AT&T (T) 8-K Results of Operations and Financial Condition

Financial Data
AT&T Inc.
Consolidated Statements of Income
Dollars in millions except per share amounts
Unaudited	Three Months Ended										Six Months Ended
		6/30/2011			6/30/2010			% Chg			6/30/2011			6/30/2010			% Chg
Operating Revenues
Wireless service		$	14,157		$	13,186			7.4	%	$	28,118		$	26,036			8.0	%
Data			7,356			6,866			7.1	%		14,536			13,517			7.5	%
Voice			6,342			7,224			-12.2	%		12,893			14,707			-12.3	%
Directory			841			1,007			-16.5	%		1,709			2,048			-16.6	%
Other			2,799			2,525			10.9	%		5,486			5,030			9.1	%
Total Operating Revenues			31,495			30,808			2.2	%		62,742			61,338			2.3	%
Operating Expenses
Cost of services and sales (exclusive of depreciation and    amortization shown separately below)			13,332			12,452			7.1	%		26,735			24,835			7.7	%
Selling, general and administrative			7,396			7,454			-0.8	%		14,848			14,850			-
Depreciation and amortization			4,602			4,819			-4.5	%		9,186			9,599			-4.3	%
Total Operating Expenses			25,330			24,725			2.4	%		50,769			49,284			3.0	%
Operating Income			6,165			6,083			1.3	%		11,973			12,054			-0.7	%
Interest Expense			848			754			12.5	%		1,694			1,519			11.5	%
Equity in Net Income of Affiliates			207			195			6.2	%		456			412			10.7	%
Other Income (Expense) - Net			27			723			-96.3	%		86			701			-87.7	%
Income from Continuing Operations Before Income Taxes			5,551			6,247			-11.1	%		10,821			11,648			-7.1	%
Income Tax Expense			1,893			2,160			-12.4	%		3,695			5,023			-26.4	%
Income from Continuing Operations			3,658			4,087			-10.5	%		7,126			6,625			7.6	%
Loss from Discontinued Operations, net of tax			-			(5	)		-			-			(3	)		-
Net Income			3,658			4,082			-10.4	%		7,126			6,622			7.6	%
Less: Net Income Attributable to Noncontrolling Interest			(67	)		(79	)		15.2	%		(127	)		(166	)		23.5	%
Net Income Attributable to AT&T		$	3,591		$	4,003			-10.3	%	$	6,999		$	6,456			8.4	%
Basic Earnings Per Share from Continuing      Operations Attributable to AT&T		$	0.60		$	0.68			-11.8	%	$	1.18		$	1.09			8.3	%
Basic Earnings Per Share from Discontinued      Operations Attributable to AT&T			-			-			-			-			-			-
Basic Earnings Per Share Attributable to AT&T		$	0.60		$	0.68			-11.8	%	$	1.18		$	1.09			8.3	%
Weighted Average Common      Shares Outstanding (000,000)			5,932			5,909			0.4	%		5,929			5,907			0.4	%
Diluted Earnings Per Share from Continuing      Operations Attributable to AT&T		$	0.60		$	0.67			-10.4	%	$	1.18		$	1.09			8.3	%
Diluted Earnings Per Share from Discontinued      Operations Attributable to AT&T			-			-			-			-			-			-
Diluted Earnings Per Share Attributable to AT&T		$	0.60		$	0.67			-10.4	%	$	1.18		$	1.09			8.3	%
Weighted Average Common      Shares Outstanding with Dilution (000,000)			5,953			5,937			0.3	%		5,948			5,936			0.2	%

