UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-Q




           .X. QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

                         SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended September 30, 2003

                                       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 1-1105



                                   AT&T CORP.


              A New York                          I.R.S. Employer
              Corporation                         No. 13-4924710


                   One AT&T Way, Bedminster, New Jersey 07921

                       Telephone - Area Code 908-221-2000



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 is an accelerated filer (as
defined in Exchange Act Rule 12b-2) Yes .X No ...


At October 31, 2003, the following shares of stock were outstanding: AT&T common
stock - 789,873,024

<PAGE>


PART I - FINANCIAL INFORMATION
Item 1.   FINANCIAL STATEMENTS

<TABLE>
                       AT&T CORP. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF OPERATIONS
                               (UNAUDITED)
<CAPTION>


                                                                 For the Three Months Ended        For the Nine Months Ended
                                                                         September 30,                     September 30,
                                                                 -------------------------------------------------------------------
                                                                    2003             2002             2003             2002
                                                                 -------------------------------------------------------------------
                                                                         Dollars in millions (except per share amounts)
<S>                                                               <C>               <C>             <C>               <C>
Revenue                                                           $  8,649          $  9,409        $ 26,430          $ 28,537

Operating Expenses
Access and other connection                                          2,785             2,679           8,191             8,214
Costs of services and products (excluding depreciation
  of $874, $826, $2,608 and $2,538 included below)                   1,954             2,066           5,923             6,166
Selling, general and administrative                                  1,793             2,032           5,551             5,911
Depreciation and amortization                                        1,224             1,243           3,607             3,631
Net restructuring and other charges                                     64               (26)            134               (26)
                                                                  --------          --------        --------          --------
Total operating expenses                                             7,820             7,994          23,406            23,896
                                                                  --------          --------        --------          --------

Operating income                                                       829             1,415           3,024             4,641

Other (expense) income, net                                             (7)             (180)             89              (285)
Interest (expense)                                                    (289)             (355)           (917)           (1,087)
                                                                  --------          --------        --------          --------
Income from continuing operations before income taxes,
  minority interest income, and net (losses) earnings
  related to equity investments                                        533               880           2,196             3,269
(Provision) for income taxes                                           (72)             (370)           (677)           (1,362)
Minority interest income                                                 -                28               1                81
Net (losses) earnings related to equity investments                     (3)              (13)              3              (414)
                                                                  --------          --------        --------          --------
Income from continuing operations                                      458               525           1,523             1,574
Net (loss) from discontinued operations (net of income tax
  benefit of $0, $81, $0 and $5,887)                                   (13)             (318)            (13)          (14,316)
                                                                  --------          --------        --------          --------
Income (loss) before cumulative effect of accounting changes           445               207           1,510           (12,742)
Cumulative effect of accounting changes [net of income taxes
  of $17, $0, $(9) and $530]                                           (27)                -              15              (856)
                                                                  --------          --------        --------          --------
Net income (loss)                                                 $    418          $    207        $  1,525          $(13,598)
                                                                  --------          --------        --------          --------

Per basic share:
Earnings from continuing operations                               $   0.58          $   0.68        $   1.94          $   2.14
(Loss) from discontinued operations                                  (0.02)            (0.41)          (0.02)           (19.45)
Cumulative effect of accounting changes                              (0.03)                -            0.02             (1.16)
                                                                  --------          --------        --------          --------
Earnings (loss) per basic share                                   $   0.53          $   0.27        $   1.94          $ (18.47)
                                                                  --------          --------        --------          --------

Per diluted share:
Earnings from continuing operations                               $   0.58          $   0.67        $   1.93          $   2.07
(Loss) from discontinued operations                                  (0.02)            (0.41)          (0.01)           (18.86)
Cumulative effect of accounting changes                              (0.03)                -            0.02             (1.13)
                                                                  --------          --------        --------          --------
Earnings (loss) per diluted share                                 $   0.53          $   0.26        $   1.94          $ (17.92)
                                                                  --------          --------        --------          --------

    The notes are an integral part of the consolidated financial statements.
</TABLE>



<PAGE>
<TABLE>
                               AT&T CORP. AND SUBSIDIARIES
                               CONSOLIDATED BALANCE SHEETS
                                       (UNAUDITED)
<CAPTION>
                                                                                                    At              At
                                                                                              September 30,    December 31,
                                                                                                   2003            2002
                                                                                              -------------    ------------
                                                                                                   Dollars in millions
<S>                                                                                           <C>              <C>
ASSETS
Cash and cash equivalents                                                                     $    6,751       $    8,014
Accounts receivable, less allowances of $681 and $669                                              4,525            5,286
Deferred income taxes                                                                                617              910
Other current assets                                                                               1,109            1,693
                                                                                              ----------       ----------
TOTAL CURRENT ASSETS                                                                              13,002           15,903

Property, plant and equipment, net of accumulated depreciation of
  $33,689 and $31,021                                                                             24,719           25,604
Goodwill                                                                                           4,691            4,626
Other purchased intangible assets, net of accumulated amortization
  of $298 and $244                                                                                   508              556
Prepaid pension costs                                                                              3,791            3,596
Other assets                                                                                       4,596            4,987
                                                                                              ----------       ----------
TOTAL ASSETS                                                                                  $   51,307       $   55,272
                                                                                              ----------       ----------

LIABILITIES
Accounts payable                                                                              $    3,297       $    3,819
Payroll and benefit-related liabilities                                                            1,091            1,519
Debt maturing within one year                                                                      4,647            3,762
Other current liabilities                                                                          2,974            2,924
                                                                                              ----------       ----------
TOTAL CURRENT LIABILITIES                                                                         12,009           12,024

Long-term debt                                                                                    12,759           18,812
Long-term benefit-related liabilities                                                              4,240            4,001
Deferred income taxes                                                                              5,580            4,739
Other long-term liabilities and deferred credits                                                   3,180            3,384
                                                                                              ----------       ----------
TOTAL LIABILITIES                                                                                 37,768           42,960

SHAREOWNERS' EQUITY
AT&T Common Stock, $1 par value, authorized 6,000,000,000 shares; issued and
  outstanding 789,220,022 shares (net of 171,692,349 treasury shares) at
  September 30, 2003 and 783,037,580 shares
  (net of 171,801,716 treasury shares) at December 31, 2002                                          789              783
Additional paid-in capital                                                                        27,855           28,163
Accumulated deficit                                                                              (15,044)         (16,566)
Accumulated other comprehensive (loss)                                                               (61)             (68)
                                                                                              ----------       ----------
TOTAL SHAREOWNERS' EQUITY                                                                         13,539           12,312
                                                                                              ----------       ----------
TOTAL LIABILITIES AND SHAREOWNERS' EQUITY                                                     $   51,307       $   55,272
                                                                                              ----------       ----------

    The notes are an integral part of the consolidated financial statements.
</TABLE>

<PAGE>
<TABLE>
                              AT&T CORP. AND SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF CHANGES IN SHAREOWNERS' EQUITY
                                      (UNAUDITED)
<CAPTION>
                                                                                              For the Nine Months Ended
                                                                                                     September 30,
                                                                                              --------------     --------------
                                                                                                   2003               2002
                                                                                              --------------     --------------
                                                                                                     Dollars in millions
<S>                                                                                           <C>                <C>
AT&T Common Stock
  Balance at beginning of year                                                                $     783          $     708
  Shares issued, net:
    Under employee plans                                                                              5                  5
    For funding AT&T Canada obligation                                                                -                 46
    Redemption of TCI Pacific preferred stock                                                         -                 10
    Other                                                                                             1                  1
                                                                                              ---------          ---------
Balance at end of period                                                                            789                770
                                                                                              ---------          ---------

Additional Paid-In Capital
  Balance at beginning of year                                                                   28,163             54,798
  Shares issued, net:
    Under employee plans                                                                            129                295
    For funding AT&T Canada obligation                                                                -              2,485
    Redemption of TCI Pacific preferred stock                                                         -              2,087
    Other                                                                                            25                 33
  Dividends declared                                                                               (482)              (422)
  Other                                                                                              20                 34
                                                                                              ---------          ---------
Balance at end of period                                                                         27,855             59,310
                                                                                              ---------          ---------

Accumulated deficit
  Balance at beginning of year                                                                  (16,566)            (3,484)
  Net income (loss)                                                                               1,525            (13,598)
  Treasury shares issued at less than cost                                                           (3)                 -
                                                                                              ---------          ---------
Balance at end of period                                                                        (15,044)           (17,082)
                                                                                              ---------          ---------

Accumulated Other Comprehensive (Loss)
  Balance at beginning of year                                                                      (68)              (342)
  Other comprehensive income                                                                          7                207
                                                                                              ---------          ---------
Balance at end of period                                                                            (61)              (135)
                                                                                              ---------          ---------
Total Shareowners' Equity                                                                     $  13,539          $  42,863
                                                                                              ---------          ---------

Summary of Total Comprehensive Income (Loss):
Income (loss) before cumulative effect of accounting changes                                  $   1,510          $ (12,742)
Cumulative effect of accounting changes                                                              15               (856)
                                                                                              ---------          ---------
Net income (loss)                                                                                 1,525            (13,598)

Other Comprehensive Income                                                                            7                207
                                                                                              ---------          ---------
Comprehensive Income (Loss)                                                                   $   1,532          $ (13,391)
                                                                                              ---------          ---------

AT&T accounts for treasury stock as retired stock. We have 100 million authorized shares of preferred stock at $1 par value.

    The notes are an integral part of the consolidated financial statements.
</TABLE>

<PAGE>
<TABLE>
                             AT&T CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
<CAPTION>
                                                                                          For the Nine Months Ended
                                                                                                September 30,
                                                                                        --------------  --------------
                                                                                             2003            2002
                                                                                        --------------  --------------
                                                                                             Dollars in millions
<S>                                                                                     <C>             <C>
OPERATING ACTIVITIES
Net income (loss)                                                                       $      1,525    $    (13,598)
Deduct:
  Loss from discontinued operations - net of income taxes                                        (13)        (14,316)
  Cumulative effect of accounting changes - net of income taxes                                   15            (856)
                                                                                        ------------    ------------
Income from continuing operations                                                              1,523           1,574

Adjustments to reconcile income from continuing operations to net cash provided
  by operating activities of continuing operations:
    Net gains on sales of businesses and investments                                             (51)            (42)
    Cost investment impairment charges                                                             -             141
    Net restructuring and other charges                                                           87             (28)
    Depreciation and amortization                                                              3,607           3,631
    Provision for uncollectible receivables                                                      588             701
    Deferred income taxes                                                                      1,105             556
    Net revaluation of certain financial instruments                                              (3)             74
    Minority interest income                                                                      (1)            (81)
    Net pretax (earnings) losses related to equity investments                                   (28)            670
    Decrease in receivables                                                                      231             290
    Decrease in accounts payable                                                                (428)           (180)
    Net change in other operating assets and liabilities                                         443            (409)
    Other adjustments, net                                                                        40              47
                                                                                        ------------    ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES OF CONTINUING OPERATIONS                             7,113           6,944
                                                                                        ------------    ------------
INVESTING ACTIVITIES
Capital expenditures and other additions                                                      (2,413)         (2,813)
Proceeds from sale or disposal of property, plant and equipment                                  134             464
Investment sales and distributions                                                               120               9
Net (acquisitions) dispositions of businesses, net of cash acquired                             (158)             19
Increase in restricted cash                                                                      (22)           (418)
Other investing activities, net                                                                  (50)            125
                                                                                        ------------    ------------
NET CASH (USED IN) INVESTING ACTIVITIES OF CONTINUING OPERATIONS                              (2,389)         (2,614)
                                                                                        -------------   ------------
FINANCING ACTIVITIES
Retirement of long-term debt, including redemption premiums                                   (4,576)           (999)
(Decrease) in short-term borrowings, net                                                      (1,263)         (5,196)
Issuance of AT&T common shares                                                                    92           2,640
Dividends paid on common stock                                                                  (442)           (411)
Proceeds from long-term debt issuances                                                             -              79
Other financing activities, net                                                                  202               5
                                                                                        ------------    ------------
NET CASH (USED IN) FINANCING ACTIVITIES OF CONTINUING OPERATIONS                              (5,987)         (3,882)
                                                                                        ------------    ------------

Net cash (used in) discontinued operations                                                         -          (4,133)
Net (decrease) in cash and cash equivalents                                                   (1,263)         (3,685)
Cash and cash equivalents at beginning of year                                                 8,014          10,680
                                                                                        ------------    ------------
Cash and cash equivalents at end of period                                              $      6,751    $      6,995
                                                                                        ------------    ------------

    The notes are an integral part of the consolidated financial statements.
</TABLE>
<PAGE>

                           AT&T CORP. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1.   BASIS OF PRESENTATION

     The consolidated financial statements have been prepared by AT&T Corp.
     (AT&T or the Company) pursuant to the rules and regulations of the
     Securities and Exchange Commission (SEC) and, in the opinion of management,
     include all adjustments necessary for a fair statement of the consolidated
     results of operations, financial position and cash flows for each period
     presented. The consolidated results for interim periods are not necessarily
     indicative of results for the full year. These financial results should be
     read in conjunction with AT&T's Form 10-K for the year ended December 31,
     2002, and Form 10-Q for the quarters ended March 31, 2003, and June 30,
     2003. We have reclassified certain prior period amounts to conform to our
     current presentation including a restatement to reflect AT&T Broadband as a
     discontinued operation and a restatement of shares and earnings per share
     to reflect the November 18, 2002, 1-for-5 reverse stock split.


2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     STOCK-BASED COMPENSATION

     AT&T has a Long-Term Incentive Program under which AT&T grants stock
     options, performance shares, restricted stock and other awards in AT&T
     common stock. We also have an Employee Stock Purchase Plan (ESPP).
     Effective May 31, 2003, we suspended employee purchases of company stock
     under the ESPP. Effective January 1, 2003, we adopted the fair value
     recognition provisions of Statement of Financial Accounting Standards
     (SFAS) No. 123, "Accounting for Stock-Based Compensation" and we began to
     record stock-based compensation expense for all employee awards (including
     stock options) granted or modified after January 1, 2003. For awards issued
     prior to January 1, 2003, we apply Accounting Principals Board (APB)
     Opinion No. 25, "Accounting for Stock Issued to Employees," and related
     interpretations in accounting for our plans. Under APB Opinion No. 25, no
     compensation expense was recognized other than for our performance-based
     and restricted stock awards, stock appreciation rights (SARs), and certain
     occasions when we modified the terms of the stock option vesting schedule.

     If we had elected to recognize compensation costs based on the fair value
     at the date of grant of all awards, consistent with the provisions of SFAS
     No. 123, net income (loss) and earnings (loss) per share amounts would have
     been as follows:

<TABLE>
<CAPTION>
                                                                            For the Three Months              For the Nine Months
                                                                             Ended September 30,              Ended September 30,
                                                                            2003            2002             2003            2002
                                                                          --------        --------         --------        --------
                                                                               Dollars in millions (except per share amounts)
        <S>                                                               <C>             <C>              <C>             <C>
        Net income (loss)                                                 $   418         $   207          $ 1,525         $(13,598)
        Add:
          Stock-based employee compensation included in
          reported results from continuing operations, net of taxes            22              (2)              56               33

          Stock-based employee compensation included in
          reported results from discontinued operations, net of taxes           -               2                -                6

        Deduct:
          Total stock-based employee compensation expense
          determined under the fair value method for all awards
          relating to continuing operations, net of taxes                     (59)            (44)            (168)            (171)

          Total stock-based employee compensation expense
          determined under the fair value method for all awards
          relating to discontinued operations, net of taxes                     -             (17)               -              (51)
                                                                          -------         -------          -------         --------
     Pro forma net income (loss)                                          $   381         $   146          $ 1,413         $(13,781)
                                                                          -------         -------          -------         --------

     Basic earnings (loss) per share                                      $  0.53         $  0.27          $  1.94         $ (18.47)
     Proforma basic earnings (loss) per share                             $  0.48         $  0.19          $  1.79         $ (18.72)

     Diluted earnings (loss) per share                                    $  0.53         $  0.26          $  1.94         $ (17.92)
     Proforma diluted earnings (loss) per share                           $  0.48         $  0.18          $  1.80         $ (18.16)
</TABLE>

     Pro forma earnings from continuing operations were $421 million and $479
     million for the three months ended September 30, 2003 and 2002,
     respectively, and $1,411 million and $1,436 million for the nine months
     ended September 30, 2003 and 2002, respectively. Pro forma (loss) from
     discontinued operations was $(13) million and $(333) million for the three
     months ended September 30, 2003 and 2002, respectively, and $(13) million
     and $(14,361) million for the nine months ended September 30, 2003 and
     2002, respectively.

     Pro forma earnings per basic share from continuing operations was $0.53 and
     $0.62 for the three months ended September 30, 2003 and 2002, respectively,
     and $1.79 and $1.95 for the nine months ended September 30, 2003 and 2002,
     respectively. Pro forma (loss) per basic share from discontinued operations
     was $(0.02) and $(0.43), for the three months ended September 30, 2003 and
     2002, respectively, and $(0.02) and $(19.51) for the nine months ended
     September 30, 2003 and 2002, respectively.

     Pro forma earnings per diluted share from continuing operati ons was $0.53
     and $0.61 for the three months ended September 30, 2003 and 2002,
     respectively, and $1.79 and $1.89 for the nine months ended September 30,
     2003 and 2002, respectively. Pro forma (loss) per diluted share from
     discontinued operations was $(0.02) and $(0.43), respectively, for the
     three months ended September 30, 2003 and 2002, respectively, and $(0.01)
     and $(18.92), respectively, for the nine months ended September 30, 2003
     and 2002, respectively.

     For a detailed discussion of significant accounting policies, please refer
     to AT&T's Form 10-K for the year ended December 31, 2002.


3.   IMPACTS OF RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

     SFAS No. 143, "Accounting for Asset Retirement Obligations"
     Effective  January  1, 2003,  AT&T  adopted  SFAS No.  143.  This  standard
     requires that obligations that are legally enforceable and unavoidable, and
     are  associated  with the  retirement  of tangible  long-lived  assets,  be
     recorded as  liabilities  when those  obligations  are  incurred,  with the
     amount of the liability initially measured at fair value. The offset to the
     initial asset  retirement  obligation is an increase in the carrying amount
     of the related  long-lived  asset. Over time, this liability is accreted to
     its future value,  and the asset is depreciated  over its useful life. Upon
     settlement of the  liability,  an entity either  settles the obligation for
     its recorded amount or incurs a gain or loss upon settlement.

     AT&T historically included in its group depreciation rates an amount
     related to the cost of removal for certain assets. However, such amounts
     are not legally enforceable or unavoidable; therefore, upon adoption of
     SFAS No. 143, AT&T reversed the amount accrued in accumulated depreciation.
     As of January 1, 2003, AT&T recorded income of $42 million as the
     cumulative effect of a change in accounting principle primarily related to
     this reversal. The impact of no longer including the cost of removal in the
     group depreciation rates, partially offset by the cumulative effect impact
     on accumulated depreciation, has resulted in a decrease to depreciation
     expense in 2003. However, the costs incurred to remove these assets will be
     reflected as a cost in the period incurred as "Costs of services and
     products."

     Financial Accounting Standards Board Interpretation No. 46 (FIN 46),
     "Consolidation of Variable Interest Entities - an Interpretation of
     Accounting Research Bulletin No. 51"
     Effective  July 1, 2003,  AT&T early  adopted FIN 46.  This  interpretation
     requires the primary  beneficiary to consolidate a variable interest entity
     (VIE) if it has a variable  interest  that will  absorb a  majority  of the
     entity's expected losses if they occur,  receive a majority of the entity's
     expected  residual  returns  if  they  occur,  or  both.  Based  on the new
     standard, two entities that AT&T leases buildings from qualify as VIEs and,
     therefore,  became subject to consolidation as of July 1, 2003. AT&T had no
     ownership  interest  in  either  entity,  but  provided  guarantees  of the
     residual values for the leased  facilities with a maximum  exposure of $427
     million.  The adoption of FIN 46 added approximately $433 million of assets
     (included in property,  plant and equipment of AT&T  Business  Services and
     Corporate  and Other  group) and $477 million of  liabilities  (included in
     short-term debt) to our consolidated balance sheet and resulted in a charge
     of $27  million,  net of  income  taxes,  as the  cumulative  effect  of an
     accounting  change in the third quarter of 2003. The noncash impacts of the
     adoption  of  this  interpretation  include  a  $433  million  increase  in
     property,  plant and  equipment and a $477 million  increase in debt.  (See
     note 10 for discussion on exercise of purchase option).

     Other Recently Adopted Accounting Pronouncements
     During 2003, AT&T also adopted the following accounting pronouncements,
     which did not have an impact upon the initial adoption:
        - SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments
          and Hedging Activities,"
        - SFAS No. 150, "Accounting for Certain Financial Instruments with
          Characteristics of both Liabilities and Equity,"
        - EITF 02-18, "Accounting for Subsequent Investments in an Investee
          after Suspension of Equity Method Loss Recognition,"
        - EITF 00-21, "Revenue Arrangements with Multiple Deliverables" and
        - EITF 01-8, "Determing Whether an Arrangement Contains a Lease."


4.   SUPPLEMENTARY FINANCIAL INFORMATION
<TABLE>
<CAPTION>
                                                                   AT&T               AT&T
                                                                 Business           Consumer             Total
                                                                 Services           Services              AT&T
                                                               -------------      ------------         ----------
                                                                              Dollars in millions
        <S>                                                    <C>                <C>                  <C>
        GOODWILL

        Balance at January 1, 2003                             $    4,556         $       70           $    4,626
        Translation adjustment                                         65                  -                   65
                                                               ----------         ----------           ----------
        Balance at September 30, 2003                          $    4,621         $       70           $    4,691
                                                               ----------         ----------           ----------



                                                               Gross Carrying     Accumulated             Net
                                                                  Amount          Amortization     Intangible Assets
                                                               --------------     ------------     -----------------
                                                                              Dollars in millions
        INTANGIBLE ASSETS

        Amortizable purchased intangible assets at
          September 30, 2003:
            Customer lists and relationships                   $      539         $      152           $      387
            Other                                                     267                146                  121
                                                               ----------         ----------           ----------
        Total intangible assets                                $      806         $      298           $      508
                                                               ----------         ----------           ----------
</TABLE>

     The amortization expense associated with purchased intangible assets for
     the three and nine months ended September 30, 2003, was $19 million and $52
     million, respectively. Amortization expense for purchased intangible assets
     is estimated to be approximately $70 million for the year ending December
     31, 2003, $60 million for the year ending December 31, 2004, $55 million
     for each of the years ending December 31, 2005 and 2006, and $30 million
     for the year ending 2007.

<TABLE>
<CAPTION>
                                                                                                       Nine months ended
                                                                                                          September 30,
                                                                                                     --------      --------
                                                                                                       2003          2002
                                                                                                     --------      --------
                                                                                                       Dollars in millions
        <S>                                                                                          <C>           <C>
        OTHER COMPREHENSIVE INCOME (LOSS):
        Net foreign currency translation adjustment [net of income taxes of $(59) and $(38)]         $     97      $     61

        Net revaluation of certain financial instruments:
          Unrealized gains (losses) [net of income taxes of $(66) and $443]                               107          (717)
          Recognition of previously unrealized (gains) losses [net of income taxes of $118
          and $(535)] (1)                                                                                (191)          863

        Net minimum pension liability adjustment (net of income taxes of $3 and $0]                        (6)            -
                                                                                                     --------      --------
        Total other comprehensive income                                                             $      7      $    207
                                                                                                     --------      --------
<FN>
        (1)  See below for a summary of the "Recognition of previously
             unrealized (gains) losses" and the Statement of Operations line
             items impacted.
</FN>
</TABLE>

<TABLE>
<CAPTION>
                                                                                     For the Nine Months Ended September 30,
                                                                                  ----------------------------------------------
        SUMMARY OF RECOGNITION OF PREVIOUSLY UNREALIZED                                 2003                      2002
           (GAINS) LOSSES AND THE LINE ITEMS IMPACTED:                            ----------------------------------------------
                                                                                  Pretax     After-tax     Pretax      After-tax
                                                                                  ------     ---------     ------      ---------
                                                                                              Dollars in millions
          <S>                                                                     <C>        <C>           <C>         <C>
          Other  income/expense, net:
          Other-than-temporary investment impairments                             $    -     $       -     $  142      $      88
          Sale/exchange of various securities (1)                                   (209)         (129)         -              -
          Other financial instrument activity                                       (100)          (62)         -              -

          Income from discontinued operations                                          -             -      1,256            775
                                                                                  ------     ---------     ------      ---------

        Total recognition of previously unrealized (gains) losses                 $ (309)    $    (191)    $1,398      $     863
                                                                                  ------     ---------     ------      ---------

<FN>
        (1) 2003 includes a $0.2 billion pretax gain associated with the
            redemption of exchangeable notes that were indexed to AT&T Wireless
            common stock.
</FN>
</TABLE>

5.   ACCESS AND OTHER CONNECTION

     In September 2003, in conjunction with our review of accounting and
     internal control systems, the Company determined that the liability on the
     balance sheet (included in accounts payable) relating to costs incurred in
     2001 and 2002 pertaining to access and other connection expense was
     understated by $125 million. Since the impact to prior years' annual
     financial statements was not material, the Company recorded an additional
     expense of $125 million ($77 million after-tax) in the third quarter of
     2003 to reflect the proper estimate of the liability.

