AT&T (T) 8-K AT&T Reports Record 2.8 Million Wireless Net Adds, Strong U-verse Sales, Continued Revenue Gains in the Fourth Quarter

Financial Data
AT&T Inc.
Consolidated Statements of Income
Dollars in millions except per share amounts
Unaudited	Three Months Ended										Twelve Months Ended
		12/31/2010			12/31/2009			% Chg			12/31/2010			12/31/2009			% Chg
Operating Revenues
Wireless service		$	13,799		$	12,585			9.6	%	$	53,510		$	48,563			10.2	%
Voice			6,644			7,623			-12.8	%		28,315			32,324			-12.4	%
Data			7,072			6,508			8.7	%		27,479			25,561			7.5	%
Directory			926			1,102			-16.0	%		3,935			4,724			-16.7	%
Other			2,920			2,890			1.0	%		11,041			11,341			-2.6	%
Total Operating Revenues			31,361			30,708			2.1	%		124,280			122,513			1.4	%
Operating Expenses
Cost of services and sales (exclusive of depreciation and      amortization shown separately below)			13,897			12,973			7.1	%		52,263			50,571			3.3	%
Selling, general and administrative			10,469			8,205			27.6	%		33,065			31,427			5.2	%
Depreciation and amortization			4,907			4,966			-1.2	%		19,379			19,515			-0.7	%
Total Operating Expenses			29,273			26,144			12.0	%		104,707			101,513			3.1	%
Operating Income			2,088			4,564			-54.3	%		19,573			21,000			-6.8	%
Interest Expense			746			795			-6.2	%		2,994			3,368			-11.1	%
Equity in Net Income of Affiliates			133			185			-28.1	%		762			734			3.8	%
Other Income (Expense) - Net			72			107			-32.7	%		897			152			-
Income from Continuing Operations Before Income Taxes			1,547			4,061			-61.9	%		18,238			18,518			-1.5	%
Income Tax (Benefit) Expense			388			1,271			-69.5	%		(1,162	)		6,091			-
Income from Continuing Operations			1,159			2,790			-58.5	%		19,400			12,427			56.1	%
Income from Discontinued Operations, net of tax			2			14			-85.7	%		779			20			-
Net Income			1,161			2,804			-58.6	%		20,179			12,447			62.1	%
Less: Net Income Attributable to Noncontrolling Interest			(72	)		(74	)		2.7	%		(315	)		(309	)		-1.9	%
Net Income Attributable to AT&T		$	1,089		$	2,730			-60.1	%	$	19,864		$	12,138			63.7	%
Basic Earnings Per Share from Continuing      Operations Attributable to AT&T		$	0.18		$	0.46			-60.9	%	$	3.23		$	2.06			56.8	%
Basic Earnings Per Share from Discontinued      Operations Attributable to AT&T			-			-			-			0.13			-			-
Basic Earnings Per Share Attributable to AT&T		$	0.18		$	0.46			-60.9	%	$	3.36		$	2.06			63.1	%
Weighted Average Common      Shares Outstanding (000,000)			5,915			5,901			0.2	%		5,913			5,900			0.2	%
Diluted Earnings Per Share from Continuing      Operations Attributable to AT&T		$	0.18		$	0.46			-60.9	%	$	3.22		$	2.05			57.1	%
Diluted Earnings Per Share from Discontinued      Operations Attributable to AT&T			-			-			-			0.13			-			-
Diluted Earnings Per Share Attributable to AT&T		$	0.18		$	0.46			-60.9	%	$	3.35		$	2.05			63.4	%
Weighted Average Common      Shares Outstanding with Dilution (000,000)			5,941			5,927			0.2	%		5,938			5,924			0.2	%