Financial Data
AT&T Inc.
Statements of Segment Income
Dollars in millions
Unaudited
	Three Months Ended									Six Months Ended
Wireless	6/30/2011			6/30/2010			% Chg			6/30/2011			6/30/2010			% Chg
Segment Operating Revenues
Service	$	14,157		$	13,186			7.4	%	$	28,118		$	26,036			8.0	%
Equipment		1,445			1,056			36.8	%		2,793			2,103			32.8	%
Total Segment Operating Revenues		15,602			14,242			9.5	%		30,911			28,139			9.9	%
Segment Operating Expenses
Operations and support		9,782			8,553			14.4	%		19,640			16,726			17.4	%
Depreciation and amortization		1,613			1,578			2.2	%		3,118			3,136			-0.6	%
Total Segment Operating Expenses		11,395			10,131			12.5	%		22,758			19,862			14.6	%
Segment Operating Income		4,207			4,111			2.3	%		8,153			8,277			-1.5	%
Equity in Net Income (Loss) of Affiliates		(8	)		8			-			(12	)		20			-
Segment Income	$	4,199		$	4,119			1.9	%	$	8,141		$	8,297			-1.9	%
Segment Operating Income Margin		27.0	%		28.9	%					26.4	%		29.4	%
Wireline
Segment Operating Revenues
Data	$	7,356		$	6,866			7.1	%	$	14,536		$	13,517			7.5	%
Voice		6,342			7,224			-12.2	%		12,893			14,707			-12.3	%
Other		1,237			1,332			-7.1	%		2,456			2,644			-7.1	%
Total Segment Operating Revenues		14,935			15,422			-3.2	%		29,885			30,868			-3.2	%
Segment Operating Expenses
Operations and support		10,104			10,289			-1.8	%		20,370			20,801			-2.1	%
Depreciation and amortization		2,876			3,105			-7.4	%		5,834			6,181			-5.6	%
Total Segment Operating Expenses		12,980			13,394			-3.1	%		26,204			26,982			-2.9	%
Segment Operating Income		1,955			2,028			-3.6	%		3,681			3,886			-5.3	%
Equity in Net Income of Affiliates		-			-			-			-			5			-
Segment Income	$	1,955		$	2,028			-3.6	%	$	3,681		$	3,891			-5.4	%
Segment Operating Income Margin		13.1	%		13.2	%					12.3	%		12.6	%
Advertising Solutions
Segment Operating Revenues	$	841		$	1,007			-16.5	%	$	1,709		$	2,048			-16.6	%
Segment Operating Expenses
Operations and support		580			662			-12.4	%		1,153			1,326			-13.0	%
Depreciation and amortization		102			132			-22.7	%		207			270			-23.3	%
Total Segment Operating Expenses		682			794			-14.1	%		1,360			1,596			-14.8	%
Segment Income	$	159		$	213			-25.4	%	$	349		$	452			-22.8	%
Segment Income Margin		18.9	%		21.2	%					20.4	%		22.1	%
Other
Segment Operating Revenues	$	117		$	137			-14.6	%	$	237		$	283			-16.3	%
Segment Operating Expenses		273			406			-32.8	%		447			844			-47.0	%
Segment Operating Loss		(156	)		(269	)		42.0	%		(210	)		(561	)		62.6	%
Equity in Net Income of Affiliates		215			187			15.0	%		468			387			20.9	%
Segment Income (Loss) from Continuing Operations	$	59		$	(82	)		-		$	258		$	(174	)		-

Financial Data
AT&T Inc.
Consolidated Balance Sheets
Dollars in millions except per share amounts
	6/30/11			12/31/10
	Unaudited
Assets
Current Assets
Cash and cash equivalents	$	3,831		$	1,437
Accounts receivable - net of allowances for
doubtful accounts of $908 and $957		13,608			13,610
Prepaid expenses		1,563			1,458
Deferred income taxes		1,180			1,170
Other current assets		2,057			2,276
Total current assets		22,239			19,951
Property, Plant and Equipment - Net		104,606			103,196
Goodwill		73,591			73,601
Licenses		50,403			50,372
Customer Lists and Relationships - Net		3,643			4,708
Other Intangible Assets - Net		5,407			5,440
Investments in Equity Affiliates		5,207			4,515
Other Assets		6,918			6,705
Total Assets	$	272,014		$	268,488
Liabilities and Stockholders' Equity
Current Liabilities
Debt maturing within one year	$	7,910		$	7,196
Accounts payable and accrued liabilities		18,145			20,055
Advanced billing and customer deposits		3,804			4,086
Accrued taxes		1,130			72
Dividends payable		2,548			2,542
Total current liabilities		33,537			33,951
Long-Term Debt		58,663			58,971
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes		25,065			22,070
Postemployment benefit obligation		28,350			28,803
Other noncurrent liabilities		12,290			12,743
Total deferred credits and other noncurrent liabilities		65,705			63,616
Stockholders' Equity
Common stock		6,495			6,495
Additional paid-in capital		91,687			91,731
Retained earnings		33,687			31,792
Treasury stock		(20,786	)		(21,083	)
Accumulated other comprehensive income		2,720			2,712
Noncontrolling interest		306			303
Total stockholders' equity		114,109			111,950
Total Liabilities and Stockholders' Equity	$	272,014		$	268,488