     A review was conducted by outside legal counsel, under the direction of the
     Audit Committee. This review found that two employees, one lower-level and
     one mid-level management employee, circumvented the internal controls
     process, resulting in the financial impacts noted below. The Company made
     the appropriate personnel changes and enhanced its internal controls
     accordingly.

     The expense, properly recorded in the respective periods, would have
     impacted quarterly and annual income from continuing operations as follows:

<TABLE>
<CAPTION>
        -------------------------------------------------------------------------------------------------------------
                                                          Income From                            Earnings Per Diluted
                                                          Continuing                              Share--Continuing
        Impact:  (Decrease)/Increase                      Operations                                  Operations
        -------------------------------------------------------------------------------------------------------------
                                                               Dollars in millions (except per share amounts)
        <S>                                                <C>                                         <C>

        For the Three Months Ended:
          September 30, 2001                               $  (33)                                     $ (0.04)
          December 31, 2001                                $   1                                       $  0.01

          March 31, 2002                                   $  (64)                                     $ (0.08)
          June 30, 2002                                    $   12                                      $  0.02
          September 30, 2002                               $   14                                      $  0.01
          December 31, 2002                                $   (7)                                     $ (0.01)

        For the Year Ended:
          December 31, 2001                                $  (32)                                     $ (0.04)
          December 31, 2002                                $  (45)                                     $ (0.06)
</TABLE>

6.   EARNINGS PER COMMON SHARE AND POTENTIAL COMMON SHARE

     On November 18, 2002, a 1-for-5 reverse stock split of AT&T common stock,
     as approved by shareowners on July 10, 2002, was effected. Shares (except
     shares authorized) and per share amounts were restated to reflect the stock
     split on a retroactive basis.

     Basic earnings per common share (EPS) is computed by dividing net income by
     the weighted-average number of common shares outstanding for the period.
     Diluted EPS reflects the potential dilution (considering the combined
     income and share impact) that could occur if securities or other contracts
     to issue common stock were exercised or converted into common stock. The
     potential issuance of common stock is assumed to occur at the beginning of
     the year (or at time of issuance if later), and the incremental shares are
     included using the treasury stock method. The proceeds utilized in applying
     the treasury stock method consist of the amount, if any, the employee must
     pay upon exercise, the amount of compensation cost attributed to future
     service not yet recognized, and any tax benefits credited to
     paid-in-capital related to the exercise. These proceeds are then assumed to
     be used by the Company to purchase common stock at the average market price
     during the period. The incremental shares (difference between the shares
     assumed to be issued and the shares assumed to be purchased), to the extent
     they would have been dilutive, are included in the denominator of the
     diluted EPS calculation.

     A reconciliation of the share components for basic to diluted EPS is as
     follows:

<TABLE>
<CAPTION>
                                                               For the Three Months      For the Nine Months
                                                               Ended September 30,       Ended September 30,
                                                                  2003       2002           2003       2002
                                                                -------    --------       -------    --------
                                                                              Shares in millions
     <S>                                                          <C>        <C>            <C>        <C>
     Weighted-average common shares                               789        770            787        736
     Effect of dilutive securities:
       Stock options                                                2          -              1          1
       Preferred stock of subsidiary                                -          -              -          4
       Convertible quarterly income preferred securities            -         18              -         18
     Weighted-average common shares and potential                 ---        ---            ---        ---
       common shares                                              791        788            788        759
                                                                  ---        ---            ---        ---
</TABLE>

     For the three and nine months ended September 30, 2003 and 2002, no
     adjustments were made to income for the computation of diluted EPS.

<PAGE>

     Preferred Stock of Subsidiary
     Pursuant to the AT&T Broadband and Comcast merger agreement, AT&T was
     required to redeem the outstanding TCI Pacific Communications, Inc. Class A
     Senior Cumulative Exchangeable Preferred Stock (TCI Pacific preferred
     stock) for AT&T common stock. All outstanding shares of TCI Pacific
     preferred stock were either exchanged or redeemed for AT&T common stock
     during 2001 and 2002. Dividends were included in "Net (loss) from
     discontinued operations" for 2002.

     Convertible Quarterly Income Preferred Securities
     On June 16, 1999, AT&T Finance Trust I, a wholly owned subsidiary of AT&T,
     completed the private sale of 100 million shares of 5.0% cumulative
     quarterly income preferred securities (quarterly preferred securities) to
     Microsoft Corporation. Such securities were convertible into AT&T common
     stock. However, in connection with the AT&T Broadband spin-off, Comcast
     assumed the quarterly preferred securities and Microsoft agreed to convert
     these preferred securities into shares of Comcast common stock. Dividends
     were included in "Net (loss) from discontinued operations" for 2002.


7.   NET RESTRUCTURING AND OTHER CHARGES

     For the three months ended September 30, 2003, net restructuring and other
     charges of $64 million consisted of $75 million of costs associated with
     the Company's management realignment efforts (involuntarily impacting
     approximately 800 mid-level managers), primarily representing separation
     costs, partially offset by the reversal of $11 million of sales obligation
     liabilities recorded in a prior year, associated with the disposition of
     AT&T Communications (U.K.) Ltd, where the liabilities incurred were below
     the original estimate. This quarter's business restructuring activity
     reflects the next step towards completion of the Company's initiative to
     streamline its management structure, which is expected to be completed by
     the end of 2003.

     Net restructuring and other charges of $134 million for the nine months
     ended September 30, 2003, consists of costs associated with the Company's
     management realignment efforts, primarily separation costs. These exit
     plans involuntarily impacted approximately 900 managers across the Company,
     almost 30% of which have exited the business as of September 30, 2003, with
     substantially all of the remainder expected to be off roll by the end of
     2003. These activities were partially offset by the reversal of $11million
     of sales obligation liabilities recorded in a prior year, associated with
     the disposition of AT&T Communications (U.K.) Ltd, where the liabilities
     incurred were below the original estimate.

     The following table displays the activity and balances of the restructuring
     reserve account:

<TABLE>
<CAPTION>
                                                                                 Type of Cost
                                                       --------------------------------------------------------------
                                                        Employee           Facility
                                                       Separations         Closings           Other             Total
                                                       -----------        -----------      -----------       -----------
                                                                              Dollars in millions
        <S>                                            <C>                <C>              <C>               <C>


        Balance at January 1, 2003                     $      379         $      283       $        3        $     665
           Additions                                          124                  -                -              124
           Deductions                                        (300)               (60)              (1)            (361)
                                                       ----------         ----------       ----------        ---------
        Balance at September 30, 2003                  $      203         $      223       $        2        $     428
                                                       ----------         ----------       ----------        ---------
</TABLE>

     Deductions primarily reflect cash payments, which included cash termination
     benefits of $285 million, funded primarily through cash from operations.

     For the three and nine months ended September 30, 2002, AT&T recorded a net
     reversal of $26 million of net restructuring and other charges. At that
     time, AT&T's management reevaluated the business restructuring plan
     established in the fourth quarter of 2001 and determined that the plan
     needed to be modified, primarily for certain areas of AT&T Business
     Services, including network services, given the industry conditions at that
     time, as well as the redeployment of certain employees to different
     functions within the Company. As a result, approximately $137 million of
     net restructuring and other charges were reversed, which primarily
     consisted of $110 million for employee separation costs. The reversals also
     included $12 million of sales obligation liabilities recorded in a prior
     year associated with the disposition of AT&T Communications (U.K.) Ltd,
     where the liabilities incurred were below the original estimate. AT&T's
     management developed a new exit plan to ensure proper management of our
     cost structure in other areas of AT&T Business Services, including network
     services, with an offsetting additional charge of $111 million. This plan
     primarily consisted of $91 million for employee separation costs and $16
     million for facility closings related to buildings becoming vacant as a
     result of previously announced restructuring plans. Of the 1,400 employees
     affected by this exit plan, slightly more than half were management
     employees and 17% left voluntarily.

     Relative to the business restructuring reserves recorded during the third
     and fourth quarters of 2002, approximately 70% of the employees affected by
     these exit plans have left their positions as of September 30, 2003, with
     the remaining reductions to occur by the end of 2003.


8.   DISCONTINUED OPERATIONS

     NCR CORPORATION

     Net (loss) from discontinued operations for the three and nine months ended
     September 30, 2003, reflects an estimated cost related to potential legal
     liabilities for certain environmental clean-up matters associated with NCR
     Corporation (NCR), which was spun-off from AT&T in 1996. NCR has been
     formally notified by federal and state agencies that it is a potentially
     responsible party (PRP) for environmental claims under the Comprehensive
     Environmental Response, Compensation and Liability Act of 1980 (CERCLA) and
     other statutes arising out of the presence of polychlorinated biphenyls
     (PCBs) in sediments in the lower Fox River and in the Bay of Green Bay, in
     Wisconsin. NCR was identified as a PRP because of alleged PCB discharges
     from two carbonless copy paper manufacturing facilities it previously
     owned, which were located along the Fox River. In July 2003, the government
     clarified its planned approach for remediation of the contaminated
     sediments, which caused NCR to increase its estimated liability. Under the
     separation and distribution agreement between AT&T and NCR, AT&T is
     required to pay a portion of such costs that NCR incurs above a certain
     threshold. Therefore, in the third quarter of 2003, AT&T recorded its
     estimated proportionate share of certain costs associated with the Fox
     River matter, which totaled $13 million on both, a pretax and after-tax
     basis. The extent of NCR's potential liability is subject to numerous
     variables that are uncertain at this time, including the actual remediation
     costs and the percentage NCR may ultimately be responsible for. As a
     result, AT&T's actual liability may be different than the estimated amount.
     Pursuant to the separation and distribution agreement, NCR is liable for
     the first $100 million of costs in connection with this liability. AT&T is
     liable for 37% of costs incurred by NCR beyond such $100 million threshold.
     All such amounts are determined after reduction of any monies collected by
     NCR from other parties.

     AT&T BROADBAND

     AT&T Broadband, composed primarily of the AT&T Broadband segment, was
     spun-off to AT&T shareowners on November 18, 2002, and simultaneously
     combined with Comcast Corporation (Comcast). Pursuant to SFAS No. 144,
     "Accounting for the Impairment or Disposal of Long-Lived Assets," AT&T
     Broadband was accounted for as a discontinued operation. In accordance with
     SFAS No. 144, prior period financial statements have been restated to
     reflect AT&T Broadband as a discontinued operation in all periods. As a
     discontinued operation, the revenue, expenses and cash flows of AT&T
     Broadband have been excluded from the respective captions in the
     Consolidated Statements of Operations and Consolidated Statements of Cash
     Flows, and have been reported through the date of separation within "Net
     (loss) from discontinued operations" and as "Net cash (used in)
     discontinued operations."

     Revenue for AT&T's Broadband business was $2,547 million and $7,512 million
     for the three and nine months ended September 30, 2002, respectively. Net
     (loss) from discontinued operations before income taxes was $(399) million
     [$(318) million after-tax] for the three months ended September 30, 2002,
     and $(20,071) million [$(14,228) million after-tax] for the nine months
     ended September 30, 2002. For the three and nine months ended September 30,
     2002, interest expense of $114 million and $287 million, respectively, was
     allocated to discontinued operations based on the balance of intercompany
     debt between AT&T Broadband and AT&T.

     LUCENT TECHNOLOGIES INC.

     Net (loss) from discontinued operations for the three and nine months ended
     September 30, 2002, included an estimated loss on a litigation settlement
     associated with the business of Lucent Technologies Inc. (Lucent), which
     was spun-off from AT&T in 1996. Sparks, et al. v. AT&T and Lucent. et al.,
     was a class action lawsuit filed in 1996 in Illinois state court. On August
     9, 2002, a settlement proposal was submitted to and accepted by the court.
     In accordance with the separation and distribution agreement between AT&T
     and Lucent, AT&T's estimated proportionate share of the settlement and
     legal costs recorded in the second quarter of 2002 totaled $132 million
     pretax ($88 million after-tax). (In the fourth quarter of 2002, this
     initial estimate was reduced to $45 million [$33 million after-tax]).
     Depending upon the number of claims submitted and accepted, the actual cost
     of the settlement to AT&T may be different than amounts accrued as of
     September 30, 2003. While similar consumer class actions are pending in
     various state courts, the Illinois state court has held that the class it
     certified covers claims in the other state court class actions.

9.   INVESTMENTS

     AT&T CANADA

     AT&T had an approximate 31% ownership interest in AT&T Canada. Pursuant to
     a 1999 merger agreement, AT&T had a commitment to purchase, or arrange for
     another entity to purchase, the publicly-owned shares of AT&T Canada for
     the Back-end Price, which was the greater of a contractual floor price or
     the fair market value. The floor price accreted 4% each quarter, commencing
     on June 30, 2000.

     In 2001, AT&T recorded charges reflecting the difference between the
     underlying value of publicly owned AT&T Canada shares and the price AT&T
     had committed to pay for them, including the 4% accretion of the floor
     price. In the nine months ended September 30, 2002, AT&T recorded charges
     of $0.3 billion after-tax ($0.5 billion pretax) within "Net (losses)
     earnings related to equity investments," reflecting further deterioration
     in the underlying value of AT&T Canada as well as accretion of the floor
     price.

     During 2002, AT&T arranged for third parties (Tricap Investment Corporation
     and CIBC Capital Partners) to purchase the remaining 69% equity in AT&T
     Canada. As part of this agreement, AT&T agreed to fund the purchase price
     on behalf of the third parties. Tricap and CIBC Partners made a nominal
     payment to AT&T upon completion of the purchase in October 2002. Although
     AT&T held an equity interest in AT&T Canada throughout 2002, it did not
     record equity earnings or losses since its investment balance was written
     down to zero largely through losses generated by AT&T Canada. As of
     September 30, 2003, AT&T had disposed of all of its AT&T Canada shares.

     Summarized financial information for the three and nine months ended
     September 30, 2002, for this investment accounted for under the equity
     method was as follows:

<TABLE>
<CAPTION>
                                                                   For the Three Months       For the Nine Months
                                                                   Ended September 30,        Ended September 30,
                                                                           2002                      2002
                                                                   --------------------       -------------------
                                                                                 Dollars in millions
     <S>                                                                <C>                         <C>
     Revenue                                                            $    232                    $    719
     Operating income (loss)                                                   5                        (869)
     (Loss) from continuing operations before extraordinary
       items and cumulative effect of accounting changes                    (163)                     (1,215)
     Net (loss)                                                             (163)                     (2,194)
</TABLE>

     CONCERT

     On April 1, 2002, Concert, our 50% owned joint venture with British
     Telecommunications plc (BT), was unwound and the venture's assets and
     customer accounts were distributed back to the parent companies, as agreed
     to in 2001. Under the partnership termination agreement, each of the
     partners generally reclaimed the customer contracts and assets that were
     initially contributed to the joint venture, including international
     transport facilities and gateway assets. In addition, AT&T assumed certain
     other assets that BT originally contributed to the joint venture. In
     conjunction with the unwind of Concert, AT&T paid BT $158 million in the
     first quarter of 2003. In the second quarter of 2003, a $28 million
     after-tax benefit ($45 million pretax) was recorded within "Net (losses)
     earnings related to equity investments" due to the favorable settlement of
     certain items in connection with the Concert unwind.

     AT&T had various related party transactions with Concert until the joint
     venture was unwound on April 1, 2002. Included in "Revenue" was $268
     million for services provided to Concert for the nine months ended
     September 30, 2002. Included in "Access and other connection" expense are
     charges from Concert representing costs incurred on our behalf to connect
     calls made to foreign countries (international settlements) and costs paid
     by AT&T to Concert for distributing Concert products totaling $491 million
     for the nine months ended September 30, 2002.

     AT&T Wireless

     In February 2003, AT&T redeemed exchangeable notes that were indexed to
     AT&T Wireless common stock. The notes were settled with 78.6 million shares
     of AT&T Wireless common stock and $152 million in cash (see note 10). Also
     in February, AT&T sold its remaining investment in AT&T Wireless
     (approximately 12.2 million shares) for $72 million, resulting in a gain of
     $22 million recorded in "Other (expense) income, net."


10.  DEBT OBLIGATIONS

     LONG-TERM DEBT

     On January 31, 2003, AT&T completed the early retirement of $1,152 million
     and $2,590 million long-term notes, with interest rates of 6.375% and
     6.50%, due in March 2004 and March 2013, respectively. The notes were
     repurchased with cash and resulted in a loss of $178 million recorded in
     "Other (expense) income, net."

     On September 15, 2003, AT&T completed the early retirement of $322 million
     and $184 million long-term notes, with an interest rate of 8.125%, due in
     January 2022 and July 2024, respectively. The notes were repurchased with
     cash and resulted in a loss of $23 million recorded in "Other (expense)
     income, net."

     On October 22, 2003, AT&T completed the early retirement of three long-term
     notes totaling approximately $1.1 billion (as previously called for early
     redemption on September 22, 2003). The first note of $236 million, had an
     interest rate of 8.625%, and was due in December 2031. The other two notes,
     with $410 million and $439 million of principal amounts outstanding, bore
     interest rates of 5.625% and 6.375%, respectively, and were each due in
     March 2004. The notes were repurchased with cash and resulted in a loss of
     $32 million recorded in "Other (expense) income, net."

     In September 2003, AT&T gave notice to exercise its purchase option on
     buildings we lease, which were consolidated in July along with debt of
     approximately $477 million, as a result of our adoption of FIN 46 (see note
     3). A $28 million loss on the early extinguishment of debt was recorded in
     "Other (expense) income, net."

     EXCHANGEABLE NOTES

     During 2001, we issued long-term debt (exchangeable notes) that was indexed
     to AT&T Wireless common stock and, at AT&T's option, was mandatorily
     redeemable with a number of shares of AT&T Wireless common stock that was
     equal to the underlying shares multiplied by an exchange ratio, or its cash
     equivalent. The notes were accounted for as indexed debt instruments,
     because the carrying value of the debt was dependent upon the fair market
     value of the underlying securities. In addition, the notes contained
     embedded derivatives, which were designated as cash flow hedges and
     required separate accounting. These designated options were carried at fair
     value with changes in fair value recorded, net of income taxes, within
     "Accumulated other comprehensive (loss)," a component of shareowners'
     equity.

     The shares of AT&T Wireless common stock were accounted for as
     "available-for-sale" securities under SFAS No. 115, "Accounting for Certain
     Investments in Debt and Equity Securities," with changes in the carrying
     value of the underlying securities that are not "other-than-temporary"
     being recorded as unrealized gains or losses, net of income taxes, within
     "Accumulated other comprehensive (loss)," a component of shareowners'
     equity.

     In February 2003, AT&T redeemed these exchangeable notes with 78.6 million
     shares of AT&T Wireless common stock and $152 million in cash. The
     settlement resulted in a pretax gain of approximately $176 million recorded
     in "Other (expense) income, net." The noncash impacts of this transaction
     include the use of $0.5 billion of our investment in AT&T Wireless to
     settle long-term debt.


11.  FINANCIAL INSTRUMENTS

     In the normal course of business, we use various financial instruments,
     including derivative financial instruments, for purposes other than
     trading. These instruments include letters of credit, guarantees of debt
     and certain obligations of former affiliates, interest rate swap
     agreements, foreign currency exchange contracts, option contracts, equity
     contracts and warrants.

     Interest Rate Swap Agreements

     We enter into interest rate swaps to manage our exposure to changes in
     interest rates. We enter into swap agreements to manage the fixed/floating
     mix of our debt portfolio in order to reduce aggregate risk of interest
     rate movements. These agreements involve the exchange of floating-rate for
     fixed-rate payments or the exchange of fixed-rate for floating-rate
     payments without the exchange of the underlying notional amount.
     Floating-rate payments and receipts are primarily tied to the LIBOR (London
     Inter-Bank Offered Rate). In 2003, we entered into $1.0 billion of notional
     fixed-to-floating interest rate swaps, which we designated as fair value
     hedges in accordance with SFAS No. 133, "Accounting for Derivative
     Instruments and Hedging Activities", as amended. The weighted-average
     receive rate and pay rate for these swaps at September 30, 2003, was 4.23%
     and 2.55%, respectively.

     In addition, we have combined interest rate, foreign currency swap
     agreements for foreign-currency-denominated debt, which hedge our risk to
     both interest rate and currency movements. The fair value of such
     arrangements has increased $514 million since December 31, 2002, to $1,174
     million at September 30, 2003, primarily due to the strength of the Euro
     currency compared with the U.S. dollar.

     In connection with the combined interest rate swap agreements, as of
     September 30, 2003, we had received $200 million of cash collateral
     (included in "Cash" in the Consolidated Balance Sheet) and $10 million of
     security collateral (included in "Other current assets" in the Consolidated
     Balance Sheet).

     Debt Securities

     As of September 30, 2003, the carrying value of our long-term debt
     (including currently maturing long-term debt), excluding capital leases,
     was $15.9 billion. The market value associated with this debt was $17.5
     billion. The carrying value of debt with an original maturity of less than
     one year approximates market value. The fair values of long-term debt were
     obtained based on quotes for these securities.


12.  EQUITY TRANSACTIONS

     Pursuant to the AT&T Broadband and Comcast merger agreement, AT&T was
     required to redeem the outstanding TCI Pacific Communications, Inc. Class A
     Senior Cumulative Exchangeable Preferred Stock for AT&T common stock. Each
     share of TCI Pacific preferred stock was exchangeable, at the option of the
     holder, for 1.673 shares of AT&T common stock. As of June 30, 2002, all
     outstanding shares (approximately 6.2 million) of TCI Pacific preferred
     stock were either exchanged or redeemed for approximately 10.4 million
     shares of AT&T common stock. No gain or loss was recorded on the
     exchange/redemption of the TCI Pacific preferred stock.

     During 2002, AT&T issued 2.9 million shares of AT&T common stock to certain
     current and former senior managers in settlement of their deferred
     compensation accounts. Approximately 2.8 million shares were issued in the
     second quarter of 2002 and 0.1 million shares in the third quarter of 2002.
     Pursuant to AT&T's deferred compensation plan, senior managers may defer
     short- and long-term incentive compensation awards. The issuance of these
     shares resulted in an increase to total shareowners' equity of $0.2
     billion.

     In June 2002, AT&T completed a public equity offering of 46 million shares
     of AT&T common stock for net proceeds of $2.5 billion. AT&T utilized the
     proceeds from the offering to satisfy a portion of its obligation to AT&T
     Canada common shareholders (see note 9).


13.  COMMITMENTS AND CONTINGENCIES

     In connection with the separation of its former subsidiaries, AT&T has
     entered into a number of separation and distribution agreements that
     provide, among other things, for the allocation and/or sharing of certain
     costs associated with potential litigation liabilities. For example,
     pursuant to these agreements, AT&T shares in the cost of certain litigation
     if the settlement exceeds certain thresholds. With the exception of two
     matters already reserved for (Sparks, et al. v. AT&T Lucent Technologies
     and NCR's Fox River environmental clean-up matter, see note 8), we have
     assessed that none of the litigation liabilities allocated to former
     subsidiaries were probable of incurring costs in excess of the threshold
     above which we would be required to share in the costs. However, in the
     event these former subsidiaries were unable to meet their obligations with
     respect to these liabilities due to financial difficulties, AT&T could be
     held responsible for all or a portion of the costs, irrespective of the
     sharing agreements.

     In October 2003, the Federal Communications Commission (FCC) found that
     AT&T violated Section 203 of the Communications Act of 1934 (Act) for
     refusing to transfer the customers of one reseller to the service plans of
     another reseller. The actions which gave rise to this finding were the
     subject of a lawsuit filed in March 1995 in the United States District
     Court for the District of New Jersey by Combined Companies, Inc, Winback &
     Conserve, One Stop Financial, 800 Discounts and Group discounts, Inc.
     against AT&T. AT&T intends to appeal this decision, as it believes its
     actions were consistent with its obligations under the Act. In addition,
     AT&T's liability in this matter is subject to the plaintiff proving it
     sustained damages and demonstrating the amount to which it claims to be
     entitled. Thus, the extent of liability cannot be estimated at this time.
     In the original lawsuit plaintiff had sought an injunction requiring AT&T
     to transfer customers from one reseller to another. Plaintiff has not filed
     an amended complaint asserting damages.

     In the normal course of business we are subject to proceedings, lawsuits
     and other claims, including proceedings under laws and regulations related
     to environmental and other matters. Such matters are subject to many
     uncertainties, and outcomes are not predictable with assurance.