Financial Data
AT&T Inc.
Statements of Segment Income
Dollars in millions
Unaudited
	Three Months Ended									Twelve Months Ended
Wireless	12/31/2010			12/31/2009			% Chg			12/31/2010			12/31/2009			% Chg
Segment Operating Revenues
Service	$	13,799		$	12,585			9.6	%	$	53,510		$	48,563			10.2	%
Equipment		1,382			1,232			12.2	%		4,990			4,941			1.0	%
Total Segment Operating Revenues		15,181			13,817			9.9	%		58,500			53,504			9.3	%
Segment Operating Expenses
Operations and support		9,988			8,695			14.9	%		36,746			33,631			9.3	%
Depreciation and amortization		1,721			1,550			11.0	%		6,497			6,043			7.5	%
Total Segment Operating Expenses		11,709			10,245			14.3	%		43,243			39,674			9.0	%
Segment Operating Income		3,472			3,572			-2.8	%		15,257			13,830			10.3	%
Equity in Net Income (Loss) of Affiliates		(5	)		9			-			9			9			-
Segment Income	$	3,467		$	3,581			-3.2	%	$	15,266		$	13,839			10.3	%
Segment Operating Income Margin		22.9	%		25.9	%					26.1	%		25.8	%
Wireline
Segment Operating Revenues
Voice	$	6,644		$	7,623			-12.8	%	$	28,315		$	32,324			-12.4	%
Data		7,072			6,508			8.7	%		27,479			25,561			7.5	%
Other		1,394			1,483			-6.0	%		5,408			5,629			-3.9	%
Total Segment Operating Revenues		15,110			15,614			-3.2	%		61,202			63,514			-3.6	%
Segment Operating Expenses
Operations and support		10,055			10,470			-4.0	%		41,008			42,352			-3.2	%
Depreciation and amortization		3,092			3,217			-3.9	%		12,371			12,743			-2.9	%
Total Segment Operating Expenses		13,147			13,687			-3.9	%		53,379			55,095			-3.1	%
Segment Operating Income		1,963			1,927			1.9	%		7,823			8,419			-7.1	%
Equity in Net Income of Affiliates		4			-			-			11			17			-35.3	%
Segment Income	$	1,967		$	1,927			2.1	%	$	7,834		$	8,436			-7.1	%
Segment Operating Income Margin		13.0	%		12.3	%					12.8	%		13.3	%
Advertising Solutions
Segment Operating Revenues	$	926		$	1,102			-16.0	%	$	3,935		$	4,724			-16.7	%
Segment Operating Expenses
Operations and support		626			650			-3.7	%		2,583			2,743			-5.8	%
Depreciation and amortization		104			150			-30.7	%		497			650			-23.5	%
Total Segment Operating Expenses		730			800			-8.8	%		3,080			3,393			-9.2	%
Segment Income	$	196		$	302			-35.1	%	$	855		$	1,331			-35.8	%
Segment Income Margin		21.2	%		27.4	%					21.7	%		28.2	%
Other
Segment Operating Revenues	$	144		$	175			-17.7	%	$	643		$	771			-16.6	%
Segment Operating Expenses		1,166			1,197			-2.6	%		2,484			3,136			-20.8	%
Segment Operating Income (Loss)		(1,022	)		(1,022	)		-			(1,841	)		(2,365	)		22.2	%
Equity in Net Income of Affiliates		134			176			-23.9	%		742			708			4.8	%
Segment Income (Loss) from Continuing Operations	$	(888	)	$	(846	)		-5.0	%	$	(1,099	)	$	(1,657	)		33.7	%

