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, 2000

                                       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

            32 Avenue of the Americas, New York, New York 10013-2412

                       Telephone - Area Code 212-387-5400

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 ...

At October 31, 2000, the following shares of stock were outstanding:

         AT&T common stock -  3,753,409,021  shares AT&T  Wireless  Group common
         stock - 360,971,000  shares  Liberty Media Group Class A common stock -
         2,369,760,656  shares  Liberty  Media  Group  Class  B  common  stock -
         206,221,288 shares

<PAGE>
                                                         AT&T Form 10-Q - Part I

                         PART I - FINANCIAL INFORMATION
                          AT&T CORP. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF INCOME
                 (Dollars in Millions Except Per Share Amounts)
                                   (Unaudited)


                                               For the Three       For the Nine
                                               Months Ended        Months Ended
                                               September 30,       September 30,

                                              2000      1999     2000      1999

Revenue                                    $16,975   $16,333  $49,097   $46,202

Operating Expenses

Access and other connection                  3,255     3,654   10,460    11,054
Costs of services and products               4,547     3,932   12,578    10,660
Selling, general and administrative          3,397     3,442    9,796    10,060
Depreciation and other amortization          1,919     1,558    5,182     4,408
Amortization of goodwill, franchise
  costs and other purchased intangibles        879       358    1,661       900
Net restructuring and other charges             24         -      797       702
Total operating expenses                    14,021    12,944   40,474    37,784

Operating income                             2,954     3,389    8,623     8,418

Equity earnings (losses) from Liberty

  Media Group                                1,756      (217)   2,965      (818)
Other income (expense)                          71      (375)     486      (254)
Interest expense                               946       493    2,158     1,188
Income before income taxes                   3,835     2,304    9,916     6,158
Provision for income taxes                     763       888    2,127     2,679

Net income                                 $ 3,072   $ 1,416  $ 7,789   $ 3,479

AT&T Common Stock Group:
Earnings per share:
  Basic                                    $  0.35   $  0.51  $  1.41   $  1.41
  Diluted                                  $  0.35   $  0.50  $  1.40   $  1.39
Dividends declared                         $  0.22   $  0.22  $  0.66   $  0.66

AT&T Wireless Group:
(Loss) earnings per share:
  Basic and diluted                        $ (0.01)  $     -  $  0.05   $     -

Liberty Media Group:
Earnings (loss) per share:
  Basic and diluted                        $  0.68   $ (0.09) $  1.15   $ (0.33)



              See Notes to Consolidated Financial Statements


<PAGE>

                                                         AT&T Form 10-Q - Part I

                           AT&T CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                   (Dollars in Millions Except Share Amounts)
                                   (Unaudited)

                           September 30, December 31,

                                                           2000        1999
ASSETS

Cash and cash equivalents                              $    316    $  1,024

Receivables, less allowances of $1,341 and $1,281        11,686      10,453

Deferred income taxes                                     1,386       1,287

Other current assets                                      2,064       1,120

TOTAL CURRENT ASSETS                                     15,452      13,884

Property, plant and equipment, net of accumulated
  depreciation of $31,453 and $30,057                    48,165      39,618

Franchise costs, net of accumulated amortization
  of $1,413 and $697                                     48,452      32,693

Licensing costs, net of accumulated amortization
  of $1,685 and $1,491                                   10,457       8,548

Goodwill, net of accumulated amortization of
  $3,535 and $363                                        33,407       7,445

Investment in Liberty Media Group and related
  receivables, net                                       39,229      38,460

Other investments and related advances                   46,429      19,366

Prepaid pension costs                                     2,978       2,464

Other assets                                              7,783       6,928

TOTAL ASSETS                                           $252,352    $169,406

                                   (CONTINUED)

<PAGE>

                                                         AT&T Form 10-Q - Part I

                          AT&T CORP. AND SUBSIDIARIES
                     CONSOLIDATED BALANCE SHEETS (CONTINUED)
                   (Dollars in Millions Except Share Amounts)
                                   (Unaudited)

                                                  September 30, December 31,

                                                          2000         1999
LIABILITIES

Accounts payable                                       $  5,344    $  6,771
Payroll and benefit-related liabilities                   2,362       2,651
Debt maturing within one year                            32,342      12,633
Dividends payable                                           826         703
Other current liabilities                                10,470       5,449

TOTAL CURRENT LIABILITIES                                51,344      28,207

Long-term debt                                           29,443      23,217
Long-term benefit-related liabilities                     3,923       3,964
Deferred income taxes                                    39,141      24,199
Other long-term liabilities and deferred credits          4,639       3,801