     Consequently, we are unable to ascertain the ultimate aggregate amount of
     monetary liability or financial impact with respect to these matters at
     September 30, 2003. However, we believe that after final disposition, any
     monetary liability or financial impact to us beyond that provided for at
     September 30, 2003, would not be material to our annual consolidated
     financial statements.

     LEASES AND OTHER COMMITMENTS

     Under certain real estate operating leases (with entities consolidated as a
     result of FIN 46, see note 3), AT&T could have been required to make
     payments to the lessors of up to $427 million at the end of the lease term.
     In September 2003, AT&T gave notice to exercise its purchase options under
     these leases. As a result of the exercise of these options, AT&T will no
     longer have a potential payment requirement.


14.  SEGMENT REPORTING

     AT&T's results are segmented according to the customers we service: AT&T
     Business Services and AT&T Consumer Services. AT&T evaluates performance
     based on several factors, of which the primary financial measure is
     operating income.

     Our existing segments reflect certain managerial changes that were
     implemented during 2003. The changes primarily include a redistribution of
     property, plant and equipment from the Corporate and Other group to AT&T
     Business Services and a transfer of deferred taxes from AT&T Consumer
     Services to the Corporate and Other group.

     AT&T Business Services provides a variety of communication services to
     various sized businesses and government agencies including long distance,
     international, toll-free and local voice, including wholesale transport
     services, as well as data services and Internet protocol and enhanced
     (IP&E) services, which includes the management of network servers and
     applications. AT&T Business Services also provides outsourcing solutions
     and other professional services.

     AT&T Consumer Services provides a variety of communication services to
     residential customers. These services include traditional long distance
     voice services, such as domestic and international dial services (long
     distance or local toll calls where the number "1" is dialed before the
     call), calling card services and dial-up Internet. Transaction services,
     such as prepaid card and operator-assisted calls, are also offered.
     Collectively these services represent stand-alone long distance and are not
     offered in conjunction with any other service. AT&T Consumer Services also
     provides all distance services, which bundle long distance, local and local
     toll.

     The balance of AT&T's continuing operations is included in a "Corporate and
     Other" group. This group primarily reflects corporate staff functions and
     the elimination of transactions between segments.

     Total assets for our reportable segments include all assets, except
     intercompany receivables. AT&T prepaid pension assets, taxes and
     corporate-owned or leased real estate are generally held at the corporate
     level and therefore are included in the Corporate and Other group. Capital
     additions for each segment include capital expenditures for property, plant
     and equipment, additions to nonconsolidated investments and additions to
     internal-use software (which are included in "Other assets").

     AT&T Business Services sells services to AT&T Consumer Services at
     cost-based prices. Generally, AT&T Business Services accounts for these
     sales as contra-expense.

<TABLE>
     REVENUE
<CAPTION>
                                                                 For the Three Months           For the Nine Months
                                                                 Ended September 30,            Ended September 30,
                                                                  2003       2002                2003       2002
                                                                --------   --------            --------   --------
                                                                                Dollars in millions
        <S>                                                     <C>        <C>                 <C>        <C>

        AT&T Business Services external revenue                 $  6,282   $  6,602            $ 19,125   $ 19,697
        AT&T Business Services internal revenue                        -         98                   -        273
                                                                --------   --------            --------   --------
        Total AT&T Business Services revenue                       6,282      6,700              19,125     19,970
        AT&T Consumer Services external revenue                    2,353      2,794               7,265      8,791
                                                                --------   --------            --------   --------
        Total reportable segments                                  8,635      9,494              26,390     28,761
        Corporate and Other                                           14        (85)                 40       (224)
                                                                --------   --------            --------   --------
        Total revenue                                           $  8,649   $  9,409            $ 26,430   $ 28,537
                                                                --------   --------            --------   --------
</TABLE>

<TABLE>
     RECONCILIATION OF OPERATING INCOME TO INCOME FROM CONTINUING
       OPERATIONS BEFORE INCOME TAXES, MINORITY INTEREST INCOME,
       AND NET (LOSSES)  EARNINGS RELATED TO EQUITY INVESTMENTS
<CAPTION>
                                                                For the Three Months            For the Nine Months
                                                                 Ended September 30,            Ended September 30,
                                                                  2003       2002                2003       2002
                                                                --------   --------            --------   --------
                                                                                Dollars in millions
        <S>                                                     <C>        <C>                 <C>        <C>
        AT&T Business Services operating income                 $    417   $    854            $  1,614   $  2,577
        AT&T Consumer Services operating income                      500        595               1,621      2,203
                                                                --------   --------            --------   --------
        Total reportable segments operating income                   917      1,449               3,235      4,780
        Corporate and Other operating (loss)                         (88)       (34)               (211)      (139)
                                                                --------   --------            --------   --------
        Operating income                                             829      1,415               3,024      4,641
        Other (expense) income, net                                   (7)      (180)                 89       (285)
        Interest (expense)                                          (289)      (355)               (917)    (1,087)
                                                                --------   --------            --------   --------
        Income from continuing operations before
          income taxes, minority interest income, and
          net (losses) earnings related to equity investments   $    533   $    880            $  2,196   $  3,269
                                                                --------   --------            --------   --------
</TABLE>

<TABLE>
     ASSETS
<CAPTION>
                                                                                       At                  At
                                                                                  September 30,       December 31,
                                                                                      2003                2002
                                                                                  -------------       ------------
                                                                                        Dollars in millions
        <S>                                                                       <C>                 <C>
        AT&T Business Services assets                                             $ 34,951            $ 36,389
        AT&T Consumer Services assets                                                1,095               1,390
                                                                                    --------           --------
        Total reportable segments assets                                            36,046              37,779
        Corporate and Other assets*                                                 15,261              17,493
                                                                                    --------           --------
        Total assets                                                              $ 51,307            $ 55,272
                                                                                    --------           --------


        * Includes cash of $6.4 billion at September 30, 2003, and $7.8 billion
          at December 31, 2002.
</TABLE>
        Geographic information is not presented due to the immateriality of
        revenue attributable to international customers.

        Reflecting the dynamics of our business, we continually review our
        management model and structure, which may result in additional
        adjustments to our operating segments in the future.

<PAGE>

Item 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATONS

                           AT&T CORP. AND SUBSIDIARIES

         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                              RESULTS OF OPERATIONS


OVERVIEW

AT&T Corp. (AT&T or the Company) is among the world's communications leaders,
providing voice and data communications services to large and small businesses,
consumers and government agencies. We provide domestic and international long
distance, regional and local communications services, and data and Internet
communications services.


FORWARD-LOOKING STATEMENTS

This document may contain forward-looking statements with respect to AT&T's
financial condition, results of operations, cash flows, dividends, financing
plans, business strategies, operating efficiencies or synergies, budgets,
capital and other expenditures, network build-out and upgrade, competitive
positions, availability of capital, growth opportunities for existing products,
benefits from new technologies, availability and deployment of new technologies,
plans and objectives of management, and other matters.

These forward-looking statements, including, without limitation, those relating
to the future business prospects, revenue, working capital, liquidity, capital
needs, network build-out, interest costs and income, are necessary estimates
reflecting the best judgment of senior management that rely on a number of
assumptions concerning future events, many of which are outside AT&T's control,
and involve a number of risks and uncertainties that could cause actual results
to differ materially from those suggested by the forward-looking statements.
These forward-looking statements should, therefore, be considered in light of
various important factors that could cause actual results to differ materially
from estimates or projections contained in the forward-looking statements
including, without limitation:

|X|  the impact of existing and new competitors in the markets in which AT&T
     competes, including competitors that may offer less expensive products and
     services, desirable or innovative products, technological substitutes, or
     have extensive resources or better financing,

|X|  the impact of oversupply of capacity resulting from excessive deployment of
     network capacity,

|X|  the ongoing global and domestic trend toward consolidation in the
     telecommunications industry, which may have the effect of making the
     competitors of these entities larger and better financed and afford these
     competitors with extensive resources and greater geographic reach, allowing
     them to compete more effectively,

|X|  the effects of vigorous competition in the markets in which the Company
     operates, which may decrease prices charged, increase churn and change
     customer mix and profitability,

|X|  the ability to establish a significant market presence in new geographic
     and service markets,

|X|  the requirements imposed on the Company or latitude allowed to competitors
     by the Federal Communications Commission (FCC) or state regulatory
     commissions under the Telecommunications Act of 1996 or other applicable
     laws and regulations,

|X|  the risks associated with technological requirements, wireless, Internet or
     other technology substitution and changes and other technological
     developments,

|X|  the results of litigation filed or to be filed against the Company, and

|X|  the possibility of one or more of the markets in which the Company competes
     being impacted by changes in political, economic or other factors, such as
     monetary policy, legal and regulatory changes or other external factors
     over which the Company has no control.

The words "estimate," "project," "intend," "expect," "believe," "plan" and
similar expressions are intended to identify forward-looking statements. Readers
are cautioned not to place undue reliance on these forward-looking statements,
which speak only as of the date this document is filed. Moreover, in the future,
AT&T, through its senior management, may make forward-looking statements about
the matters described in this document or other matters concerning AT&T.

The discussion and analysis that follows provides information management
believes is relevant to an assessment and understanding of AT&T's consolidated
results of operations for the three and nine months ended September 30, 2003,
and 2002, and financial condition as of September 30, 2003, and December 31,
2002.


Critical Accounting Estimates and Judgments

AT&T's financial statements are prepared in accordance with accounting
principles that are generally accepted in the United States. The preparation of
these financial statements requires management to make estimates and judgments
that affect the reported amounts of assets, liabilities, revenue and expenses as
well as the disclosure of contingent assets and liabilities. Management
continually evaluates its estimates and judgments including those related to
useful lives of plant and equipment, pension and other postretirement benefits,
income taxes and legal contingencies. Management bases its estimates and
judgments on historical experience and other factors that are believed to be
reasonable under the circumstances. Actual results may differ from these
estimates under different assumptions or conditions. For a detailed discussion
of significant accounting policies that may involve a higher degree of judgment,
please refer to AT&T's Form 10-K for the year ended December 31, 2002.


CONSOLIDATED RESULTS OF OPERATIONS

The comparison of 2003 results with 2002 results was impacted by the April 1,
2002 unwind of Concert, our joint venture with British Telecommunications plc
(BT). The venture's assets and customer accounts were distributed back to the
parent companies. Under the partnership termination agreement, each of the
partners generally reclaimed the customer contracts and assets that were
initially contributed to the joint venture, including international transport
facilities and gateway assets. In addition, AT&T assumed certain other assets
that BT originally contributed to the joint venture. As a result, the results
for the second and third quarters of 2002 and year-to-date 2003 include revenue
and expenses associated with these customers and businesses, while the period of
January 1, 2002 through March 31, 2002 includes our proportionate share of
Concert's earnings and related charges in "Net (losses) earnings related to
equity investments."

During 2002, AT&T's interest in AT&T Latin America was fully consolidated in
AT&T's results. In December 2002, AT&T signed a non-binding term-sheet for the
sale of its 69% economic interest (95% voting interest) in AT&T Latin America
and began accounting for AT&T Latin America as an asset held for sale (the
operations of AT&T Latin America did not qualify for treatment as a discontinued
operation). As a result of this action, in the fourth quarter of 2002 we wrote
down AT&T Latin America's assets and liabilities to fair value and reclassified
these assets and liabilities to "Other current assets" and "Other current
liabilities" at December 31, 2002. The operating losses of AT&T Latin America
for the first half of 2003 are reflected in "Net restructuring and other
charges." On April 21, 2003, AT&T Latin America filed for Chapter 11 bankruptcy
and on June 30, 2003, the AT&T appointed members of the AT&T Latin America Board
of Directors resigned. They were replaced with three new independent directors.
This action resulted in the deconsolidation of AT&T Latin America as of June 30,
2003.

The consolidated financial statements of AT&T reflect AT&T Broadband as a
discontinued operation. AT&T Broadband was spun-off to AT&T shareowners on
November 18, 2002, and simultaneously combined with Comcast Corporation.
Accordingly, the revenue, expenses and cash flows of AT&T Broadband have been
excluded from the respective captions in the Consolidated Statements of
Operations and Consolidated Statements of Cash Flows, and have been reported as
"Net (loss) from discontinued operations" and as "Net cash (used in)
discontinued operations" for all applicable periods.
<TABLE>
Revenue
<CAPTION>
                                                                For the Three Months            For the Nine Months
                                                                 Ended September 30,            Ended September 30,
                                                                2003            2002            2003           2002
                                                              --------        --------        --------       --------
                                                                                 Dollars in millions
<S>                                                           <C>             <C>             <C>            <C>
AT&T Business Services                                        $  6,282        $  6,700        $ 19,125       $ 19,970
AT&T Consumer Services                                           2,353           2,794           7,265          8,791
Corporate and Other                                                 14             (85)             40           (224)
                                                              --------        --------        --------       --------
Total revenue                                                 $  8,649        $  9,409        $ 26,430       $ 28,537
                                                              --------        --------        --------       --------
</TABLE>
Total revenue decreased $0.8 billion, or 8.1%, in the third quarter of 2003,
compared with the third quarter of 2002, and decreased $2.1 billion, or 7.4%, in
the nine months ended September 30, 2003, compared with the nine months ended
September 30, 2002. The declines were driven by continued declines in
stand-alone long distance voice revenue of approximately $1.0 billion for the
third quarter of 2003, and $2.9 billion for the nine months ended September 30,
2003, compared with the respective prior year periods. The declines in
stand-alone long distance voice revenue reflect competition, which has led to
lower prices and loss of market share, the impact of substitution by consumers
and a decline in business retail volumes, partially offset by strength in
business wholesale volumes. Total long distance voice volumes (including long
distance volumes sold as part of a bundled product) increased about 6% for the
third quarter of 2003, and increased about 5% for the nine months ended
September 30, 2003, compared with the same periods of 2002, as growth in
lower-priced business wholesale more than offset the declines in business retail
and traditional consumer long distance volumes.

Partially offsetting the decreases in stand-alone long distance voice revenue
were increases in bundled services revenue (local and long distance) at AT&T
Consumer Services of approximately $0.2 billion for the third quarter of 2003,
and $0.7 billion for the nine months ended September 30, 2003, compared with the
respective prior year periods. In addition, AT&T Business Services experienced
increases in local services revenue of $0.1 billion in the third quarter of
2003, and $0.3 billion for the nine months ended September 30, 2003, compared
with the respective prior year periods.

Revenue by segment is discussed in greater detail in the Segment Results
section.
<TABLE>
Operating Expenses
<CAPTION>
                                                                For the Three Months          For the Nine Months
                                                                Ended September 30,           Ended September 30,
                                                                --------------------          -------------------
                                                                  2003        2002              2003       2002
                                                                --------    --------          --------   --------
                                                                               Dollars in millions
<S>                                                             <C>         <C>               <C>        <C>
Access and other connection                                     $   2,785   $  2,679          $  8,191   $  8,214
Costs of services and products                                      1,954      2,066             5,923      6,166
Selling, general and administrative                                 1,793      2,032             5,551      5,911
Depreciation and amortization                                       1,224      1,243             3,607      3,631
Net restructuring and other charges                                    64        (26)              134        (26)
                                                                ---------   --------          --------   --------
Total operating expenses                                        $   7,820   $  7,994          $ 23,406   $ 23,896
                                                                ---------   --------          --------   --------

Operating income                                                $     829   $  1,415          $  3,024   $  4,641
Operating margin                                                      9.6%      15.0%             11.4%      16.3%
</TABLE>

Included within ACCESS AND OTHER CONNECTION EXPENSES are costs we pay to connect
calls using the facilities of other service providers, as well as the Universal
Service Fund contributions and per-line charges mandated by the FCC. Costs paid
to telephone companies outside of the United States to connect international
calls are also included within access and other connection expenses.

Access and other connection expenses increased 4.0%, or $0.1 billion, in the
third quarter of 2003 and decreased 0.3%, or $23 million, for the nine months
ended September 30, 2003, compared with the same periods of 2002. Domestic
access charges for the third quarter and year-to-date period included a $125
million access expense adjustment to reflect the proper estimate of liability
relating to access costs incurred in 2001 and 2002 (see note 5). Excluding this
adjustment, domestic access charges declined $0.1 billion for the third quarter
and $0.4 billion for the year-to-date period. These declines were primarily due
to lower Universal Service Fund contributions and per-line charges of $0.1
billion for the quarter and $0.3 billion for the year-to-date period primarily
resulting from the decline in long distance voice revenue. In addition, the
declines were due to more efficient network usage and product mix aggregating
$0.2 billion for the third quarter and $0.3 billion for the year-to-date period.
These declines in domestic access charges were partially offset by higher costs
of $0.1 billion for the quarter and $0.2 billion for the year-to-date period as
a result of overall long distance volume growth. Also contributing to the
decline in access and other connection expenses for the year-to-date period were
lower international connection charges of $0.1 billion as a result of lower
rates as well as the reintegration of customers and assets from the unwind of
Concert. These declines were partially offset by an increase in local
connectivity costs of $0.1 billion for the quarter and $0.4 billion for the
year-to-date period, primarily as a result of new state entries and subscriber
increases.

Since most of the Universal Service Fund contributions, and per-line charges are
passed through to the customer, these reductions generally result in a
corresponding reduction in revenue.

COSTS OF SERVICES AND PRODUCTS include costs of operating and maintaining our
networks, costs to support our outsourcing contracts, the provision for
uncollectible receivables and other service-related costs, including cost of
equipment sold.

Costs of services and products decreased $0.1 billion, or 5.4%, in the third
quarter of 2003 and $0.2 billion, or 3.9%, in the first nine months of 2003,
compared with comparable prior year periods. The declines were primarily driven
by the overall impact of lower revenue and the related costs, a lower provision
for uncollectibles, as well as by the deconsolidation of AT&T Latin America.
These declines were partially offset by the impact of a weak U.S. dollar.
Additionally, the decrease for the nine months ended September 30, 2003, was
partially offset by increased costs as a result of the reintegration of
customers and assets from the unwind of Concert.

SELLING, GENERAL AND ADMINISTRATIVE (SG&A) EXPENSES decreased $0.2 billion, or
11.8%, in the third quarter of 2003 and $0.4 billion, or 6.1%, in the nine
months ended September 30, 2003, compared with the corresponding periods in
2002. The decreases were driven by approximately $0.2 billion for the quarter
and $0.3 billion for the year-to-date period of lower expenses due to reduced
volumes at AT&T Consumer Services resulting from a reduction in the number of
residential customers, as well as overall cost control efforts. The year-to-date
decrease was also driven by $0.1 billion of lower long distance and brand
advertising and promotional spending, partially offset by $0.1 billion of
increased marketing, customer care and sales expenses associated with new local
service offerings by AT&T Consumer Services.

DEPRECIATION AND AMORTIZATION EXPENSES decreased $19 million, or 1.5%, in the
third quarter of 2003, compared with the third quarter of 2002, and decreased
$24 million, or 0.7%, in the nine months ended September 30, 2003, compared with
the corresponding period in 2002. The decreases were primarily due to the
adoption of Statement of Financial Accounting Standards (SFAS) No. 143,
"Accounting for Asset Retirement Obligations," and lower depreciation associated
with our AT&T Latin America subsidiary, which was classified as an asset held
for sale in December 2002. These declines were largely offset by an increase in
the asset base. Total capital expenditures were $1.2 billion and $1.0 billion
for the three months ended September 30, 2003 and 2002, respectively, and were
$2.7 billion and $2.6 billion for the nine months ended September 30, 2003 and
2002, respectively. These amounts include $0.4 billion recorded in the third
quarter of 2003 in connection with the adoption of Financial Accounting
Standards Board Interpretation (FIN) No. 46, "Consolidation of Variable Interest
Entities - an Interpretation of Accounting Research Bulletin No. 51." We
continue to focus the majority of our capital spending on Internet protocol &
enhanced services (IP&E services) and data services, both of which include
managed services, as well as local voice services.

In the third quarter of 2003, NET RESTRUCTURING AND OTHER CHARGES of $64 million
consisted of $75 million of costs associated with the Company's management
realignment efforts (involuntarily impacting approximately 800 mid-level
managers), primarily representing separation costs, partially offset by the
reversal of $11 million of sales obligation liabilities recorded in a prior
year, associated with the disposition of AT&T Communications (U.K.) Ltd, where
the liabilities incurred were below the original estimate. This quarter's
business restructuring activity reflects the next step towards completion of the
Company's initiative to streamline its management structure, which is expected
to be completed by the end of 2003. The completion of these activities will
require AT&T to record an additional charge in the fourth quarter of 2003.
However, it is anticipated that it will be lower than the charge recorded in the
third quarter of 2003.

Net restructuring and other charges of $134 million for the nine months ended
September 30, 2003, consists of costs associated with the Company's management
realignment efforts, primarily separation costs. These exit plans involuntarily
impacted approximately 900 managers across the company, almost 30% of which have
exited the business as of September 30, 2003, with substantially all of the
remainder expected to be off roll by the end of 2003. These activities were
partially offset by the reversal of $11 million of sales obligation liabilities
recorded in a prior year, associated with the disposition of AT&T Communications
(U.K.) Ltd, where the liabilities incurred were below the original estimate. The
exit plans are not expected to yield cash savings (net of severance benefit
payouts) or a benefit to operating income (net of the restructuring charge
recorded) in 2003, however, we expect to realize approximately $225 million of
cash savings and benefit to operating income in subsequent years, when the exit
plan is completed.

For the three and nine months ended September 30, 2002, AT&T recorded a net
reversal of $26 million of net restructuring and other charges. At that time,
AT&T's management reevaluated the business restructuring plan established in the
fourth quarter of 2001 and determined that the plan needed to be modified,
primarily for certain areas of AT&T Business Services, including network
services, given the industry conditions at that time, as well as the
redeployment of certain employees to different functions within the Company. As
a result, approximately $137 million of net restructuring and other charges were
reversed, which primarily consisted of $110 million for employee separation
costs. The reversals also included $12 million of sales obligation liabilities
recorded in a prior year associated with the disposition of AT&T Communications
(U.K.) Ltd, where the liabilities incurred were below the original estimate.
AT&T's management developed a new exit plan to ensure proper management of our
cost structure in other areas of AT&T Business Services, including network
services, with an offsetting additional charge of $111 million. This plan
primarily consisted of $91 million for employee separation costs and $16 million
for facility closings related to buildings becoming vacant as a result of
previously announced restructuring plans. Of the 1,400 employees affected by
this exit plan, slightly more than half were management employees and 17% left
voluntarily.

Relative to the business restructuring reserves recorded during the third and
fourth quarters of 2002, approximately 70% of the employees affected by these
exit plans have left their positions as of September 30, 2003, with the
remaining reductions to occur by the end of 2003.

AT&T's OPERATING INCOME in the third quarter of 2003 decreased $0.6 billion, or
41.4%, compared with the third quarter of 2002. For the nine months ended
September 30, 2003, AT&T's operating income declined $1.6 billion, or 34.8%,
compared with the sameperiod in 2002. AT&T's operating margin was 9.6% in the
third quarter of 2003 compared with 15.0% in the third quarter of 2002, and was
11.4% in the 2003 year-to-date period, compared with 16.3% in the 2002
year-to-date period. The margin declines were primarily due to the decline in
revenue coupled with a lower rate of decline in related operating expenses
reflecting pricing pressures, product substitution and a shift from
higher-margin retail long distance services to lower-margin wholesale long
distance service and other lower-margin services. In addition, the margins were
negatively impacted by a $125 million access expense adjustment recorded in the
third quarter of 2003.
<TABLE>
<CAPTION>
                                                               For the Three Months             For the Nine Months
                                                                Ended September 30,             Ended September 30,
                                                               --------------------             -------------------
                                                                 2003        2002                 2003       2002
                                                               --------    --------             --------   --------
                                                                               Dollars in millions
<S>                                                            <C>         <C>                  <C>        <C>
Other (expense) income, net                                    $    (7)    $  (180)             $    89    $  (285)
</TABLE>
OTHER (EXPENSE) INCOME, NET, in the third quarter of 2003 was expense of $7
million compared with expense of $0.2 billion in the third quarter of 2002. The
favorable variance of $0.2 billion was primarily due to impairments of $0.2
billion in the third quarter of 2002 related to certain leases of aircraft which
are accounted for as leveraged leases. Additionally, investment-related income
for the third quarter of 2003 increased compared with the comparable prior year
period. Unfavorably impacting other (expense) income, net was a loss of $0.1
billion, associated with the early call of certain debt instruments.