Financial Data
AT&T Inc.
Consolidated Balance Sheets
Dollars in millions except per share amounts
	12/31/10			12/31/09
	Unaudited
Assets
Current Assets
Cash and cash equivalents	$	1,437		$	3,741
Accounts receivable - net of allowances for
doubtful accounts of $957 and $1,202		13,610			14,845
Prepaid expenses		1,458			1,562
Deferred income taxes		1,170			1,247
Other current assets		2,276			3,792
Total current assets		19,951			25,187
Property, Plant and Equipment - Net		103,963			100,286
Goodwill		73,601			72,782
Licenses		50,372			48,741
Customer Lists and Relationships - Net		4,708			7,393
Other Intangible Assets - Net		5,440			5,494
Investments in Equity Affiliates		4,515			2,921
Other Assets		6,704			6,275
Total Assets	$	269,254		$	269,079
Liabilities and Stockholders' Equity
Current Liabilities
Debt maturing within one year	$	7,196		$	7,361
Accounts payable and accrued liabilities		20,055			21,260
Advanced billing and customer deposits		4,086			4,170
Accrued taxes		72			1,681
Dividends payable		2,542			2,479
Total current liabilities		33,951			36,951
Long-Term Debt		58,971			64,720
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes		22,361			23,870
Postemployment benefit obligation		28,803			27,847
Other noncurrent liabilities		12,743			13,226
Total deferred credits and other noncurrent liabilities		63,907			64,943
Stockholders' Equity
Common stock		6,495			6,495
Additional paid-in capital		91,731			91,707
Retained earnings		32,268			22,419
Treasury stock		(21,083	)		(21,260	)
Accumulated other comprehensive income		2,711			2,679
Noncontrolling interest		303			425
Total stockholders' equity		112,425			102,465
Total Liabilities and Stockholders' Equity	$	269,254		$	269,079

Financial Data
AT&T Inc.
Consolidated Statements of Cash Flows
Dollars in millions, increase (decrease) in cash and cash equivalents
Unaudited
	2010			2009			2008
Operating Activities
Net income (loss)	$	20,179		$	12,447		$	(2,364	)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization		19,379			19,515			19,673
Undistributed earnings from investments in equity affiliates		(603	)		(419	)		(654	)
Provision for uncollectible accounts		1,334			1,762			1,795
Deferred income tax expense (benefit) and noncurrent
unrecognized tax benefits		(3,280	)		1,885			(4,202	)
Net (gain) loss from impairment and sale of investments		(802	)		-			517
Remeasurement of pension and postretirement benefits		2,521			215			25,150
(Income) Loss from discontinued operations		(779	)		(20	)		2
Changes in operating assets and liabilities:
Accounts receivable		(99	)		(490	)		(1,475	)
Other current assets		717			(617	)		1,854
Accounts payable and accrued liabilities		(2,414	)		943			(4,456	)
Net income attributable to noncontrolling interest		(315	)		(309	)		(261	)
Other - net		(845	)		(507	)		(1,969	)
Total adjustments		14,814			21,958			35,974
Net Cash Provided by Operating Activities		34,993			34,405			33,610
Investing Activities
Construction and capital expenditures:
Capital expenditures		(19,530	)		(16,554	)		(19,631	)
Interest during construction		(772	)		(740	)		(659	)
Acquisitions, net of cash acquired		(2,906	)		(983	)		(10,972	)
Dispositions		1,830			287			1,615
(Purchases) and sales of securities, net		(100	)		55			68
Sale of other investments		-			-			436
Other		29			52			45
Net Cash Used in Investing Activities		(21,449	)		(17,883	)		(29,098	)
Financing Activities
Net change in short-term borrowings with
original maturities of three months or less		1,592			(3,910	)		2,017
Issuance of long-term debt		2,235			8,161			12,416
Repayment of long-term debt		(9,294	)		(8,652	)		(4,009	)
Purchase of treasury shares		-			-			(6,077	)
Issuance of treasury shares		50			28			319
Dividends paid		(9,916	)		(9,670	)		(9,507	)
Share-based payment excess tax benefit		-			-			15
Other		(515	)		(465	)		136
Net Cash Used in Financing Activities		(15,848	)		(14,508	)		(4,690	)
Net increase (decrease) in cash and cash equivalents		(2,304	)		2,014			(178	)
Cash and cash equivalents beginning of year		3,741			1,727			1,905
Cash and Cash Equivalents End of Year	$	1,437		$	3,741		$	1,727

