AT&T INC. (Form: 10-K, Received: 02/25/2010 17:20:03)

FORM 10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

(Mark One)

	x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
		OF THE SECURITIES EXCHANGE ACT OF 1934

		For the fiscal year ended December 31, 2009

		OR

	¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
		OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 1-8610

AT&T INC.

Incorporated under the laws of the State of Delaware

I.R.S. Employer Identification Number 43-1301883

208 S. Akard St., Dallas, Texas, 75202

Telephone Number 210-821-4105

Securities registered pursuant to Section 12(b) of the Act: (See attached Schedule A)

Securities registered pursuant to Section 12(g) of the Act: None.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [X] No [ ]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12-b2 of the Exchange Act.

Large accelerated filer [X]	Accelerated filer [ ]
Non-accelerated filer [ ]	Smaller reporting company [ ]

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

Based on the closing price of $24.84 per share on June 30, 2009, the aggregate market value of our voting and non-voting common stock held by non-affiliates was $146.6 billion.

At January 31, 2010, common shares outstanding were 5,902,074,438.

DOCUMENTS INCORPORATED BY REFERENCE

(1)	Portions of AT&T Inc.’s Annual Report to Stockholders for the fiscal year ended December 31, 2009 (Parts I and II).

(2)	Portions of AT&T Inc.’s Notice of 2010 Annual Meeting and Proxy Statement dated on or about March 11, 2010 to be filed within the period permitted under General Instruction G(3) (Parts III and IV).

SCHEDULE A

Securities Registered Pursuant To Section 12(b) Of The Act:

		Name of each exchange
Title of each class		on which registered

Common Shares (Par Value $1.00 Per Share)		New York Stock Exchange

6.125% AT&T Inc.		New York Stock Exchange
Global Notes, Due April 2, 2015

5.875% AT&T Inc.		New York Stock Exchange
Global Notes due April 28, 2017

7.00% AT&T Inc.		New York Stock Exchange
Global Notes due April 30, 2040

6.375% Forty-Nine Year AT&T Inc.		New York Stock Exchange
Senior Notes, Due February 15, 2056

TABLE OF CONTENTS

Item		Page
	PART I
1.	Business	1
1A.	Risk Factors	8
2.	Properties	9
3.	Legal Proceedings	9
4.	Submission of Matters to a Vote of Security Holders	9

	Executive Officers of the Registrant	10


	PART II
5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	11
6.	Selected Financial Data	11
7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11
7A.	Quantitative and Qualitative Disclosures about Market Risk	11
8.	Financial Statements and Supplementary Data	11
9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	11
9A.	Controls and Procedures	11
9B.	Other Information	12


	PART III
10.	Directors, Executive Officers and Corporate Governance	13
11.	Executive Compensation	13
12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	14
13.	Certain Relationships and Related Transactions, and Director Independence	15
14.	Principal Accountant Fees and Services	15


	PART IV
15.	Exhibits and Financial Statement Schedules	15

AT&T Inc.

PART I

ITEM 1. BUSINESS

GENERAL

AT&T Inc. (“AT&T,” “we” or the “Company”) is a holding company incorporated under the laws of the State of Delaware in 1983 and has its principal executive offices at 208 S. Akard St., Dallas Texas, 75202 (telephone number 210-821-4105). We maintain an Internet website at www.att.com. (This website address is for information only and is not intended to be an active link or to incorporate any website information into this document.) We make available, free of charge, on our website our annual report on Form 10-K, our quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports as soon as reasonably practicable after such reports are electronically filed with, or furnished to, the Securities and Exchange Commission (SEC). We also make available on that website, and in print, if any stockholder or other person so requests, our code of business conduct and ethics entitled “Code of Ethics” applicable to all employees and Directors, our “Corporate Governance Guidelines,” and the charters for all committees of our Board of Directors, including Audit, Human Resources and Corporate Governance and Nominating. Any changes to our Code of Ethics or waiver of our Code of Ethics for senior financial officers, executive officers or Directors will be posted on that website.

History

AT&T, formerly known as SBC Communications Inc. (SBC), was formed as one of several regional holding companies created to hold AT&T Corp.’s (ATTC) local telephone companies. On January 1, 1984, we were spun-off from ATTC pursuant to an anti-trust consent decree, becoming an independent publicly traded telecommunications services provider. At formation, we primarily operated in five southwestern states. Our subsidiaries merged with Pacific Telesis Group in 1997, Southern New England Telecommunications Corporation in 1998 and Ameritech Corporation in 1999, thereby expanding our wireline operations as the incumbent local exchange carrier (ILEC) into a total of 13 states. In November 2005, one of our subsidiaries merged with ATTC, creating one of the world’s leading telecommunications providers. In connection with the merger, we changed the name of our company from “SBC Communications Inc.” to “AT&T Inc.” In December 2006, one of our subsidiaries merged with BellSouth Corporation (BellSouth) making us the ILEC in an additional nine states. With the BellSouth acquisition, we thereby acquired BellSouth’s 40% economic interest in AT&T Mobility LLC (AT&T Mobility), formerly Cingular Wireless LLC, and BellSouth’s 34% economic interest in YELLOWPAGES.COM (YPC), resulting in 100% ownership of AT&T Mobility and YPC. Our services and products are marketed under the AT&T brand name, including alliances such as AT&T Yahoo! and AT&T | DIRECT TV.

Scope

We rank among the leading providers of telecommunications services in the United States and the world. We offer our services and products to consumers in the U.S. and services and products to businesses and other providers of telecommunications services worldwide.

The services and products that we offer vary by market, and include: wireless communications, local exchange services, long-distance services, data/broadband and Internet services, video services, telecommunications equipment, managed networking, wholesale services and directory advertising and publishing. We group our operating subsidiaries as follows, corresponding to our operating segments for financial reporting purposes:

·	wireless subsidiaries provide both wireless voice and data communications services across the U.S. and, through roaming agreements, in a substantial number of foreign countries,

·	wireline subsidiaries provide primarily landline voice and data communication services, AT&T U-Verse SM TV, high-speed broadband and voice services (U-Verse) and managed networking to business customers.,

·	advertising solutions subsidiaries publish Yellow and White Pages directories and sell directory advertising and Internet-based advertising and local search.

·	other subsidiaries provide results from Sterling Commerce, Inc. (Sterling), all corporate and other operations.

Our traditional wireline local exchange subsidiaries operate in 22 states: Alabama, Arkansas, California, Connecticut, Illinois, Indiana, Florida, Georgia, Kentucky, Louisiana, Kansas, Michigan, Mississippi, Missouri, Nevada, North Carolina, Ohio, Oklahoma, South Carolina, Tennessee, Texas and Wisconsin (22-state area). Our wireline local exchange services are provided through regulated subsidiaries which operate within authorized regions subject to regulation by each state in which they operate and by the Federal Communications Commission (FCC). Wireless service providers are regulated by the FCC. Additional information relating to regulation is contained under the heading “Government Regulation” and in the Annual Report under the heading “Operating Environment and Trends of the Business,” and is incorporated herein by reference pursuant to General Instruction G(2).

AT&T Inc.

With the expansion of our company through acquisitions and the resulting ownership consolidation of AT&T Mobility, and with continuing advances in technology, we plan to offer new services that combine our traditional wireline and wireless services, thereby making our customers’ lives more convenient and productive and fostering competition and further innovation in the communications and entertainment industry. In 2010, we plan to focus on the areas discussed below.

Wireless

AT&T Mobility began operations in October 2000 as a joint venture between us and BellSouth and, in 2004, acquired AT&T Wireless Services, Inc. Upon our acquisition of BellSouth, AT&T Mobility became a wholly-owned subsidiary.

Our Universal Mobile Telecommunications System/ High-Speed Downlink Packet Access third generation (3G) network technology covers most major metropolitan areas of the U.S. This technology provides superior speeds for data and video services, as well as operating efficiencies, using the same spectrum and infrastructure for voice and data on an IP-based platform. Our wireless network also relies on digital transmission technologies known as Global System for Mobile Communication, General Packet Radio Services and Enhanced Data Rates for GSM Evolution for data communications. We have also announced plans to transition our network to more advanced Long Term Evolution technology in 2011 as network equipment and handsets are expected to become widely available. We also have continued to expand the number of locations, including airports and cafes, where customers can access broadband internet connections using wireless fidelity (local radio frequency commonly referred as Wi-Fi) wireless technology.

As of December 31, 2009, we served 85.1 million customers and were a leading provider of mobile wireless voice and data communications services in the U.S. As the wireless industry continues to mature, we believe that future wireless growth will become increasingly dependent on our ability to offer integrated handsets and other innovative devices such as netbooks and eReaders and innovative services that will encourage existing customers to upgrade their services and will attract customers from other providers as well as our ability to minimize turnover of our existing customer base (customer churn). We intend to accomplish these goals by continuing to expand our network coverage, improve our network quality and offer a broad array of products and services, including exclusive devices such as Apple iPhone, Wi-Fi enabled devices and free mobile-to-mobile calling among our wireless customers. The effective management of customer churn is critical to our ability to maximize revenue growth and to maintain and improve our operating margins.

Business Customers

We expect to continue to strengthen the reach and sophistication of our network facilities and our ability to offer a variety of communications services, both wireless and wireline, to large businesses and wholesale customers worldwide. We expect to offer similar services to small- and medium-businesses and to increase the attractiveness of our services to governmental customers. We also expect to extend our wholesale business offerings to other service products and systems integration services.

Data/Broadband

As the communications industry continues to move toward internet-based technologies that are capable of blending traditional wireline and wireless services, we plan to offer services that take advantage of these new and more sophisticated technologies. In particular, we intend to continue to focus on deploying our AT&T U-verse sm high-speed broadband and video services and on developing internet protocol-based services that allow customers to unite their home or business wireline services with their wireless service.

U-verse Services We are continuing to expand our deployment of our U-verse services. In December 2009, we added our two millionth U-verse video customer, ending the year with approximately 2,065,000 customers. As of December 31, 2009, we passed 22.8 million living units (constructed housing units as well as platted housing lots) and are marketing the services to almost 72 percent of those units. Our deployment strategy is to enter each new area on a limited basis in order to ensure that all operating and back-office systems are functioning successfully and then expand within each area as we continue to monitor these systems. Our rate of expansion will be slowed if we cannot obtain all required local building permits in a timely fashion. We also continue to work with our vendors on improving, in a timely manner, the requisite hardware and software technology. Our deployment plans could be delayed if we do not receive required equipment and software on schedule.

We believe that our U-verse TV service is subject to federal oversight as a “video service” under the Federal Communications Act. However, some cable providers and municipalities have claimed that certain IP services should be treated as a traditional cable service and therefore subject to the applicable state and local cable regulation. Certain municipalities have delayed our request or have refused us permission to use our existing right-of-ways to deploy or activate our U-verse-related services and products, resulting in litigation. Pending negotiations and current or threatened litigation involving municipalities could delay our deployment plans in those areas. In July 2008, the U.S. District Court for Connecticut affirmed its October 2007 ruling that AT&T’s U-verse TV service is a cable service in Connecticut. We have appealed that decision on the basis that state legislation rendered the case moot. Petitions have been filed at the FCC alleging that the manner in which AT&T provisions “public, educational, and governmental” (PEG) programming over its U-verse TV service conflicts with federal law, and a lawsuit has been filed in a California state superior court raising similar allegations under California law. If the courts having jurisdiction where we have significant deployments of our U-verse services were to decide that federal, state and/or local cable regulation were applicable to our U-verse services, or if the FCC, state agencies or the courts were to rule that AT&T must deliver PEG programming in a manner substantially different from the way it does today or in ways that are inconsistent with AT&T’s current network architecture, it could have a material adverse effect on the cost, timing and extent of our deployment plans.

AT&T Inc.

Voice over Internet Protocol VoIP is generally used to describe the transmission of voice using Internet-Protocol-based technology rather than a traditional wire and switch-based telephone network. A company using this technology often can provide voice services at a lower cost because this technology uses bandwidth more efficiently than a traditional network and because this technology has not been subject to traditional telephone industry regulation. While the development of VoIP has resulted in increased competition for our wireless and wireline voice services, it also presents growth opportunities for us to develop new products for our customers.

BUSINESS OPERATIONS

OPERATING SEGMENTS

Our segments are strategic business units that offer different products and services over various technology platforms and are managed accordingly. We analyze our various operating segments based on segment income before income taxes, reviewing operating revenues, operating expenses (depreciation and non-depreciation) and equity income for each segment. We make our capital allocations decisions primarily based on the network (wireless or wireline) providing services. Interest expense and other income (expense) – net, are managed only on a total company basis and are, accordingly, reflected only in consolidated results. Therefore, these items are not included in the calculation of each segment’s percentage of our total segment income. We have four reportable segments: (1) Wireless; (2) Wireline; (3) Advertising Solutions; and (4) Other.

Additional information about our segments, including financial information, is included under the heading “Segment Results” on pages 33 through 41 and in Note 4 of the Annual Report and is incorporated herein by reference pursuant to General Instruction G(2).