TOTAL LIABILITIES                                       128,490      83,388

Minority Interest                                         9,046       2,391

Company-Obligated Convertible Quarterly Income
  Preferred Securities of Subsidiary Trust Holding
  Solely Subordinated Debt Securities of AT&T             4,708       4,700

SHAREOWNERS' EQUITY
Common Stock:

AT&T Common Stock, $1 par value,  authorized
  6,000,000,000  shares;  issued and  outstanding
  3,753,642,726  shares  (net of  297,563,162  treasury
  shares) at  September 30, 2000,  and  3,196,436,757
  shares (net of  287,866,419  treasury  shares) at
  December 31, 1999                                       3,754       3,196
AT&T Wireless Group Common Stock, $1 par value,
  authorized 6,000,000,000 shares; issued and
  outstanding 360,648,000 shares at September 30, 2000      361           -
Liberty Media Group Class A Common Stock, $1 par
  value, authorized 4,000,000,000  shares;  issued
  and  outstanding  2,369,760,656  shares  (net  of
  51,729,408  treasury shares) at September 30, 2000,
  and 2,313,557,460 shares at December 31, 1999           2,370       2,314
Liberty Media Group Class B Common Stock, $1 par
  value,  authorized  400,000,000  shares; issued
  and outstanding  206,221,288 shares (net of
  10,607,776 treasury  shares) at September 30, 2000,
  and 216,842,228 shares at December 31, 1999               206         217
Additional paid-in capital                               90,344      59,526
Guaranteed ESOP obligation                                    -         (17)
Retained earnings                                        10,724       6,712
Accumulated other comprehensive income                    2,349       6,979
TOTAL SHAREOWNERS' EQUITY                               110,108      78,927

TOTAL LIABILITIES & SHAREOWNERS' EQUITY                $252,352    $169,406

                 See Notes to Consolidated Financial Statements


<PAGE>

                                                         AT&T Form 10-Q - Part I

                             AT&T CORP. AND SUBSIDIARIES
             CONSOLIDATED STATEMENTS OF CHANGES IN SHAREOWNERS' EQUITY
                    (Dollars in Millions Except Share Amounts)
                                  (Unaudited)
                                                   For the Nine
                                                   Months Ended
                                                   September 30,

                                                 2000       1999
AT&T Common Shares

  Balance at beginning of year                $ 3,196    $ 2,630
  Shares issued (acquired), net:
    Under employee plans                            -          1
    For acquisitions                              607        565
    Other*                                        (49)         -
Balance at end of period                        3,754      3,196

AT&T Wireless Group Common Stock

  Balance at beginning of year                      -          -
  Shares issued (acquired), net:
    For initial public offering                   360          -
    Under employee plans                            1
Balance at end of period                          361          -

Liberty Media Group Class A Common Stock

  Balance at beginning of year                  2,314          -
  Shares issued (acquired), net:
    For acquisitions                               61      2,280
    Other                                          (5)        33
Balance at end of period                        2,370      2,313

Liberty Media Group Class B Common Stock

  Balance at beginning of year                    217          -
  Shares issued (acquired), net:
    For acquisitions                                -        220
    Other                                         (11)        (3)
Balance at end of period                          206        217

Additional Paid-In Capital

  Balance at beginning of year                 59,526     15,195
  Shares issued (acquired), net:
    Under employee plans                           15         37
    For acquisitions                           22,769     42,374
    Other*                                     (2,514)       324
  Proceeds in excess of par value from
    issuance of AT&T Wireless common stock      9,915          -
  Common stock warrants issued                      -        306
  Gain on issuance of common stock
    by affiliates                                 480        534
  Other                                           153        134
Balance at end of period                       90,344     58,904

Guaranteed ESOP Obligation

  Balance at beginning of year                    (17)       (44)
  Amortization                                     17         27
Balance at end of period                            -        (17)

Retained Earnings

  Balance at beginning of year                  6,712      7,800
  Net income                                    7,789      3,479
  Dividends declared                           (2,344)    (2,104)
  Treasury shares issued at less
    than cost                                  (1,433)    (1,584)
Balance at end of period                       10,724      7,591

                                  (CONTINUED)
<PAGE>

                                                         AT&T Form 10-Q - Part I

                        AT&T CORP. AND SUBSIDIARIES
     CONSOLIDATED STATEMENTS OF CHANGES IN SHAREOWNERS' EQUITY (CONTINUED)
                 (Dollars in Millions Except Share Amounts)
                               (Unaudited)

                                                   For the Nine
                                                   Months Ended
                                                   September 30,

                                                 2000       1999
Accumulated Other Comprehensive Income
  Balance at beginning of year                  6,979        (59)
  Other comprehensive income                   (4,630)     2,618
Balance at end of period                        2,349      2,559

Total Shareowners' Equity                    $110,108    $74,763

Summary of Total Comprehensive Income:
Net income                                   $  7,789    $ 3,479
Net foreign currency translation adjustment
 (net of taxes of $(177) and $109)               (305)       188
Net revaluation of securities (net of
 taxes of $(2,730) and $1,586)                 (4,325)     2,430
Total Comprehensive Income                   $  3,159    $ 6,097

*  Activity  in  2000  primarily   represents   AT&T  stock  received  from  Cox
Communications, Inc., in exchange for an entity owning certain cable systems and
other assets.