Other (expense) income, net, in the nine months ended September 30, 2003, was
income of $0.1 billion compared with expense of $0.3 billion in the nine months
ended September 30, 2002. The favorable variance of $0.4 billion was primarily
due to impairments of $0.2 billion in the third quarter of 2002 related to
certain leases of aircraft, which are accounted for as leveraged leases and
lower investment impairment charges of $0.1 billion, primarily driven by
impairment charges recorded in 2002 for Time Warner Telecom. Also contributing
to the favorable variance were gains related to mark-to-market adjustments on
financial instruments recorded in 2003 versus losses in 2002 and increased
investment-related income totaling $0.1 billion. Partially offsetting these
favorable items was a $0.1 billion reserve recorded in 2003 related to certain
leases of aircraft which are accounted for as leveraged leases. Also included in
other (expense) income, net, in the first nine months of 2003 were losses of
$0.3 billion associated with the early call and repurchase of long-term debt
instruments. This loss was partially offset by a $0.2 billion gain, also in the
first nine months of 2003, associated with the early retirement of exchangeable
notes that were indexed to AT&T Wireless common stock.

We continue to hold investments in leveraged leases of commercial aircraft,
which we lease to domestic airlines as well as aircraft related companies.
Should the financial difficulties in the U.S, airline industry lead to further
bankruptcies or lease restructurings, AT&T could be expected to record
additional losses associated with its aircraft lease portfolio.
<TABLE>
<CAPTION>
                                                                For the Three Months            For the Nine Months
                                                                Ended September 30,             Ended September 30,
                                                                --------------------            -------------------
                                                                  2003        2002                2003       2002
                                                                --------    --------            --------   --------
                                                                                Dollars in millions
<S>                                                             <C>         <C>                 <C>        <C>
Interest (expense)                                              $  (289)    $  (355)            $  (917)   $(1,087)
</TABLE>

INTEREST (EXPENSE) decreased 18.7%, or $0.1 billion, in the third quarter of
2003 compared with the third quarter of 2002, and decreased 15.7%, or $0.2
billion, in the nine months ended September 30, 2003 compared with the first
nine months of 2002. The decrease was primarily due to a lower average debt
balance in 2003 compared with 2002, reflecting our debt reduction efforts,
slightly offset by interest rate step-ups within our existing debt portfolio.
<TABLE>
<CAPTION>
                                                                 Ended September 30,            Ended September 30,
                                                                 -------------------            -------------------
                                                                   2003       2002                2003       2002
                                                                 --------   --------            --------   --------
                                                                               Dollars in millions
<S>                                                              <C>        <C>                 <C>        <C>
(Provision) for income taxes                                     $   (72)   $  (370)            $  (677)   $(1,362)
Effective tax rate                                                  13.5%      42.0%               30.8%      41.7%
</TABLE>

The (PROVISION) FOR INCOME TAXES decreased $0.3 billion in the third quarter of
2003 compared with the third quarter of 2002. This decrease was primarily due to
the impact of a lower effective tax rate and lower income before income taxes in
the third quarter of 2003. The effective tax rate in the third quarter of 2003
was 13.5%, compared with 42.0% in the prior year quarter. The effective tax rate
in 2003 was positively impacted by approximately 22.5 percentage points due to
the recognition of approximately $120 million of tax benefits associated with
refund claims, which received governmental approval during the third quarter.
The tax refund claims related to additional research and experimentation tax
credits generated in prior years. The effective tax rate in 2002 was negatively
impacted by charges we recorded in connection with certain investments in
leveraged leases, for which a limited tax benefit was recorded.

The (provision) for income taxes decreased $0.7 billion in the first nine months
of 2003 compared with the same period of 2002. This decrease was primarily due
to lower income before income taxes and the impact of a lower effective tax rate
in the first nine months of 2003. The effective tax rate in the first nine
months of 2003 was 30.8%, compared with 41.7% for the same period of 2002. The
effective tax rate in 2003 was positively impacted by approximately 5.5
percentage points due to the recognition of approximately $120 million of tax
benefits associated with tax refund claims related to additional research and
experimentation tax credits generated in prior years. In addition, the 2003
effective tax rate was positively impacted by the recognition of tax benefits in
connection with the exchange and sale of AT&T's remaining interest in AT&T
Wireless common stock. The effective tax rate in 2002 was negatively impacted by
the consolidation of AT&T Latin America's losses, for which the Company was
unable to record tax benefits, as well as by charges we recorded in 2002 in
connection with certain investments in leveraged leases for which a limited tax
benefit was recorded.

In the fourth quarter of 2002, AT&T recorded a valuation allowance against the
deferred tax asset attributable to the book and tax basis difference for our
investment in AT&T Latin America. AT&T's ability to realize the deferred tax
asset related to AT&T Latin America is dependent on factors outside of AT&T's
control. Based on the resolution of various matters, which are expected over the
next 12-15 months, AT&T may determine that all, or a portion of, the valuation
allowance established in 2002 would no longer be necessary.
<TABLE>
<CAPTION>
                                                                For the Three Months            For the Nine Months
                                                                 Ended September 30,            Ended September 30,
                                                                --------------------            -------------------
                                                                  2003        2002                2003       2002
                                                                --------    --------            --------   --------
                                                                                Dollars in millions
<S>                                                             <C>         <C>                 <C>        <C>
Minority interest income                                        $     -     $    28             $     1    $    81
</TABLE>

MINORITY INTEREST INCOME represents an adjustment to AT&T's income to reflect
the less than 100% ownership of consolidated subsidiaries. Minority interest
income decreased $28 million in the third quarter of 2003 compared with the
third quarter of 2002, and decreased $80 million in the nine months ended
September 30, 2003, compared with the comparable period in 2002. The decreases
were primarily due to our no longer recording minority interest income related
to AT&T Latin America. In December 2002, AT&T fully utilized the minority
interest balance related to AT&T Latin America.
<TABLE>
<CAPTION>
                                                                For the Three Months            For the Nine Months
                                                                Ended September 30,             Ended September 30,
                                                                --------------------            -------------------
                                                                  2003        2002                2003       2002
                                                                --------    --------            --------   --------
                                                                                Dollars in millions
<S>                                                             <C>         <C>                 <C>        <C>
Net (losses) earnings related to equity investments             $    (3)    $   (13)            $     3    $  (414)
</TABLE>

NET (LOSSES) EARNINGS RELATED TO EQUITY INVESTMENTS, which are recorded net of
income taxes, were losses of $3 million in the third quarter of 2003 compared
with losses of $13 million in the third quarter of 2002. The favorable variance
was primarily driven by a $13 million after-tax charge ($21 million pretax)
recorded in the third quarter of 2002 due to the accretion of the floor price of
AT&T's obligation to purchase the shares of AT&T Canada not owned by AT&T.

For the nine months ended September 30, 2003, net (losses) earnings related to
equity investments were earnings of $3 million compared with losses of $414
million for the nine months ended September 30, 2002. The favorable variance was
driven primarily by after-tax charges of $326 million ($528 million pretax)
recorded in 2002 related to the estimated loss on AT&T's commitment to purchase
the shares of AT&T Canada not owned by AT&T. The charges reflected further
deterioration in the underlying value of AT&T Canada as well as accretion of the
floor price of AT&T's obligation to purchase AT&T Canada shares. The variance
was also positively impacted by equity losses from the Concert joint venture
recorded in 2002 (prior to the unwind on April 1, 2002), combined with a
favorable settlement in 2003 related to the unwind of the Concert joint venture,
totaling $84 million after-tax ($136 million pretax).
<TABLE>
<CAPTION>
                                                                For the Three Months            For the Nine Months
                                                                Ended September 30,             Ended September 30,
                                                                --------------------            -------------------
                                                                  2003        2002                2003       2002
                                                                --------    --------            --------   --------
                                                                                Dollars in millions
<S>                                                             <C>         <C>                 <C>        <C>
Net (loss) from discontinued operations, net of
  income taxes                                                  $   (13)    $  (318)            $   (13)   $(14,316)
</TABLE>

NET (LOSS) FROM DISCONTINUED OPERATIONS for the three and nine months ended
September 30, 2003, reflects an estimated cost related to potential legal
liabilities for certain environmental clean-up matters associated with NCR
Corporation (NCR), which was spun-off from AT&T in 1996. NCR has been formally
notified by federal and state agencies that it is a potentially responsible
party (PRP) for environmental claims under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (CERCLA) and other statutes
arising out of the presence of polychlorinated biphenyls (PCBs) in sediments in
the lower Fox River and in the Bay of Green Bay, in Wisconsin. NCR was
identified as a PRP because of alleged PCB discharges from two carbonless copy
paper manufacturing facilities it previously owned, which were located along the
Fox River. In July 2003, the government clarified its planned approach for
remediation of the contaminated sediments, which caused NCR to increase its
estimated liability. Under the separation and distribution agreement between
AT&T and NCR, AT&T is required to pay a portion of such costs that NCR incurs
above a certain threshold. Therefore, in the third quarter of 2003, AT&T
recorded its estimated proportionate share of certain costs associated with the
Fox River matter, which totaled $13 million on both, a pretax and after-tax
basis. The extent of NCR's potential liability is subject to numerous variables
that are uncertain at this time, including the actual remediation costs and the
percentage NCR may ultimately be responsible for. As a result, AT&T's actual
liability may be different than the estimated amount. Pursuant to the separation
and distribution agreement, NCR is liable for the first $100 million of costs in
connection with this liability. AT&T is liable for 37% of costs incurred by NCR
beyond such $100 million threshold. All such amounts are determined after
reduction of any monies collected by NCR from other parties.

Net (loss) from discontinued operations for the three and nine months ended
September 30, 2002 primarily represents the operating results of AT&T Broadband,
which AT&T disposed of on November 18, 2002. Accordingly, the revenue and
expenses of AT&T Broadband have been excluded from the respective captions in
the Consolidated Statements of Operations. The operating results for AT&T
Broadband for the three months ended September 30, 2002, was a loss of $318
million after-tax ($399 million pretax). For the nine months ended September 30,
2002, AT&T Broadband's operating loss was $14,228 million after-tax ($20,071
million pretax).

Also included in net (loss) from discontinued operations for the three and nine
months ended September 30, 2002, was an estimated loss on a litigation
settlement associated with the business of Lucent Technologies Inc. (Lucent),
which was spun-off from AT&T in 1996. Sparks, et al. v. AT&T and Lucent
Technologies Inc. et al., was a class action lawsuit filed in 1996 in Illinois
state court. On August 9, 2002, a settlement proposal was submitted to and
accepted by the court. In accordance with the separation and distribution
agreement between AT&T and Lucent, AT&T's estimated proportionate share of the
settlement and legal costs recorded in the second quarter of 2002 totaled $88
million after-tax ($132 million pretax). (In the fourth quarter of 2002, this
initial estimate was reduced to $33 million after-tax [$45 million pretax]).
Depending upon the number of claims submitted and accepted, the actual cost of
the settlement to AT&T may be different than amounts accrued at September 30,
2003. While similar consumer class actions are pending in various state courts,
the Illinois state court has held that the class it certified covers claims in
the other state court class actions.
<TABLE>
<CAPTION>
                                                                For the Three Months            For the Nine Months
                                                                Ended September 30,             Ended September 30,
                                                                --------------------            -------------------
                                                                  2003        2002                2003       2002
                                                                --------    --------            --------   --------
                                                                                Dollars in millions
<S>                                                             <C>         <C>                 <C>        <C>
Cumulative effect of accounting changes                         $   (27)    $     -             $    15    $  (856)
</TABLE>

Effective July 1, 2003, we early adopted FIN 46, "Consolidation of Variable
Interest Entities - an Interpretation of Accounting Research Bulletin (ARB) No.
51," resulting in a charge of $27 million, net of income taxes of $17 million,
recognized as the CUMULATIVE EFFECT of accounting change in the third quarter of
2003. This interpretation requires the primary beneficiary to consolidate a
variable interest entity (VIE) if it has a variable interest that will absorb a
majority of the entity's expected losses if they occur, receive a majority of
the entity's expected residual returns if they occur, or both. Based on this
standard, two entities that AT&T leases buildings from qualify as VIEs and,
therefore, were consolidated as of July 1, 2003.

Effective January 1, 2003, we adopted SFAS No. 143, "Accounting for Asset
Retirement Obligations," resulting in $42 million of income, net of income taxes
of $26 million, as the cumulative effect of this accounting principle. This
standard requires that obligations that are legally enforceable and unavoidable,
and are associated with the retirement of tangible long-lived assets, be
recorded as liabilities when those obligations are incurred, with the amount of
the liability initially measured at fair value. AT&T historically included in
its group depreciation rates an amount related to the cost of removal for
certain assets. However, such amounts are not legally enforceable or
unavoidable; therefore, the cumulative effect impact primarily reflects the
reversal of such amounts accrued in accumulated depreciation.

Effective January 1, 2002, we adopted SFAS No. 142, "Goodwill and Other
Intangible Assets." In accordance with SFAS No. 142, franchise costs were tested
for impairment as of January 1, 2002, by comparing the fair value to the
carrying value (at the market level). As a result of this test, an impairment
loss (related to discontinued operations) of $0.9 billion, net of income taxes
of $0.5 billion, was recorded in 2002.

<TABLE>
Earnings Per Share
<CAPTION>
                                                                For the Three Months            For the Nine Months
                                                                Ended September 30,             Ended September 30,
                                                                --------------------            -------------------
                                                                  2003        2002                2003       2002
                                                                --------    --------            --------   --------
<S>                                                              <C>         <C>                 <C>        <C>
Earnings from continuing operations per basic share              $ 0.58      $ 0.68              $ 1.94     $ 2.14
Total earnings (loss) per basic share                              0.53        0.27                1.94     (18.47)

Earnings from continuing operations per diluted share            $ 0.58      $ 0.67              $ 1.93     $ 2.07
Total earnings (loss) per diluted share                            0.53        0.26                1.94     (17.92)
</TABLE>

EARNINGS PER DILUTED SHARE from continuing operations declined $0.09 to $0.58 in
the third quarter of 2003 compared with $0.67 per diluted share in the third
quarter of 2002. For the nine months ended September 30, 2003, earnings per
share from continuing operations declined $0.14 to $1.93 from $2.07 for the nine
months ended September 30, 2002. The decline for the quarter was primarily
driven by lower operating income, partially offset by favorable variances in
other (expense) income, interest expense and the provision for income taxes. The
decline for the year-to-date period was primarily due to lower operating income,
partially offset by favorable variances in net earnings (losses) related to
equity investments, other income and the provision for income taxes. Also
contributing to the decline in the year-to-date period was higher average shares
primarily resulting from AT&T common stock issued in conjunction with various
equity transactions that took place during 2002 (see note 12).

In the third quarter of 2003, total diluted earnings per share of $0.53 included
income from continuing operations as discussed above of $0.58, a loss from
discontinued operations of $0.02 and a loss related to the cumulative effect of
an accounting change of $0.03. Total earnings per share of $1.94 for the nine
months ended September 30, 2003, included income from continuing operations as
discussed above of $1.93, a loss from discontinued operations of $0.01 and
income related to the cumulative effect of accounting changes of $0.02.

In the third quarter of 2002, total diluted earnings per share of $0.26 included
income from continuing operations as discussed above of $0.67 and a loss from
discontinued operations of $0.41. For the nine months ended September 30, 2002,
total diluted loss per share of $17.92 included income from continuing
operations as discussed above of $2.07, a loss from discontinued operations of
$18.86, and a loss related to the cumulative effect of an accounting change of
$1.13.


SEGMENT RESULTS

AT&T's results are segmented according to the customers we service: AT&T
Business Services and AT&T Consumer Services. The balance of AT&T's continuing
operations is included in a "Corporate and Other" group. This group primarily
reflects corporate staff functions and the elimination of transactions between
segments. The discussion of segment results includes revenue, operating income,
capital additions and total assets.

Operating income is the primary measure used by AT&T's chief operating decision
makers to measure AT&T's operating results and to measure segment profitability
and performance.

Total assets for each segment generally include all assets, except intercompany
receivables. Prepaid pension assets, taxes and corporate-owned or leased real
estate are generally held at the corporate level, and therefore are included in
the Corporate and Other group. The (loss) from discontinued operations is not
reflected in the Corporate and Other group. Capital additions for each segment
include capital expenditures for property, plant and equipment, additions to
nonconsolidated investments and additions to internal-use software.

Our existing segments reflect certain managerial changes that were implemented
during 2003. The changes primarily include a redistribution of property, plant
and equipment from the Corporate and Other group to AT&T Business Services and a
transfer of deferred taxes from AT&T Consumer Services to the Corporate and
Other group.

Reflecting the dynamics of our business, we continuously review our management
model and structure, which may result in additional adjustments to our operating
segments in the future.


AT&T BUSINESS SERVICES

AT&T Business Services provides a variety of global communications services to
small and medium-sized businesses, large domestic and multinational businesses
and government agencies. AT&T Business' services include long distance,
international, toll-free and local voice, including wholesale transport services
(sales of services to service resellers), as well as data services and Internet
protocol and enhanced (IP&E) services, which includes the management of network
servers and applications. Data services and IP&E services are broad categories
of services in which data (e.g., e-mail, video or computer file) is transported
from one location to another. Data services includes bandwidth services
(dedicated private line services through high-capacity optical transport),
packet services and managed data services. In packet services, data is divided
into efficiently sized components and transported between packet switches until
it reaches its final destination, where it is reassembled. Packet services
includes frame relay and Asynchronous Transfer Mode (ATM). IP&E services
includes all services that ride on the IP common backbone or that use IP
technology, including managed IP services, as well as application services
(e.g., hosting or security). Managed services delivers end-to-end enterprise
networking solutions by managing networks, servers and applications. AT&T
Business Services also provides outsourcing solutions and other professional
services.
<TABLE>
<CAPTION>
                                                                 For the Three Months             For the Nine Months
                                                                 Ended September 30,              Ended September 30,
                                                                 --------------------             -------------------
                                                                   2003        2002                 2003       2002
                                                                 --------    --------             --------   --------
                                                                                 Dollars in millions
<S>                                                              <C>         <C>                  <C>        <C>
Services revenue*                                                $  6,199    $  6,616             $ 18,903   $ 19,697
Equipment and product sales                                            83          84                  222        273
                                                                 --------    --------             --------   --------
Total revenue                                                    $  6,282    $  6,700             $ 19,125   $ 19,970
                                                                 --------    --------             --------   --------

Operating income                                                 $    417    $    854             $  1,614   $  2,577
Capital additions                                                $    995    $    912             $  2,396   $  2,418
</TABLE>

<TABLE>
<CAPTION>
                                                                  At               At
                                                             September 30,    December 31,
                                                                 2003             2002
                                                             -------------    ------------
<S>                                                            <C>              <C>
Total assets                                                   $ 34,951         $ 36,389
<FN>
*  For the three and nine months ended September 30, 2002, services revenue
   included $98 million and $273 million, respectively, of sales to AT&T
   Broadband, which were recorded as internal revenue through the November 18,
   2002, date of disposition. Currently, sales to AT&T Broadband, now Comcast
   Corporation, are recorded as external revenue.
</FN>
</TABLE>
REVENUE

AT&T Business Services revenue decreased $0.4 billion, or 6.2%, in the third
quarter of 2003 and declined $0.8 billion, or 4.2%, for the nine months ended
September 30, 2003, compared with the same prior year periods. The decreases
were primarily driven by declines in long distance voice services, decreased
data services and lower outsourcing contract revenue, partially offset by growth
in local voice services and IP&E services. The year-to-date growth rate was
favorably impacted by the reintegration of Concert businesses on April 1, 2002.
Additionally, both the quarter and year-to-date period growth rates were
negatively impacted by AT&T Latin America, which was fully consolidated in 2002,
but not in 2003.

Long distance voice revenue for the third quarter of 2003 declined $328 million,
or 10.5%, to $2.8 billion and decreased $766 million, or 8.2%, to $8.6 billion,
for the nine months ended September 30, 2003, compared with the same prior year
periods. The declines were driven by a decrease in the average price per minute
in both the retail and wholesale businesses combined with a decline in retail
volumes. These factors are expected to continue to negatively impact revenue.
Total long distance volumes grew nearly 15% in the third quarter 2003 and
approximately 13% for the nine months ended September 30, 2003, compared with
the same prior year periods, reflecting an increase in lower-priced wholesale
minutes more than offsetting the decrease in higher-priced retail minutes. This
volume increase was not enough to offset the price declines previously noted.

Data services revenue declined 6.5%, or $137 million, to $1.9 billion, compared
with the third quarter of 2002, and declined 3.8%, or $239 million, to $5.9
billion, for the nine months ended September 30, 2003, compared with the nine
months ended September 30, 2002. The declines were primarily due to the
continued decline in private line services (a service in which the connection is
dedicated to the customer) driven by pricing. Excluding equipment and product
sales, data services revenue declined 5.7% in the third quarter of 2003 compared
with the third quarter of 2002, and declined 3.6% in the nine months ended
September 30, 2003, compared with the nine months ended September 30, 2002.

IP&E services revenue increased $55 million, or 13.0%, to $476 million in the
third quarter of 2003 compared with the third quarter of 2002 driven by
increases in managed internet access, hosting and related equipment and product
sales. For the nine months ended September 30, 2003, IP&E services revenue
increased $145 million, or 11.8% to $1.4 billion, compared with the nine months
ended September 30, 2002, driven primarily by increases in managed internet
access, hosting and related equipment and product sales. Excluding equipment and
product sales, IP&E services revenue increased 8.6% in the third quarter of 2003
compared with the third quarter of 2002, and increased 10.0% in the nine months
ended September 30, 2003, compared with the nine months ended September 30,
2002.

Local voice services revenue grew $105 million, or 37.9%, to $379 million in the
third quarter of 2003, and grew $279 million, or 33.9%, to $1.1 billion in the
nine months ended September 30, 2003, compared with the same prior year periods.
This growth reflects our continued focus on increasing the utilization of our
existing footprint. There were over 4.3 million access lines in service at
September 30, 2003, an increase of approximately 97 thousand since the end of
the second quarter of 2003.

OPERATING INCOME

Operating income declined $0.4 billion, or 51.2%, in the third quarter of 2003
and $1.0 billion, or 37.4%, in the nine months ended September 30, 2003,
compared with the same periods in 2002. The declines were primarily due to the
decrease in the long distance voice business resulting primarily from the impact
of continued decline in the average price per minute and declining retail
volumes tied to the weak economyand substitution. The decline in operating
income was also impacted by a $125 million access expense adjustment recorded in
the third quarter of 2003 and an increase in restructuring charges, partially
offset by cost control efforts.

Operating margin declined to 6.6% in the third quarter of 2003 from 12.7% in the
third quarter of 2002, and declined to 8.4% in the nine months ended September
30, 2003 from 12.9% in the comparable prior year period. The margin declines for
the third quarter and the year-to-date period reflect the declining long
distance retail voice business coupled with a shift from higher-margin long
distance voice services to lower-margin growth services, which include wholesale
services. The decline in operating margin was also impacted by the access
expense adjustment and an increase in restructuring charges, partially offset by
cost control efforts.

OTHER ITEMS

Capital additions were $995 million in the third quarter of 2003, and were $2.4
billion for the nine months ended September 30, 2003. We continue to concentrate
the majority of capital spending on our growth businesses, focusing on improving
the customer experience and AT&T's overall cost structure. The current period
capital additions also included $241 million of property, plant and equipment
resulting from the adoption of FIN 46.

Total assets declined $1.4 billion, or 4.0%, at September 30, 2003, compared
with December 31, 2002, primarily driven by lower net property, plant and
equipment, a decrease in accounts receivable resulting from improved cash
collections and lower revenue and a decrease in other current assets as a result
of the deconsolidation of AT&T Latin America in the second quarter of 2003.


AT&T CONSUMER SERVICES

AT&T Consumer Services provides a variety of communication services to
residential customers. These services include traditional long distance voice
services such as domestic and international dial services (long distance or
local toll calls where the number "1" is dialed before the call), calling card
services and dial-up Internet. Transaction services, such as prepaid card and
operator-assisted calls, are also offered. Collectively, these represent
stand-alone long distance services and are not offered in conjunction with any
other service. In addition, AT&T Consumer Services provides all distance
services, which bundle long distance, local and local toll.
<TABLE>
<CAPTION>
                                                                 For the Three Months            For the Nine Months
                                                                 Ended September 30,             Ended September 30,
                                                                 --------------------            -------------------
                                                                   2003        2002                2003       2002
                                                                 --------    --------            --------   --------
                                                                                 Dollars in millions
<S>                                                              <C>         <C>                 <C>        <C>
Revenue                                                          $  2,353    $  2,794            $  7,265   $  8,791
Operating income                                                      500         595               1,621      2,203
Capital additions                                                      14          34                  55         95
</TABLE>

<TABLE>
<CAPTION>
                                                                 At               At
                                                            September 30,    December 31,
                                                                2003             2002
                                                            -------------    ------------
<S>                                                           <C>              <C>
Total assets                                                  $ 1,095          $ 1,390
</TABLE>

REVENUE

AT&T Consumer Services revenue declined $0.4 billion, or 15.8%, in the third
quarter of 2003 and declined $1.5 billion, or 17.4%, in the nine months ended
September 30, 2003, compared with the same prior year periods. The decline in
both periods was primarily due to a decline in stand-alone long distance voice
services, which declined $0.7 billion to $1.8 billion in the third quarter of
2003, and declined $2.2 billion to $5.6 billion in the first nine months of
2003, largely due to the impact of ongoing competition, which has led to a loss
of market share, and substitution. In addition, stand-alone long distance voice
services have been negatively impacted by the continued migration of customers
to lower priced optional calling plans and other products offered by AT&T, such
as bundled services. Partially offsetting these declines was an increase in
bundled revenue and pricing actions. Bundled revenue rose $0.2 billion to $0.5
billion for the third quarter of 2003, and increased $0.7 billion to $1.4
billion for the nine months of 2003, reflecting an increase in subscribers
primarily due to penetration in existing markets, as well as new markets entered
into since September 30, 2002, including Indiana, Virginia, Maryland,
Massachusetts, Wisconsin, Minnesota and Arizona. The increase in bundled revenue
includes amounts previously incorporated in stand-alone long distance voice
revenue for existing customers that migrated to bundled offers. Also partially
offsetting the declines in stand-alone long-distance voice services were pricing
actions taken, including a monthly fee that we began billing in the third
quarter of 2003 to recover costs, including certain access charges and property
taxes.