WIRELESS

Wireless consists of our subsidiary, AT&T Mobility, which operates as a wireless provider to both business and consumer customers. Our Wireless segment provided approximately 43% of 2009 total segment operating revenues and 60% of our 2009 total segment income. At December 31, 2009, we had more than 85 million wireless subscribers.

Services and Products

We offer a comprehensive range of high-quality nationwide wireless voice communications services in a variety of pricing plans, including postpaid and prepaid service plans. Our voice offerings are tailored to meet the communications needs of targeted customer segments, including youth, family, active professionals, small businesses, government and major national corporate accounts.

Service – Our voice service is generally offered on a contract basis for one- or two-year periods, referred to as postpaid. Under the terms of these contracts, service is billed and provided on a monthly basis according to the applicable rate plan chosen. Our wireless services include basic local wireless communications service, long-distance service and roaming services. Roaming services enable our subscribers to utilize other carriers’ networks when they are “roaming” outside our network footprint. We also charge fees to other carriers for providing roaming services to their customers when their customers utilize our network. Additionally, we offer prepaid service to meet the demands of distinct consumer segments, such as the youth market, families and small business customers, who prefer to control usage or pay in advance.

Wireless data revenues continue to be a growing area of our business, representing an increasing share of our overall subscriber revenue. We are experiencing solid growth from both consumer and enterprise wireless data services, as an increasing number of our subscribers have upgraded their handsets to more advanced integrated devices, including Apple iPhone. We are also seeing rapid growth in demand for new wireless devices such as notebooks, eReaders, direction and navigation aids and monitoring devices. We continue to upgrade our network and coordinate with equipment manufacturers and applications developers in order to further capitalize on the continued growth in the demand for wireless data services. At December 31, 2009, we were a leading provider of wireless data in the U.S. wireless industry based on subscribers.

AT&T Inc.

Equipment – We sell a wide variety of handsets, wirelessly enabled computers (i.e., notebooks and netbooks) and personal computer wireless data cards manufactured by various suppliers for use with our voice and data services. We sell through our own company-owned stores or through agents or third-party retail stores. We also sell accessories, such as carrying cases, hands-free devices, batteries, battery chargers and other items, to consumers, as well as to agents and other third-party distributors for resale. Like other wireless service providers, we often provide postpaid contract subscribers substantial equipment subsidies to initiate or upgrade service. Our subscriber base also includes emerging devices (e.g., eReaders and mobile navigation devices) purchased by consumers from third-party suppliers which buy data access supported by our network; purchasers of these devices are included in our reseller base.

Additional information on our Wireless segment is contained in the Annual Report in the “Operating Environment Overview” section under the heading “Expected Growth Areas,” “Wireless” beginning on page 42 and is incorporated herein by reference pursuant to General Instruction G(2).

WIRELINE

Our Wireline subsidiaries provide both retail and wholesale communication services domestically and internationally. Our Wireline segment provided approximately 52% of 2009 segment operating revenues and 36% of our 2009 total segment income. We divide our wireline services into three product-based categories: voice, data and other. Revenues from our traditional voice services have been declining as customers have been switching to wireless, cable and other internet-based providers. In addition, the continuing economic recession has caused wireline customers to terminate their residential or business phone service as individuals have lost jobs or otherwise combined households and businesses have closed or reduced operations. We have responded by offering packages of combined voice and data services, including broadband and video, and intend to continue this strategy during 2010.

Services and Products

Voice – Voice includes traditional local and long-distance service provided to retail customers and wholesale access to our network and individual network elements provided to competitors. At December 31, 2009, our wireline subsidiaries served approximately 26 million retail consumer access lines, 20 million retail business access lines and 3 million wholesale access lines. We also have a number of integrated voice and data services, such as integrated network connections, that provide customers the ability to integrate access for their voice and data services, the data component of which is included in the data category. Additionally, voice revenues do not include any of our VoIP revenues, which are included in data revenues.

Long distance consists of traditional long distance and international long distance for customers that select us as their primary long-distance carrier. Long distance also includes services provided by calling card, 1-800 services and conference calling. These services are used in a wide variety of business applications, including sales, reservation centers or customer service centers. We also provide wholesale switched access service to other service providers.

Voice also includes calling features, fees to maintain wire located inside customer premises and other miscellaneous voice products. Calling features are enhanced telephone services available to retail customers such as Caller ID, Call Waiting and voice mail. These calling features services are generally more profitable than basic local phone service.

Data - Data includes traditional products, such as switched and dedicated transport, Internet access and network integration, and data equipment sales, and U-verse services. Additionally, data products include high-speed connections such as private lines, packet, dedicated Internet and enterprise networking services, as well as products such as DSL/broadband, dial-up Internet access and Wi-Fi (local radio frequency commonly known as wireless fidelity). We also provide businesses voice applications over IP-based networks (i.e., Enhanced Virtual Private Networks or “EVPN”). Over the past several years, we have built out our new multi-protocol label switching/asynchronous transfer mode, or MPLS/ATM network, to supplement, and eventually replace, our other extensive global data networks. These products allow us to provide highly complex global data networks.

Private Line uses high-capacity digital circuits to transmit from point-to-point in multiple configurations and allows customers to create internal data networks and to access external data networks.

AT&T Inc.

Switched Transport services transmit data using switching equipment to transfer the data between multiple lines before reaching its destination. Dedicated Transport services use a single direct line to transmit data between destinations. DSL is a digital modem technology that converts existing twisted-pair telephone lines into access paths for multimedia and high-speed data communications to the Internet or private networks. DSL allows customers to simultaneously make a phone call and access information via the Internet or an office local area network. Digital Services use dedicated digital circuits to transmit digital data at various high rates of speed.

Network integration services include installation of business data systems, local area networking and other data networking offerings. Internet access services include a wide range of products for residences and businesses, Internet services offered include basic dial-up access service, dedicated access, web hosting, e-mail and high-speed access services. Our managed web-hosting services for businesses provide network, server and security infrastructure as well as built-in data storage and include application performance management, database management, hardware and operating system management. Our hosting services also provide customers with secure access to detailed reporting information about their infrastructure and applications.

Packet services consist of data networks using packet switching and transmission technologies, including traditional circuit-based, and IP connectivity services. Packet services enable customers to transmit large volumes of data economically and securely and are used for local area network interconnection, remote site, point of sale and branch office communications. High-speed packet services are used extensively by enterprise (large business) customers.

Dedicated Internet services are designed to meet the needs of all types of commercial and governmental enterprises, including small and medium sized businesses. Our managed Internet services provide customers with dedicated high-speed access to the Internet managed by us.

Enterprise networking services provide comprehensive support from network design, implementation and installation to ongoing network operations and management for networks of varying scales, including local area networks, wide area networks, and virtual private networks. These services include applications such as e-mail, order entry systems, employee directories, human resource transactions and other database applications.

We also provide local, interstate and international wholesale networking capacity to other service providers. We offer a combination of high-volume transmission capacity and conventional dedicated line services on a regional, national and international basis to wireless carriers, interexchange carriers, Internet service providers (ISPs) and facility-based and switchless resellers. Our wholesale customers are primarily large ISPs, wireless carriers, competitive local exchange carriers (CLECs), regional phone companies, interexchange carriers, cable companies and systems integrators. We also have sold dedicated network capacity through indefeasible rights-of-use agreements under which capacity is furnished for contract terms as long as 25 years.

Other - Other includes application management, security service, integration services, customer premises equipment, outsourcing, government-related services, and satellite video services. Security services include business continuity and disaster recovery services as well as premise and network based security products.

Customer premises equipment and other equipment sales range from single-line and cordless telephones to sophisticated digital PBX systems. PBX is a private telephone switching system, typically used by businesses and usually located on a customer’s premises, which provides intra-premise telephone services as well as access to our network.

ADVERTISING SOLUTIONS

Advertising Solutions includes our directory operations, which publish Yellow and White Pages directories and sell directory advertising and Internet-based advertising and local search. The Advertising Solutions segment provided approximately 4% of total segment operating revenues and 6% of our 2009 total segment income. This segment sells advertising services throughout the United States, with our print directory operations primarily covering our 22-state area.

OTHER

Our Other segment includes operations from Sterling, our business integration software and services subsidiary, operator services, corporate and other operations. The Other segment provided approximately 1% of total segment operating revenues and less than 1% of our 2009 total segment income. We also include in this segment the equity income (loss) from our investments in Telmex, America Movil and Telmex Internacional. Sterling provides “multi-enterprise collaboration” services to businesses in various industries, including retail, financial services, manufacturing, healthcare and telecom. In recent years, Sterling has completed a number of acquisitions in order to provide end-to-end order fulfillment for customers.

AT&T Inc.

MAJOR CLASSES OF SERVICE

The following table sets forth the percentage of total consolidated reported operating revenues by any class of service that accounted for 10% or more of our consolidated total operating revenues in any of the last three fiscal years:

Percentage of Total
Consolidated Operating Revenues
2009	2008	2007

Wireless Segment
Wireless service	40	%	36	%	33	%
Wireline Segment
Voice	27	%	31	%	35	%
Data	22	%	20	%	20	%

GOVERNMENT REGULATION

Wireless communications providers must be licensed by the FCC to provide communications services at specified spectrum frequencies within specified geographic areas and must comply with the rules and policies governing the use of the spectrum as adopted by the FCC. Wireless licenses are issued for a fixed time period, typically ten years, and we must seek renewal of these licenses. While the FCC has generally renewed licenses given to operating companies such as us, the FCC has authority to both revoke a license for cause and to deny a license renewal if a renewal is not in the public interest. Additionally, while wireless communications providers’ prices and service offerings are generally not subject to regulation, the federal government and an increasing number of states are considering new regulations and legislation relating to various aspects of wireless services.

Our wireline subsidiaries are subject to regulation by state commissions which have the power to regulate intrastate rates and services, including local, long-distance and network access services. These subsidiaries are also subject to the jurisdiction of the FCC with respect to interstate and international rates and services, including interstate access charges. Access charges are designed to compensate our wireline subsidiaries for the use of their networks by other carriers.

Our subsidiaries operating outside the U.S. are subject to the jurisdiction of national and supranational regulatory authorities in the market where service is provided. Regulation is generally limited to operational licensing authority for the provision of enterprise services.

Additional information relating to regulation of our subsidiaries is contained in the Annual Report under the heading “Operating Environment Overview” beginning on page 41 and is incorporated herein by reference pursuant to General Instruction G(2).

IMPORTANCE, DURATION AND EFFECT OF LICENSES

Certain of our subsidiaries own or have licenses to various patents, copyrights, trademarks and other intellectual property necessary to conduct business. Many of our subsidiaries also hold government-issued licenses or franchises to provide wireline or wireless services and regulation affecting those rights is contained in the Annual Report under the heading “Operating Environment Overview” beginning on page 41 and is incorporated herein by reference pursuant to General Instruction G(2). We actively pursue patents, trademarks and service marks to protect our intellectual property within the U.S. and abroad. We maintain a global portfolio of more than 5,000 trademark and service mark registrations. We have also entered into agreements that permit other companies, in exchange for fees and subject to appropriate safeguards and restrictions, to utilize certain of our trademarks and service marks. We periodically receive offers from third parties to obtain licenses for patent and other intellectual rights in exchange for royalties or other payments. We also receive notices asserting that our products or services infringe on their patents and other intellectual property rights. These claims, whether against us directly or against third-party suppliers of products or services that we, in turn, sell to our customers, such as wireless handsets, could require us to pay damages, royalties, stop offering the relevant products or services and/or cease other activities. While the outcome of any litigation is uncertain, we do not believe that the resolution of any of these infringement claims or the expiration or non-renewal of any of our intellectual property rights would have a material adverse effect on our results of operations.

AT&T Inc.

MAJOR CUSTOMER

No customer accounted for 10% or more of our consolidated revenues in 2009, 2008 or 2007.

COMPETITION

Information relating to competition in each of our operating segments is contained in the Annual Report under the heading “Competition” beginning on page 44, and is incorporated herein by reference pursuant to General Instruction G(2).

RESEARCH AND DEVELOPMENT

The majority of our research activities are related to our wireline segment, performed at our subsidiary AT&T Labs. AT&T Labs’ scientists and engineers conduct research in a variety of areas, including IP; advanced network design and architecture; network operations support systems; data mining technologies and advanced speech technologies. The majority of the development activities are performed by AT&T Services. The developers within AT&T Services work with our business units and AT&T Labs to create new services and invent tools and systems to manage secure and reliable networks for us and our customers. We also have a research agreement with Telcordia Technologies, formerly Bell Communications Research, Inc. Research and development expenses were $986 in 2009, $832 in 2008 and $985 million in 2007.

EMPLOYEES

As of January 31, 2010, we employed approximately 281,000 persons. Approximately 58 percent of our employees are represented by the Communications Workers of America (CWA), the International Brotherhood of Electrical Workers (IBEW) or other unions. Contracts covering approximately 120,000 collectively-bargained wireline employees expired during 2009. As of January 31, 2010, the Company and approximately 86,000 employees, covered by these expired collectively-bargained wireline contracts have ratified new labor agreements. In the absence of an effective contract, the union is entitled to call a work stoppage.