Financial Data
AT&T Inc.
Supplementary Operating and Financial Data
Dollars in millions except per share amounts
Unaudited	Three Months Ended									Twelve Months Ended
	12/31/2010			12/31/2009			% Chg			12/31/2010			12/31/2009			% Chg
Wireless
Wireless Customers (000)											95,536			85,120			12.2	%
Net Customer Additions (000)		2,803			2,661			5.3	%		8,853			7,278			21.6	%
M&A Activity, Partitioned Customers and Other Adjs. (000)		(28	)		863						1,563			833
Total Churn7		1.32	%		1.42	%	-10 BP				1.31	%		1.47	%	-16 BP
Postpaid Customers (000)7											68,041			64,627			5.3	%
Net Postpaid Customer Additions (000)7		400			841			-52.4	%		2,153			4,199			-48.7	%
Postpaid Churn7		1.15	%		1.15	%	0 BP				1.09	%		1.13	%	-4 BP
Licensed POPs (000,000)											308			306			0.7	%
Prepaid Customers (including tablets) (000)7											6,524			5,350			21.9	%
Net Prepaid Customer Additions (including tablets) (000)7		307			(58	)					952			(801	)
Connected Devices Customers (000)7											9,326			4,704			98.3	%
Net Connected Devices Customer Additions (000)7		1,501			1,394			7.7	%		4,608			2,077
In-Region Wireline 1
Total Consumer Revenue Connections (000)
Retail Consumer Voice Connections 2											24,195			27,332			-11.5	%
Consumer Wireline Broadband Connections 3											14,320			13,717			4.4	%
Video Connections: 4
Satellite Connections											1,930			2,174			-11.2	%
U-verse Video Connections											2,985			2,064			44.6	%
Total Consumer Revenue Connections (000)											43,430			45,287			-4.1	%
Net Consumer Revenue Connection Changes (000)		(303	)		(372	)		18.5	%		(1,857	)		(1,756	)		-5.8	%
Broadband and Video
Total Broadband Connections (000) 5											17,755			17,254			2.9	%
Net Broadband Connection Changes (000) 5		193			171			12.9	%		501			989			-49.3	%
Total Video Connections (000) 4											4,917			4,239			16.0	%
Net Video Connection Changes (000) 4		182			227			-19.8	%		678			1,004			-32.5	%
AT&T Inc.
Construction and capital expenditures
Capital expenditures	$	6,360		$	5,520			15.2	%	$	19,530		$	16,554			18.0	%
Interest during construction	$	195		$	187			4.3	%	$	772		$	740			4.3	%
Dividends Declared per Share	$	0.4300		$	0.4200			2.4	%	$	1.6900		$	1.6500			2.4	%
End of Period Common Shares Outstanding (000,000)											5,911			5,902			0.2	%
Debt Ratio 6											37.0	%		41.3	%	-430 BP
Total Employees											266,590			282,720			-5.7	%

1	In-region wireline represents access lines served by AT&T's incumbent local exchange companies.
2	Includes consumer U-verse Voice over Internet Protocol connections of 1,680 as of December 31, 2010.
3	Consumer wireline 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 4Q10, total switched access lines were 43,678, retail business switched access lines totaled 18,733, and wholesale and coin switched
	access lines totaled 2,430. These include 1,699 retail business and 95 wholesale lines that are used solely by AT&T or our subsidiaries.

Financial Data
AT&T Inc.
Non-GAAP Wireless Reconciliation
Wireless Segment OIBDA
Dollars in millions
Unaudited
	Three Months Ended
	12/31/2009			3/31/2010			6/30/2010			9/30/2010			12/31/2010
Segment Operating Revenues
Service	$	12,585		$	12,850		$	13,186		$	13,675		$	13,799
Equipment		1,232			1,047			1,056			1,505			1,382
Total Segment Operating Revenues		13,817			13,897			14,242			15,180			15,181
Segment Operating Expenses
Operations and support		8,695			8,173			8,553			10,032			9,988
Depreciation and amortization		1,550			1,558			1,578			1,640			1,721
Total Segment Operating Expenses		10,245			9,731			10,131			11,672			11,709
Segment Operating Income		3,572			4,166			4,111			3,508			3,472
Plus: Depreciation and amortization		1,550			1,558			1,578			1,640			1,721
OIBDA		5,122			5,724			5,689			5,148			5,193
OIBDA as a % of Service Revenue		40.7	%		44.5	%		43.1	%		37.6	%		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
Dollars in Millions
Unaudited
	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2009			2010			2009			2010
Net cash provided by operating activities	$	8,962		$	9,643		$	34,405		$	34,993
Less: Construction and capital expenditures		(5,707	)		(6,555	)		(17,294	)		(20,302	)
Free Cash Flow	$	3,255		$	3,088		$	17,111		$	14,691