  Other  comprehensive  income for the nine months  ended  September  30,  2000,
included Liberty Media Group's foreign currency translation adjustments totaling
$(193),   net  of  applicable  taxes,   revaluation  of  Liberty  Media  Group's
available-for-sale securities totaling $(1,825), net of applicable taxes and the
recognition  of  previously   unrecognized  available  for  sale  securities  of
$(1,479), net of applicable taxes.

  Other  comprehensive  income in 1999 included  Liberty  Media Group's  foreign
currency  translation  adjustments  totaling $88, net of applicable  taxes,  and
revaluation  of Liberty Media  Group's  available-for-sale  securities  totaling
$2,320, net of applicable taxes.

  AT&T  accounts for treasury  stock as retired  stock,  and as of September 30,
2000, had 298 million  treasury shares of which 225 million shares were owned by
AT&T  Broadband  subsidiaries  and 70 million  shares related to the purchase of
AT&T shares previously owned by Liberty Media Group.

  We have 100 million  authorized  shares of preferred stock at $1 par value. No
preferred stock is currently issued or outstanding.

                 See Notes to Consolidated Financial Statements

     <PAGE>                                              AT&T Form 10-Q - Part I

                          AT&T CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (Dollars in Millions)
                                   (Unaudited)

                                                   For the Nine
                                                   Months Ended
                                                   September 30,

                                                  2000      1999
Operating Activities
Net income                                     $ 7,789   $ 3,479
Adjustments to reconcile net income to net
  cash provided by operating activities:
   Gains on sales of businesses and
     investments                                (1,051)     (495)
   Net restructuring and other charges             630       581
   Depreciation and amortization                 6,843     5,308
   Provision for uncollectibles                    985     1,077
   Net equity (earnings) losses from Liberty
     Media Group                                (2,965)      818
   Net losses from other equity investments        970       846
   Increase in accounts receivable              (2,705)   (2,529)
   Decrease in accounts payable                   (248)     (318)
   Net change in other operating assets
     and liabilities                            (1,025)   (1,718)
   Other adjustments                               (49)        1
Net cash provided by operating activities        9,174     7,050

Investing Activities
  Capital expenditures and other additions     (10,913)   (8,770)
  Proceeds from sale or disposal of
    property, plant and equipment                  547       192
  (Increase) decrease in other receivables        (981)       11
  Net (acquisitions) dispositions of
    licenses                                      (218)        1
  Equity investment distributions and sales      1,104       936
  Equity investment contributions and
    purchases                                   (2,867)   (6,878)
    Net acquisitions of businesses including
    cash acquired                              (19,791)   (6,830)
  Other investing activities, net                  (57)      (15)
Net cash used in investing activities          (33,176)  (21,353)

Financing Activities
  Proceeds from long-term debt issuances           739     8,396
  Retirements of long-term debt                 (1,954)   (2,134)
  Issuance of convertible securities                 -     4,694
  Dividends paid on convertible securities        (147)      (75)
  Issuance of AT&T Wireless Group common stock  10,291         -
  Redemption of subsidiary preferred stock        (156)        -
  Net acquisition of treasury shares              (588)   (4,476)
  Dividends paid on common stock                (2,221)   (2,009)
  Increase in short-term borrowings, net        17,363     6,313
  Other financing activities, net                  (33)      434
Net cash provided by financing activities       23,294    11,143

Net decrease in cash and cash equivalents         (708)   (3,160)

Cash and cash equivalents at beginning
  of year                                        1,024     3,160

Cash and cash equivalents at end of period     $   316   $     -

                 See Notes to Consolidated Financial Statements
<PAGE>

                                                         AT&T Form 10-Q - Part I

                         AT&T CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 (Dollars in Millions Except Per Share Amounts)
                                   (Unaudited)