For approximately 60,000 employees covered by these ratified agreements, the agreements provide for a three-year term and, for the vast majority of those covered employees, a 3 percent wage increase in years one and two, a wage increase in year three of 2.75 percent, and pension band increases of 2 percent for each year of the agreement. For both wage and pension band increases, there is potential cost-of-living increase based on the consumer price index for the third year. These agreements also provide for continued health care coverage with reasonable cost sharing.

For the remaining approximately 26,000 employees covered by these ratified agreements, the agreement provides for a four-year term. The provisions of the tentative agreement are substantially similar to the provisions of the ratified agreements discussed above, with a wage increase in year four of 2.75 percent and a potential cost-of-living increase in year four instead of in year three.

On February 8, 2010, the Company and the CWA announced a tentative agreement covering approximately 30,000 core wireline employees in the nine-state former BellSouth region, subject to ratification by those covered employees. The tentative agreement provides for a three-year term and, for the vast majority of those covered employees, a 3 percent wage increase in years one and two, a wage increase in year three of 2.75 percent, and pension band increases of 2 percent for each year of the agreement. These agreements also provide for continued health care coverage with reasonable cost sharing.

AT&T Inc.

ITEM 1A. RISK FACTORS

Information required by this Item is included in the Annual Report under the heading “Risk Factors” on page 55 through page 57 which is incorporated herein by reference pursuant to General Instruction G(2).

CAUTIONARY LANGUAGE CONCERNING FORWARD-LOOKING STATEMENTS

The following factors could cause our future results to differ materially from those expressed in the forward-looking statements:

·	Adverse economic and/or capital access changes in the markets served by us or in countries in which we have significant investments, including the impact on customer demand and our ability and our suppliers’ ability to access financial markets.

·	Changes in available technology and the effects of such changes, including product substitutions and deployment costs.

·	Increases in our benefit plans’ costs, including increases due to adverse changes in the U.S. and foreign securities markets, resulting in worse-than-assumed investment returns and discount rates, and adverse medical cost trends and unfavorable healthcare legislation and regulations.

The final outcome of Federal Communications Commission and other Federal agency proceedings and reopenings of such proceedings and judicial review, if any, of such proceedings, including issues relating to access charges, broadband deployment, E911 services, competition, net neutrality, unbundled loop and transport elements, wireless license awards and renewals and wireless services.

The final outcome of regulatory proceedings in the states in which we operate and reopenings of such proceedings, and judicial review, if any, of such proceedings, including proceedings relating to Interconnection terms, access charges, universal service, unbundled network elements and resale and wholesale rates, broadband deployment including our U-verse services, net neutrality, performance measurement plans, service standards and traffic compensation.

·	Enactment of additional state, federal and/or foreign regulatory and tax laws and regulations pertaining to our subsidiaries and foreign investments, including laws and regulations that reduce our incentive to invest in our networks, resulting in lower revenue growth and/or higher operating costs.

·	Our ability to absorb revenue losses caused by increasing competition, including offerings using alternative technologies (e.g., cable, wireless and VoIP) and our ability to maintain capital expenditures.

·	The extent of competition and the resulting pressure on access line totals and wireline and wireless operating margins.

·	Our ability to develop attractive and profitable product/service offerings to offset increasing competition in our wireless and wireline markets.

The ability of our competitors to offer product/service offerings at lower prices due to lower cost structures and regulatory and legislative actions adverse to us, including state regulatory proceedings relating to unbundled network elements and nonregulation of comparable alternative technologies (e.g., VoIP).

The timing, extent and cost of deployment of our U-verse services; the development of attractive and profitable service offerings; the extent to which regulatory, franchise fees and build-out requirements apply to this initiative; and the availability, cost and/or reliability of the various technologies and/or content required to provide such offerings.

·	Our continued ability to attract and offer a diverse of portfolio of devices, some on an exclusive basis.

·	The availability and cost of additional wireless spectrum and regulations relating to licensing and technical standards and deployment and usage, including network management rules.

·	Our ability to manage growth in wireless data services, including network quality.

·	The outcome of pending or threatened litigation including patent and product safety claims by or against third parties.

·	The impact on our networks and business of major equipment failures, our inability to obtain equipment/software or have equipment/software serviced in a timely and cost-effective manner from suppliers, severe weather conditions, natural disasters, pandemics or terrorist attacks.

·	Our ability to successfully negotiate new collective bargaining contracts and the terms of those contracts.

·	The issuance by the Financial Accounting Standards Board or other accounting oversight bodies of new accounting standards or changes to existing standards.

The issuance by the Internal Revenue Service and/or state tax authorities of new tax regulations or changes to existing standards and actions by federal, state or local tax agencies and judicial authorities with respect to applying applicable tax laws and regulations and the resolution of disputes with any taxing jurisdictions.

·	Our ability to adequately fund our wireless operations, including payment for additional spectrum, network upgrades and technological advancements.

·	Changes in our corporate strategies, such as changing network requirements or acquisitions and dispositions, to respond to competition and regulatory, legislative and technological developments.

Readers are cautioned that other factors discussed in this report, although not enumerated here, also could materially affect our future earnings.

AT&T Inc.

ITEM 2. PROPERTIES

Our properties do not lend themselves to description by character and location of principal units. At December 31, 2009, approximately 84% of our property, plant and equipment was owned by our wireline subsidiaries and approximately 15% was owned by our wireless subsidiaries. Central office equipment represented 34%; network access lines represented approximately 32% of our telephone plant; other equipment, comprised principally of furniture and office equipment and vehicles and other work equipment, represented 18%; land and buildings represented 11%; and other miscellaneous property represented 5%.

Substantially all of the installations of central office equipment are located in buildings and on land we own. Many garages, administrative and business offices, and telephone centers and retail stores are in leased quarters.

ITEM 3. LEGAL PROCEEDINGS

We are a party to numerous lawsuits, regulatory proceedings and other matters arising in the ordinary course of business. Additional information regarding litigation is included in the Annual Report under the headings “Retiree Phone Concession Litigation” and “NSA Litigation” on page 48, which is incorporated herein by reference pursuant to General Instruction G(2). As of the date of this report, we do not believe any pending legal proceedings to which we or our subsidiaries are subject are required to be disclosed as material legal proceedings pursuant to this item.

We are subject from time to time to judicial and administrative proceedings brought by various governmental authorities under federal, state or local environmental laws. We are required to discuss in our Forms 10-Q and 10-K two of these proceedings, (which are listed below), because each could result in monetary sanctions (exclusive of interest and costs) of one hundred thousand dollars or more. However, we do not believe that any of them currently pending will have a material adverse effect on our results of operations.

(a) The City of Philadelphia notified AT&T Corp. in December 2008 that it would seek civil penalties for alleged violations of state and local air emissions control requirements and permit terms applicable to back-up power generators at an AT&T Corp. facility. In July 2009, AT&T Corp. and the City settled this matter on terms that included civil penalties of less than one hundred thousand dollars.

(b) The U.S. Environmental Protection Agency (EPA) is seeking civil penalties from AT&T Mobility in connection with alleged violations of federal environmental statutes in connection with management of back-up power systems at AT&T Mobility facilities. The EPA’s allegations include noncompliance with requirements to obtain air emission permits for generators and to prepare spill prevention plans for fuel storage tanks. We expect to settle those allegations on terms that would include civil penalties in the range of $1 to $3 million dollars.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matter was submitted to a vote of stockholders in the fourth quarter of 2009.

AT&T Inc.

EXECUTIVE OFFICERS OF THE REGISTRANT

(As of January 20 , 2010)

Name	Age		Position	Held Since

Randall L. Stephenson	49	Chairman of the Board, Chief Executive Officer and President		6/2007
William A. Blase Jr.	54	Senior Executive Vice President – Human Resources		6/2007
James W. Callaway	63	Senior Executive Vice President – Executive Operations		5/2007
James W. Cicconi	57	Senior Executive Vice President – External and Legislative Affairs, AT&T Services, Inc.		11/2008
Catherine M. Coughlin	52	Senior Executive Vice President and Global Marketing Officer		6/2007
Ralph de la Vega	58	President and Chief Executive Officer, AT&T Mobility and Consumer Markets		10/2008
Richard G. Lindner	55	Senior Executive Vice President and Chief Financial Officer		5/2004
Forrest E. Miller	57	Group President – Corporate Strategy and Development		6/2007
Ronald E. Spears	61	President and Chief Executive Officer, AT&T Business Solutions		11/2008
John T. Stankey	47	President and Chief Executive Officer, AT&T Operations, Inc.		10/2008
Wayne Watts	56	Senior Executive Vice President and General Counsel		6/2007
Rayford Wilkins, Jr.	58	Chief Executive Officer – AT&T Diversified Businesses		10/2008

All of the above executive officers have held high-level managerial positions with AT&T or its subsidiaries for more than the past five years. Executive officers are not appointed to a fixed term of office.

AT&T Inc.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED

STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is listed on the New York Stock Exchange. The number of stockholders of record as of December 31, 2009 and 2008 was 1,454,030 and 1,541,767. The number of stockholders of record as of February 20, 2010, was 1,448,975. We declared dividends, on a quarterly basis, totaling $1.65 per share in 2009 and $1.61 per share in 2008.

Other information required by this Item is included in the Annual Report under the headings “Quarterly Financial Information” on page 91, “Selected Financial and Operating Data” on page 30, “Issuer Equity Repurchases” on page 54, and “Stock Trading Information” on the back cover, which are incorporated herein by reference pursuant to General Instruction G(2).

ITEM 6. SELECTED FINANCIAL DATA

Information required by this Item is included in the Annual Report under the heading “Selected Financial and Operating Data” on page 30, which is incorporated herein by reference pursuant to General Instruction G(2).

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

Information required by this Item is included in the Annual Report on pages 31 through 52, which is incorporated herein by reference pursuant to General Instruction G(2).

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Information required by this Item is included in the Annual Report under the heading “Market Risk” on pages 52 through 53, which is incorporated herein by reference pursuant to General Instruction G(2).

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Information required by this Item is included in the Annual Report on pages 59 through 91, which is incorporated herein by reference pursuant to General Instruction G(2).

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING

AND FINANCIAL DISCLOSURE

During our two most recent fiscal years, there has been no change in the independent accountant engaged as the principal accountant to audit our financial statements and the independent accountant has not expressed reliance on other independent accountants in its reports during such time period.

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The registrant maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed by the registrant is recorded, processed, summarized, accumulated and communicated to its management, including its principal executive and principal financial officers, to allow timely decisions regarding required disclosure, and reported within the time periods specified in the SEC’s rules and forms. The Chief Executive Officer and Chief Financial Officer have performed an evaluation of the effectiveness of the design and operation of the registrant’s disclosure controls and procedures as of December 31, 2009. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the registrant’s disclosure controls and procedures were effective as of December 31, 2009.

AT&T Inc.

Internal Control Over Financial Reporting

(a) Management’s Annual Report on Internal Control over Financial Reporting

The management of AT&T is responsible for establishing and maintaining adequate internal control over financial reporting. AT&T’s internal control system was designed to provide reasonable assurance as to the integrity and reliability of the published financial statements. AT&T management assessed the effectiveness of the company’s internal control over financial reporting as of December 31, 2009. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework . Based on its assessment, AT&T management believes that, as of December 31, 2009, the Company’s internal control over financial reporting is effective based on those criteria.

(b) Attestation Report of the Registered Public Accounting Firm

The registered public accounting firm that audited the financial statements included in the Annual Report containing the disclosure required by this Item, Ernst & Young LLP, has issued an attestation report on the Company’s internal control over financial reporting. The attestation report issued by Ernst & Young LLP is included in the Annual Report on page 93, which is incorporated herein by reference pursuant to General Instruction G(2).

ITEM 9B. OTHER INFORMATION

There is no information that was required to be disclosed in a report on Form 8-K during the fourth quarter of 2009 but was not reported.

AT&T Inc.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information regarding executive officers required by Item 401 of Regulation S-K is furnished in a separate disclosure at the end of Part I of this report since the registrant did not furnish such information in its definitive proxy statement prepared in accordance with Schedule 14A. Information regarding directors required by Item 401 of Regulation S-K is incorporated herein by reference pursuant to General Instruction G(3) from the registrant’s definitive proxy statement, dated on or about March 11, 2010 (Proxy Statement) under the heading “Election of Directors.”

There is no disclosure in this Form 10-K of reporting person delinquencies in response to Item 405 and the registrant, at the time of filing this Annual Report on Form 10-K, has reviewed the information necessary to ascertain, and has determined that Item 405 disclosure is not expected to be contained in this Form 10-K or incorporated by reference.

The registrant has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934. The members of the committee are Messrs. Aldinger, Chico, Kelly and Madonna. The additional information required by Item 407(d)(5) of Regulation S-K is incorporated herein by reference pursuant to General Instruction G(3) from the registrant’s Proxy Statement under the heading “Audit Committee.”