Total long distance calling volumes (including long distance volumes sold as
part of a bundle) declined approximately 19% in the third quarter of 2003 and
declined approximately 16% for the year-to-date period in 2003, compared with
the same periods of 2002, as a result of competition and wireless and Internet
substitution. The year-to-date decline was partially offset by an increase in
prepaid card usage. We expect product substitution, competition (including the
continued entry of the Regional Bell Operating Companies (RBOC's) into the long
distance market) and customer migration to lower-priced calling plans and
products to continue to negatively impact AT&T Consumer Services.

OPERATING INCOME

Operating income declined $0.1 billion, or 16.1%, in the third quarter of 2003
and declined $0.6 billion, or 26.4%, in the nine months ended September 30,
2003, compared with the same periods in 2002. The declines were primarily due to
the decline in the stand-alone long distance business.

Operating margin declined to 21.2% in the third quarter of 2003 from 21.3% in
the third quarter of 2002, and declined to 22.3% in the nine months ended
September 30, 2003, from 25.1% in the comparable prior year period. The margin
declines for the third quarter and the year-to-date period reflect the decrease
in revenue coupled with a slower rate of decline in related expenses. The margin
declines, particularly the third quarter decline, were partially mitigated by
pricing actions taken.

OTHER ITEMS

Capital additions decreased $20 million, or 58.0% in the third quarter of 2003,
and declined $40 million, or 42.2%, for the nine months ended September 30,
2003, compared with the same periods in 2002.

Total assets declined $0.3 billion to $1.1 billion at September 30, 2003, from
December 31, 2002. The decline was primarily due to lower accounts receivable,
reflecting lower revenue and improved cash collections.


CORPORATE AND OTHER

This group primarily reflects the results of corporate staff functions, brand
licensing fee revenue and the elimination of transactions between segments.
<TABLE>
<CAPTION>
                                                                 For the Three Months             For the Nine Months
                                                                 Ended September 30,              Ended September 30,
                                                                 --------------------             -------------------
                                                                   2003        2002                 2003       2002
                                                                 --------    --------             --------   --------
                                                                                 Dollars in millions
<S>                                                              <C>         <C>                  <C>        <C>
Revenue                                                          $    14     $   (85)             $    40    $  (224)
Operating (loss)                                                     (88)        (34)                (211)      (139)
Capital additions                                                    198          23                  210         47
</TABLE>

<TABLE>
<CAPTION>
                                                                 At               At
                                                            September 30,    December 31,
                                                                2003             2002
                                                            -------------    ------------
<S>                                                           <C>              <C>
Total assets                                                  $ 15,261         $ 17,493
</TABLE>

REVENUE

For the third quarter of 2003, Corporate and Other revenue was $14 million,
compared with negative $85 million for the third quarter of 2002. For the nine
months ended September 30, 2003, Corporate and Other revenue was $40 million,
compared with negative $224 million for the nine months ended September 30,
2002. The year-over-year changes were primarily due to lower eliminations of
internal revenue in 2003 as a result of the split-off of AT&T Broadband in
November 2002.

OPERATING INCOME

For the third quarter of 2003, the operating loss grew $54 million to $88
million, compared with the third quarter of 2002. For the nine months ended
September 30, 2003, the operating loss grew $72 million to a loss of $211
million, compared with the nine months ended September 30, 2002. The increased
operating loss in 2003 compared with 2002 for both the quarter and year-to-date
periods was primarily due to higher compensation and benefit costs reflecting
higher postretirement and pension expense driven in part by a lower discount
rate and expected rate of return on plan assets. The year-to-date increases were
partly offset by transaction costs associated with AT&T's restructuring recorded
in 2002 and an asset impairment charge recorded in 2002.

OTHER ITEMS

Capital additions increased $0.2 billion for the third quarter and nine months
ended September 30, 2003, compared with the same periods in 2002, as a result of
$192 million of property, plant and equipment recorded in connection with the
adoption of FIN 46.

Total assets decreased $2.2 billion to $15.3 billion at September 30, 2003, from
December 31, 2002. The decrease was primarily driven by a lower cash balance of
$1.4 billion at September 30, 2003, and lower other current assets of $0.4
billion primarily due to a reduction in income taxes receivable as a result of
the receipt of tax refunds. In addition, other assets declined $0.4 billion,
primarily due to the disposal of our interest in AT&T Wireless common stock.

<TABLE>
FINANCIAL CONDITION
<CAPTION>
                                                                                    September 30,       December 31,
                                                                                       2003                 2002
                                                                                    -------------       ------------
                                                                                          Dollars in millions
<S>                                                                                   <C>                 <C>
Total assets                                                                          $ 51,307            $ 55,272
Total liabilities                                                                       37,768              42,960
Total shareowners' equity                                                               13,539              12,312
</TABLE>

Total assets decreased $4.0 billion, or 7.2%, to $51.3 billion at September 30,
2003, compared with December 31, 2002. This decrease was largely driven by a
$1.3 billion decrease in cash and cash equivalents. Property, plant and
equipment declined $0.9 billion as a result of depreciation recorded during the
period, partially offset by capital expenditures and assets added as a result of
the adoption of FIN 46. Accounts receivable decreased by $0.8 billion, primarily
driven by lower revenue and improved collections. In addition, other current
assets declined $0.6 billion, primarily due to a reduction in income taxes
receivable as a result of the receipt of tax refunds, and due to the
deconsolidation of AT&T Latin America, partially offset by mark-to-market
adjustments on financial instruments. Other assets declined by $0.4 billion,
primarily due to the disposal of our interest in AT&T Wireless common stock,
which had a carrying amount of $0.5 billion at December 31, 2002, a portion of
which was used to redeem exchangeable notes that were indexed to AT&T Wireless
common stock and the remaining interest was sold. The decline in other assets
was partially offset by increased mark-to-market adjustments on financial
instruments.

Total liabilities decreased $5.2 billion, or 12.1%, to $37.8 billion at
September 30, 2003, from $43.0 billion at December 31, 2002. This decrease was
primarily the result of $5.2 billion in lower debt, reflecting the early
retirement of $4.8 billion of debt, including exchangeable notes indexed to AT&T
Wireless common stock we owned, and the $1.3 billion repayment of one-year notes
and commercial paper. These reductions in debt were partially offset by a $0.5
billion increase as a result of the adoption of FIN 46 and an increase of $0.4
billion due to mark-to-market adjustments. Also contributing to the decline in
total liabilities was lower accounts payable of $0.5 billion as payments were
made against year-end capital expenditures and other accruals and lower payroll
and short-term benefit-related liabilities of $0.4 billion, as payments for
salary and other compensation accruals were made during the period. Partially
offsetting these declines was an increase in deferred taxes of $0.8 billion,
reflecting greater tax deductions related to property, plant and equipment.

Total shareowners' equity increased $1.2 billion, or 10.0%, to $13.5 billion at
September 30, 2003, from $12.3 billion at December 31, 2002. This increase was
primarily due to $1.5 billion of net income, partially offset by dividends
declared.

We expect the market value of AT&T's pension assets at December 31, 2003, to
continue to be lower than the accumulated benefit obligation (ABO) for the AT&T
Management Pension Plan. Under SFAS No. 87, "Employer's Accounting for
Pensions," a company is required to record an additional minimum liability equal
to the amount of the unfunded ABO. The actual 2003 minimum pension liability
will be calculated on the next measurement date of the plan, which is December
31, 2003, and is dependent on plan asset values at that time, as well as
assumptions used to measure pension obligations and could result in a net charge
to equity. There is a wide range of possible outcomes depending on the
securities' market performance and interest rate fluctuations during the fourth
quarter.


<TABLE>
LIQUIDITY

Cash Flows
<CAPTION>
                                                                                For the Nine Months Ended September 30,
                                                                                      2003                   2002
                                                                                ------------------- -------------------
                                                                                          Dollars in millions
<S>                                                                                <C>                    <C>
Provided by operating activities of continuing operations                             7,113                  6,944
(Used in) investing activities of continuing operations                              (2,389)                (2,614)
(Used in) financing activities of continuing operations                              (5,987)                (3,882)
(Used in) discontinued operations                                                         -                 (4,133)
                                                                                   --------               --------
Net (decrease) in cash and cash equivalents                                        $ (1,263)              $ (3,685)
                                                                                   --------               --------
</TABLE>

Net cash provided by operating activities of AT&T's continuing operations of
$7.1 billion for the nine months ended September 30, 2003, was generated
primarily by $6.9 billion of income from continuing operations, adjusted to
exclude noncash income items and net gains on sales of businesses and
investments. Also contributing to the source of cash was a net change in other
assets and liabilities of $0.4 billion primarily due to tax refunds partially
offset by lower payroll and benefit related liabilities due to payments of
accruals. In addition, accounts receivable decreased $0.2 billion reflecting
cash collections. Partially offsetting these sources of cash was a $0.4 billion
decrease in accounts payable primarily due to payments of year-end operating
accruals.

Net cash provided by operating activities of continuing operations of $6.9
billion for the nine months ended September 30, 2002, primarily included $7.2
billion of income from continuing operations, adjusted to exclude noncash income
items and net gains on sales of businesses and investments. Also contributing to
the source of cash from operating activities was a decrease in accounts
receivable of $0.3 billion, primarily due to the collection of a receivable from
Liberty Media Corporation and improved cash collections. Partially offsetting
these sources of cash were net changes in other operating assets and liabilities
of $0.4 billion due to decreases in payroll and benefit-related liabilities and
other short-term liabilities and a decrease of $0.2 billion in accounts payable,
all of which were primarily attributable to payments made against year-end
accruals.

AT&T's investing activities resulted in a net use of cash of $2.4 billion in the
nine months ended September 30, 2003, compared with $2.6 billion in 2002. During
the nine months ended September 30, 2003, AT&T spent $2.4 billion on capital
expenditures, made payments of $0.2 billion to BT primarily associated with
assets assumed by AT&T that BT originally contributed to the Concert joint
venture, and received $0.1 billion of proceeds from the sale of its remaining
AT&T Wireless shares. During the nine months ended September 30, 2002, AT&T
spent $2.8 billion on capital expenditures, had an increase in restricted cash
of $0.4 billion as a result of the posting of a cash-collateralized letter of
credit associated with certain private debt, and received $0.5 billion from the
sale of fixed assets.

During the nine months ended September 30, 2003, net cash used in financing
activities was $6.0 billion, compared with $3.9 billion in the nine months ended
September 30, 2002. During the nine months ended September 30, 2003, AT&T made
net payments of $5.8 billion to reduce debt, including early termination of debt
(see "Financial Condition" discussion above), paid dividends of $0.4 billion and
received $0.2 billion of cash collateral related to favorable positions of
certain combined interest rate swap agreements. During the nine months ended
September 30, 2002, AT&T made net payments of $6.1 billion to reduce debt, paid
dividends of $0.4 billion, and received $2.6 billion from the issuance of AT&T
common stock, primarily due to the sale of 46 million shares, the proceeds of
which were used in October 2002 to settle a portion of AT&T's obligation to the
AT&T Canada shareholders.


Working Capital and Other Sources of Liquidity

At September 30, 2003, our working capital ratio (current assets divided by
current liabilities) was 1.08.

On October 8, 2003, we closed a $2.0 billion syndicated 364-day credit facility
led by J.P. Morgan Securities Inc. and Citigroup Global Markets Inc. that
replaced our existing undrawn $3.0 billion facility. This new credit facility
provides the option to extend the terms of the agreement for an additional
364-day period beyond October 7, 2004. Up to $0.3 billion of the facility can be
utilized for letters of credit, which reduces the amount available. In October
2003, approximately $0.1 billion of letters of credit were issued under this
facility. Additionally, the credit facility contains a financial covenant that
requires AT&T to meet a net debt-to-EBITDA ratio (as defined in the credit
agreement) not exceeding 2.25 to 1.00 and an EBITDA interest coverage ratio (as
defined in the credit agreement) of at least 3.50 to 1.00 for four consecutive
quarters ending on the last day of each fiscal quarter.

At September 30, 2003, we were in compliance with the $3.0 billion credit
facility covenants. Pursuant to the definitions in the new and previous credit
facility, business restructuring and asset impairment charges have no impact on
the EBITDA financial covenant in the credit facility.

In July 2003, AT&T renewed its AT&T Consumer Services 364-day customer accounts
receivable securitization facility and entered into a new AT&T Business Services
364-day customer accounts receivable securitization facility. Together, the
programs provide up to $1.65 billion of available financing, limited by the
eligible receivables balance, which varies from month to month. Proceeds from
the securitizations are recorded as borrowings and included in short term debt.
At September 30, 2003, approximately $0.2 billion was outstanding. The new
facilities do not include the provision that previously required the outstanding
balances to be paid by the collection of the receivables in the event AT&T's
credit ratings were downgraded below investment grade. In addition, the new
facilities require AT&T to meet a net debt-to-EBITDA ratio (as defined in the
agreements) not exceeding 2.25 to 1.00.

We anticipate continuing to fund our operations in 2003 primarily with cash and
cash equivalents on hand, as well as cash from operations. If economic
conditions worsen or do not improve and/or competition and product substitution
accelerate beyond current expectations, our cash flow from operations would
decrease, negatively impacting our liquidity. However, we believe our access to
the capital markets is adequate to provide the flexibility in funding our
operations that we desire. Sources of liquidity include the commercial paper
market, $2.4 billion remaining under a universal shelf registration, an up to
$1.65 billion securitization program (limited by eligible receivables) and the
$2.0 billion credit facility. The maximum amount of commercial paper outstanding
during the third quarter of 2003 and during the first nine months of 2003 was
approximately $1.0 billion and $1.1 billion, respectively. We cannot provide any
assurances that any or all of these sources of funding will be available at the
time they are needed or in the amounts required.

Credit Ratings and Related Debt Implications

In July 2003, AT&T's long-term credit ratings were lowered by both Standard and
Poor's and Fitch to BBB from BBB+. Standard and Poor's (S&P) removed the ratings
from CreditWatch. The Company's short term credit and commercial paper ratings
were affirmed by S&P and Fitch at A-2 and F-2, respectively. The rating action
by S&P triggered a 25 basis point interest rate step-up on $11 billion of debt,
$1.7 billion of which matures in November 2003. This step-up will result in an
increase in interest expense of approximately $25 million in 2004. On July 24,
2003, Moody's affirmed AT&T's current ratings at Baa2 for long term and P-2 for
short term. Moody's continues to hold AT&T's outlook at negative. The table
below reflects the most recent actions of the rating agencies as described
above:

                              Short-Term     Long-Term
Credit Rating Agency          Rating         Rating        Outlook

Standard & Poor's             A-2            BBB           Stable
Fitch                         F-2            BBB           Negative
Moody's                       P-2            Baa2          Negative


Further debt rating downgrades could require AT&T to pay higher rates on certain
existing debt and post cash collateral for certain interest-rate and equity
swaps if we are in a net payable position.

If AT&T's debt ratings are further downgraded, AT&T's access to the capital
markets may be restricted and/or such replacement financing may be more costly
or have additional covenants than we had in connection with our debt at
September 30, 2003. In addition, the market environment for financing in
general, and within the telecommunications sector in particular, has been
adversely affected by economic conditions and bankruptcies of other
telecommunications providers. If the financial markets become more cautious
regarding the industry/ratings category we operate in, our ability to obtain
financing would be further reduced.

AT&T Corp. is generally the obligor for debt issuance. However we have some
instances where AT&T Corp. is not the obligor, for example, the securitization
facilities and certain capital leases. The total debt of these entities, which
are fully consolidated, is approximately $0.7 billion at September 30, 2003, is
included within short-term and long-term debt on the Consolidated Balance Sheet.
AT&T expects to repay approximately $0.5 billion of this debt by the end of
November 2003.

Cash Requirements

Our cash needs for 2003 will be primarily related to capital expenditures,
repayment of debt and payment of dividends. We continue to expect our capital
expenditures for 2003 to be approximately $3.4 billion (including the $0.4
billion noncash impact of assets consolidated as a result of FIN 46). On January
31, 2003, we completed the repurchase, with cash, of $3.7 billion of notes with
interest rates of 6.375% and 6.5% and maturities of 2004 and 2013. In addition,
in connection with the early retirement in February 2003 of exchangeable notes
that were indexed to AT&T Wireless common stock, we made cash payments of $152
million to the debt holders, funded in part by $72 million of proceeds from the
sale of our remaining AT&T Wireless shares. On September 15, 2003, we completed
the cash repurchase of $0.5 billion of notes with interest rates of 8.125% and
maturities of 2022 and 2024. On October 22, 2003, we completed the cash
repurchase of notes called for redemption in September 2003, totaling $1.1
billion with interest rates of 5.625%, 6.375% and 8.625%, and maturities of 2004
and 2031. In addition, by the end of November 2003, AT&T expects to repay, with
cash, $0.5 billion of debt associated with the exercise of its purchase option
on buildings we leased. These transactions are expected to save approximately
$0.3 billion of interest expense in 2003. In addition, we anticipate
contributing approximately $0.5 billion to the postretirement benefit trusts in
the fourth quarter of 2003.

In September 2003, the Board of Directors declared the third quarter dividend of
$0.2375 per share (payable in November 2003), an increase of $0.05 per share
compared with previous quarterly dividends.

Contractual Cash Obligations

Prior to the spin-off of AT&T Broadband, AT&T had guaranteed certain debt of
AT&T Broadband, which as of September 30, 2003, we continued to provide. In
October 2003, Comcast called this debt, which relieved AT&T of this $0.5 billion
commitment.

Additionally, AT&T had guaranteed various other obligations of AT&T Broadband,
including operating leases for real estate, surety bonds, and equity hedges,
which we continue to provide. The notional amount of such guarantees totaled
$458 million at December 31, 2002, and have decreased to $262 million as of
September 30, 2003, primarily resulting from third parties releasing us from
guarantees we provided for surety bonds. Comcast continues to provide
indemnifications for the full amount of the remaining guarantees.

Under certain real estate operating leases (with entities consolidated as a
result of FIN 46, see note 3), AT&T could have been required to make payments to
the lessors of up to $427 million at the end of the lease term. On September 18,
2003, AT&T gave notice to exercise its purchase options under these leases. As a
result of the exercise of these options, AT&T will no longer have a potential
payment requirement.


RISK MANAGEMENT

We are exposed to market risk from changes in interest and foreign exchange
rates, as well as changes in equity prices associated with previously affiliated
companies. On a limited basis, we use certain derivative financial instruments,
including interest rate swaps, options, forwards, equity hedges and other
derivative contracts, to manage these risks. We do not use financial instruments
for trading or speculative purposes. All financial instruments are used in
accordance with board-approved policies.

<PAGE>

Item 4. CONTROLS AND PROCEDURES


As of the end of the period covered by this report, we completed an evaluation,
under the supervision and with the participation of our management including our
Chief Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of our disclosure controls and procedures pursuant to
Exchange Act Rule 13a-14. Based upon that evaluation, the Chief Executive
Officer and Chief Financial Officer have concluded that our disclosure controls
and procedures are effective in alerting them timely to material information
required to be included in our Exchange Act filings. Other than as described
below, there have not been any significant changes in our internal controls or
in other factors that could significantly affect these controls subsequent to
the date of the evaluation.

In September 2003, in conjunction with our review of accounting and internal
control systems, the Company determined that the liability on the balance sheet
(included in accounts payable) relating to costs incurred in 2001 and 2002
pertaining to access and other connection expense was understated by $125
million. Since the impact to prior years' annual financial statements was not
material, the Company recorded an additional expense of $125 million ($77
million after-tax) in the third quarter of 2003 to reflect the proper estimate
of the liability.

A review was conducted by outside legal counsel, under the direction of the
Audit Committee. This review found that two employees, one lower-level and one
mid-level management employee, circumvented the internal controls process
resulting in the financial impacts noted below. The Company made the appropriate
personnel changes and enhanced its internal controls accordingly.

<PAGE>

PART II - OTHER INFORMATION

Item 1.           LEGAL PROCEEDINGS
                  Refer to Part 1, Footnote 13, "Commitments and Contingencies"
                  for discussion of certain legal proceedings.

Item 6.           Exhibits and Reports on Form 8-K

         (a)      Exhibits
                  Exhibit Number

                  10(iii)(A)1       Form of Amendment to AT&T Excess Benefit and
                                    Compensation Plan dated as of July 28, 2003
                                    to AT&T Excess Benefit and Compensation
                                    Plan, as amended and restated effective
                                    October 1, 1996 (incorporated by reference
                                    to Exhibit (10)(iii)(A)9 to Form 10-K for
                                    1996, File No. 1-1105).

                  10(iii)(A)2       Form of Amendment to AT&T Non-Qualified
                                    Pension Plan dated as of July 28, 2003 to
                                    AT&T Non-Qualified Pension Plan, as amended
                                    and restated January 1, 1995 (incorporated
                                    by reference to Exhibit (10)(iii)(A)10 to
                                    Form 10-K for 1996, File No. 1-1105).

                  10(iii)(A)3       Form of Amendment to AT&T Senior Management
                                    Incentive Award Deferral Plan dated as of
                                    July 28, 2003 to AT&T Senior Management
                                    Incentive Award Deferral Plan, as amended
                                    effective January 21, 1998 (incorporated by
                                    reference to Exhibit (10)(iii)(A)11 to Form
                                    10-K for 1998, File No. 1-1105).

                  10(iii)(A)4       Form of Amendment to AT&T Corp. Senior
                                    Management Universal Life Insurance Program
                                    dated as of July 28, 2003 to AT&T Corp.
                                    Senior Management Universal Life Insurance
                                    Program effective October 1, 1999
                                    (incorporated by reference to Exhibit
                                    (10)(iii)(A)16 to Form 10-K for 2000, File
                                    No. 1-1105).

                  10(iii)(A)5       Form of Amendment of Appendix A of AT&T
                                    Senior Officer Separation Plan dated as of
                                    July 28, 2003 to AT&T Senior Officer
                                    Severance Plan, as amended October 30, 1997
                                    (incorporated by reference to Exhibit
                                    (10)(iii)(A)18 to Form 10-K for 1997, File
                                    No. 1-1105), and as amended, restated and
                                    renamed AT&T Senior Officer Separation Plan
                                    as of January 1, 2003 (incorporated by
                                    reference to Exhibit (10)(iii)(A)18 to Form
                                    10-K for 2002, File No. 1-1105).

                  10(iii)(A)6       Form of Employment Agreement between AT&T
                                    Corp. and Betsy J. Bernard as amended on
                                    July 25, 2003 to original agreement dated
                                    April 9, 2001 (incorporated by reference to
                                    Exhibit (10)(iii)(A)21 to Form 10-K for
                                    2001. File No. 1-1105) including amendment
                                    dated October 1, 2002 (incorporated by
                                    reference to Exhibit (10)(iii)(A)21 to Form
                                    10-K for 2002, File No. 1-1105).

                  10(iii)(A)7       Form of Employment Agreement between AT&T
                                    Corp. and David W. Dorman as amended on July
                                    25, 2003 to original agreement dated May 18,
                                    2001 (incorporated by reference to Exhibit
                                    (10)(iii)(A)35 to Form 10-K for 2001)
                                    including amendment dated December 31, 2002
                                    (incorporated by reference to Exhibit
                                    (10)(iii)(A)34 to Form 10-K for 2002, File
                                    No. 1-1105).

                  12                Computation of Ratio of Earnings to Fixed
                                    Charges
                  99.1              CEO Certification of Periodic Financial
                                    Reports
                  99.2              CFO Certification of Periodic Financial
                                    Reports

         (b)      Reports on Forms 8-K

                  Form 8-K dated July 16, 2003 was filed pursuant to Item 5 on
                  July 17,  2003.  Form 8-K dated July 24, 2003 was  furnished
                  pursuant  to Item 7 and  Item 9 on July 24,  2003.  Form 8-K
                  dated July 24,  2003 was  furnished  pursuant  to Item 12 on
                  July 28, 2003.