(a)           BASIS OF PRESENTATION
              The consolidated  financial  statements have been prepared by AT&T
              Corp.  (AT&T)  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, 1999,  filed
              on March 27, 2000,  (which  includes the  financial  statements of
              Liberty Media Group for the year ended December 31, 1999),  AT&T's
              Form 10-Q for the quarter  ended March 31, 2000,  (which  includes
              the  financial  results of Liberty  Media  Group for this  period,
              attached as an exhibit thereto),  AT&T's Form 10-Q for the quarter
              ended June 30,  2000,  (which  includes the  financial  results of
              Liberty  Media  Group  and AT&T  Wireless  Group for  quarter  and
              year-to-date  periods  ended June 30,  2000,  attached as exhibits
              thereto) and the  financial  statements of Liberty Media Group and
              AT&T Wireless Group for the quarter and year-to-date periods ended
              September   30,  2000,   included  as  Exhibits   99.1  and  99.2,
              respectively, to this AT&T quarterly report on Form 10-Q.

              On April 27,  2000,  AT&T  created  a new  class of stock  when we
              completed an initial public offering of 360 million shares of AT&T
              Wireless Group tracking stock at a price of $29.50 per share. This
              stock is  designed  to track the  economic  performance  of AT&T's
              wireless  services  business and  represented a 15.6%  interest in
              that business.  AT&T retained the remaining 84.4% interest in AT&T
              Wireless Group. In addition to AT&T Wireless Group tracking stock,
              AT&T has two other  classes of stock,  Liberty  Media  Group (LMG)
              tracking stock and AT&T common stock. Liberty Media Group tracking
              stock is  intended  to reflect the  performance  of Liberty  Media
              Group. AT&T common stock is intended to reflect the performance of
              all other  businesses  of AT&T,  referred to as AT&T Common  Stock
              Group, including AT&T's retained interest in AT&T Wireless Group.

              The earnings  attributable  to AT&T Wireless Group represent 15.6%
              of the  earnings  for the third  quarter and 15.6% of the earnings
              from April 27,  2000,  the date of the  initial  public  offering,
              through  September  30, 2000,  for the  year-to-date  period.  The
              remaining  earnings  of  AT&T's  wireless  services  business  are
              included in the earnings  attributable to AT&T Common Stock Group.
              Similarly, the earnings or losses related to LMG are excluded from
              earnings available to AT&T Common Stock Group.

              The board of directors of LMG declared a  two-for-one  stock split
              of LMG tracking  stock,  paid on June 9, 2000.  All  references to
              number  of  shares  and  per  share  information  for  LMG  in the
              consolidated  financial  statements  have been adjusted to reflect
              the stock split on a retroactive basis.

              We have  reclassified  certain  prior period amounts to conform to
              our current presentation.

<PAGE>
                                                         AT&T Form 10-Q - Part I

(b)           MERGERS

              MERGER WITH MEDIAONE GROUP, INC. (MEDIAONE)
              On June 15, 2000,  AT&T completed a merger with MediaOne in a cash
              and stock  transaction  valued at approximately  $56 billion.  For
              each share of MediaOne stock, MediaOne  shareholders  received, in
              the aggregate, 0.95 of a share of AT&T common stock and $36.27 per
              share in cash, consisting of $30.85 per share as stipulated in the
              merger  agreement  and $5.42 per share based on AT&T's stock price
              preceding the merger, which was below a predetermined amount. AT&T
              issued  approximately 603 million shares of common stock, of which
              approximately 60 million were treasury shares. The AT&T shares had
              an aggregate  market value of  approximately  $21 billion and cash
              payments  totaled  approximately  $24 billion.  In  addition,  the
              transaction  included  debt  and  other  obligations  of  MediaOne
              totaling approximately $11 billion.

              The  merger  was  accounted  for  under  the  purchase  method  of
              accounting, accordingly the results of MediaOne have been included
              in the accompanying  consolidated  financial  statements since the
              date of acquisition as part of our Broadband segment.

              Approximately $17 billion of the purchase price of $56 billion has
              been  attributed to agreements  with local  franchise  authorities
              that  allow  access  to  homes  in  our  broadband  service  areas
              ("franchise  costs")  and is being  amortized  on a  straight-line
              basis over 40 years.  Also  included in the $56  billion  purchase
              price was  approximately  $29 billion  related to  nonconsolidated
              investments,  including  investments in Time Warner  Entertainment
              (TWE) and Vodafone Group, plc, approximately $5 billion related to
              property,   plant  and   equipment,   approximately   $10  billion
              attributable  to MediaOne  debt, and  approximately  $1 billion of
              minority  interest in Centaur  Funding  Corporation  (Centaur),  a
              subsidiary  of  MediaOne.  The  purchase  resulted in  preliminary
              goodwill  of  $16   billion,   which  is  being   amortized  on  a
              straight-line  basis over 40 years. We may make refinements to the
              allocation of the purchase  price in future periods as the related
              fair value  appraisals  of  certain  assets  and  liabilities  are
              finalized.

