INCOME STATEMENT
 AT&T Corp. Consolidated Statements of Income (Unaudited)
 Dollars in millions (except per share amounts)
 
 Three Months Ended
  March 31,
 
 2003 2002 Change
REVENUE
-------
AT&T Business Services $ 6,437 $ 6,528 (1.4%)
AT&T Consumer Services 2,536 3,086 (17.8%)
Corporate and Other 13 (66) 119.7%
 ---------------
Total Revenue 8,986 9,548 (5.9%)
 
OPERATING EXPENSES
------------------
Access and other connection 2,698 2,788 (3.2%)
Costs of services and products 2,011 2,014 (0.1%)
Selling, general and administrative 1,921 1,937 (0.8%)
Depreciation and amortization 1,186 1,175 1.0%
Net restructuring and other charges 4 - NA
 ---------------
Total operating expenses 7,820 7,914 (1.2%)
 
Operating Income  1,166 1,634 (28.7%)
Other income (expense), net 10 (55) 118.9%
Interest (expense) (332) (396)(16.0%)
 ---------------
 
Income from continuing operations before income
 taxes, minority interest income, and net
 earnings (losses) related to equity
 investments 844 1,183 (28.7%)
 
(Provision) for income taxes (297) (479)(38.0%)
Minority interest income 1 20 (96.6%)
Net (losses) related to equity investments (19) (278) 93.2%
 ---------------
Income from continuing operations  529 446 18.5%
(Loss) from discontinued operations - net of
 taxes - (565) 100.0%
Cumulative effect of accounting changes - net
 of taxes 42 (856) 104.9%
 ---------------
Net income (loss) $ 571 $ (975) 158.6%
 ===============
 
Weighted-average common shares (millions) 784 709
Weighted-average common shares and potential
 common shares (millions) 785 738
 
PER BASIC SHARE:
----------------
Earnings from continuing operations $ 0.67 $ 0.63 6.3%
(Loss) from discontinued operations - (0.80) 100.0%
Cumulative effect of accounting changes 0.06 (1.21) 105.0%
 ---------------
Earnings (loss) per basic share $ 0.73 $ (1.38) 152.9%
  ===============
 
PER DILUTED SHARE:
------------------
Earnings from continuing operations $ 0.67 $ 0.60 11.7%
(Loss) from discontinued operations - (0.76) 100.0%
Cumulative effect of accounting changes 0.06 (1.16) 105.2%
 ---------------
Earnings (loss) per diluted share $ 0.73 $ (1.32) 155.3%
 ===============
 
Dividends declared per share $0.1875 $0.1875
 
 
 AT&T Corp. Consolidated Statements of Income (Unaudited)
 Dollars in millions (except per share amounts)
 
 1Q03 4Q02 3Q02 2Q02 1Q02 2002
 
REVENUE
------------------------
AT&T Business Services $6,437 $6,588 $6,700 $ 6,742 $6,528 $ 26,558
AT&T Consumer Services 2,536 2,736 2,794 2,911 3,086 11,527
Corporate and Other 13 (34) (85) (73) (66) (258)
Total revenue  8,986 9,290 9,409 9,580 9,548 37,827
 
OPERATING EXPENSES
------------------------
Access and other
 connection 2,698 2,576 2,679 2,747 2,788 10,790
Costs of services and
 products 2,011 2,197 2,066 2,086 2,014 8,363
Selling, general and
 administrative 1,921 2,077 2,032 1,942 1,937 7,988
Depreciation and
 amortization 1,186 1,257 1,243 1,213 1,175 4,888
Net restructuring and
 other charges 4 1,463  (26) - - 1,437
Total operating expenses 7,820 9,570 7,994 7,988 7,914 33,466
Operating income (loss) 1,166 (280) 1,415 1,592 1,634 4,361
 
Other income (expense),
 net 10 208 (180) (50) (55) (77)
Interest (expense) (332) (361) (355) (336) (396) (1,448)
Income (loss) from
 continuing operations
 before income taxes,
 minority interest
 income, and net
 earnings (losses)
 related to equity
 investments 844 (433) 880 1,206 1,183 2,836
 