<PAGE>

                                   SIGNATURES


Pursuant to the requirements 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.



                                   AT&T Corp.


                                  /s/   N. S. Cyprus
                                  -----------------------
                                  By:   N. S. Cyprus
                                        Vice President and Controller
                                        (Principal Accounting Officer)


Date:    November 11, 2003

<PAGE>


       Chief Executive Officer and Chief Financial Officer Certifications

                                   AT&T Corp.

                    Certifications Pursuant To Section 302 of
                         The Sarbanes-Oxley Act of 2002

                                  CERTIFICATION

I, David W. Dorman, certify that:

1. I have reviewed this quarterly report on Form 10-Q of AT&T,

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and

c) disclosed in this report any change in the registrant's internal control over
financial reporting that occurred during the registrant's most recent fiscal
quarter (the registrant's fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting ; and

5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of registrant's board of directors
(or persons performing the equivalent function):

a) all significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.

Date:  November 11, 2003          /s/   David W. Dorman
                                  -------------------------
                                  By:   David W. Dorman
                                        Chief Executive Officer

<PAGE>

                                  CERTIFICATION


I, Thomas W. Horton, certify that:

1. I have reviewed this quarterly report on Form 10-Q of AT&T,

2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and

c) disclosed in this report any change in the registrant's internal control over
financial reporting that occurred during the registrant's most recent fiscal
quarter (the registrant's fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting ; and

5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of registrant's board of directors
(or persons performing the equivalent function):

a) all significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.


Date:  November 11, 2003          /s/   Thomas W. Horton
                                  -----------------------
                                  By:   Thomas W. Horton
                                        Chief Financial Officer

<PAGE>

Exhibit Index


Exhibit
Number

10(iii)(A)1       Form of Amendment to AT&T Excess Benefit and Compensation Plan
                  dated as of July 28, 2003 to AT&T Excess Benefit and
                  Compensation Plan, as amended and restated effective October
                  1, 1996 (incorporated by reference to Exhibit (10)(iii)(A)9 to
                  Form 10-K for 1996, File No. 1-1105).

10(iii)(A)2       Form of Amendment to AT&T Non-Qualified Pension Plan dated as
                  of July 28, 2003 to AT&T Non-Qualified Pension Plan, as
                  amended and restated January 1, 1995 (incorporated by
                  reference to Exhibit (10)(iii)(A)10 to Form 10-K for 1996,
                  File No. 1-1105).

10(iii)(A)3       Form of Amendment to AT&T Senior Management Incentive Award
                  Deferral Plan dated as of July 28, 2003 to AT&T Senior
                  Management Incentive Award Deferral Plan, as amended effective
                  January 21, 1998 (incorporated by reference to Exhibit (10)
                  (iii)(A)11 to Form 10-K for 1998, File No. 1-1105).

10(iii)(A)4       Form of Amendment to AT&T Corp. Senior Management Universal
                  Life Insurance Program dated as of July 28, 2003 to AT&T Corp.
                  Senior Management Universal Life Insurance Program effective
                  October 1, 1999 (incorporated by reference to Exhibit (10)
                  (iii)(A)16 to Form 10-K for 2000, File No. 1-1105).

10(iii)(A)5       Form of Amendment of Appendix A of AT&T Senior Officer
                  Separation Plan dated as of July 28, 2003 to AT&T Senior
                  Officer Severance Plan, as amended October 30, 1997
                  (incorporated by reference to Exhibit (10)(iii)(A)18 to Form
                  10-K for 1997, File No. 1-1105), and as amended, restated and
                  renamed AT&T Senior Officer Separation Plan as of January 1,
                  2003 (incorporated by reference to Exhibit (10)(iii)(A)18 to
                  Form 10-K for 2002, File No. 1-1105).

10(iii)(A)6       Form of Employment Agreement between AT&T Corp. and Betsy J.
                  Bernard as amended on July 25, 2003 to original agreement
                  dated April 9, 2001 (incorporated by reference to Exhibit (10)
                  (iii)(A)21 to Form 10-K for 2001. File No. 1-1105) including
                  amendment dated October 1, 2002 (incorporated by reference to
                  Exhibit (10)(iii)(A)21 to Form 10-K for 2002, File No.
                  1-1105).

10(iii)(A)7       Form of Employment Agreement between AT&T Corp. and David W.
                  Dorman as amended on July 25, 2003 to original agreement dated
                  May 18, 2001 (incorporated by reference to Exhibit (10)(iii)
                  (A)35 to Form 10-K for 2001) including amendment dated
                  December 31, 2002 (incorporated by reference to Exhibit (10)
                  (iii)(A)34 to Form 10-K for 2002, File No. 1-1105).

12                Computation of Ratio of Earnings to Fixed Charges
99.1              CEO Certification of Periodic Financial Reports
99.2              CFO Certification of Periodic Financial Reports

<PAGE>

                                                             Exhibit 10(iii)(A)1





                    AT&T EXCESS BENEFIT AND COMPENSATION PLAN








                                      AT&T
                                      and
                   such of its Subsidiary Companies that are
                            Participating Companies

<PAGE>

                                    ARTICLE 4

                          RETIREMENT AND DEATH BENEFITS

                                     * * * *



4.9.    Change in Control Provisions

     (a) In  accordance  with the  preceding  provisions  of  Article 3 and this
Article 4,  following  the  occurrence of a "change in control," as that term is
defined in the AT&T Management Pension Plan, the benefit determined  pursuant to
Section 4.2 and/or  Section 4.3 for a "CIC  eligible  employee," as that term is
defined in the AT&T  Management  Pension Plan,  shall be determined  taking into
account  the change in control  provisions  of such plan.  Pursuant to the Board
resolution  of January 21,  1998,  the Company may elect to pay a  Participant's
benefit from this Plan in a single sum payment.

     (b)  Notwithstanding  the provisions of Section 9.1, or any other provision
of the Plan,  unless  required by  applicable  law,  this Section 4.9 may not be
amended in any manner  adverse to the  interests of  Participants  without their
consent and, further,  upon the occurrence of a CIC, no amendment may be made to
this Section 4.9 by the Board,  the  Company,  (including  any  successor to the
Company), any committee,  any officer, or any other party to suspend, modify, or
eliminate any benefit provisions that are applicable upon occurrence of a CIC.

<PAGE>

                                                             Exhibit 10(iii)(A)2




                         AT&T NON-QUALIFIED PENSION PLAN






                                      AT&T
                                       and
                    such of its Subsidiary Companies that are
                             Participating Companies

<PAGE>

                                   ARTICLE 9.

                               GENERAL PROVISIONS

                                     * * * *


9.18    CIC Provision

        (a)    Applicability

               This Section 9.18  applies  only to an individual  who, as of the
               date a Change  in  Control  ("CIC")  occurs  (as  defined  in the
               Pension Plan),  is an employee of a  Participating  Company and a
               Participant in this Plan.

         (b)   Nonforfeitable Benefits

               Notwithstanding  any other  provisions of this Plan, on and after
               the  date  a CIC  occurs,  solely  for  purposes  of  determining
               entitlement  to benefits from this Plan, an individual  described
               in Section 9.18(a) shall be deemed to be vested under the Pension
               Plan,  whether or not such Participant is otherwise entitled to a
               vested benefit from the Pension Plan.

         (c)   Amendments to CIC Provisions

               Notwithstanding  the  provisions  of Section  8.02,  or any other
               provision of the Plan,  unless  required by applicable  law, this
               Section  9.18 may not be  amended  in any  manner  adverse to the
               interests of  Participants  without their  consent and,  further,
               upon the  occurrence  of a CIC, no amendment  may be made to this
               Section 9.18 by the Board, the Company,  (including any successor
               to the Company),  any committee,  any officer, or any other party
               to suspend,  modify, or eliminate any benefit provisions that are
               applicable upon occurrence of a CIC.

<PAGE>

                                                             Exhibit 10(iii)(A)3








                             AT&T SENIOR MANAGEMENT
                          INCENTIVE AWARD DEFERRAL PLAN






<PAGE>

              AT&T SENIOR MANAGEMENT INCENTIVE AWARD DEFERRAL PLAN


                                     * * * *


6.   CHANGE IN CONTROL/POTENTIAL CHANGE IN CONTROL

     (a) Upon the occurrence of a "Change in Control" or a "Potential  Change in
Control", as those terms are defined in the AT&T Corp. Benefits Protection Trust
(as in effect on October  23,  2000),  the Senior  Manager  (active  and former)
individual deferral agreements  (including any individual  non-qualified pension
arrangements)  for the deferral of  compensation,  retirement  and/or  severance
benefits (and the deferral account  balance,  if any, under each such agreement)
identified by the AT&T Executive Vice President - Human  Resources,  in her sole
discretion,  shall be deemed to be deferred  compensation  obligations under the
Plan.  Notwithstanding any other provision of the Plan to the contrary, (i) each
of  the  individual  deferral  agreements  (including  each  of  the  individual
non-qualified  pension  arrangements)  deemed  to  be  a  deferred  compensation
obligation of the Plan pursuant to the  provisions of this Section 6(a) shall be
treated under the Plan in a manner that is consistent with the express terms and
conditions  of the  respective  agreement;  and (ii) the  deferred  compensation
(including  non-qualified pension benefit) entitlement of a Senior Manager under
the Plan with  respect  to any such  individual  deferral  agreement  (including
individual  non-qualified  pension  arrangements) shall be limited solely to the
benefit  provided  under the  express  terms and  conditions  of the  respective
agreements.  Nothing  contained in this Section 6 shall entitle a Senior Manager
to any  other  deferred  compensation  benefits  under  the Plan  other  than as
expressly  provided  in  the  individual   deferral  agreement   (including  any
individual non-qualified pension arrangement).

     (b) Upon the  occurrence  of a "Change in Control",  as defined in the AT&T
1997 Long Term Incentive Program (as in effect on October 23, 2000), the portion
of each account  balance under the Plan (including the account balance under any
individual   deferral   agreement   and  the  benefits   under  any   individual
non-qualified  pension arrangement) deemed pursuant to the provisions of Section
6(a) to be an obligation of the Plan), that was not vested  immediately prior to
such change in control, shall become fully vested.

     (c) After the  occurrence of a "Change in Control",  as defined in the AT&T
1997 Long  Term  Incentive  Program  (as in effect on  October  23,  2000),  the
interest  credited to an account  balance  (including the account balance of any
former  Senior  Manager and the account  balance under any  individual  deferral
agreement  deemed pursuant to the provisions of Section 6(a) to be an obligation
of the Plan) for any period,  to the extent  applicable,  shall not be less than
the interest derived under the interest rate formula  applicable to such account
balance (and used to calculate  the interest  credited to such account  balance)
for the interest  crediting period  immediately  prior to the occurrence of such
change in control  (unless the provisions of any individual  deferral  agreement
provide otherwise).

     (d) Notwithstanding any provision of any Senior Manager's deferral election
to the contrary,  after the  occurrence of a "Change in Control",  as defined in
the AT&T 1997 Long Term Incentive Program (as in effect on October 23, 2000), no
payment of any Senior  Manager's  short term incentive  award, if any, under the
AT&T Short Term Incentive Plan for the performance year during which such change
in control occurs shall be deferred under the Plan.

<PAGE>

                                                             Exhibit 10(iii)(A)4








                                   AT&T CORP.
                                SENIOR MANAGEMENT
                        UNIVERSAL LIFE INSURANCE PROGRAM






<PAGE>

          AT&T CORP. SENIOR MANAGEMENT UNIVERSAL LIFE INSURANCE PROGRAM


                                     Section
                                       8.
                            Amendment and Termination


                                     * * * *

8.2  Continued  Maintenance of Program After Change in Control.  Notwithstanding
     any other  provision  of the Program to the  contrary  (including,  but not
     limited to the  provisions  of Section 8.0 and Section 8.1), if a Change in
     Control occurs,  the Company (or its successor)  shall continue to maintain
     the  Program  in  accordance  with its  terms and  conditions  prior to the
     occurrence  of the Change in Control  (including,  but not  limited to, the
     provisions  in Section 5.1 and Section 5.2 that require the Company to make
     applicable premium payments and tax adjustment payments,  respectively, and
     any amendment to such terms and  conditions  that was duly adopted prior to
     the occurrence of the Change in Control), without any material reduction in
     any Program benefits, features or Participant or Policyholder rights, for a
     minimum of two (2) years after the Change in Control occurs.

8.3  Prohibition  on  Amendments  After Change in Control.  Notwithstanding  any
     other provision of the Program to the contrary (including,  but not limited
     to, the  amendment  provisions  set forth in Section 8.0 and Section  8.1),
     unless  required by  applicable  law,  after the  occurrence of a Change in
     Control, no amendment shall be made by the Board (or the successor board of
     directors),  a delegate, the Company (or the successor of the Company), any
     committee,  any officer,  any employee of the Company (or the  successor of
     the Company) or by any other party,  to suspend,  modify,  or eliminate the
     Program  continuation  provisions set forth in Section 8.2, or to eliminate
     the  restrictions  contained in this Section 8.3, and no such  amendment to
     the Program  made in  violation  of this  Section  8.3 shall be  effective.
     Nothing in Section 8.2 or this  Section 8.3 shall be  construed to preclude
     the  Company  (or the  successor  of the  Company)  from  implementing  any
     amendment to the Program that was duly adopted  prior to the  occurrence of
     the Change in Control, but does not become effective until after the Change
     in Control occurs.

                                     * * * *

<PAGE>

                                                             Exhibit 10(iii)(A)5



                                   Appendix A

                       AT&T SENIOR OFFICER SEPARATION PLAN
                          CHANGE IN CONTROL PROVISIONS



1.   PURPOSE:

The Change in Control  benefits  described in Appendix A will not apply unless a
Change in Control occurs.


Notwithstanding  any terms of the Plan to the contrary,  for the two-year period
following a Change in Control (as defined below), (i) the definitions of "Senior
Officer",  "Cause" and "Good Reason" that otherwise  would have been governed by
Sections A and B,  respectively,  of the Plan, (ii) the procedure to be followed
in the case of termination  of employment  for Good Reason that otherwise  would
have been governed by Section E.2 of the Plan,  and (iii) the Plan benefits that
otherwise would have been governed by Section F of the Plan, shall be determined
exclusively  pursuant to the  provisions  of this Appendix A.  Accordingly,  the
definition  of Senior  Officer  in  Section A of the Plan,  the  definitions  of
"Cause" and "Good  Reason" in Section B of the Plan,  and  Sections E.2 and F of
the Plan shall not apply for the two-year period  following a Change in Control.
Except to the extent  otherwise  specified  in this  Appendix A, the  applicable
definitional,  operational, procedural and administrative provisions detailed in
Sections A (other than the definition of "Senior  Officer"),  B, (other than the
definitions of "Cause" and "Good Reason"),  C, D, E (other than the notification
requirements set forth in Section E.2), G, H, I, J, K, L, M, N, O, P, Q and R of
the Plan remain  unchanged and will govern the operation of the Plan,  including
the provisions of this Appendix A, following a Change in Control.

2.   EFFECTIVE DATE:

The effective date of the Change In Control  related  provisions of the Plan, as
set forth in this Appendix A, is October 23, 2000.

3.   DEFINITIONS:

     Business Relocation Beyond a Reasonable Commuting Distance - shall mean:

     a change in the Senior Officer's principal work location to a location that

     (i)  is more than thirty five (35) highway miles from the Senior  Officer's
          principal  work location  immediately  prior to the Change in Control;
          and

     (ii) increases the Senior Officer's commuting distance in highway mileage.

<PAGE>

The terms "highway miles" and "highway  mileage" shall have the same meanings as
these  terms  have when used to  express  the  distances  between  locations  by
mapmakers such as the Hagstrom Map Company.

     Cause - shall mean:

     (i)  commission of a crime,  or conviction of a crime,  including by a plea
          of guilty or nolo contendere,  involving theft,  fraud,  dishonesty or
          moral turpitude;

     (ii) intentional or grossly  negligent  disclosure of confidential or trade
          secret  information  of the  Company  to anyone not  entitled  to such
          information, which causes significant harm to the Company;

     (iii)gross  omission or gross  dereliction  of any  statutory or common law
          duty of loyalty to the Company,  which causes  significant harm to the
          Company; or

     (iv) willful  violation  of the  Company's  Code of  Conduct  or any  other
          written Company policy,  where said violation causes  significant harm
          to the Company

     Change in Control  ("CIC") - shall have the same  meaning  assigned to that
term in the AT&T 1997 Long Term Incentive  Program,  as in effect on October 23,
2000.

     CIC Eligible  Senior Officer - shall mean a Senior Officer who,  within two
(2) years following a CIC, (a) has his or her employment  terminated for reasons
other than (i) Cause or (ii) by reason of becoming  eligible for benefits  under
any AT&T long-term disability plan, or (b) terminates employment for Good Reason
occurring  after a CIC,  provided  that the  Senior  Officer  has  followed  the
Notification Procedure set forth in Section 4 of this Appendix A.

     Good Reason - with respect to a Senior  Officer,  shall mean the occurrence
of any of the following  events  without the Senior  Officer's  express  written
consent:

     (i)  a Reduction In Authority or Responsibility (as defined below); or

     (ii) a Reduction in Compensation (as defined below); or

     (iii)a Business  Relocation  Beyond a  Reasonable  Commuting  Distance  (as
          defined above).

     Reduction in Authority or Responsibility - shall mean:

     (i)  the  assignment  to  the  Senior  Officer  of  any  duties  materially
          inconsistent  in  any  respect  with  the  Senior  Officer's  position
          (including  status,  offices,  titles  and  reporting   requirements),
          authority,  duties or responsibilities to which the Senior Officer was
          assigned immediately prior to the date of the Change in Control; or

     (ii) any other action by the Company  which results in a diminution in such
          position, authority, duties or responsibilities.

     Reduction in Authority or Responsibility shall not include:

     (a)  an isolated,  insubstantial and inadvertent action taken in good faith
          and which is remedied by the Company  promptly after receipt of notice
          thereof given by the Senior Officer; or

     (b)  any  temporary  reduction  in authority  or  responsibility  while the
          Senior   Officer  is  absent  from  active  service  on  any  approved
          disability or approved leave of absence.

          By way  of  example,  and  not by  way  of  limitation,  Reduction  in
          Authority or Responsibility shall include:

          (1)  The removal of any division,  business or operating unit or other
               business  organization from the direct managerial  responsibility
               of the Senior Officer, or

          (2)  The material  reduction in the size or scope of responsibility or
               operating  budget of any division,  business or operating unit or
               other  business  organization  for which the Senior  Officer  has
               direct managerial responsibility, or

          (3)  A reduction in the Senior Officer's authority to legally bind the
               Company  under the  Company's  Schedule of  Authorization,  as in
               effect immediately prior to the Change in Control,  without first
               obtaining any additional authority or approval.

     Reduction in Compensation - shall mean, with respect to a Senior Officer, a
reduction in any of the following  amounts of  compensation  from the amounts of
such  compensation that existed  immediately prior to the Change in Control:

          a.   the Senior Officer's annual base salary rate; or

          b.   the Senior  Officer's  Target  Annual  Bonus (as  defined  below)
               without an  offsetting  increase in the Senior  Officer's  annual
               base salary rate, or

          c.   the  Senior   Officer's   Target   Annual  Long  Term   Incentive
               Compensation (as defined below),  without an offsetting  increase
               in the Senior Officer's annual base salary rate and/or the Senior
               Officer's Target Annual Bonus.


A Senior  Officer's  Target  Annual  Bonus  shall mean the value  determined  by
multiplying the Senior Officer's Target Annual Bonus percentage in effect on the
day  preceding  the date of the CIC by his or her  annual  base  salary  rate in
effect on the day preceding the date of the CIC.

A Senior Officer's Target Annual Long Term Incentive Compensation shall mean the
total  value of the annual  equity-based  incentive  compensation  grants to the
Senior Officer,  including the following:  (a) "full value equity" compensation,
including,  but  not  limited  to,  restricted  stock,  restricted  stock  units
("RSUs"),  and  performance  shares,  and  (b)  "non-full  value  equity"  based
compensation including, but not limited to, stock options and stock appreciation
rights,   in  each  case  granted  as  part  of  the  Senior   Officer's  annual
compensation,  but shall not include any special  one-time or periodic grants or
awards,  granted or awarded as part of a hiring  package or  retention  program,
agreement or arrangement.

     (a) The value of each "full value equity" grant,  if any, shall be the fair
     market value ("FMV") of such grant on the date the grant is approved by the
     Compensation  and  Employee  Benefits   Committee  of  the  AT&T  Board  of
     Directors,  by such other  management  committee  or  committee of the AT&T
     Board of Directors,  or by the duly authorized officers of the successor to
     AT&T Corp. (for the purpose of this definition, separately and collectively
     referred to as the "Committee").  The FMV of each "full value equity" grant
     shall be determined by multiplying the number of related AT&T common shares
     by the  applicable  average of the daily  high and low sale  prices of AT&T
     common shares on the New York Stock Exchange,  or by multiplying the number
     of related common shares of the successor to AT&T by the applicable average
     of the daily high and low sale prices of such successor's  common shares on
     the New York Stock Exchange or other national exchange on which such shares
     are  listed,  as  appropriate,  for the date the grant was  approved by the
     Committee.  For 2003,  the average of the high and low sales prices of AT&T
     common shares on the NYSE on the date RSU grants were approved, January 21,
     2003, was $25.925.

     (b) The value of each "non-full value equity" grant,  such as stock options
     and stock appreciation  rights ("SARs"),  shall equal the per option or per
     SAR value on the date the grant was  approved  by the  Committee,  based on
     Black  Scholes  estimates  (or  such  other  option-pricing  model,  deemed
     acceptable by the Financial  Accounting Standards Board for valuing options
     and SARs  and  utilized  by the  Committee  when  considering  such  grant)
     multiplied  by the  number of related  AT&T  common  shares in such  grant,
     and/or other such amounts determined in the same manner and approved by the
     Committee  for the year in which the grant being  valued was  granted.  For
     2003, the Black Scholes value per stock option approved on January 21, 2003
     for the AT&T 2003 annual grant was $10.

     For this  purpose,  the Black  Scholes  and FMV  values  of the  respective
components  of AT&T Target  Annual  Long Term  Incentive  Compensation  shall be
updated annually as approved by the Committee.

     Senior  Officer - Shall mean a Senior Officer (as defined in the Plan) who,
immediately prior to a CIC, was an employee of AT&T or an Affiliate (including a
Senior Officer who was receiving  benefits under any AT&T short term  disability
plan,  or was on an  approved  leave of absence  with  guaranteed  reinstatement
rights), or was a Senior Officer immediately prior to an event which constitutes
Good Reason,  and who remains  continuously  employed by the Company following a
CIC.

     Special  Pension  Enhancement - shall mean the CIC Credit as defined in the
AT&T Management Pension Plan (as amended by the resolutions of the AT&T Board of
Directors dated October 23, 2000), without regard to whether it is payable under
the  AT&T  Management  Pension  Plan  or  under  the  AT&T  Excess  Benefit  and
Compensation Plan, or both..

     Target Annual  Full-Value  Equivalent  Award - Shall mean the  equity-based
award, designated in full-value shares or share equivalents, such as performance
shares,  restricted stock,  restricted stock units or cash, and not a derivative
value, such as stock options or stock appreciation rights,  granted as part of a
Senior  Officer's  annual  compensation  and not a special  one-time or periodic
grant, such as part of a hiring package or retention program.

4.   NOTIFICATION REQUIREMENTS FOR TERMINATION FOR GOOD REASON:

In the event a Senior  Officer  determines  that Good Reason exists to terminate
his or her  employment  with the  Company,  the Senior  Officer  must notify the
Company  in  writing  of the  specific  event,  within  sixty  (60)  days of the
occurrence  of such event,  and such notice shall also include the date on which
the Senior Officer will terminate employment with the Company,  which date shall
be no earlier than 15 days from the date of such  notice.  The date set forth in
the notice for termination,  or such earlier or later date as the Senior Officer
and the Company shall mutually agree in writing,  shall be the Senior  Officer's
Final Payroll Date.

Within  seven (7) days of the  Company's  receipt of such  written  notice,  the
Company  shall notify the Senior  Officer  that it agrees or disagrees  with the
Senior Officer's  determination that the event specified in the Senior Officer's
notice  constitutes  Good Reason.  Notwithstanding  any provision of the Plan or
this   Appendix  A  giving  the  Company   discretionary   authority   regarding
administration  of the Plan,  the Company's  determination  whether it agrees or
disagrees with the Senior  Officer's  determination  that the event specified in
the Senior Officer's notice  constitutes Good Reason shall be reasonable,  based
on all the relevant facts and  circumstances.  The Arbitrator in any arbitration
proceeding  initiated  pursuant to Section M of the Plan, in which the existence
of Good Reason is an issue, shall be expressly empowered and directed to review,
de novo, the facts and circumstances claimed by the Senior Officer to constitute
Good Reason.