The registrant has adopted a code of ethics entitled “Code of Ethics” that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer, or controller or persons performing similar functions. The additional information required by Item 406 of Regulation S-K is provided in this report under the heading “General” under Part I, Item 1. Business.

ITEM 11. EXECUTIVE COMPENSATION

Information required by Item 402(k) of Regulation S-K is incorporated herein by reference pursuant to General Instruction G(3) from the registrant’s Proxy Statement under the heading “Compensation of Directors.” Information regarding officers is included in the registrant’s Proxy Statement on the pages beginning with the heading “Compensation Discussion and Analysis” and ending with, and including, the pages under the heading “Potential Payments upon Termination or Change in Control” which are incorporated herein by reference pursuant to General Instruction G(3). Information required by Item 407(e)(5) of Regulation S-K is included in the registrant’s Proxy Statement under the heading “Compensation Committee Report” and is incorporated herein by reference pursuant to General Instruction G(3) and shall be deemed furnished in this Annual Report on Form 10-K and will not be deemed incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.

AT&T Inc.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND

MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Information required by Item 403 of Regulation S-K is included in the registrant’s Proxy Statement under the heading “Common Stock Ownership,” which is incorporated herein by reference pursuant to General Instruction G(3).

Information required by Item 201(d) of Regulation S-K is provided below:

Equity Compensation Plan Information

The following table provides information as of December 31, 2009 concerning shares of AT&T common stock authorized for issuance under AT&T’s existing equity compensation plans:

Equity Compensation Plan Information

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)		Weighted-average exercise price of outstanding options, warrants and rights (b)	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders	75,250,858	(1)	$36.46	110,172,927	(2)
Equity compensation plans not approved by security holders	54,042,255	(3)	$39.07	0
Total	129,293,113	(4)	$37.85	110,172,927

(1)

Includes the issuance of stock in connection with the following stockholder approved plans: (a) 38,020,599 stock options under the 1996 Stock and Incentive Plan, 2001 Incentive Plan, and Stock Purchase and Deferral Plan (SPDP), (b) 1,575,223 phantom stock units under the Stock Savings Plan (SSP) and 3,633,282 phantom stock units under the SPDP, and (c) 18,194,742 target number of stock-settled performance shares under the 2006 Incentive Plan. At payout, the target number of performance shares may be reduced to zero or increased by up to 150% (452,025 of the performance shares may be increased by up to 200%). Each phantom stock unit and performance share is settleable in stock on a 1-to-1 basis. The weighted-average exercise price in the table does not include outstanding performance shares or phantom stock units.

The SSP was approved by stockholders in 1994, and was amended by the Board of Directors in 2000 to increase the number of shares available for purchase under the Plan (including shares from the company match and reinvested dividend equivalents) and shares subject to options. Stockholder approval was not required for the amendment. To the extent applicable, the amount shown for approved plans in column (a), in addition to the above amounts, includes 4,242,727 phantom stock units (computed on a first-in-first-out basis) and 9,584,285 stock options that were approved by the Board in 2000. Under the SSP, shares could be purchased with payroll deduction and reinvested dividend equivalents by mid-level and above managers and limited company partial matching contributions. No new contributions may be made to the Plan. In addition, participants received approximately 2 options for each share purchased with employee payroll deductions. The options have a 10-year term and an exercise strike price equal to the fair market value of the stock on the date of grant.

(2)	Includes 14,564,165 shares that may be issued under the SPDP, 68,280,585 shares that may be issued under the 2006 Incentive Plan, and up to 4,320,234 shares that may be purchased through reinvestment of dividends on phantom shares held in the SSP.

(3)

Number of outstanding stock options under the 1995 Management Stock Option Plan (1995 MSOP), which has not been approved by stockholders. The 1995 MSOP provides for grants of stock options to management employees (10-year terms) subject to vesting requirements and shortened exercise terms upon termination of employment. No further options may be issued under this plan.

AT&T Inc.

(4)

Does not include certain stock options issued by companies acquired by AT&T that were converted into options to acquire AT&T stock. As of December 31, 2009, there were 76,052,645 shares of AT&T common stock subject to the converted options, having a weighted-average exercise price of $35.3764. Also, does not include 186,700 outstanding phantom stock units that were issued by companies acquired by AT&T that are convertible into stock on a 1-to-1 basis, along with up to 74,569 shares that may be purchased with reinvested dividend equivalents (applies only to 112,012 of the outstanding phantom stock units). These units have no exercise price. No further phantom stock units, other than reinvested dividends, may be issued under the assumed plans. The weighted-average exercise price in the table does not include outstanding performance shares or phantom stock units.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Information required by Item 404 of Regulation S-K is included in the registrant’s Proxy Statement under the heading “Related Person Transactions,” which is incorporated herein by reference pursuant to General Instruction G(3). Information required by Item 407(a) of Regulation S-K is included in the registrant’s Proxy Statement under the heading “Independence of Directors,” which is incorporated herein by reference pursuant to General Instruction G(3).

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Information required by this Item is included in the registrant’s Proxy Statement under the heading “Principal Accountant Fees and Services,” which is incorporated herein by reference pursuant to General Instruction G(3).

Part IV

ITEM 15. EXHIBITS and FINANCIAL STATEMENT SCHEDULES

(a) Documents filed as a part of the report:

		Page
(1)	Report of Independent Registered Public Accounting Firm	*
	Financial Statements covered by Report of Independent Registered Public Accounting Firm:
	Consolidated Statements of Income	*
	Consolidated Balance Sheets	*
	Consolidated Statements of Cash Flows	*
	Consolidated Statements of Changes in Stockholders’ Equity	*
	Notes to Consolidated Financial Statements	*

*	Incorporated herein by reference to the appropriate portions of the registrant’s Annual Report to Stockholders for the fiscal year ended December 31, 2009. (See Part II.)

		Page
(2)	Financial Statement Schedules:
	II - Valuation and Qualifying Accounts	22

Financial statement schedules other than those listed above have been omitted because the required information is contained in the financial statements and notes thereto, or because such schedules are not required or applicable.

(3) Exhibits:

Exhibits identified in parentheses below, on file with the SEC, are incorporated herein by reference as exhibits hereto. Unless otherwise indicated, all exhibits so incorporated are from File No. 1-8610.

Exhibit

Number

3-a

Restated Certificate of Incorporation, filed with the Secretary of State of Delaware on May 1, 2009. (Exhibit 3 to Form 10-Q filed for June 30, 2009.)

AT&T Inc.

3-b

Bylaws amended December 18, 2009. (Exhibit 3 to Form 8-K dated December 18, 2009.)

4-a

Certificate of Designations for Perpetual Cumulative Preferred Stock of SBC Communications Inc., filed with the Secretary of State of the State of Delaware on November 18, 2005. (Contained in Restated Certificate of Incorporation filed as Exhibit 3-a.)

4-b

No instrument which defines the rights of holders of long-term debt of the registrant and all of its consolidated subsidiaries is filed herewith pursuant to Regulation S-K, Item 601b)(4)(iii)(A), except for the instruments referred to in 4-c, 4-d, 4-e, 4-f, 4-g and 4-h below. Pursuant to this regulation, the registrant hereby agrees to furnish a copy of any such instrument not filed herewith to the SEC upon request.

4-c

Guaranty of certain obligations of Pacific Bell Telephone Co. and SBC Communications Inc. (Exhibit 4-c to Form 10-K for 2007.)

4-d

Guaranty of certain obligations of Ameritech Capital Funding Corp., Illinois Bell Telephone Co., Indiana Bell Telephone Co. Inc., Michigan Bell Telephone Co., The Ohio Bell Telephone Co., Pacific Bell Telephone Co., Southern New England Telecommunications Corp., The Southern New England Telephone Co., Southwestern Bell Telephone Co., Wisconsin Bell, Inc. (Exhibit 4-c to Form 10-Q for September 30, 2005.)

4-e

Guarantee of certain obligations of AT&T Corp. (Exhibit 4-e to Form 8-K dated December 16, 2005.)

4-f

Guarantee of certain obligations of BellSouth. (Exhibit 4.3 to Form 8-K dated December 29, 2006.)

4-g

Cingular Third Supplemental Indenture. (Exhibit 4.1 to Form 8-K dated December 29, 2006.)

4-h

Indenture dated as of November 1, 1994 between SBC Communications Inc. and The Bank of New York, as Trustee. (Exhibit 4-h to Form 10-K for 2008.)

10-a

Short Term Incentive Plan, dated November 18, 2005. (Exhibit 10-a to Form 10-K for 2008.)

10-b

Supplemental Life Insurance Plan, amended and restated effective January 1, 2010. (Exhibit 10-d to Form 10-Q filed for June 30, 2009.)

10-c

Supplemental Retirement Income Plan, amended and restated December 31, 2008. (Exhibit 10-c to Form 10-K for 2008.)

10-d

Senior Management Deferred Compensation Plan (effective for Units of Participation Having a Unit Start Date Prior to January 1, 1988). (Exhibit 10-d to Form 10-K for 2008.)

10-e

Senior Management Deferred Compensation Program of 1988 (effective for Units of Participation Having a Unit Start Date of January 1, 1988 or later). (Exhibit 10-e to Form 10-K for 2008.)

10-f

Officer Disability Plan, amended and restated effective January 1, 2010. (Exhibit 10-i to Form 10-Q filed for June 30, 2009.)

10-g

Salary and Incentive Award Deferral Plan, dated December 31, 2004. (Exhibit 10-g to Form 10-K for 2006.)

10-h

AT&T Inc. Health Plan, amended and restated effective January 1, 2010. (Exhibit 10-e to Form 10-Q filed for June 30, 2009.)

10-i

Retirement Plan for Non-Employee Directors. (Exhibit 10-i to Form 10-K for 2007.)

10-j

Form of Indemnity Agreement, effective July 1, 1986, between SBC (now AT&T Inc.) and its directors and officers. (Exhibit 10-j to Form 10-K for 2007.)

10-k

Administrative Plan, amended and restated November 1, 2009.

AT&T Inc.

10-l

Stock Savings Plan, dated December 31, 2004. (Exhibit 10-l to Form 10-K for 2006.)

10-m

Pacific Telesis Group Supplemental Cash Balance Plan, amended as of July 1, 1996. (Exhibit 10-lll to Form 10-K for 2007.)

10-n

1996 Stock and Incentive Plan, dated November 2, 2002. (Exhibit 10-n to Form 10-K for 2008.)

10-o

Non-Employee Director Stock and Deferral Plan, amended and restated June 26, 2008. (Exhibit 10-f to Form 10-Q filed for June 30, 2008.)

10-p

Pacific Telesis Group Deferred Compensation Plan for Nonemployee Directors. (Exhibit 10-p to Form 10-K for 2007.)

10-p(i)

Resolutions amending the Plan, effective November 21, 1997. (Exhibit 10-p(i) to Form10-K for 2007.)

10-q

Pacific Telesis Group Outside Directors’ Deferred Stock Unit Plan. (Exhibit 10-q to Form 10-K for 2007.)

10-r

Pacific Telesis Group 1996 Directors’ Deferred Compensation Plan. (Exhibit 10-r to Form 10-K for 2007.)

10-r(i) Resolutions amending the Plan, effective November 21, 1997. (Exhibit 10-r(i) to Form 10-K for 2007.)

10-s

Transition Agreement by and between BellSouth Corporation and Rafael de la Vega, dated December 29, 2003. (Exhibit 10-s to Form 10-K for 2007.)

10-t

2001 Incentive Plan, dated November 18, 2005. (Exhibit 10-t to Form 10-K for 2008.)

10-u

Pacific Telesis Group 1996 Executive Deferred Compensation Plan, amended November 20, 2008. (Exhibit 10-u to Form 10-K for 2008.)

10-v

AT&T Inc. Change in Control Severance Plan, amended and restated effective January 1, 2010.

10-w

1995 Management Stock Option Plan, dated November 16, 2001. (Exhibit 10-w to Form 10-K for 2008.)

10-x

Non-Employee Director Stock Purchase Plan, effective June 27, 2008. (Exhibit 10-e to Form 10-Q filed for June 30, 2008.)

10-y

Communications Concession Program for Directors, amended and restated November 2009.

10-z

Pacific Telesis Group Executive Deferral Plan, amended November 20, 2008. (Exhibit 10-z to Form 10-K for 2008.)

10-aa

Five Year Credit Agreement. (Exhibit 10 to Form 8-K dated July 12, 2006.)

10-bb

Stock Purchase and Deferral Plan, amended and restated November 19, 2009.

10-cc

Cash Deferral Plan, amended and restated November 19, 2009.

10-dd

Master Trust Agreement for AT&T Inc. Deferred Compensation Plans and Other Executive Benefit Plans and subsequent amendments dated August 1, 1995 and November 1, 1999.

10-ee

2005 Supplemental Employee Retirement Plan, amended and restated January 1, 2010. (Exhibit 10-a to Form 10-Q filed for June 30, 2009.)

AT&T Inc.

10-ff

AT&T Corp. 1997 Long Term Incentive Program, dated March 14, 2000. (Exhibit 10-gg to Form 10-K for 2005.)