(Provision) for income
 taxes (297) (225) (370) (513) (479) (1,587)
Minority interest income 1 33 28 33 20 114
Net (losses) earnings
 related to equity
 investments  (19) 14 (13) (123) (278) (400)
Income (loss) from
 continuing operations 529 (611) 525 603 446 963
(Loss) from discontinued
 operations - net of
 taxes - (197) (318) (13,433) (565) (14,513)
Gain on disposition of
 discontinued operations
 - net of taxes - 1,324 - - - 1,324
Income (loss) before
 cumulative effect of
 accounting changes 529 516 207 (12,830) (119) (12,226)
Cumulative effect of
 accounting changes, net
 of taxes 42 - - - (856) (856)
Net income (loss) $ 571 $ 516 $ 207 $(12,830)$ (975)$(13,082)
 
Weighted-average common
 shares (millions) 784 776 770 730 709 746
Weighted-average common
 shares and potential
 common shares
 (millions) 785 776 788 750 738 766
 
PER BASIC SHARE:
------------------------
Earnings (loss) from
 continuing operations $ 0.67 $(0.79)$ 0.68 $ 0.83 $ 0.63 $ 1.29
(Loss) from discontinued
 operations - (0.26) (0.41) (18.41) (0.80) (19.44)
Gain on disposition of
 discontinued operations - 1.71 - - - 1.77
Cumulative effect of
 accounting changes  0.06 - - - (1.21) (1.15)
Earnings (loss) per
 basic share $ 0.73 $ 0.66 $ 0.27 $ (17.58)$(1.38)$ (17.53)
 
PER DILUTED SHARE:
------------------------
Earnings (loss) from
 continuing operations $ 0.67 $(0.79)$ 0.67 $ 0.80 $ 0.60 $ 1.26
(Loss) from discontinued
 operations - (0.26) (0.41) (17.91) (0.76) (18.95)
Gain on disposition of
 discontinued operations - 1.71 - - - 1.73
Cumulative effect of
 accounting changes 0.06 - - - (1.16) (1.12)
Earnings (loss) per
 diluted share $ 0.73 $ 0.66 $ 0.26 $ (17.11)$(1.32)$ (17.08)
------------------------ ------ ------ ------ -------- ------ --------
 
 
 Historical Segment Data
 Segment Disclosures (Unaudited)
 Dollars in millions
 
 
 1Q03 4Q02 3Q02 2Q02 1Q02 2002
AT&T Business Services
 
LD Voice $2,961 $2,853 $3,129 $3,224 $3,048 $12,254
Local Voice  335 336 274 277 268 1,155
Total Voice 3,296 3,189 3,403 3,501 3,316 13,409
 
Data Services 2,000 2,079 2,086 2,077 2,018 8,260
IP&E-Services 445 442 421 406 408 1,677
Total Data Services, IP&E-
 Services 2,445 2,521 2,507 2,483 2,426 9,937
 
Outsourcing, Professional
 Services & Other 696 878 790 758 786 3,212
 
Total Revenue 6,437 6,588 6,700 6,742 6,528 26,558
Operating Income (Loss)(1) 600 (612) 854 856 867 1,965
Operating Margin 9.3% (9.3%) 12.7% 12.7% 13.3% 7.4%
Capital Expenditures 636 1,297 912 930 575 3,714
Depreciation & Amortization 1,126 1,173 1,128 1,141 1,104 4,546
 
Total Data Services, IP&E-
 Services - % managed 30% 30% 29% 29% 29% 29%
Total Data Services, IP&E-
 Services - % international 14% 15% 14% 15% 13% 14%
LD Volume Growth - Yr/Yr 12% 7% 2% (1%) (1%) N/A
LD Volume % Wholesale 45% 42% 38% 34% 33% 37%
 
AT&T Consumer Services
 
Standalone LD,
 Transactional and Other
 Services $2,112 $2,375 $2,499 $2,670 $2,869 $10,413
Bundled Services 424 361 295 241 217 1,114
Total Revenue 2,536 2,736 2,794 2,911 3,086 11,527
Operating Income(2) 632 389 595 787 821 2,592
Operating Margin  24.9% 14.2% 21.3% 27.0% 26.6% 22.5%
Capital Expenditures 22 32 34 33 28 127
Depreciation & Amortization 35 57 89 43 41 230
 