In the event the Company  notifies  the Senior  Officer  that it agrees with the
Senior Officer's  determination that the event specified in the Senior Officer's
notice  constitutes  Good Reason,  the Senior Officer will terminate  employment
with the Company on his or her Final Payroll Date.

In the event the Company  notifies the Senior Officer that it disagrees with the
Senior Officer's  determination that the event specified in the Senior Officer's
notice constitutes Good Reason, the Senior Officer may elect to terminate his or
her  employment  on the date  specified in the Notice (or such later date as the
Senior  Officer and the Company may  mutually  agree in writing) or may elect to
continue his or her  employment.  In either event,  the Senior  Officer shall be
entitled  to  pursue a claim in  accordance  with the  procedures  set  forth in
Section L of the Plan, or pursue the Arbitration procedures set out in Section M
of the Plan without  first filing a claim.  If the Senior  Officer's  claim,  or
arbitration,  is ultimately  concluded in the Senior Officer's favor, the Senior
Officer shall retain the right to receive the benefits under this Appendix A.

5.   SEVERANCE PAYMENT:

In addition to the Special Pension  Enhancement  provided under the terms of the
AT&T Management  Pension Plan and the AT&T Excess Benefit and Compensation Plan,
a CIC Eligible  Senior  Officer shall be provided a Severance  Payment that is a
lump sum cash payment  equal to the sum of (a) three hundred  percent  (300%) of
the CIC Eligible Senior  Officer's  highest annual base salary rate in effect on
or after the day preceding the date of the CIC (but ignoring increases in annual
base salary rate  attributable  solely to any  decreases in the value of the CIC
Eligible  Senior  Officer's  Target Annual Bonus and/or Target Annual  Long-Term
Incentive,  as  contemplated  by the definition of Reduction in  Compensation),,
plus (b) three  hundred  percent  (300%) of the CIC  Eligible  Senior  Officer's
Target Annual Bonus for the year in which the CIC occurs, plus (c) three hundred
percent  (300%)  of the  fair  market  value  (FMV) of the CIC  Eligible  Senior
Officer's  Target Annual  Full-Value  Equivalent  Award for the calendar year in
which the CIC occurs,  minus (d) an amount equal to ninety  percent (90%) of the
CIC Eligible Senior Officer's Special Pension Enhancement.  For purposes of this
Section 5 the FMV of a CIC Eligible Senior  Officer's  Target Annual  Full-Value
Equivalent  Award shall be determined by  multiplying  the number of performance
shares,  or shares of restricted  stock, or restricted  stock units, as the case
may be, by the  average  of the daily  high and low sale  prices of AT&T  common
shares on the New York Stock Exchange (NYSE) on the date the Committee  approved
the annual grant for the calendar  year in which the CIC occurs.  For 2003,  the
average of the high and low sales  prices of AT&T  target  common  shares on the
NYSE on the date the RSU grant was approved, January 21, 2003, was $25.925.

The Severance  Payment under this Section 5 will be paid in a single lump sum as
soon as administratively  feasible after the expiration of the revocation period
indicated in the CIC  Eligible  Senior  Officer's  Release  without  revocation,
unless deferral of such Severance  Payment is elected in accordance with Section
6 of this Appendix A below.

6.   DEFERRAL OPTION:

The CIC  Eligible  Senior  Officer may elect to defer  receipt of the  Severance
Payment. The CIC Eligible Senior Officer's written election must be submitted to
the AT&T Executive Benefits Organization,  or successor organization,  not later
than the day prior to the date on which the Release is  executed.  A copy of the
election  form to be completed is attached as Appendix C.  Deferral may be for a
period of up to five (5) years  following  the date of the CIC  Eligible  Senior
Officer's Final Payroll Date, in whole year  increments.  Payout of the deferred
Severance  Payment  may be in the form of a lump sum, or up to a maximum of five
(5) approximately equal annual installments, as indicated on the election form.

The first  installment from the deferred account (or the single payment,  if the
CIC Eligible Senior Officer so elected),  including  interest  thereon,  will be
paid by the end of the calendar  quarter  which  immediately  follows the first,
second,  third,  fourth or fifth  anniversary (as so elected by the CIC Eligible
Senior  Officer) of the CIC Eligible  Senior  Officer's  Final Payroll Date. All
unpaid  deferred  amounts will continue to accrue interest at the rate of return
set forth below. In the event of a CIC Eligible Senior  Officer's death prior to
the payment of all deferred amounts,  the unpaid balance shall be paid to his or
her named  beneficiary  (or to his or her  estate,  if no  beneficiary  has been
named) in a lump sum not later than the end of the calendar quarter  immediately
following   the  calendar   quarter  in  which  the  AT&T   Executive   Benefits
Organization, or successor organization, receives written notice of such death.

For  individuals who were designated as Senior Officers (as defined in the Plan)
as of January 1, 2003, deferred amounts will be credited quarterly with interest
equal to  one-quarter  (1/4) of the average rate  applicable to actively  traded
10-year U.S. Treasury Notes for the prior calendar  quarter,  plus 1.25 percent.
For  individuals  who were  designated as Senior Officers after January 1, 2003,
the interest  rate credited on their  deferred  amounts will be as determined by
the Board. The crediting of interest on deferred amounts, will commence with the
CIC Eligible  Senior  Officer's  Final Payroll  Date,  and will be calculated in
accordance  with rules and  procedures  in place for the AT&T Senior  Management
Incentive  Award  Deferral  Plan,  or the  successor  to such  plan,  in  effect
immediately prior to the date of the CIC. CIC Eligible Senior Officers who elect
to defer amounts under this arrangement  shall be unsecured general creditors of
the Company.  The Company shall  establish for each CIC Eligible Senior Officer,
an unfunded bookkeeping account to which deferred amounts (and interest) will be
credited,  but the Company  shall have no obligation to fund or set aside assets
for the payment of any deferred amounts under this arrangement.

7.   ANNUAL BONUS:

Subject to the  second and third  sentences  of this  Section 7, a CIC  Eligible
Senior Officer who has performed at least  eighty-eight (88) consecutive days of
service to the Company during his or her  Termination  Year, will be eligible to
receive a prorated portion of the annual incentive applicable to the Termination
Year based on the CIC  Eligible  Senior  Officer's  time on the  active  payroll
during the Termination Year. The prorated portion shall equal the product of the
actual  achievement level for the CIC Eligible Senior Officer's annual incentive
for such year, as determined by the Company,  calculated in a manner  consistent
with the  calculation  of the annual  incentive  for similarly  situated  senior
management  employees  who were  employed  throughout  the year  for  which  the
calculation is being made,  multiplied by a fraction,  the numerator of which is
the number of completed months of the CIC Eligible Senior  Officer's  employment
during the  Termination  Year (including the last month of employment if the CIC
Eligible  Senior  Officer's  Final  Payroll  Date is on or after the 15th of the
month) and the denominator of which is 12. If the CIC Eligible Senior  Officer's
Final Payroll Date occurs in the same calendar year as the CIC, the CIC Eligible
Senior  Officer  will have  received  a  prorated  portion  of his or her annual
incentive  with respect to service during such calendar year through the date of
the CIC, in accordance  with the terms of the AT&T  Management Pay Plan. In such
event, the numerator of the fraction  referred to in the second sentence of this
Section 7 shall equal the number of complete  months of the CIC Eligible  Senior
Officer's  employment  during  the  Termination  Year  after the date of the CIC
(including the month in which the CIC occurs if the CIC occurs prior to the 15th
of the month, as well as the last month of employment if the CIC Eligible Senior
Officer's Final Payroll Date is on or after the 15th of the month).

8.   OUTSTANDING LONG TERM INCENTIVES:

The  disposition  of all  grants  under any AT&T long  term  incentive  program,
including any plan  previously  maintained by McCaw,  LIN, TCG, TCI or MediaOne,
including the AT&T Wireless Adjustment Plan, shall be governed by the provisions
of the applicable AT&T long term incentive program.

<PAGE>

9.   CASH AWARDS/PAYMENTS:

Cash awards/payments,  including cash retention,  unpaid signing bonuses and any
other cash  payments or awards  which have not yet  vested,  will vest as of the
Participant's  Final Payroll Date and upon  expiration of the revocation  period
indicated  in the  Release  without  revocation,  and  will  be  paid as soon as
administratively feasible following such revocation period.

10.  SENIOR MANAGER UNIVERSAL LIFE INSURANCE PROGRAM:

Notwithstanding  the terms  and  conditions  of the AT&T  Corp.  Senior  Manager
Universal  Life  Insurance  Program  ("SMULIP"),  with respect to a CIC Eligible
Senior Officer who is a participant  in SMULIP,  but has not attained his or her
Normal  Termination  Date (as defined in SMULIP) as of his or her Final  Payroll
Date,  the Company shall pay a lump sum cash payment  ("SMULIP  Payment") to the
CIC Eligible  Senior Officer (or to his or her assignee,  as applicable) as soon
as  administratively  feasible  after the  expiration of the  revocation  period
indicated in the CIC Eligible Senior Officer's Release without  revocation.  The
SMULIP  Payment  shall  equal to the sum of (x) plus (y)  where (x)  equals  the
present value, as of the date of the CIC Eligible Senior Officer's Final Payroll
Date and assuming that the discount rate equals 8%, of any necessary  additional
premium payments, estimated, but not guaranteed, which, together with the SMULIP
policy  cash  value as of the month end  immediately  prior to the CIC  Eligible
Senior  Officer's  Final  Payroll  Date,  to be  sufficient  to provide  for the
continuation  of the  insurance  coverage  under  the  SMULIP  Policy  (based on
assumptions  that are consistent  with the  assumptions  under the SMULIP policy
used  immediately  prior to the CIC  including,  but not  limited to, the annual
crediting  rate of the  SMULIP  policy)  with  projected  coverage  equal to the
applicable  benefit amount (as defined in SMULIP) as if the CIC Eligible  Senior
Officer had  continued in active  employment  until  attaining his or her Normal
Termination Date (as defined in SMULIP) and assuming that his or her annual base
salary rate  remains  fixed in an amount equal to his or her highest base salary
rate in effect on or after the day  preceding the date of the CIC, (but ignoring
increases in annual base salary rate attributable solely to any decreases in the
value of the CIC Eligible  Senior  Officer's  Target  Annual Bonus and/or Target
Annual Long-Term  Incentive,  as contemplated by the definition of "Reduction in
Compensation"  set forth  above) and (y) equals the amount (the "tax  adjustment
payment"),  calculated in accordance with AT&T's practice for Senior Officers as
in effect  immediately  prior to the CIC, to cover the  Federal  income and FICA
(Medicare  portion)  taxes  estimated to be incurred by the CIC Eligible  Senior
Officer by reason of the lump sum cash  payment and the tax  adjustment  payment
provided for in this  section.  Such CIC Eligible  Senior  Officer  shall not be
entitled to any additional or future payments from the Company under SMULIP.

<PAGE>

11.  FINANCIAL COUNSELING:

A CIC Eligible Senior Officer shall receive a lump sum payment  estimated by the
Company in its sole discretion to be sufficient to provide,  for a period of two
(2) years after the CIC Eligible Senior Officer's Final Payroll Date,  financial
counseling services from a qualified financial counselor,  plus a tax adjustment
payment equal to the amount,  calculated in accordance  with AT&T's practice for
Senior Officers as in effect  immediately prior to the CIC, to cover the Federal
income and FICA  (Medicare  portion)  taxes  estimated to be incurred by the CIC
Eligible  Senior  Officer  by  reason  of the lump  sum  payment  for  financial
counseling services and the tax adjustment payment provided for in this section.
Payment  shall be made as soon as  administratively  feasible  following the CIC
Eligible  Senior  Officer's  Final  Payroll  Date  and  the  expiration  of  the
revocation  period indicated in the Release without  revocation.  A CIC Eligible
Senior Officer shall not be entitled to any  additional or future  payments from
the Company with respect to financial counseling or related services provided to
the CIC Eligible Senior Officer after his or her Final Payroll Date.

12.  AT&T TOLL DISCOUNT:

The CIC Eligible Senior Officer will be eligible for toll reimbursement  through
the AT&T Toll  Discount  Program  under the terms and  conditions  that apply to
senior management employees Eligible for Retirement-Related  Benefits, under the
same terms and conditions  that applied  immediately  prior to the CIC to active
senior management employees.

13.  VACATION:

A CIC Eligible Senior Officer should make every  reasonable  effort,  consistent
with the needs of the business, to use all vacation, personal days, and floating
holidays to which he or she is eligible before his or her Final Payroll Date. If
the CIC Eligible  Senior  Officer is unable to do so, he or she will be paid for
any unused  (earned and  unearned)  vacation days for the calendar year in which
his or her Final Payroll Date occurs and any approved and un-expired  carry-over
days from the prior year in  accordance  with AT&T policy at that time.  The CIC
Eligible  Senior  Officer will not receive pay in lieu of floating  holidays and
management  personal  days if these days are not taken prior to his or her Final
Payroll  Date,  except for those CIC Eligible  Senior  Officers in the states of
California,  Illinois or Ohio, who will receive such payments as may be mandated
by state law.

14.  MEDICAL/DENTAL COVERAGE:

The extension and cost of medical and dental  coverage for a CIC Eligible Senior
Officer who is Eligible for  Retirement-Related  Benefits  will be in accordance
with the terms of the AT&T Corp.  Post-Retirement  Welfare Benefits Plan, or the
successor to such plan,  as amended from time to time.  The Company will provide
continuation  of medical  coverage  and dental  coverage  under the AT&T Medical
Expense  Plan  and/or  the  AT&T  Dental  Expense  Plan  for  Active  Employees,
respectively,  for each CIC  Eligible  Senior  Officer who is not  Eligible  for
Retirement-Related Benefits, and his or her Class I dependents, Domestic Partner
and Domestic  Partner's Children (as those terms are defined in the AT&T Medical
Expense  Plan)  (provided  that such Class I  dependents,  Domestic  Partner and
Domestic Partner's Children were covered by the AT&T Medical Expense Plan and/or
the AT&T Dental  Expense Plan for Active  Employees,  or the  successors to such
plans,  immediately  prior to the CIC Eligible  Senior  Officer's  Final Payroll
Date),  for up to eighteen  (18) months  following the month in which occurs the
CIC Eligible Senior Officer's Final Payroll Date. Company-provided  continuation
of coverage  under the AT&T Medical  Expense Plan and/or the AT&T Dental Expense
Plan for Active Employees,  or the successors to such plans, as the plans may be
amended  from  time  to  time,  shall  run  concurrently   with  any  rights  to
continuation  of coverage  the CIC  Eligible  Senior  Officer  and/or his or her
eligible dependents may otherwise have under COBRA.

If, at the end of the 18-month COBRA period,  the CIC Eligible Senior Officer is
not covered  under  another  group  health  plan,  the Company will make medical
coverage (not dental coverage) available for the CIC Eligible Senior Officer and
his or her Class I dependents,  Domestic Partner and Domestic Partner's Children
under the AT&T  Separation  Medical  Plan, or the successor to such plan, on the
same basis as for certain former senior managers.  Should the Participant  elect
to take this coverage,  the CIC Eligible  Senior Officer will be responsible for
the same  portion of the annual  premium  for this  medical  coverage as is then
applicable to similarly  situated former senior managers  covered under the AT&T
Separation  Medical Plan.  Continuation  of coverage  under the AT&T  Separation
Medical Plan after the CIC Eligible  Senior  Officer's death is available to the
CIC  Eligible  Senior  Officer's  spouse,  if the spouse pays 100% of the annual
premium for coverage.  There will be no continuing  dental  coverage for the CIC
Eligible Senior Officer or his or her Class I dependents,  Domestic  Partner and
Domestic  Partner's Children after the end of eighteen (18) months following the
month in which occurs the CIC Eligible  Senior  Officer's  Final  Payroll  Date,
except as may otherwise be required by law. The Participant  should  immediately
notify the Company if he or she becomes covered under another group health plan,
at which time the Company's  provision of medical  coverage for the  Participant
and his or her Class I  dependents,  Domestic  Partner  and  Domestic  Partner's
Children will cease.

All  coverage  continued  for a CIC  Eligible  Senior  Officer  (and  his or her
eligible  dependent(s))  will be the same as the  coverage  provided  to the CIC
Eligible  Senior  Officer  while an active  employee,  to the extent  available,
subject to the terms of the AT&T  Medical  Expense  Plan  and/or the AT&T Dental
Expense  Plan or the AT&T  Separation  Medical  Plan or the  successors  to such
plans, as those plans may be amended from time to time.

15.  TRANSITION COUNSELING:

A CIC  Eligible  Senior  Officer  will be entitled to receive the  services of a
Company-paid and Company-approved  outplacement or career transition  consultant
in accordance with AT&T's current  practices for Senior Officers in effect as of
the CIC Eligible Senior Officer's Final Payroll Date;  provided,  however,  that
commencement  of such transition  counseling  services,  if desired,  must begin
prior to the  first  anniversary  of the CIC  Eligible  Senior  Officer's  Final
Payroll Date.

16.  EXCISE TAX:

(a) If any element of compensation or benefit  provided to a CIC Eligible Senior
Officer under the terms of the Plan, or under any other plan, program, policy or
other  arrangement  ("Benefit"),  either  alone  or in  combination  with  other
elements of  compensation  and  benefits  paid or provided to such CIC  Eligible
Senior  Officer,  constitutes  an "excess  parachute  payment",  as that term is
defined  in  Section  280G of the  Internal  Revenue  Code  and the  regulations
thereunder,  and  subjects  such CIC Eligible  Senior  Officer to the excise tax
pursuant to Section  4999 of the  Internal  Revenue  Code,  and any interest and
penalties  thereon  (collectively,  the "Excise  Tax"),  then such CIC  Eligible
Senior Officer shall be entitled to an additional lump-sum cash payment from the
Company (the "Excise Tax Adjustment Payment"), subject to mandatory withholding,
in an amount equal to the Excise Taxes (including the Excise Tax attributable to
the Excise Tax  Adjustment  Payment  related to the Benefit) plus any income and
FICA taxes and any interest and penalties thereon attributable to the Excise Tax
Adjustment Payment. For purposes of calculating an Excise Tax Adjustment Payment
to any CIC Eligible Senior Officer in any year, it shall be assumed that the CIC
Eligible  Senior  Officer is subject to Federal and  applicable  state and local
income  taxes at the highest  marginal  Federal and  applicable  state and local
income tax rates, respectively,  for the year in which the Excise Tax Adjustment
Payment is paid.  Also,  the Excise Tax  Adjustment  Payment to any CIC Eligible
Senior  Officer  shall  reflect  the Federal tax  benefits  attributable  to the
deduction of applicable state and local income taxes.

(b)  Subject  to the  provisions  of Section  16(c)  below,  all  determinations
required to be made under this Section 16, including  whether and when an Excise
Tax Adjustment  Payment is required and the amount of such Excise Tax Adjustment
Payment and the assumptions utilized in arriving at such  determinations,  shall
be made by an independent accounting firm chosen by the Company (the "Accounting
Firm").  The Accounting Firm shall provide detailed  supporting  calculations to
the Company and to the CIC Eligible  Senior  Officer within thirty (30) business
days of the  receipt  of notice  from the  Company  or the CIC  Eligible  Senior
Officer that there has been a Benefit  provided to which this Section 16 applies
(or such earlier time as requested by the  Company).  Any Excise Tax  Adjustment
Payment,  as  determined  pursuant to this Section  16(b),  shall be paid by the
Company to the CIC Eligible  Senior Officer within fifteen (15) business days of
the receipt of the Accounting Firm's determination.

(c) (i) If it is established  pursuant to a final determination of a court or an
Internal Revenue Service  proceeding,  or in the opinion of independent  counsel
agreed upon by the Company and the CIC Eligible Senior Officer,  that the Excise
Tax payable by the CIC Eligible  Senior  Officer on the Benefit is less than the
amount  initially  taken  into  account  under  Section  16(a) for  purposes  of
calculating  the Excise Tax  Adjustment  Payment  related to such  Benefit,  the
Accounting Firm shall  recalculate the Excise Tax Adjustment  Payment to reflect
the actual Excise Tax related to such Benefit.  Within thirty (30) business days
following the CIC Eligible Senior Officer's  receipt of notice of the results of
such recalculation from the Accounting Firm and/or the Company, the CIC Eligible
Senior  Officer shall repay to the Company the excess of the initial  Excise Tax
Adjustment Payment over the recalculated Excise Tax Adjustment Payment.

    (ii) If it is established pursuant to a final determination of a court or an
Internal Revenue Service proceeding, or in the opinion of an independent counsel
agreed upon by the Company and the CIC Eligible Senior Officer,  that the Excise
Tax payable by the CIC Eligible  Senior  Officer on the Benefit is more than the
amount  initially  taken  into  account  under  Section  16(a) for  purposes  of
calculating  the  Excise  Tax  Adjustment  Payment,  the  Accounting  Firm shall
recalculate the Excise Tax Adjustment  Payment to reflect the actual Excise Tax.
Within fifteen (15) business days  following the Company's  receipt of notice of
the results of such  recalculation  from the Accounting  Firm, the Company shall
pay to the CIC Eligible Senior Officer the excess of the recalculated Excise Tax
Adjustment Payment over the initial Excise Tax Adjustment Payment.

(d) All fees and  expenses of the  Accounting  Firm shall be borne solely by the
Company.

(e) The CIC Eligible  Senior  Officer shall notify the Company in writing of any
written claim by the Internal Revenue Service that, if successful, would require
the  payment  by  the  Company  of an  Excise  Tax  Adjustment  Payment  or  the
recalculation  of an Excise  Tax  Adjustment  Payment.  The  notification  shall
apprise  the Company of the nature of such  claim,  including  (1) a copy of the
written claim from the Internal Revenue Service,  (2) the  identification of the
element of  compensation  and/or  benefit  that is the subject of such  Internal
Revenue  Service claim,  and (3) the date on which such claim is requested to be
paid. Such notification  shall be given as soon as practicable but no later than
ten (10) business days after the CIC Eligible Senior Officer  actually  receives
notice in writing of such claim.

Within ten (10)  business  days  following  receipt of the  notification  of the
Internal Revenue Service written claim from the CIC Eligible Senior Officer, the
Company shall pay to the CIC Eligible  Senior  Officer an Excise Tax  Adjustment
Payment,  or the excess of a recalculated Excise Tax Adjustment Payment over the
initial Excise Tax Adjustment Payment, as applicable,  related to the element of
compensation and/or benefit which is the subject of the Internal Revenue Service
claim.  Within ten (10) business days following such payment to the CIC Eligible
Senior  Officer,  the CIC Eligible  Senior  Officer shall provide to the Company
written  evidence  that he or she had paid the  claim  to the  Internal  Revenue
Service (the United States Treasury).

The failure of the CIC Eligible Senior Officer to properly notify the Company of
the Internal Revenue Service claim (or to provide any required  information with
respect  thereto) shall not affect any rights granted to the CIC Eligible Senior
Officer  under  this  Section  16,  except to the  extent  that the  Company  is
materially  prejudiced in the challenge to such claim as a direct result of such
failure.  If the Company  notifies the CIC Eligible  Senior  Officer in writing,
within sixty (60) business days following  receipt from the CIC Eligible  Senior
Officer of notification of the Internal  Revenue Service claim,  that it desires
to contest such claim, the CIC Eligible Senior Officer shall:

     (i)  give the Company any information  reasonably  requested by the Company
          relating to such claim;

     (ii) take such  action in  connection  with  contesting  such  claim as the
          Company  shall  reasonably  request  in  writing  from  time  to  time
          including,  without  limitation,  accepting legal  representation with
          respect to such  claim by an  attorney  selected  by the  Company  and
          reasonably acceptable to the CIC Eligible Senior Officer;

     (iii)cooperate  with the  Company in good  faith  in order  to  effectively
          contest such claim; and

     (iv) permit the Company to participate in any proceedings  relating to such
          claim if the  Company  elects not to assume and control the defense of
          such claim;

     provided, however, that the Company shall bear and pay directly all costs
     and expenses (including additional interest and penalties) incurred in
     connection with such contest and shall indemnify and hold the CIC Eligible
     Senior Officer harmless, on an after-tax basis, for any Excise Tax, income
     tax and FICA tax (including interest and penalties with respect thereto)
     imposed as a result of such representation and payment of costs and
     expenses. Without limitation on the foregoing provisions of this Section
     16, the Company shall have the right, at its sole option, to assume the
     control of all proceedings in connection with such contest, in which case
     it may pursue or forego any and all administrative appeals, proceedings,
     hearings and conferences with the taxing authority in respect of such
     claim, and may direct the CIC Eligible Senior Officer to sue for a refund
     or contest the claim in any permissible manner, and the CIC Eligible Senior
     Officer agrees to prosecute such contest to a determination before any
     administrative tribunal, in a court of initial jurisdiction and in one or
     more appellate courts, as the Company shall determine; provided, that any
     extension of the statute of limitations relating to payment of tax for the
     taxable year of the CIC Eligible Senior Officer with respect to which such
     contested amount is claimed to be due is limited solely to such contested
     amount. Furthermore, the Company's rights to assume the control of the
     contest shall be limited to issues with respect to which an Excise Tax
     Adjustment Payment would be payable hereunder, and the CIC Eligible Senior
     Officer shall be entitled to settle or contest, as the case may be, any
     other issue raised by the Internal Revenue Service or any other taxing
     authority. To the extent that the contest to the Internal Revenue Service
     claim is successful, the Excise Tax Adjustment Payment related to the
     element of compensation and/or benefit that was the subject of the claim
     shall be recalculated in accordance with the provisions of Section
     16(c)(ii).