10-gg

AT&T Corp. 2004 Long Term Incentive Program. (Exhibit 10-hh to Form 10-K for 2005.)

10-hh

AT&T Corp. Executive Deferred Compensation Plan (formerly known as AT&T Corp. Senior Management Incentive Award Deferral Plan), amended and restated January 1, 2008. (Exhibit 10-hh to Form 10-K for 2008.)

10-ii

2006 Incentive Plan, amended and restated effective through January 28, 2010.

10-jj

Pension Benefit Makeup Plan #1, amended December 31, 2008. (Exhibit 10-jj to Form 10-K for 2008.)

10-kk

BellSouth Corporation Executive Incentive Award Deferral Plan, as amended and restated effective January 1, 2008. (Exhibit 10-kk to Form 10-K for 2007.)

10-ll

BellSouth Corporation Nonqualified Deferred Compensation Plan, dated January 1, 2005. (Exhibit 10-ll to Form 10-K for 2006.)

10-mm

BellSouth Officer Compensation Deferral Plan, amended January 1, 2005.

10-nn

BellSouth Corporation Deferred Compensation Plan for Non-Employee Directors, dated March 9, 1984. (Exhibit 10-nn to Form 10-K for 2006.)

10-oo

BellSouth Corporation Director’s Compensation Deferral Plan, as amended and restated effective as of January 1, 2005. (Exhibit 10-a to Form 10-Q for September 30, 2007.)

10-pp

BellSouth Corporation Stock Plan, dated April 24, 1995. (Exhibit 10-pp to Form 10-K for 2006.)

10-qq

BellSouth Corporation Stock and Incentive Compensation Plan, as amended June 28, 2004.

10-qq(i)

First Amendment to the BellSouth Corporation Stock and Incentive Compensation Plan, dated September 26, 2005. (Exhibit 10ii to Form 10-Q for September 30, 2005 of BellSouth Corporation (File No. 1-8607).)

10-qq(ii)

Second Amendment to BellSouth Corporation Stock and Incentive Compensation Plan, effective June 26, 2008. (Exhibit 10-qq(ii) to Form 10-K for 2008.)

10-rr

Cingular Wireless Long Term Compensation Plan, amended and restated effective November 1, 2007. (Exhibit 10-rr to Form 10-K for 2007.)

10-ss

Master Trust Agreement for AT&T Corp. Deferred Compensation Plans and Other Executive Benefit Plans, effective January 13, 1994. (Exhibit 10-ss to Form 10-K for 2006.)

10-ss(i)

First Amendment to Master Trust Agreement, effective December 23, 1997. (Exhibit 10-ss(i) to Form 10-K for 2006.)

10-tt

BellSouth Corporation Non-Employee Director Non-Qualified Stock Option Terms and Conditions (for options granted under the BellSouth Corporation Stock and Incentive Compensation Plan).

10-uu

BellSouth Corporation Amended And Restated Trust Under Board Of Directors Benefit Plan(s), effective October 11, 2006. (Exhibit 10-u to Form 10-K for 2006.)

10-vv

BellSouth Non-Employee Directors Charitable Contribution Program, effective February 29, 1992. (Exhibit 10-vv to Form 10-K for 2006.)

AT&T Inc.

10-vv(i)

First Amendment to the Non-Employee Directors Charitable Contribution Program, effective January 27, 1997. (Exhibit 10-vv(i) to Form 10-K for 2006.)

10-vv(ii)

Second Amendment to the Non-Employee Directors Charitable Contribution Program, effective February 25, 2002. (Exhibit 10-vv(ii) to Form 10-K for 2006.)

10-ww

AT&T Management Relocation Plan. (Exhibit 10-b to Form 10-Q for June 30, 2007.)

10-ww(i) Amendment to AT&T Management Relocation Plan, dated November 20, 2008. (Exhibit 10-ww to Form 10-Q filed for March 31, 2009.)

10-xx

AT&T Corp, Senior Management Long Term Disability and Survivor Protection Plan, amended December 31, 2008. (Exhibit 10-xx to Form 10-K for 2008.)

10-yy

Cingular Wireless Cash Deferral Plan, effective November 1, 2001. (Exhibit 10-yy to Form 10-K for 2007.)

10-zz

BellSouth Corporation Supplemental Executive Retirement Plan, amended and restated effective January 1, 2010. (Exhibit10-gto Form 10-Q filed for June 30, 2009.)

10-aaa

BellSouth Supplemental Life Insurance Plan, amended and restated November 1, 2009.

10-bbb

BellSouth Compensation Deferral Plan, as amended and restated effective January 1, 2005. (Exhibit 10-bbb to Form 10-K for 2007.)

10-ccc

Cingular Wireless BLS Executive Transition Benefit Plan. (Exhibit 10-ccc to Form 10-K for 2007.)

10-ddd

Cingular Wireless SBC Executive Transition Benefit Plan. (Exhibit 10-ddd to Form 10-K for 2007.)

10-eee

BellSouth Nonqualified Deferred Income Plan, as amended and restated effective January 1, 2005. (Exhibit 10-eee to Form 10-K for 2008.)

10-fff

AT&T Mobility 2005 Cash Deferral Plan. (Exhibit 10-fff to Form 10-K for 2007.)

10-ggg

AT&T Corp. Non-Qualified Pension Plan, as amended and restated effective December 31, 2008. (Exhibit 10-ggg to Form 10-K for 2008.)

10-hhh

AT&T Corp. Excess Benefit and Compensation Plan, as amended and restated effective December 31, 2008. (Exhibit 10-hhh to Form 10-K for 2008.)

10-iii

BellSouth Split-Dollar Life Insurance Plan, as amended December 31, 2008, and restated effective January 1, 2005. (Exhibit 10-iii to Form 10-K for 2008.)

10-jjj

Form of Non-Disclosure and Non-Solicitation Agreement.

Computation of Ratios of Earnings to Fixed Charges.

Portions of AT&T’s Annual Report to Stockholders for the fiscal year ended December 31, 2009. Only the information incorporated by reference into this Form 10-K is included in the exhibit.

Subsidiaries of AT&T Inc.

Consent of Ernst & Young LLP, independent registered public accounting firm for AT&T.

24	Powers of Attorney.

31	Rule 13a-14(a)/15d-14(a) Certifications

31.1 Certification of Principal Executive Officer

31.2 Certification of Principal Financial Officer

32	Section 1350 Certification

AT&T Inc.

101 XBRL Instance Document

We will furnish to stockholders upon request, and without charge, a copy of the Annual Report to Stockholders and the Proxy Statement, portions of which are incorporated by reference in the Form 10-K. We will furnish any other exhibit at cost.

AT&T Inc.

Schedule II - Sheet 1

AT&T INC.

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

Allowance for Doubtful Accounts

Dollars in Millions

COL. A		COL. B		COL. C									COL. D			COL. E
				Additions
					(1	)		(2	)		(3	)
	Balance at Beginning of Period			Charged to Costs and Expenses (a)			Charged to Other Accounts (b)			Acquisitions			Deductions (c)		Balance at End of Period

Year 2009		$	1,270		1,763			30			2			1,860		$	1,205
Year 2008		$	1,364		1,796			929			-			2,819		$	1,270
Year 2007		$	1,276		1,617			366			-			1,895		$	1,364

___________________

(a)	Excludes direct charges and credits to expense on the consolidated statements of income and reinvested earnings related to interexchange carrier receivables.

(b)	Includes amounts previously written off which were credited directly to this account when recovered and amounts related to long-distance carrier receivables which were billed by AT&T.

AT&T Inc.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 25 th day of February, 2010.

AT&T INC.

/s/ Richard G. Lindner

Richard G. Lindner

Senior Executive Vice President

and Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.

Principal Executive Officer:

Randall Stephenson*

Chairman of the Board, Chief Executive Officer

and President

Principal Financial and Accounting Officer:

Richard G. Lindner

Senior Executive Vice President

and Chief Financial Officer

/s/ Richard G. Lindner

Richard G. Lindner, as attorney-in-fact

and on his own behalf as Principal

Financial Officer and Principal

Accounting Officer

February 25, 2010

Directors:
Randall L. Stephenson*	Jon C. Madonna*
William F. Aldinger III*	Lynn M. Martin*
Gilbert F. Amelio*	John B. McCoy*
Reuben V. Anderson*	Mary S. Metz*
James H. Blanchard*	Joyce M. Roché*
August A. Busch III*	Laura D’Andrea Tyson*
Jaime Chico Pardo*	Patricia P. Upton*
James P. Kelly*

* by power of attorney

6.3 Cash Payments . The Company shall use its best efforts to pay, or shall use its best efforts to cause the Employer to pay, to the Participant the cash lump sum described in Section 4.2(b) within eight (8) days following the execution by the Participant of the Release (subject to the Participant not revoking such Release); provided, however, that in no event shall such payment be made later than the later of (i) the date provided in Section 6.1, if applicable, and (ii) the end of the ninety (90) day period commencing with the Date of Termination .

6.4 No Adverse Action . No Employer will take any action that would expose any payment or benefit to a Participant under this Plan to the additional tax imposed under Section 409A unless (i) the Employer is obligated to take the action under an agreement, plan or arrangement, (ii) a Participant requests the action, (iii) the Employer advises such Participant in writing that the action may result in the imposition of the additional tax and (iv) such Participant subsequently requests the action in a writing that acknowledges that he or she will be responsible for any effect of the action under Section 409A.

Article 7 - Successors; Binding Agreement

7.1 The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to unconditionally assume all of the obligations of the Employer hereunder. Failure of the Company to obtain such assumption prior to the effectiveness of any such succession shall constitute Good Reason hereunder and shall entitle the Participants to compensation and other benefits in the same amount and on the same terms as the Participants would be entitled hereunder if they had a Qualifying Termination, except that for purposes of implementing the foregoing, the date on which any succession becomes effective shall be deemed the Date of Termination.

7.2 The benefits provided under this Plan shall inure to the benefit of and be enforceable by the Participant’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Participant shall die while any amounts would be payable to the Participant hereunder had the Participant continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Plan to such person or persons appointed in writing by the Participant to receive such amounts or, if no person is so appointed, to the Participant’s estate.

Article 8 - Miscellaneous

8.1 Elections and Notices .

Notwithstanding anything to the contrary contained in this Plan, all elections and notices of every kind under this Plan shall be made on forms prepared by the Company or its General Counsel, Secretary or Assistant Secretary, or their respective delegates or shall be made in such other manner as permitted or required by the Company or its General Counsel, Secretary or Assistant Secretary, or their respective delegates, including through electronic means, over the Internet or otherwise. An election shall be deemed made when received by the Company (or its designated agent, but only in cases where the designated agent has been appointed for the purpose of receiving such election), which may waive any defects in form.

If not otherwise specified by this Plan or the Company, any notice or filing required or permitted to be given to the Company under the Plan shall be delivered to the principal office of the Company, directed to the attention of the Senior Executive Vice President in charge of Human Resources for the Company or his or her successor. Such notice shall be deemed given on the date of delivery.

Notice to the Participant shall be deemed given when mailed (or sent by telecopy) to the Participant’s work or home address as shown on the records of the Employer or, at the option of the Company, to the Participant’s e-mail address as shown on the records of the Employer. It is the Participant’s responsibility to ensure that the Participant’s addresses are kept up to date on the records of the Employer. In the case of notices affecting multiple Participants, the notices may be given by general distribution at the Participants’ work locations.

8.2 No Mitigation; Resolution of Disputes and Costs .

(a) In no event shall the Participant be obligated to seek other employment or take other action by way of mitigation of the amounts payable to the Participant under any of the provisions of this Plan and, except as provided in Section 4.2(c), such amounts shall not be reduced whether or not the Participant obtains other employment.

(b) Participants may submit claims for benefits by giving notice to the Company pursuant to Section 8.1. If a Participant believes that he or she has not received coverage or benefits to which he or she is entitled under the Plan, the Participant may notify the Company in writing of a claim for coverage or benefits. If the claim for coverage or benefits is denied in whole or in part, the Company shall notify the applicant in writing of such denial within thirty (30) days (which may be extended to sixty (60) days under special circumstances), with such notice setting forth: (i) the specific reasons for the denial; (ii) the Plan provisions upon which the denial is based; (iii) any additional material or information necessary for the applicant to perfect his or her claim; and (iv) the procedures for requesting a review of the denial. Upon a denial of a claim by the Company, the Participant may: (i) request a review of the denial by the Board or, where review authority has been so delegated, by such other person or entity as may be designated by the Board for this purpose; (ii) review any Plan documents relevant to his or her claim; and (iii) submit issues and comments to the Board or its delegate that are relevant to the review. Any request for review must be made in writing and received by the Board or its delegate within sixty (60) days of the date the applicant received notice of the initial denial, unless special circumstances require an extension of time for processing. The Board or its delegate will make a written ruling on the applicant’s request for review setting forth the reasons for the decision and the Plan provisions upon which the denial, if appropriate, is based. This written ruling shall be made within thirty (30) days of the date the Board or its delegate receives the applicant’s request for review unless special circumstances require an extension of time for processing, in which case a decision will be rendered as soon as possible, but not later than sixty (60) days after receipt of the request for review. All extensions of time permitted by this Section 18 will be permitted at the sole discretion of the Board or its delegate. If the Board does not provide the Participant with written notice of the denial of his or her appeal, the Participant’s claim shall be deemed denied.