Financial Data
AT&T Inc.
Consolidated Statements of Cash Flows
Dollars in millions
Unaudited	Six months ended June 30,
	2011			2010
Operating Activities
Net income	$	7,126		$	6,622
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization		9,186			9,599
Undistributed earnings from investments in equity affiliates		(417	)		(378	)
Provision for uncollectible accounts		523			671
Deferred income tax expense and noncurrent
unrecognized tax benefits		2,818			2,249
Net gain from impairment and sale of investments		(44	)		(629	)
Loss from discontinued operations		-			3
Changes in operating assets and liabilities:
Accounts receivable		(521	)		394
Other current assets		104			389
Accounts payable and accrued liabilities		(1,133	)		(3,063	)
Net income attributable to noncontrolling interest		(127	)		(166	)
Other - net		(758	)		120
Total adjustments		9,631			9,189
Net Cash Provided by Operating Activities		16,757			15,811
Investing Activities
Construction and capital expenditures
Capital expenditures		(9,405	)		(7,856	)
Interest during construction		(77	)		(379	)
Acquisitions, net of cash acquired		(62	)		(2,554	)
Dispositions		30			14
(Purchases) and sales of securities, net		45			(545	)
Other		19			15
Net Cash Used in Investing Activities		(9,450	)		(11,305	)
Financing Activities
Net change in short-term borrowings with
original maturities of three months or less		(1,603	)		3,280
Issuance of long-term debt		2,985			-
Repayment of long-term debt		(1,290	)		(4,661	)
Issuance of treasury shares		199			5
Dividends paid		(5,082	)		(4,960	)
Other		(122	)		(534	)
Net Cash Used in Financing Activities		(4,913	)		(6,870	)
Net increase (decrease) in cash and cash equivalents		2,394			(2,364	)
Cash and cash equivalents beginning of year		1,437			3,741
Cash and Cash Equivalents End of Period	$	3,831		$	1,377

Financial Data
AT&T Inc.
Supplementary Operating and Financial Data
Dollars in millions except per share amounts
Unaudited	Three Months Ended									Six Months Ended
	6/30/2011			6/30/2010			% Chg			6/30/2011			6/30/2010			% Chg
Wireless
Volumes (000)
Total											98,615			90,130			9.4	%
Postpaid6											68,353			66,970			2.1	%
Prepaid6											6,750			5,881			14.8	%
Reseller6											12,522			10,597			18.2	%
Connected Devices6											10,990			6,682			64.5	%
Wireless Net Adds (000)
Total		1,095			1,562			-29.9	%		3,079			3,419			-9.9	%
Postpaid6		331			496			-33.3	%		393			1,008			-61.0	%
Prepaid6		137			300			-54.3	%		222			324			-31.5	%
Reseller6		248			(130	)		-			809			139			-
Connected Devices6		379			896			-57.7	%		1,655			1,948			-15.0	%
M&A Activity, Partitioned Customers and Other Adjs.		1			1,581						-			1,591
Wireless Churn
Postpaid Churn6		1.15	%		1.01	%	14 BP				1.17	%		1.04	%	13 BP
Total Churn6		1.43	%		1.29	%	14 BP				1.40	%		1.29	%	11 BP
Other
Licensed POPs (000,000)											313			307			2.0	%
In-Region Wireline1
Voice
Total Wireline Voice Connections											41,298			46,058			-10.3	%
Net Change		(1,159	)		(1,327	)		12.7	%		(2,265	)		(2,430	)		6.8	%
Broadband
Total Wireline Broadband Connections											16,473			15,952			3.3	%
Net Change		(12	)		(92	)		87.0	%		163			163			-
Video
U-verse											3,407			2,505			36.0	%
Satellite											1,852			2,053			-9.8	%
Total Video Connections											5,259			4,558			15.4	%
Net Change		168			135			24.4	%		342			319			7.2	%
Consumer Revenue Connections
Broadband3											14,520			13,925			4.3	%
Video Connections4											5,250			4,557			15.2	%
Voice2											22,735			25,780			-11.8	%
Total Consumer Revenue Connections											42,505			44,262			-4.0	%
Net Change		(574	)		(782	)		26.6	%		(922	)		(1,025	)		10.0	%
AT&T Inc.
Construction and capital expenditures
Capital expenditures	$	5,272		$	4,709			12.0	%	$	9,405		$	7,856			19.7	%
Interest during construction	$	42		$	195			-78.5	%	$	77		$	379			-79.7	%
Dividends Declared per Share	$	0.43		$	0.42			2.4	%	$	0.86		$	0.84			2.4	%
End of Period Common Shares Outstanding (000,000)											5,925			5,909			0.3	%
Debt Ratio5											36.8	%		40.4	%	-360 BP
Total Employees											258,870			272,450			-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 Internet Protocol connections of 2,023 as of June 30, 2011.
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 long-term debt plus debt maturing within one year divided by total debt plus total stockholders' equity.
6	Prior year amounts restated to conform to current period reporting methodology.
	Note: For the end of 2Q11, total switched access lines were 39,275, retail business switched access lines totaled 16,293, and wholesale
		and coin switched access lines totaled 2,270.