Local Customers (in
 thousands) 2,778 2,423 1,916 1,549 1,266 2,423
Bundled Households (in
 millions) 32.2 32.2 32.2 17.6 13.1 32.2
 
Corporate and Other
 
Revenue $ 13 $ (34)$ (85)$ (73)$ (66)$ (258)
Operating Income (Loss)(3) (66) (57) (34)  (51) (54) (196)
Capital Expenditures 4 17 23 13 10 63
Depreciation & Amortization 25 27 26 29 30 112
 
Total AT&T
 
Revenue $8,986 $9,290 $9,409 $9,580 $9,548 $37,827
Operating Income (Loss)(4) 1,166 (280) 1,415 1,592 1,634 4,361
Operating Margin 13.0% (3.0%) 15.0% 16.6% 17.1% 11.5%
Capital Expenditures 662 1,346 969 976 613 3,904
Depreciation & Amortization 1,186 1,257 1,243 1,213 1,175 4,888
 
(1) Includes business restructuring and asset impairment (charges)
 benefits of ($1,230M) in 4Q02 and $27M in 3Q02.
(2) Includes business restructuring and asset impairment (charges)
 benefits of ($223M) in 4Q02 and $12M in 3Q02.
(3) Includes business restructuring (charges) of ($10M) in 4Q02 and
 ($13M) in 3Q02.
(4) Includes business restructuring and asset impairment (charges)
 benefits of ($1,463M) in 4Q02 and $26M in 3Q02.
 
 
 BALANCE SHEET
 AT&T Corp. Consolidated Balance Sheets (Unaudited)
 Dollars in millions
 
 
 March December %
 31, 2003 31, 2002 Change
ASSETS
Cash and cash equivalents $ 4,900 $ 8,014 -38.9%
Accounts receivable, less allowances of $697
 and $669 5,028 5,286 -4.9%
Deferred income taxes 779 910 -14.4%
Other current assets 1,150 1,693 -32.1%
 -----------------
Total Current Assets 11,857 15,903 -25.4%
 
Property, plant and equipment, net of 
 accumulated depreciation of $32,096 and 
 $31,021 25,246 25,604 -1.4%
Goodwill 4,660 4,626 0.7%
Other purchased intangible assets, net of 
 accumulated depreciation of $262 and $244 542 556 -2.6%
Prepaid pension costs 3,655 3,596 1.6%
Other assets 4,463 4,987 -10.5%
 -----------------
TOTAL ASSETS $ 50,423 $ 55,272 -8.8%
 =================
 
LIABILITIES
Accounts payable $ 3,384 $ 3,819 -11.4%
Payroll and benefit-related liabilities  941 1,519 -38.0%
Debt maturing within one year 4,346 3,762 15.5%
Other current liabilities 3,046 2,924 4.2%
 -----------------
Total Current Liabilities 11,717 12,024 -2.5%
 
Long-term debt 13,786 18,812 -26.7%
Long-term benefit-related liabilities 4,095 4,001 2.3%
Deferred income taxes 4,768 4,739 0.6%
Other long-term liabilities and deferred
 credits 3,359 3,384 -0.7%
 -----------------
Total Liabilities 37,725 42,960 -12.2%
  -----------------
 
SHAREOWNERS' EQUITY
AT&T Common Stock, $1 par value, authorized 
 6,000,000,000 shares; issued and outstanding 
 785,563,631 shares (net of 171,748,905
 treasury shares) at March 31, 2003 and 
 783,037,580 shares (net of 171,801,716 
 treasury shares) at December 31, 2002 786 783 0.3%
Additional paid-in capital 28,079 28,163 -0.3%
Accumulated deficit (15,995) (16,566) 3.4%
Accumulated other comprehensive loss (172) (68)-153.5%
 -----------------
Total Shareowners' Equity 12,698 12,312 3.1%
 -----------------
 
TOTAL LIABILITIES & SHAREOWNERS' EQUITY $ 50,423 $ 55,272 -8.8%
 =================