17.  LEGAL FEES:

In the event that it shall be necessary or desirable  for a CIC Eligible  Senior
Officer to retain legal  counsel or incur other costs and expenses in connection
with enforcement of his or her rights under the Plan, including this Appendix A,
or  other  matters  directly  related  to  the  CIC  Eligible  Senior  Officer's
termination  from  employment with the Company , the Company shall reimburse the
CIC Eligible Senior Officer for his or her reasonable  attorneys' fees and costs
and  expenses if a final  decision in  connection  with a material  issue of the
litigation (or arbitration) is issued in the CIC Eligible Senior Officer's favor
by an arbitrator or a court of competent jurisdiction.

18.  NO AMENDMENT:

Notwithstanding  any other provision of this Plan, unless required by applicable
law,  upon the  occurrence  of a CIC,  no  amendment  shall be made to the Plan,
including  this  Appendix A, by the AT&T Board of  Directors  (or the  successor
board), by the Company (or the successor to the Company), by any committee,  any
officer, any employee of the Company (or the successor to the Company) or by any
other party,  to suspend,  modify,  or eliminate  the level or types of benefits
that  are  applicable  upon  the  occurrence  of a  CIC,  or  to  eliminate  the
restrictions  contained  in this  sentence,  and no such  amendment  to the AT&T
Senior Officer Separation Plan,  including this Appendix A, made in violation of
this provision, shall be effective.

<PAGE>

19.  SUCCESSORS:

The  obligation  of the Company  under this Appendix A shall be binding upon any
assignee or  successor  in  interest  thereto.  The  Company  shall not merge or
consolidate with any other  corporation,  or liquidate or dissolve,  or transfer
assets or business  operations,  in a  transaction  in which the  employment  of
employees is transferred to such other corporation,  or to the purchaser of such
assets or business  operations,  without making  suitable  arrangements  for the
payment of any benefits  which are or may become  payable under this Appendix A,
and for the assumption by such successor  employer of the  obligations set forth
in this Appendix A.

<PAGE>

                                                             Exhibit 10(iii)(A)6

                                                                   July 29, 2003


Ms. Betsy Bernard

Dear Betsy:

     This letter  agreement ("the  Agreement")  completely  replaces Section (3)
Paragraph (e) of your employment  agreement dated October 1, 2002 detailing your
special individual  non-qualified  pension  agreement,  and supercedes all other
oral and written communication on the subject.

     This  Agreement  will   establish  an  individual   non-qualified   pension
arrangement  ("Individual Pension"),  which, subject to the terms and conditions
below,  will  provide  you a benefit  payable  from AT&T Corp.  (the  "Company")
operating assets upon your retirement from the Company.  This Individual Pension
will  vest on  April 1,  2006  contingent  upon  continued  employment  with the
Company,  provided,  however,  that the Individual Pension will immediately vest
for  Company-initiated  terminations  for other than "Cause" (as  defined),  for
terminations due to death, disability,  or Good Reason (as defined) occurring on
or after the effective date of this Agreement, or if the Company is subject to a
Change in  Control  ("CIC"),  as  defined  in the AT&T 1997 Long Term  Incentive
Program.  Only  for  termination  for  Cause or in the  event of your  voluntary
termination  prior to vesting will this  Individual  Pension be null and void in
its entirety. In addition,  this Individual Pension is subject to the provisions
of the AT&T Non-Competition Guideline.

     With respect to the amount  payable under this  Individual  Pension at your
retirement/termination,  the single life annual  annuity  amount payable will be
determined as (a) minus (b) as set forth in the charts below.

     (a)  the  single  life  annual  pension  annuity  benefits   calculated  in
          accordance with the table set forth below:

-------------------------------------------------------------------
Year of Retirement/ Termination     Percentage of Final 3 Year
                                 Average Total Cash Compensation
                                 (Base Pay plus Actual Bonus Paid
                                             in Year)
-------------------------------------------------------------------

-------------------------------------------------------------------
                           2003                             10.25%
-------------------------------------------------------------------
                           2004                             12.30%
-------------------------------------------------------------------
                           2005                             15.20%
-------------------------------------------------------------------
                           2006                             17.25%
-------------------------------------------------------------------
                           2007                             19.30%
-------------------------------------------------------------------
                           2008                             21.35%
-------------------------------------------------------------------
                           2009                             23.40%
-------------------------------------------------------------------
                           2010                             25.45%
-------------------------------------------------------------------
                           2011                             27.50%
-------------------------------------------------------------------
                           2012                             29.55%
-------------------------------------------------------------------
                           2013                             31.60%
-------------------------------------------------------------------
                           2014                             33.65%
-------------------------------------------------------------------
                           2015                             36.40%
-------------------------------------------------------------------
                           2016                             39.15%
-------------------------------------------------------------------
                           2017                             41.90%
-------------------------------------------------------------------
                           2018                             44.65%
-------------------------------------------------------------------
                           2019                             47.40%
-------------------------------------------------------------------
                           2020                             50.00%
-------------------------------------------------------------------


     (b)  any single  life  annual  annuity  benefits  payable  from AT&T,  i.e.
          pension  benefits under the AT&T  Management  Pension Plan  (AT&TMPP),
          AT&T Non Qualified  Pension Plan  (AT&TNQPP),  AT&T Excess Benefit and
          Compensation Plan (AT&TEBCPP),  minimum retirement  benefits under the
          AT&T Senior  Management Long Term  Disability and Survivor  Protection
          Plan  (AT&TSMLTD&SPP)  if applicable,  as well as by any qualified and
          nonqualified pension benefits from prior employers.

Joint and  survivor  benefits on your  death,  whether  your death  occurs as an
active  employee  or  following  your  termination,  will  be  governed  by  the
administrative guidelines applicable to this Agreement.

     In the event of your involuntary  termination  within two years following a
CIC for reasons  other than for Cause or if you  terminate  employment  for Good
Reason  within two years  following a CIC,  your benefit  under this  Individual
Pension will be calculated by accelerating the Individual Pension schedule above
by adding three years to the schedule,  i.e. the applicable  percentage  will be
that associated with the "Year of Retirement/Termination"  three years from your
+actual termination year. In addition, the cash compensation used in calculating
the final three year average cash  compensation  will not use cash  compensation
for years in which you did not hold the position of President- AT&T Corp.

     For purposes of this Agreement:

     a)   "Cause" shall mean:

          i.   your conviction  (including a plea of guilty or nolo  contendere)
               of a crime including theft, fraud, dishonesty or moral turpitude;

          ii.  violation   by  you  of  the   Company's   Code  of   Conduct  or
               Non-Competition Guideline;

          iii. gross omission or gross dereliction of any statutory,  common law
               or other duty of loyalty to the Company or any of its affiliates;
               or

          iv.  repeated failure to carry out the duties of your position despite
               specific instruction to do so.

     b)   "Good  Reason" prior to a CIC shall mean the  occurrence  without your
          express written consent of any of the following events:

          i.   Your  demotion  to  a  position  which  is  not  of  a  rank  and
               responsibility  comparable  to members of the current  Operations
               Group or those of a similar/replacing  governance body; provided,
               however,   that  the  Company's  decision  not  to  continue  the
               Operations Group shall not be Good Reason, and provided, further,
               that (1) changes in  reporting  relationships  shall not,  alone,
               constitute  Good Reason  and/or (2) a reduction in your  business
               unit's budget or a reduction of your business  unit's head count,
               by themselves, do not constitute Good Reason; or

          ii.  A reduction in your "Total Annual  Compensation"  (defined as the
               sum of your Annual Base Salary Rate,  Target Annual Incentive and
               "Target Annual Long Term  Incentive  Grants") for any calendar or
               fiscal year,  as  applicable,  to an amount that is less than the
               Total Annual  Compensation  that existed in the prior calendar or
               fiscal  year,  as  applicable.  For  purposes  of this  Paragraph
               (b)(ii)  the  dollar  value  of  the  "Target  Annual  Long  Term
               Incentive Grants" shall exclude the value of any special one-time
               or periodic  long-term  incentive grants, and shall be determined
               by valuing  Performance  Shares,  Stock Units,  Restricted Stock,
               Restricted Stock Units,  etc., at the market share price utilized
               in valuing the annual Senior Management  compensation  structures
               in the  materials  presented  to the  Compensation  and  Employee
               Benefits  Committee of the  Company's  Board of  Directors  ("the
               Committee")  when  authorizing  such grants,  and  assuming  100%
               performance   achievement  if  such  grants  include  performance
               criteria.  Stock  Options and Stock  Appreciation  Rights will be
               valued by the Black-Scholes methodology (and related share price)
               as utilized in the  materials  presented  to the  Committee  when
               authorizing such grants.

     c)   "Good Reason" within two years  following a CIC shall be in accordance
          with  the  October  23,  2000 CIC  Board  Resolutions,  which  include
          reduction in authority or  responsibility,  reduction in compensation,
          and business relocation beyond a reasonable commuting distance.

     Notwithstanding the foregoing,  the Company may require you to change to an
     equivalent executive position within the Company with substantially similar
     levels of duties or responsibilities without causing Good Reason to occur.

     You must notify the Company within 60 days following  knowledge of an event
     you believe  constitutes  Good Reason,  or such event shall not  constitute
     Good Reason hereunder.


     This agreement may not be amended or waived, unless the amendment or waiver
is in a writing signed by you and the Company's  Executive Vice  President-Human
Resources.

     It is understood and agreed that you will not talk about,  write about,  or
otherwise  publicize  the  terms  or  existence  of this  Agreement  or any fact
concerning its execution or implementation  unless required by law or to enforce
the terms of this Agreement.  You may,  however,  discuss its contents with your
spouse, legal and/or financial counselor,  provided that you advise them of your
obligations of confidentiality  and that any disclosures made by any of them may
be  treated by the  Company  as  disclosures  made by you for  purposes  of this
provision.

     THIS AGREEMENT IS NOT AN EMPLOYMENT CONTRACT AND SHOULD NOT BE CONSTRUED OR
INTERPRETED AS CONTAINING ANY GUARANTEE OF CONTINUED EMPLOYMENT.  THE EMPLOYMENT
RELATIONSHIP WITH THE COMPANY IS BY MUTUAL CONSENT ("EMPLOYMENT-AT-WILL").  THIS
MEANS THAT  EMPLOYEES HAVE THE RIGHT TO TERMINATE  THEIR  EMPLOYMENT AT ANY TIME
FOR ANY REASON.  LIKEWISE,  THE COMPANY  RESERVES THE RIGHT TO DISCONTINUE  YOUR
EMPLOYMENT WITH OR WITHOUT CAUSE AT ANY TIME AND FOR ANY REASON.

     You understand  that the terms of this Agreement shall apply to the Company
and its successors.  The Company  specifically  reserves the right to assign the
terms of this Agreement to any successor, whether the successor is the result of
a sale, purchase, merger, consolidation,  asset sale, divestiture or spin-off or
any combination or form thereof. No sale, purchase, merger, consolidation, asset
sale,  divestiture or spin-off or any combination or form thereof by the Company
shall  be  construed  as a  termination  of  your  employment  and  will  not be
considered a termination for purposes of this Agreement.

     The construction, interpretation and performance of this Agreement shall be
governed by the laws of the State of New Jersey,  without regard to its conflict
of laws rule.

     In addition,  all of the benefits provided under this Agreement are subject
to forfeiture if you violate the AT&T Non-Competition Guideline, a copy of which
has been previously provided to you.

     Betsy,  I am happy to present this special  pension  arrangement to you. It
recognizes  the  extraordinary  contributions  that we expect you to continue to
make to our business. If you agree with the terms and conditions detailed above,
sign and date  this  Agreement  in the  spaces  provided  below and  return  the
original executed copy to me.

                                  Sincerely,


Acknowledged and Agreed to:


/s/ Betsy Bernard               July 30, 2003
-------------------------       -------------------
Betsy Bernard                   Date

<PAGE>

                                                             Exhibit 10(iii)(A)7

                                                                   July 29, 2003


Mr. David Dorman

Dear Dave:

     This letter agreement ("the Agreement") completely replaces Attachment E of
your  employment  agreement  dated  December  1,  2000  detailing  your  special
individual  non-qualified  pension agreement,  and supercedes all other oral and
written communication on the subject.

     This  Agreement  will   establish  an  individual   non-qualified   pension
arrangement  ("Individual Pension"),  which, subject to the terms and conditions
below,  will  provide  you a benefit  payable  from AT&T Corp.  (the  "Company")
operating assets upon your retirement from the Company.  This Individual Pension
will be  immediately  vested and only for  termination  for "Cause" (as defined)
will this Individual Pension be null and void in its entirety. In addition, this
Individual  Pension  is subject to the  provisions  of the AT&T  Non-Competition
Guideline.

     With respect to the amount  payable under this  Individual  Pension at your
retirement/termination,  the single life annual  annuity  amount payable will be
determined as (a) minus (b) as set forth in the charts below:

     (a)  the  single  life  annual  pension  annuity  benefits   calculated  in
          accordance with the table set forth below:

-------------------------------------------------------------------
Year of Retirement/ Termination     Percentage of Final 3 Year
                                 Average Total Cash Compensation
                                 (Base Pay plus Actual Bonus Paid
                                             in Year)
-------------------------------------------------------------------

-------------------------------------------------------------------
                           2003                             27.50%
-------------------------------------------------------------------
                           2004                             31.10%
-------------------------------------------------------------------
                           2005                             34.70%
-------------------------------------------------------------------
                           2006                             38.30%
-------------------------------------------------------------------
                           2007                             41.90%
-------------------------------------------------------------------
                           2008                             45.50%
-------------------------------------------------------------------
                           2009                             49.10%
-------------------------------------------------------------------
                           2010                             52.70%
-------------------------------------------------------------------
                           2011                             56.30%
-------------------------------------------------------------------
                           2012                             60.00%
-------------------------------------------------------------------
                           2013                             60.00%
-------------------------------------------------------------------
                           2014                             60.00%
-------------------------------------------------------------------
                           2015                             60.00%
-------------------------------------------------------------------
                           2016                             60.00%
-------------------------------------------------------------------
                           2017                             60.00%
-------------------------------------------------------------------
                           2018                             60.00%
-------------------------------------------------------------------
                           2019                             60.00%
-------------------------------------------------------------------


     (b)  any single  life  annual  annuity  benefits  payable  from AT&T,  i.e.
          pension  benefits under the AT&T  Management  Pension Plan  (AT&TMPP),
          AT&T Non Qualified  Pension Plan  (AT&TNQPP),  AT&T Excess Benefit and
          Compensation Plan (AT&TEBCPP),  minimum retirement  benefits under the
          AT&T Senior  Management Long Term  Disability and Survivor  Protection
          Plan  (AT&TSMLTD&SPP)  if applicable,  as well as by any qualified and
          nonqualified pension benefits from prior employers.

Joint and  survivor  benefits on your  death,  whether  your death  occurs as an
active  employee  or  following  your  termination,  will  be  governed  by  the
administrative guidelines applicable to this Agreement.

     In the event of your involuntary  termination  within two years following a
Change in  Control  ("CIC"),  as  defined  in the AT&T 1997 Long Term  Incentive
Program,  for reasons  other than for Cause or if you terminate  employment  for
Good Reason (as defined)  within two years  following a CIC,  your benefit under
this  Individual  Pension will be  calculated  by  accelerating  the  Individual
Pension  schedule  above  by  adding  three  years  to the  schedule,  i.e.  the
applicable   percentage   will  be   that   associated   with   the   "Year   of
Retirement/Termination"  three  years  from your  actual  termination  year.  In
addition, the cash compensation used in calculating the final three year average
cash  compensation will not use cash compensation for years in which you did not
hold the position of Chief Executive Officer.

     For purposes of this Agreement:

     a)  "Cause" shall mean:

          i.   your conviction  (including a plea of guilty or nolo  contendere)
               of a crime including theft, fraud, dishonesty or moral turpitude;

          ii.  violation   by  you  of  the   Company's   Code  of   Conduct  or
               Non-Competition Guideline;

          iii. gross omission or gross dereliction of any statutory,  common law
               or other duty of loyalty to the Company or any of its affiliates;
               or

          iv.  repeated failure to carry out the duties of your position despite
               specific instruction to do so.

     b)   "Good  Reason" prior to a CIC shall mean the  occurrence  without your
          express written consent of any of the following events:

          i.   Your  demotion  to  a  position  which  is  not  of  a  rank  and
               responsibility  comparable  to members of the current  Operations
               Group or those of a similar/replacing  governance body; provided,
               however,   that  the  Company's  decision  not  to  continue  the
               Operations Group shall not be Good Reason, and provided, further,
               that (1) changes in  reporting  relationships  shall not,  alone,
               constitute  Good Reason  and/or (2) a reduction in your  business
               unit's budget or a reduction of your business  unit's head count,
               by themselves, do not constitute Good Reason; or

          ii.  A reduction in your "Total Annual  Compensation"  (defined as the
               sum of your Annual Base Salary Rate,  Target Annual Incentive and
               "Target Annual Long Term  Incentive  Grants") for any calendar or
               fiscal year,  as  applicable,  to an amount that is less than the
               Total Annual  Compensation  that existed in the prior calendar or
               fiscal  year,  as  applicable.  For  purposes  of this  Paragraph
               (b)(ii)  the  dollar  value  of  the  "Target  Annual  Long  Term
               Incentive Grants" shall exclude the value of any special one-time
               or periodic  long-term  incentive grants, and shall be determined
               by valuing  Performance  Shares,  Stock Units,  Restricted Stock,
               Restricted Stock Units,  etc., at the market share price utilized
               in valuing the annual Senior Management  compensation  structures
               in the  materials  presented  to the  Compensation  and  Employee
               Benefits  Committee of the  Company's  Board of  Directors  ("the
               Committee")  when  authorizing  such grants,  and  assuming  100%
               performance   achievement  if  such  grants  include  performance
               criteria.  Stock  Options and Stock  Appreciation  Rights will be
               valued by the Black-Scholes methodology (and related share price)
               as utilized in the  materials  presented  to the  Committee  when
               authorizing such grants.

          c)   "Good  Reason"  within  two  years  following  a CIC  shall be in
               accordance with the October 23, 2000 CIC Board Resolutions, which
               include  reduction in authority or  responsibility,  reduction in
               compensation,   and  business   relocation  beyond  a  reasonable
               commuting distance.

          Notwithstanding  the foregoing,  the Company may require you to change
          to  an  equivalent   executive   position   within  the  Company  with
          substantially  similar  levels of duties or  responsibilities  without
          causing Good Reason to occur.

          You must notify the Company within 60 days  following  knowledge of an
          event you believe  constitutes  Good  Reason,  or such event shall not
          constitute Good Reason hereunder.


     This agreement may not be amended or waived, unless the amendment or waiver
is in a writing signed by you and the Company's  Executive Vice  President-Human
Resources.

     It is understood and agreed that you will not talk about,  write about,  or
otherwise  publicize  the  terms  or  existence  of this  Agreement  or any fact
concerning its execution or implementation  unless required by law or to enforce
the terms of this Agreement.  You may,  however,  discuss its contents with your
spouse, legal and/or financial counselor,  provided that you advise them of your
obligations of confidentiality  and that any disclosures made by any of them may
be  treated by the  Company  as  disclosures  made by you for  purposes  of this
provision.

     THIS AGREEMENT IS NOT AN EMPLOYMENT CONTRACT AND SHOULD NOT BE CONSTRUED OR
INTERPRETED AS CONTAINING ANY GUARANTEE OF CONTINUED EMPLOYMENT.  THE EMPLOYMENT
RELATIONSHIP WITH THE COMPANY IS BY MUTUAL CONSENT ("EMPLOYMENT-AT-WILL").  THIS
MEANS THAT  EMPLOYEES HAVE THE RIGHT TO TERMINATE  THEIR  EMPLOYMENT AT ANY TIME
FOR ANY REASON.  LIKEWISE,  THE COMPANY  RESERVES THE RIGHT TO DISCONTINUE  YOUR
EMPLOYMENT WITH OR WITHOUT CAUSE AT ANY TIME AND FOR ANY REASON.

     You understand  that the terms of this Agreement shall apply to the Company
and its successors.  The Company  specifically  reserves the right to assign the
terms of this Agreement to any successor, whether the successor is the result of
a sale, purchase, merger, consolidation,  asset sale, divestiture or spin-off or
any combination or form thereof. No sale, purchase, merger, consolidation, asset
sale,  divestiture or spin-off or any combination or form thereof by the Company
shall  be  construed  as a  termination  of  your  employment  and  will  not be
considered a termination for purposes of this Agreement.

     The construction, interpretation and performance of this Agreement shall be
governed by the laws of the State of New Jersey,  without regard to its conflict
of laws rule.

     In addition,  all of the benefits provided under this Agreement are subject
to forfeiture if you violate the AT&T Non-Competition Guideline, a copy of which
has been previously provided to you.

     Dave,  I am happy to present this special  pension  arrangement  to you. It
recognizes  the  extraordinary  contributions  that we expect you to continue to
make to our business. If you agree with the terms and conditions detailed above,
sign and date  this  Agreement  in the  spaces  provided  below and  return  the
original executed copy to me.

                                  Sincerely,


Acknowledged and Agreed to:

/s/ Dave Dorman                 July 30, 2003
-------------------------       -------------------
Dave Dorman                     Date

<PAGE>

                                                                      Exhibit 12


<TABLE>
                          AT&T Corp.
       Computation of Ratio of Earnings to Fixed Charges
             (Unaudited) (Dollars in millions)
<CAPTION>
                                                                       For the Nine Months Ended
                                                                           September 30, 2003
                                                                       -------------------------
<S>                                                                             <C>
Income from continuing operations before income taxes                           $ 2,196
Add: distributions of less than 50% owned affiliates                                  5
Add: fixed charges, excluding capitalized interest                                1,039
                                                                                -------
Total earnings from continuing operations before income
  taxes and fixed charges                                                       $ 3,240
                                                                                -------

Fixed Charges:
Total interest expense                                                          $   917
Capitalized interest                                                                 26
Interest portion of rental expense                                                  122
                                                                                -------
Total fixed charges                                                             $ 1,065
                                                                                -------

Ratio of earnings to fixed charges                                                  3.0
</TABLE>
<PAGE>

                                                                    Exhibit 99.1


                   CERTIFICATION OF PERIODIC FINANCIAL REPORTS



I, David W. Dorman,  Chairman of the Board and Chief  Executive  Officer of AT&T
Corp., certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)  the Quarterly Report on Form 10-Q for the quarterly period ended September
     30, 2003 (the "Periodic Report") which this statement accompanies fully
     complies with the requirements of Section 13(a) or 15(d) of the Securities
     Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)) and

(2)  information contained in the Periodic Report fairly presents, in all
     material respects, the financial condition and results of operations of
     AT&T Corp.



Dated:  November 11, 2003         /s/   David W. Dorman
                                  -------------------------
                                  By:   David W. Dorman







A signed original of this written statement required by Section 906 has been
provided to the Company and will be retained by the Company and furnished to the
Securities and Exchange Commission or its staff upon request.

<PAGE>

                                                                    Exhibit 99.2


                   CERTIFICATION OF PERIODIC FINANCIAL REPORTS



I, Thomas W. Horton, Senior Executive Vice President, Chief Financial Officer of
AT&T Corp., certify,  pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that:

(1)  the Quarterly Report on Form 10-Q for the quarterly period ended September
     30, 2003 (the "Periodic Report") which this statement accompanies fully
     complies with the requirements of Section 13(a) or 15(d) of the Securities
     Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)) and

(2)  information contained in the Periodic Report fairly presents, in all
     material respects, the financial condition and results of operations of
     AT&T Corp.



Dated:  November 11, 2003         /s/   Thomas W. Horton
                                  ---------------------------
                                  By:   Thomas W. Horton







A signed original of this written statement required by Section 906 has been
provided to the Company and will be retained by the Company and furnished to the
Securities and Exchange Commission or its staff upon request.