(c) Notwithstanding anything in this Plan to the contrary, any court, tribunal or arbitration panel that adjudicates any dispute, controversy or claim arising between a Participant and any Employer, or any of their delegates or successors, in respect of a Participant’s Qualifying Termination, will apply a de novo standard of review to any determinations made by such person. Such de novo standard shall apply notwithstanding the grant of full discretion hereunder to any such person or characterization of any such decision by such person as final, binding or conclusive on any party.

(d) If any contest or dispute shall arise under this Plan involving a Participant’s Termination of Employment or involving the failure or refusal of any Employer to perform fully in accordance with the terms hereof, the Company shall or shall cause the Employer to reimburse the Participant on a current basis for all reasonable legal fees and related expenses, if any, incurred by the Participant at any time from the Effective Date of this Plan through the Participant’s remaining lifetime (or, if longer, through the 20th anniversary of the Change in Control) in connection with such contest or dispute (regardless of the result thereof), together with interest at the rate provided in section 1274(b)(2)(B) of the Code, such interest to accrue thirty (30) days from the date the Company receives the Participant’s statement for such fees and expenses through the date of payment thereof, regardless of whether or not the Participant’s claim is upheld by a court of competent jurisdiction or an arbitration panel; provided , however , that the Participant shall be required to repay immediately any such amounts to the Employer to the extent that a court or an arbitration panel issues a final and non-appealable order setting forth the determination that the position taken by the Participant was frivolous or advanced by the Participant in bad faith . To comply with Section 409A, in no event shall the payments by the Employer under this Section 8.2(d) be made later than the end of the calendar year next following the calendar year in which such fees and expenses were incurred, provided, that the Participant shall have submitted an invoice for such fees and expenses at least ten (10) days before the end of the calendar year next following the calendar year in which such fees and expenses were incurred. The amount of such legal fees and expenses that the Employer is obligated to pay in any given calendar year shall not affect the legal fees and expenses that the Employer is obligated to pay in any other calendar year, and the Participant’s right to have the Employer pay such legal fees and expenses may not be liquidated or exchanged for any other benefit.

8.3 Survival . The respective obligations and benefits afforded to the Company and the Participant as provided in Articles 4 (to the extent that payments or benefits are owed as a result of a Qualifying Termination that occurs during the term of this Plan), 5, 6, 7 and 8 shall survive the termination of this Plan.

8.4 Governing Law; Validity.

To the extent not preempted by Federal law, the Plan, and all benefits and agreements hereunder, and any and all disputes in connection therewith, shall be governed by and construed in accordance with the substantive laws of the State of Delaware, without regard to conflict or choice of law principles which might otherwise refer the construction, interpretation or enforceability of this Plan to the substantive law of another jurisdiction.

8.5 Amendment and Termination . The Board or the Committee may amend (and, by amendment, terminate) this Plan at any time; provided , however , that (i) no amendment that reduces or eliminates any benefit or other entitlement of any Participant or that is otherwise adverse to the interests of a Participant (an “ Adverse Amendment ”) may take effect prior to the beginning of any calendar year , and any such amendment shall be void and of no effect , unless the Participant was notified of such amendment by September 30 of the prior year, (ii) no Adverse Amendment may be adopted during the period of time beginning on a Potential Change in Control and ending on the earlier of (a) the termination of the agreement that constituted the Potential Change in Control and (b) the second anniversary of the resulting Change in Control, without the Participant’s written consent, and (iii) no Adverse Amendment may be adopted during the period commencing on a Change in Control and ending on the second anniversary of the Change in Control without the Participant’s written consent. The restrictions on amendments set forth in the prior sentence shall not apply to any amendment adopted within the period specified in clauses (ii) or (iii), above, if the following three conditions are satisfied: (1) the amendments do not take effect until the expiration of the periods, as applicable, set forth in such clauses, (2) each adversely affected Participant receives written notice of the adoption of such amendments within ten (10) days of such adoption and (3) such written notice is provided at least ninety (90) days prior to such amendments taking effect.

8.6 Interpretation and Administration . The Plan shall be administered by the Board. The Board may delegate any of its powers under the Plan to a committee thereof or prior to a Change in Control, to the CEO. Unless otherwise provided in this Plan, actions of the Board or such committee shall be taken by a majority vote of its members. All references to the “Board” herein shall be deemed to be references to such delegate, as appropriate. The Board shall have the authority (i) to exercise all of the powers granted to it under the Plan, (ii) to construe, interpret and implement the Plan, (iii) to prescribe, amend and rescind rules and regulations relating to the Plan, (iv) to make all determinations necessary or advisable in administration of the Plan and (v) to correct any defect, supply any omission and reconcile any inconsistency in the Plan.

8.7 Type of Plan . This Plan is intended to be, and shall be interpreted as an unfunded employee welfare plan under Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and Section 2520.104-24 of the Department of Labor Regulations, maintained primarily for the purpose of providing employee welfare benefits, to the extent that it provides welfare benefits, and under Sections 201, 301 and 401 of ERISA, as a plan that is unfunded and maintained primarily for the purpose of providing deferred compensation, to the extent that it provides such compensation, in each case for a select group of management or highly compensated employees.

8.8 Nonassignability . Benefits under the Plan may not be sold, assigned, transferred, pledged, anticipated, mortgaged, or otherwise encumbered, transferred, hypothecated, or conveyed in advance of actual receipt of the amounts, if any, payable hereunder, or any part thereof by the Participant.

Schedule A

RELEASE AND WAIVER

I, ________________, hereby fully waive and forever release and discharge Company, AT&T, any and all other subsidiaries of Company and of AT&T, their officers, directors, agents, servants, employees, successors and assigns and any and all employee benefit plans maintained by AT&T or any subsidiary thereof and/or any and all fiduciaries of any such plan from any and all common law and/or statutory claims, causes of action or suits of any kind whatsoever arising from or in connection with my past employment by Company (and any AT&T subsidiary to the extent applicable) and/or my separation therefrom, including but not limited to claims, actions, causes of action or suits of any kind allegedly arising under the Employee Retirement Income Security Act (ERISA), as amended, 29 USC §§ 1001 et seq.; the Rehabilitation Act of 1973, as amended, 29 USC §§ 701 et seq.; the Civil Rights Acts of 1866 and 1870, as amended, 42 USC §§ 1981, 1982 and 1988; the Civil Rights Act of 1871, as amended, 42 USC §§ 1983 and 1985; the Civil Rights Act of 1964, as amended, 42 USC § 2000d et seq.; the Americans With Disabilities Act, as amended, 42 USC §§ 12101 et seq., and the Age Discrimination in Employment Act of 1967 (ADEA), as amended, 29 USC §§ 621 et seq., known and unknown. In addition, I, ___________, agree not to file any lawsuit or other claim seeking monetary damage or other relief in any state or federal court or with any administrative agency against any of the aforementioned parties in connection with or relating to any of the aforementioned matters. Provided, however, by executing this Release and Waiver, I, ________________, do not waive rights or claims that may arise after the date of execution; provided further, however, this Release and Waiver shall not affect my right to receive or enforce through litigation, any indemnification rights to which I am entitled as a result of my past employment by the Company or contract rights pursuant to the Agreement and Release and Waiver of Claims entered into contemporaneously herewith and, if applicable, any subsidiary of AT&T; and, provided further, this Release and Waiver shall not affect the ordinary distribution of benefits/entitlements, if any, to which I am entitled upon termination from Company; it being understood by me that said benefits/entitlements, if any, will be subject to and provided in accordance with the terms and conditions of their respective governing plan and this Agreement.

Schedule B

Additional Reimbursement Payments by the Company

(a) Pursuant to Section 4.2(d) of the Plan, in the event it shall be determined that any payment, award, benefit or distribution (or any acceleration of any payment, award, benefit or distribution) by the Company (or any of its affiliated entities) or any entity which effectuates a Change in Control (or any of its affiliated entities) to or for the benefit of the Participant (whether pursuant to the terms of this Plan or otherwise, but determined without regard to any additional payments required under this Schedule B) (the “ Payments ”) would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “ Code ”), or any interest or penalties are incurred by the Participant with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “ Excise Tax ”), then the Company shall remit to the Internal Revenue Service or any other applicable taxing authority an additional payment (a “ Reimbursement Payment ”) in an amount such that after payment by the Participant of all taxes (including any Excise Tax) imposed upon the Reimbursement Payment, the Participant retains an amount of the Reimbursement Payment equal to the Excise Tax imposed upon the Payments; provided, however, that the Company shall have the obligation to make a Reimbursement Payment only to the extent the Participant is subject to the Excise Tax by virtue of the reduction of his or her “base amount” (as defined in Section 280G(b)(3) of the Code) by reason of his or her election to defer a portion of his or her compensation payable during the applicable period (such Excise Tax, a “ Qualifying Excise Tax ”). For purposes of determining the amount of the Reimbursement Payment, the Participant shall be deemed to (i) pay federal income taxes at the highest marginal rates of federal income taxation for the calendar year in which the Reimbursement Payment is to be made and (ii) pay applicable state and local income taxes at the highest marginal rate of taxation for the calendar year in which the Reimbursement Payment is to be made, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.

(b) Subject to the provisions of Paragraph (a), all determinations required to be made under this Schedule B, including whether and when a Reimbursement Payment is required, the amount of such Reimbursement Payment, the amount of any Option Redetermination (as defined below), and the assumptions to be utilized in arriving at such determinations, shall be made by a public accounting firm that is retained by the Company as of the date immediately prior to the Change in Control (the “ Accounting Firm ”) which shall provide detailed supporting calculations both to the Company and the Participant within fifteen (15) business days of the receipt of notice from the Company or the Participant that there has been a Payment, or such earlier time as is requested by the Company (collectively, the “ Determination ”). For the avoidance of doubt, the Accounting Firm may use the Option Redetermination amount in determining the reduction of the Payments to the Safe Harbor Cap. Notwithstanding the foregoing, in the event (i) the Board shall determine prior to the Change in Control that the Accounting Firm is precluded from performing such services under applicable auditor independence rules or (ii) the Audit Committee of the Board determines that it does not want the Accounting Firm to perform such services because of auditor independence concerns or (iii) the Accounting Firm is serving as accountant or auditor for the person(s) effecting the Change in Control, the Board shall appoint another nationally recognized public accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company, and the Company shall enter into any agreement reasonably requested by the Accounting Firm in connection with the performance of the services hereunder. The Reimbursement Payment under this Schedule B with respect to any Payments shall be made no later than thirty (30) days following such Payment. If the Accounting Firm determines that no Qualifying Excise Tax is payable by a Participant, it shall furnish the Participant with a written opinion to such effect, and to the effect that failure to report the Qualifying Excise Tax, if any, on the Participant’s applicable federal income tax return will not result in the imposition of a negligence or similar penalty. The Determination by the Accounting Firm shall be binding upon the Company and the Participant.

As a result of the uncertainty in the application of Section 4999 of the Code at the time of the Determination, it is possible that Reimbursement Payments which will not have been made by the Company should have been made (“ Underpayment ”) or Reimbursement Payments are made by the Company which should not have been made (“ Overpayment ”), consistent with the calculations required to be made hereunder. In the event the amount of the Reimbursement Payment is less than the amount necessary to reimburse the Participant for the Qualifying Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code) shall be promptly remitted to the Internal Revenue Service or any other applicable taxing authority an additional payment ( to or for the benefit of the Participant. In the event the amount of the Reimbursement Payment exceeds the amount necessary to reimburse the Participant for the Qualifying Excise Tax, the Accounting Firm shall determine the amount of the Overpayment that has been made and any such Overpayment (together with interest at the rate provided in Section 1274(b)(2) of the Code) shall be promptly paid by the Participant (to the extent the Participant has received a refund if the applicable Qualifying Excise Tax has been paid to the Internal Revenue Service) to or for the benefit of the Company. The Participant shall cooperate, to the extent his or her expenses are reimbursed by the Company, with any reasonable requests by the Company in connection with any contests or disputes with the Internal Revenue Service in connection with the Excise Tax. In the event that the Company makes a Reimbursement Payment to the Participant and subsequently the Company determines that the value of any accelerated vesting of stock options held by the Participant shall be redetermined within the context of Treasury Regulation §1.280G-1 Q/A 33 (the “ Option Redetermination ”), the Participant shall (i) file with the Internal Revenue Service an amended federal income tax return that claims a refund of the overpayment of the Qualifying Excise Tax attributable to such Option Redetermination and (ii) promptly pay the refunded Qualifying Excise Tax to the Company; provided that the Company shall pay all reasonable professional fees incurred in the preparation of the Participant’s amended federal income tax return. If the Option Redetermination occurs in the same year that the Reimbursement Payment is included in the Participant’s taxable income, then in addition to returning the refund to the Company, the Participant will also promptly return to the Company any tax benefit realized by the return of such refund and the return of the additional tax benefit payment (all determinations pursuant to this sentence shall be made by the Accounting Firm).

