-11.4	%
Consumer Wired Broadband Connections 3											14,092			13,550			4.0	%
Video Connections: 4
Satellite Connections											1,994			2,195			-9.2	%
U-verse Video Connections											2,739			1,816			50.8	%
Total Consumer Revenue Connections (000)											43,733			45,659			-4.2	%
Net Consumer Revenue Connection Changes (000)		(529	)		(629	)		15.9	%		(1,554	)		(1,384	)		-12.3	%
Broadband and Video
Total Broadband Connections (000) 5											17,562			17,083			2.8	%
Net Broadband Connection Changes (000) 5		123			138			-10.9	%		308			818			-62.3	%
Total Video Connections (000) 4											4,735			4,012			18.0	%
Net Video Connection Changes (000) 4		177			225			-21.3	%		496			777			-36.2	%
AT&T Inc.
Construction and capital expenditures
Capital expenditures	$	5,314		$	4,017			32.3	%	$	13,170		$	11,034			19.4	%
Interest during construction	$	198		$	185			7.0	%	$	577		$	553			4.3	%
Dividends Declared per Share	$	0.4200		$	0.4100			2.4	%	$	1.2600		$	1.2300			2.4	%
End of Period Common Shares Outstanding (000,000)											5,910			5,901			0.2	%
Debt Ratio 6											37.8	%		42.1	%	-430 BP
Total Employees											267,720			284,970			-6.1	%

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 of 1,494 as of September 30, 2010.
3	Consumer Wired 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 3Q10, total switched access lines were 45,108, retail business switched access lines totaled 19,089, and wholesale and coin switched access lines totaled 2,605. These include 1,706 retail business and 98 wholesale lines that are used solely by AT&T or our subsidiaries.

Financial Data
AT&T Inc.
Non-GAAP Wireless Reconciliation
Wireless Segment OIBDA
AT&T Inc.
Dollars in millions
Unaudited
	Three Months Ended
	9/30/2009			12/31/2009			3/31/2010			6/30/2010			9/30/2010
Service Revenues	$	12,372		$	12,585		$	12,850		$	13,186		$	13,675
Equipment Revenues		1,255			1,232			1,047			1,056			1,505
Total Operating Revenues		13,627			13,817			13,897			14,242			15,180
Operating Expenses
Operations and support		8,645			8,701			8,183			8,562			10,040
Depreciation and amortization		1,490			1,550			1,558			1,578			1,640
Total Operating Expenses		10,135			10,251			9,741			10,140			11,680
Operating Income		3,492			3,566			4,156			4,102			3,500
Plus: Depreciation and amortization		1,490			1,550			1,558			1,578			1,640
OIBDA		4,982			5,116			5,714			5,680			5,140
OIBDA as a % of Service Revenue		40.3	%		40.7	%		44.5	%		43.1	%		37.6	%

OIBDA is defined as operating income (loss) before depreciation and amortization. EBITDA is defined as Earnings Before Interest, Taxes, Depreciation and Amortization. This term is often used as a substitute for OIBDA. 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.

Financial Data
AT&T Inc.
Non-GAAP Financial Reconciliation
Free Cash Flow
AT&T Inc.
Dollars in Millions
Unaudited
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2009			2010			2009			2010
Net cash provided by operating activities	$	9,672		$	9,540		$	25,444		$	25,350
Less: Construction and capital expenditures		(4,202	)		(5,512	)		(11,587	)		(13,747	)
Free Cash Flow	$	5,470		$	4,028		$	13,857		$	11,603

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.

Free Cash Flow After Dividends
AT&T Inc.
Dollars in Millions
Unaudited
	Three Months Ended
	6/30/2009			9/30/2009			12/31/2009			3/31/2010			6/30/2010			9/30/2010
Net cash provided by operating activities	$	7,862		$	9,672		$	8,964		$	7,237		$	8,573		$	9,540
Less: Construction and capital expenditures		(4,037	)		(4,202	)		(5,707	)		(3,331	)		(4,904	)		(5,512	)
Free Cash Flow		3,825			5,470			3,257			3,906			3,669			4,028
Less: Dividends paid		(2,418	)		(2,418	)		(2,418	)		(2,479	)		(2,481	)		(2,476	)
Free Cash Flow After Dividends	$	1,407		$	3,052		$	839		$	1,427		$	1,188		$	1,552

Financial Data
AT&T Inc.
Non-GAAP Financial Reconciliation
Annualized Net Debt-to-EBITDA Ratio
AT&T Inc.
Dollars in millions
Unaudited
	Three Months Ended
	3/31/2010		6/30/2010		9/30/2010		2010 YTD
Reported Consolidated Revenues	$	30,530	$	30,808	$	31,581	$	92,919
Total Operating Expenses		24,523		24,694		26,117		75,334
Total Operating Income		6,007		6,114		5,464		17,585
Add Back Depreciation and Amortization		4,800		4,838		4,891		14,529
Total Consolidated EBITDA		10,807		10,952		10,355		32,114
Annualized Consolidated EBITDA *								42,819
End-of-period current debt								6,426
End-of-period long-term debt								62,540
Total End-of-Period Debt								68,966
(Premiums) Discounts on long-term debt								(248	)
Normalized Debt Balance								68,718
Less Cash and Cash Equivalents								3,246
Normalized Net Debt Balance								65,472
Annualized Net Debt-to-EBITDA Ratio								1.5

*EBITDA is annualized by dividing YTD EBITDA by YTD number of quarters and multiplying by 4.