AT&T Changes Benefit Plan Accounting, New Methodology to Result in Simpler, More Transparent Financial Reporting

AT&T to hold a conference call at 9 a.m. ET to discuss the changes

Dallas, Texas, January 13, 2011

AT&T Inc. (NYSE:T) announced today via a filing with the SEC that, in order to improve the transparency of its financial reporting, it has changed its method of recognizing actuarial gains and losses for pension and other post retirement benefits. These gains and losses will now be recognized in the year in which they are incurred, rather than amortized over a period of many years, and recorded on the income statement in the fourth quarter each year.

AT&T will book service costs, interest costs and expected return on assets on a quarterly basis, with an annual adjustment taken each fourth quarter to reflect actual return on assets, changes in discount rates and other actuarial assumptions.

AT&T expects the change to a market-based approach will result in simpler, more transparent financial results by linking results directly to current market returns, interest rates and health care costs. The change will not impact AT&T's cash flow or pension funding requirements.

AT&T expects the impact of this accounting change on its fourth-quarter 2010 results to be a pretax, noncash charge of approximately $2.7 billion, or $0.28 per share. This charge is driven by a reduction in the benefit plan discount rate from 6.5 percent to 5.8 percent, partially offset by higher-than-expected returns on benefit plan assets and favorable health care cost trends in 2010. Going forward, guidance regarding benefit costs will exclude this gain/loss adjustment to be taken each fourth-quarter to reflect actual results. AT&T expects that 2011 adjusted benefit costs will be in line with 2010 adjusted levels.

Adjusted quarterly and annual results are available at AT&T Investor Relations, and AT&T will host a conference call at 9 a.m. ET today to discuss this accounting change. The company will broadcast a live webcast of the call at AT&T Investor Relations, and the webcast will be available for replay until February 25, 2011, at the same address.

About AT&T
AT&T Inc. (NYSE:T) is a premier communications holding company. Its subsidiaries and affiliates – AT&T operating companies – are the providers of AT&T services in the United States and around the world. With a powerful array of network resources that includes the nation’s fastest mobile broadband network, AT&T is a leading provider of wireless, Wi-Fi, high speed Internet and voice services. A leader in mobile broadband, AT&T also offers the best wireless coverage worldwide, offering the most wireless phones that work in the most countries. It also offers advanced TV services under the AT&T U-verse® and AT&T | DIRECTV brands. The company’s suite of IP-based business communications services is one of the most advanced in the world. In domestic markets, AT&T Advertising Solutions and AT&T Interactive are known for their leadership in local search and advertising. In 2010, AT&T again ranked among the 50 Most Admired Companies by FORTUNE® magazine.

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Cautionary Language Concerning Forward-Looking Statements
Information set forth in this press release contains financial estimates and other forward-looking statements that are subject to risks and uncertainties, and actual results might differ materially. A discussion of factors that may affect future results is contained in AT&T's filings with the Securities and Exchange Commission. AT&T disclaims any obligation to update and revise statements contained in this news release based on new information or otherwise.

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