Notwithstanding any other provision to the contrary, a Reimbursement Payment described in this Schedule B shall be made by the end of the calendar year next following the calendar year in which the related taxes are remitted to the taxing authority by the Participant .

Net Credited Service	Age
10 years or more	65 or older
20 years or more	55 or older
25 years or more	50 or older
30 years or more	Any age

Net Credited Service	Age
10 years or more	65 or older
20 years or more	55 or older
25 years or more	50 or older
30 years or more	Any age

Net Credited Service	Age
10 years or more	65 or older
20 years or more	55 or older
25 years or more	50 or older
30 years or more	Any age

BellSouth Corporation Stock and Incentive Compensation Plan


Granted to Optionee Social Security No.	Grant Date	Number of Shares	Option Price $ Per Share	Expiration Date

	AT&T INC.
[Name of Executive]
	By:
	Title:

Selected Financial and Operating Data Dollars in millions except per share amounts
At December 31 or for the year ended:	2009			2008			2007				2006	2		2005	3
Financial Data 1
Operating revenues	$	123,018		$	124,028		$	118,928		$	63,055		$	43,764
Operating expenses	$	101,526		$	100,965		$	98,524		$	52,767		$	37,596
Operating income	$	21,492		$	23,063		$	20,404		$	10,288		$	6,168
Interest expense	$	3,379		$	3,390		$	3,507		$	1,843		$	1,456
Equity in net income of affiliates	$	734		$	819		$	692		$	2,043		$	609
Other income (expense) – net	$	152		$	(328	)	$	810		$	398		$	398
Income taxes	$	6,156		$	7,036		$	6,252		$	3,525		$	932
Net Income	$	12,843		$	13,128		$	12,147		$	7,361		$	4,787
Less: Net Income Attributable to Noncontrolling Interest	$	(308	)	$	(261	)	$	(196	)	$	(5	)	$	(1	)
Net Income Attributable to AT&T	$	12,535		$	12,867		$	11,951		$	7,356		$	4,786
Earnings Per Common Share:
Net Income Attributable to AT&T	$	2.12		$	2.17		$	1.95		$	1.89		$	1.42
Earnings Per Common Share – Assuming Dilution:
Net Income Attributable to AT&T	$	2.12		$	2.16		$	1.94		$	1.89		$	1.42
Total assets	$	268,752		$	265,245		$	275,644		$	270,634		$	145,632
Long-term debt	$	64,720		$	60,872		$	57,255		$	50,063		$	26,115
Total debt	$	72,081		$	74,991		$	64,115		$	59,796		$	30,570
Construction and capital expenditures	$	17,335		$	20,335		$	17,888		$	8,393		$	5,612
Dividends declared per common share	$	1.65		$	1.61		$	1.47		$	1.35		$	1.30
Book value per common share	$	17.34		$	16.42		$	19.15		$	18.58		$	14.09
Ratio of earnings to fixed charges		4.50			4.80			4.95			5.01			4.11
Debt ratio 7		41.3	%		43.7	%		35.6	%		34.1	%		35.9	%
Weighted-average common shares
outstanding (000,000)		5,900			5,927			6,127			3,882			3,368
Weighted-average common shares
outstanding with dilution (000,000)		5,924			5,958			6,170			3,902			3,379
End of period common shares
outstanding (000,000)		5,902			5,893			6,044			6,239			3,877
Operating Data
Wireless customers (000) 4		85,120			77,009			70,052			60,962			54,144
In-region network access lines in service (000) 5		49,392			55,610			61,582			66,469			49,413
In-region broadband connections (000) 6,7		17,254			16,265			14,802			12,170			6,921
Number of employees		282,720			302,660			309,050			304,180			189,950

	Amounts in the above table have been prepared in accordance with U.S. generally accepted accounting principles.
	Our 2006 income statement amounts reflect results from BellSouth Corporation (BellSouth) and AT&T Mobility LLC (AT&T Mobility), formerly Cingular Wireless LLC, for the two days following the December 29, 2006 acquisition. Our 2006 balance sheet and end-of-year metrics include 100% of BellSouth and AT&T Mobility. Prior to the December 29, 2006, BellSouth acquisition, AT&T Mobility was a joint venture in which we owned 60% and was accounted for under the equity method.
	Our 2005 income statement amounts reflect results from AT&T Corp. for the 43 days following the November 18, 2005, acquisition. Our 2005 balance sheet and end-of-year metrics include 100% of AT&T Corp.
	The number presented represents 100% of AT&T Mobility cellular/PCS customers.
	In-region represents access lines serviced by our incumbent local exchange companies (in 22 states since the BellSouth acquisition and in 13 states prior to that acquisition). Beginning in 2006, the number includes BellSouth lines in service.
	Broadband connections include in-region DSL lines, in-region U-verse High Speed Internet access, satellite broadband and 3G LaptopConnect cards.
	Prior period amounts restated to conform to current period reporting methodology.

							Percent Change
							2009 vs.			2008 vs.
	2009		2008		2007		2008			2007
Operating Revenues	$	123,018	$	124,028	$	118,928		(0.8	)%		4.3	%
Operating expenses
Cost of services and sales		50,405		49,556		46,801		1.7			5.9
Selling, general and administrative		31,407		31,526		30,146		(0.4	)		4.6
Depreciation and amortization		19,714		19,883		21,577		(0.8	)		(7.9	)
Total Operating Expenses		101,526		100,965		98,524		0.6			2.5
Operating Income		21,492		23,063		20,404		(6.8	)		13.0
Income Before Income Taxes		18,999		20,164		18,399		(5.8	)		9.6
Net Income Attributable to AT&T		12,535		12,867		11,951		(2.6	)		7.7
Diluted Earnings Per Share		2.12		2.16		1.94		(1.9	)%		11.3	%

										Percentage Change
	2009			2008			2007			2009 vs. 2008			2008 vs. 2007
	2009			2008			2007			2009 vs. 2008			2008 vs. 2007
Wireless Customers (000)		85,120			77,009			70,052			10.5	%		9.9	%
Net Customer Additions (000)		7,278			6,699			7,315			8.6			(8.4	)
Total Churn		1.48	%		1.68	%		1.67	%	( 20) bps			1 bps

Postpaid Customers (000)		65,146			60,098			55,310			8.4	%		8.7	%
Net Postpaid Customer Additions (000)		4,323			4,634			3,982			(6.7	)		16.4
Postpaid Churn		1.16	%		1.19	%		1.27	%	(3) bps			(8) bps


(in 000s)										Percent Change
										2009 vs.			2008 vs.
	2009			2008			2007			2008			2007
Switched Access Lines 1
Retail consumer		26,378			30,614			35,009			(13.8	)%		(12.6	)%
Retail business 2		20,106			21,810			22,795			(7.8	)		(4.3	)
Retail Subtotal 2		46,484			52,424			57,804			(11.3	)		(9.3	)
Percent of total switched access lines		94.1	%		94.3	%		93.9	%

Wholesale Subtotal 2		2,826			3,068			3,527			(7.9	)		(13.0	)
Percent of total switched access lines		5.7	%		5.5	%		5.7	%

Payphone (Retail and Wholesale) 3		82			118			251			(30.5	)		(53.0	)
Percent of total switched access lines		0.2	%		0.2	%		0.4	%

Total Switched Access Lines		49,392			55,610			61,582			(11.2	)		(9.7	)

Total Retail Consumer Voice Connections 6		27,332			30,838			35,009			(11.4	)		(11.9	)

Total Wired Broadband Connections 4		15,789			15,077			14,156			4.7			6.5

Satellite service 5		2,174			2,190			2,116			(0.7	)		3.5
U-verse video		2,065			1,045			231			97.6			-
Video Connections		4,239			3,235			2,347			31.0	%		37.8	%

	Represents access lines served by AT&T’s Incumbent Local Exchange Carriers (ILECs) and affiliates.
	Prior period amounts restated to conform to current period reporting methodology
	Revenue from retail payphone lines is reported in the Other segment. We are in the process of ending our retail payphone operations.
	Total wired broadband connections include DSL, U-verse High Speed Internet access and satellite broadband.
	Satellite service includes connections under our agency and resale agreements.
	Includes consumer U-verse Voice over IP connections.

	Payments Due By Period
Contractual Obligations	Total		Less than 1 Year		1 - 3 Years		3 - 5 Years		More than 5 Years
Long-term debt obligations 1	$	70,021	$	7,328	$	12,372	$	10,614	$	39,707
Interest payments on long-term debt		66,233		4,178		7,318		5,990		48,747
Operating lease obligations		20,534		2,429		4,322		3,560		10,223
Unrecognized tax benefits 2		5,181		299		-		-		4,882
Purchase obligations 3		10,228		2,890		4,095		2,549		694
Total Contractual Obligations	$	172,197	$	17,124	$	28,107	$	22,713	$	104,253

	Maturity
																					Fair
																					Value
	2010			2011			2012			2013			2014			Thereafter			Total		12/31/09
Interest Rate Derivatives
Interest Rate Swaps:
Receive Fixed/Pay Variable Notional Amount Maturing		-		$	3,200		$	3,050		$	1,750			-		$	1,000		$	9,000	$	399
Weighted-Average Variable Rate Payable 1		3.1	%		4.4	%		4.8	%		5.6	%		6.1	%		6.4	%
Weighted-Average Fixed Rate Receivable		5.8	%		5.7	%		5.3	%		5.6	%		5.6	%		5.6	%

Purchase Period	Total Number of Shares Purchased		Average Price Paid per Share 1		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
February 1, 2009 – February 28, 2009		133,334	$	25.16		133,334		0
Total		133,334	$	25.16		133,334		0

AT&T Inc.
Consolidated Statements of Income
Dollars in millions except per share amounts
	2009			2008			2007
Operating Revenues
Wireless service	$	48,563		$	44,249		$	38,568
Voice		32,314			37,321			40,798
Data		25,454			24,373			23,206
Directory		4,724			5,416			4,806
Other		11,963			12,669			11,550
Total operating revenues		123,018			124,028			118,928

Operating Expenses
Cost of services and sales (exclusive of depreciation and
amortization shown separately below)		50,405			49,556			46,801
Selling, general and administrative		31,407			31,526			30,146
Depreciation and amortization		19,714			19,883			21,577
Total operating expenses		101,526			100,965			98,524
Operating Income		21,492			23,063			20,404

Other Income (Expense)
Interest expense		(3,379	)		(3,390	)		(3,507	)
Equity in net income of affiliates		734			819			692
Other income (expense) – net		152			(328	)		810
Total other income (expense)		(2,493	)		(2,899	)		(2,005	)
Income Before Income Taxes		18,999			20,164			18,399
Income taxes		6,156			7,036			6,252
Net Income		12,843			13,128			12,147
Less: Net Income Attributable to Noncontrolling Interest		(308	)		(261	)		(196	)
Net Income Attributable to AT&T	$	12,535		$	12,867		$	11,951

Basic Earnings Per Share	$	2.12		$	2.17		$	1.95
Diluted Earnings Per Share	$	2.12		$	2.16		$	1.94
The accompanying notes are an integral part of the consolidated financial statements.


Liabilities and Stockholders’ Equity
Current Liabilities
Debt maturing within one year	$	7,361	$	14,119
Accounts payable and accrued liabilities		20,999		20,032
Advanced billing and customer deposits		4,170		3,849
Accrued taxes		1,696		1,874
Dividends payable		2,479		2,416
Total current liabilities		36,705		42,290
Long-Term Debt		64,720		60,872
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes		23,803		19,196
Postemployment benefit obligation		27,849		31,930
Other noncurrent liabilities		13,350		14,207
Total deferred credits and other noncurrent liabilities		65,002		65,333

Stockholders’ Equity
Common stock ($1 par value, 14,000,000,000 authorized at December 31, 2009 and 7,000,000,000 authorized at December 31, 2008: issued 6,495,231,088 at December 31, 2009 and 2008)		6,495			6,495
Additional paid-in capital		91,707			91,728
Retained earnings		39,366			36,591
Treasury shares (593,300,187 at December 31, 2009, and 602,221,825 at December 31, 2008, at cost)		(21,260	)		(21,410	)
Accumulated other comprehensive loss		(14,408	)		(17,057	)
Noncontrolling interest		425			403
Total stockholders’ equity		102,325			96,750
Total Liabilities and Stockholders’ Equity	$	268,752		$	265,245
The accompanying notes are an integral part of the consolidated financial statements.