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
Dollars in Millions
Unaudited
	Three Months Ended
	9/30/2009	12/31/2009	3/31/2010	6/30/2010	9/30/2010	12/31/2010
Net cash provided by operating activities	$       9,671	$       8,962	$       7,237	$       8,573	$       9,540	$       9,643
Less: Construction and capital expenditures	(4,202)	(5,707)	(3,331)	(4,904)	(5,512)	(6,555)
Free Cash Flow	5,469	3,255	3,906	3,669	4,028	3,088
Less: Dividends paid	(2,418)	(2,418)	(2,479)	(2,481)	(2,476)	(2,480)
Free Cash Flow After Dividends	$       3,051	$          837	$       1,427	$       1,188	$       1,552	$          608

Financial Data
AT&T Inc.
Non-GAAP Financial Reconciliation
Annualized Net Debt-to-Adjusted EBITDA Ratio
Dollars in millions
Unaudited
	Three Months Ended
	3/31/2010		6/30/2010		9/30/2010		12/31/2010		2010
Operating Revenues	$	30,530	$	30,808	$	31,581	$	31,361	$	124,280
Operating Expenses		24,559		24,725		26,150		29,273		104,707
Total Operating Income		5,971		6,083		5,431		2,088		19,573
Add Back Depreciation and Amortization		4,780		4,819		4,873		4,907		19,379
Consolidated Reported EBITDA		10,751		10,902		10,304		6,995		38,952
Add Back Actuarial Loss								2,521		2,521
Consolidated Adjusted EBITDA*		10,751		10,902		10,304		9,516		41,473
End-of-period current debt										7,196
End-of-period long-term debt										58,971
Total End-of-Period Debt										66,167
(Premiums) Discounts on long-term debt										(185	)
Normalized Debt Balance										65,982
Less Cash and Cash Equivalents										1,437
Normalized Net Debt Balance										64,545
Annualized Net Debt-to-Adjusted EBITDA Ratio										1.56

*Adjusted EBITDA excludes the impact of the 4Q10 actuarial loss in order to better represent AT&T's operational performance.

Financial Data
AT&T Inc.
Non-GAAP Financial Reconciliation
Adjusted Operating Income
Dollars in millions
Unaudited
	Three Months Ended						Twelve Months Ended
	12/31/09			12/31/10			12/31/09			12/31/10
Operating Revenues	$	30,708		$	31,361		$	122,513		$	124,280
Operating Expenses		26,144			29,273			101,513			104,707
Total Operating Income		4,564			2,088			21,000			19,573
Add Back:
Actuarial Loss		215			2,521			215			2,521
Severance Costs		330			769			519			769
Asset Impairments		-			173			-			173
Adjusted Operating Income		5,109			5,551			21,734			23,036
Adjusted Operating Income Margin		16.6	%		17.7	%		17.7	%		18.5	%

Adjusted Operating Income and Adjusted Operating Income Margin are non-GAAP financial measures calculated by excluding from operating revenues and operating expenses significant items that are non-operational or non-recurring in nature. Management believes that these measures provide relevant and useful information to investors and other users of our financial data in evaluating the effectiveness of our operations and underlying business trends.

Adjusted Operating Income and Adjusted Operating Income Margin should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP. Our calculation of Adjusted Operating Income, as presented, may differ from similarly titled measures reported by other companies.