AT&T Inc.
Consolidated Statements of Cash Flows
Dollars in millions, increase (decrease) in cash and cash equivalents
	2009			2008			2007
Operating Activities
Net income	$	12,843		$	13,128		$	12,147
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		19,714			19,883			21,577
Undistributed earnings from investments in equity affiliates		(419	)		(654	)		(297	)
Provision for uncollectible accounts		1,763			1,796			1,617
Deferred income tax expense (benefit)		2,104			5,889			(240	)
Net (gain) loss from impairment and sale of investments		-			517			(11	)
Gain on license exchange		-			-			(409	)
Changes in operating assets and liabilities:
Accounts receivable		(454	)		(1,421	)		(1,491	)
Other current assets		(355	)		827			(1,020	)
Accounts payable and accrued liabilities		2,372			(5,563	)		672
Share-based payment excess tax benefit		-			(15	)		(173	)
Net income attributable to noncontrolling interest		(308	)		(261	)		(196	)
Other – net		(2,815	)		(470	)		2,066
Total adjustments		21,602			20,528			22,095
Net Cash Provided by Operating Activities		34,445			33,656			34,242

Investing Activities
Construction and capital expenditures:
Capital expenditures		(16,595	)		(19,676	)		(17,717	)
Interest during construction		(740	)		(659	)		(171	)
Acquisitions, net of cash acquired		(983	)		(10,972	)		(2,873	)
Dispositions		287			1,615			1,594
Sales of securities, net of investments		55			68			455
Sale of other investments		-			436			-
Other		51			45			36
Net Cash Used in Investing Activities		(17,925	)		(29,143	)		(18,676	)

Financing Activities
Net change in short-term borrowings with original maturities of three months or less		(3,910	)		2,017			(3,411	)
Issuance of long-term debt		8,161			12,416			11,367
Repayment of long-term debt		(8,654	)		(4,010	)		(6,772	)
Purchase of treasury shares		-			(6,077	)		(10,390	)
Issuance of treasury shares		28			319			1,986
Dividends paid		(9,670	)		(9,507	)		(8,743	)
Share-based payment excess tax benefit		-			15			173
Other		(465	)		136			(224	)
Net Cash Used in Financing Activities		(14,510	)		(4,691	)		(16,014	)
Net increase (decrease) in cash and cash equivalents		2,010			(178	)		(448	)
Cash and cash equivalents beginning of year		1,792			1,970			2,418
Cash and Cash Equivalents End of Year	$	3,802		$	1,792		$	1,970

AT&T Inc.
Consolidated Statements of Changes in Stockholders’ Equity
Dollars and shares in millions except per share amounts
	2009						2008						2007
	Shares			Amount			Shares			Amount			Shares			Amount
Common Stock
Balance at beginning of year		6,495		$	6,495			6,495		$	6,495			6,495		$	6,495
Issuance of shares		-			-			-			-			-			-
Balance at end of year		6,495		$	6,495			6,495		$	6,495			6,495		$	6,495

Additional Paid-In Capital
Balance at beginning of year				$	91,728					$	91,638					$	91,352
Issuance of treasury shares					29						87						225
Share-based payments					(50	)					3						61
Balance at end of year				$	91,707					$	91,728					$	91,638

Retained Earnings
Balance at beginning of year				$	36,591					$	33,297					$	30,375
Net income attributable to AT&T ($2.12, $2.16, and $1.94 per share)					12,535						12,867						11,951
Dividends to stockholders ($1.65, $1.61, and $1.47 per share)					(9,733	)					(9,506	)					(8,945	)
Adoption of FASB guidance related to unrecognized tax benefits					-						-						(50	)
Other					(27	)					(67	)					(34	)
Balance at end of year				$	39,366					$	36,591					$	33,297

Treasury Shares
Balance at beginning of year		(602	)	$	(21,410	)		(451	)	$	(15,683	)		(256	)	$	(7,368	)
Purchase of shares		-			-			(164	)		(6,077	)		(267	)		(10,390	)
Issuance of shares		9			150			13			350			72			2,075
Balance at end of year		(593	)	$	(21,260	)		(602	)	$	(21,410	)		(451	)	$	(15,683	)
The accompanying notes are an integral part of the consolidated financial statements.

	12/31/08		Cash			Adjustments			12/31/09
	Balance		Payments			and Accruals			Balance
Severance accruals paid from:
Company funds	$	140	$	(108	)	$	(26	)	$	6
Pension and postemployment benefit plans		103		(5	)		-			98
Lease terminations 1		387		(53	)		(122	)		212
Equipment removal and other related costs		88		(38	)		(27	)		23
Total	$	718	$	(204	)	$	(175	)	$	339

Year Ended December 31,	2009		2008		2007
Numerators
Numerator for basic earnings per share:
Net income attributable to AT&T	$	12,535	$	12,867	$	11,951
Dilutive potential common shares:
Other share-based payment		10		9		8
Numerator for diluted earnings per share	$	12,545	$	12,876	$	11,959
Denominators (000,000)
Denominator for basic earnings per share:
Weighted-average number of common
shares outstanding		5,900		5,927		6,127
Dilutive potential common shares:
Stock options		3		9		24
Other share-based payment		21		22		19
Denominator for diluted earnings per share		5,924		5,958		6,170
Basic earnings per share	$	2.12	$	2.17	$	1.95
Diluted earnings per share	$	2.12	$	2.16	$	1.94

At December 31, 2009 or for the year ended
					Advertising					Consolidation			Consolidated
	Wireless		Wireline		Solutions		Other			and Elimination			Results
Revenues from external customers	$	53,504	$	63,331	$	4,724	$	1,459		$	-		$	123,018
Intersegment revenues		93		2,339		85		272			(2,789	)		-
Total segment operating revenues		53,597		65,670		4,809		1,731			(2,789	)		123,018
Operations and support expenses		34,561		44,646		2,922		2,471			(2,788	)		81,812
Depreciation and amortization expenses		5,765		13,093		649		207			-			19,714
Total segment operating expenses		40,326		57,739		3,571		2,678			(2,788	)		101,526
Segment operating income		13,271		7,931		1,238		(947	)		(1	)		21,492
Interest expense		-		-		-		-			3,379			3,379
Equity in net income of affiliates		9		18		-		706			1			734
Other income (expense) – net		-		-		-		-			152			152
Segment income before income taxes	$	13,280	$	7,949	$	1,238	$	(241	)	$	(3,227	)	$	18,999
Segment assets	$	115,282	$	163,028	$	9,782	$	13,567		$	(32,907	)	$	268,752
Investment in equity method investees		4		-		-		2,917			-			2,921
Expenditures for additions to long-lived assets		5,921		11,166		22		226			-			17,335

At December 31, 2008 or for the year ended
					Advertising					Consolidation			Consolidated
	Wireless		Wireline		Solutions		Other			and Elimination			Results
Revenues from external customers	$	49,174	$	67,669	$	5,417	$	1,768		$	-		$	124,028
Intersegment revenues		161		2,186		85		274			(2,706	)		-
Total segment operating revenues		49,335		69,855		5,502		2,042			(2,706	)		124,028
Operations and support expenses		32,481		45,440		2,998		2,868			(2,705	)		81,082
Depreciation and amortization expenses		5,770		13,206		789		118			-			19,883
Total segment operating expenses		38,251		58,646		3,787		2,986			(2,705	)		100,965
Segment operating income		11,084		11,209		1,715		(944	)		(1	)		23,063
Interest expense		-		-		-		-			3,390			3,390
Equity in net income of affiliates		6		19		-		794			-			819
Other income (expense) – net		-		-		-		-			(328	)		(328	)
Segment income before income taxes	$	11,090	$	11,228	$	1,715	$	(150	)	$	(3,719	)	$	20,164
Segment assets	$	112,146	$	157,501	$	11,038	$	8,769		$	(24,209	)	$	265,245
Investment in equity method investees		2		-		-		2,330			-			2,332
Expenditures for additions to long-lived assets		5,869		14,129		20		317			-			20,335

At December 31, 2007 or for the year ended
					Advertising				Consolidation			Consolidated
	Wireless		Wireline		Solutions		Other		and Elimination			Results
Revenues from external customers	$	42,574	$	69,571	$	5,771	$	1,976	$	(964	)	$	118,928
Intersegment revenues		110		2,012		80		253		(2,455	)		-
Total segment operating revenues		42,684		71,583		5,851		2,229		(3,419	)		118,928
Operations and support expenses		28,585		46,177		3,066		1,882		(2,763	)		76,947
Depreciation and amortization expenses		7,079		13,416		924		158		-			21,577
Total segment operating expenses		35,664		59,593		3,990		2,040		(2,763	)		98,524
Segment operating income		7,020		11,990		1,861		189		(656	)		20,404
Interest expense		-		-		-		-		3,507			3,507
Equity in net income of affiliates		16		31		-		645		-			692
Other income (expense) – net		-		-		-		-		810			810
Segment income before income taxes	$	7,036	$	12,021	$	1,861	$	834	$	(3,353	)	$	18,399
Segment assets	$	103,559	$	158,338	$	13,103	$	2,859	$	(2,215	)	$	275,644
Investment in equity method investees		13		-		-		2,257		-			2,270
Expenditures for additions to long-lived assets		3,840		13,767		25		256		-			17,888

	Lives (years)		2009		2008
Land		-	$	1,724	$	1,730
Buildings		35-45		24,271		23,372
Central office equipment		3-10		78,314		75,054
Cable, wiring and conduit		10-50		74,325		72,109
Other equipment		5-15		39,918		34,434
Software		3-5		8,841		8,348
Under construction		-		3,159		3,532
				230,552		218,579
Accumulated depreciation and amortization
Accumulated depreciation and amortization				130,459		119,491
Property, plant and equipment – net			$	100,093	$	99,088

	Wireless			Wireline			Advertising Solutions			Other			Total
Balance as of January 1, 2008	$	32,713		$	31,301		$	5,788		$	911		$	70,713
Goodwill acquired		264			185			-			-			449
Goodwill adjustments for prior-year acquisitions and tax adjustments		990			(95	)		(26	)		-			869
Other		(116	)		(10	)		(68	)		(8	)		(202	)
Balance as of December 31, 2008		33,851			31,381			5,694			903			71,829
Goodwill acquired		1,276			344			36			-			1,656
Other		(90	)		(117	)		1			(20	)		(226	)
Balance as of December 31, 2009	$	35,037		$	31,608		$	5,731		$	883		$	73,259

	December 31, 2009				December 31, 2008
Other Intangible Assets	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Amortized intangible assets:
Customer lists and relationships:
AT&T Mobility	$	5,804	$	3,097	$	10,429	$	6,409
BellSouth		9,215		5,597		9,215		4,062
ATTC		3,134		2,377		3,100		2,038
Other		926		588		788		441
Subtotal		19,079		11,659		23,532		12,950
Other		1,176		767		1,724		1,130
Total	$	20,255	$	12,426	$	25,256	$	14,080

Indefinite-life intangible assets not subject to amortization:
Licenses	$	48,759			$	47,306
Trade name		5,235				5,230
Total	$	53,994			$	52,536

	2009			2008
Beginning of year	$	2,332		$	2,270
Additional investments		44			-
Equity in net income of affiliates		734			819
Dividends received		(317	)		(164	)
Currency translation adjustments		125			(574	)
Other adjustments		3			(19	)
End of year	$	2,921		$	2,332

						2009			2008
Notes and debentures
	Interest Rates			Maturities 1
		0.35% – 2.99	%		2009 – 2010	$	3,500		$	1,500
		3.00% – 4.99	%		2009 – 2014		5,853			10,577
		5.00% – 6.99	%		2009 – 2095		41,331			37,613
		7.00% – 9.10	%		2009 – 2097		19,069			18,007
Other							136			138
Fair value of interest rate swaps recorded in debt							310			527
							70,199			68,362
Unamortized premium, net of discount							1,612			1,846
Total notes and debentures							71,811			70,208
Capitalized leases							237			167
Total long-term debt, including current maturities							72,048			70,375
Current maturities of long-term debt							(7,328	)		(9,503	)
Total long-term debt						$	64,720		$	60,872

	2009		2008
Commercial paper	$	-	$	4,575
Current maturities of long-term debt		7,328		9,503
Bank borrowings 1		33		41
Total	$	7,361	$	14,119

Level 1	Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that AT&T has the ability to access.

Level 2	Inputs to the valuation methodology include: · Quoted prices for similar assets and liabilities in active markets; · Quoted prices for identical or similar assets or liabilities in inactive markets; · Inputs other than quoted market prices that are observable for the asset or liability; · Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

	If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.

Level 3	Inputs to the valuation methodology are unobservable and significant to the fair value measurement. · Fair value is often based on internally developed models in which there are few, if any, external observations.

	2009						2008
	Carrying			Fair			Carrying			Fair
	Amount			Value			Amount			Value
Notes and debentures		$	71,811		$	75,212		$	70,208		$	70,955
Commercial paper			-			-			4,575			4,575
Bank borrowings			33			33			41			41
Available-for-sale securities			1,885			1,885			1,632			1,632

	December 31,
	2009
Interest rate swaps	$	9,000
Cross-currency swaps		7,502
Interest rate locks		3,600
Foreign exchange contracts		293
Total	$	20,395

	December 31,
Asset Derivatives	2009
Interest rate swaps	$	399
Cross-currency swaps		635
Interest rate locks		150
Foreign exchange contracts		2
Total	$	1,186

	December 31,
Liability Derivatives	2009
Cross-currency swaps	$	(390	)
Interest rate locks		(6	)
Foreign exchange contracts		(7	)
Total	$	(403	)