              MERGER WITH TELE-COMMUNICATIONS, INC. (TCI)
              In March 1999,  AT&T  completed a merger  with TCI,  renamed  AT&T
              Broadband  (Broadband),  in an  all-stock  transaction  valued  at
              approximately $52 billion.  The merger was accounted for under the
              purchase  method of accounting  and,  accordingly,  the results of
              Broadband  have been  included  in the  financial  results of AT&T
              since the acquisition.

              In connection  with the closing,  AT&T issued a separate  tracking
              stock  designed to reflect the economic  performance of LMG, TCI's
              former programming and technology investment business.

              AT&T does not have a controlling  financial interest for financial
              accounting  purposes in LMG;  therefore,  our investment in LMG is
              accounted  for  under  the  equity  method  in  the   accompanying
              consolidated financial statements. The amounts attributable to LMG
              are  reflected as separate line items  "Equity  earnings  (losses)
              from Liberty Media Group" and  "Investment  in Liberty Media Group
              and related  receivables,  net," in the accompanying  consolidated
              financial statements.

<PAGE>

                                                         AT&T Form 10-Q - Part I


              PRO FORMA RESULTS
              Following is a summary of the pro forma  results of AT&T as if the
              mergers  with  MediaOne  and TCI had closed  effective  January 1,
              1999:

                                                                 (Unaudited)
              Shares in millions
              For the Nine Months Ended September 30,           2000      1999
              Revenue                                        $50,422   $49,145
              Net income                                       8,658     3,081

              Weighted-average AT&T common shares              3,765     3,780
              Weighted-average AT&T common shares
               and potential common shares                     3,842     3,871
              Weighted-average AT&T Wireless Group shares        360         -
              Weighted-average Liberty Media Group Shares      2,573     2,514

              AT&T Common Stock Group earnings per
              common share:
                Basic                                        $  1.51   $  1.09
                Diluted                                      $  1.49   $  1.07

              AT&T Wireless Group earnings per
               common share:
               Basic and diluted                             $  0.05   $     -

              Liberty Media Group earnings (loss) per
               common share:
                Basic and diluted                            $  1.15   $ (0.41)

              Pro forma data may not be  indicative  of the  results  that would
              have been  obtained  had these  events  actually  occurred  at the
              beginning  of the  periods  presented,  nor does it intend to be a
              projection of future results.

(c)           OTHER ACQUISITIONS, EXCHANGES AND DISPOSITIONS

              AT HOME CORPORATION (EXCITE@HOME)
              On August 28, 2000,  AT&T and  Excite@Home  announced  shareholder
              approval of a new board of directors and governance  structure for
              Excite@Home  and  completion  of  the  extension  of  distribution
              contracts  with  AT&T,  Cox   Communications   (Cox)  and  Comcast
              Corporation  (Comcast).  AT&T was given the right to designate six
              of the 11  Excite@Home  board  members.  In addition,  Excite@Home
              converted  approximately  50 million  AT&T's  Series A shares into
              Series B shares, each of which has ten votes. As a result of these
              governance changes,  AT&T gained a controlling  financial interest
              and began consolidating  Excite@Home's results upon the closing of
              the  transaction  on  September  1, 2000,  at which time we had an
              approximate  24%  economic   interest  and  74%  voting  interest,
              compared  with our previous 56% voting  interest.  As of September
              30,  2000,  AT&T  had an  approximate  23%  economic  interest  in
              Excite@Home.

<PAGE>

                                                         AT&T Form 10-Q - Part I


              In exchange for Cox and Comcast  relinquishing  their rights under
              the  shareholder  agreement,  AT&T  granted put options to Cox and
              Comcast on a combined  total of 60.4 million shares of Excite@Home
              Series A common  stock.  The put  options  provide Cox and Comcast
              with the right to convert  their  Excite@Home  shares  into either
              AT&T stock or cash at their option, at any time between January 1,
              2001 and June 4, 2002,  at the higher of (i) $48 per share or (ii)
              the  30  day  average  trading  price  at  the  time  of  exercise
              (beginning  15 trading days prior to the exercise  date and ending
              15 days after the exercise  date).  If the average  price is above
              $48 per share,  the number of  Excite@Home  shares that AT&T would
              acquire  would be reduced  proportionately  from the original 60.4
              million shares.  The maximum amount that AT&T would be required to
              pay in cash or stock is  approximately  $2.9 billion  based on the
              $48 strike  price.  The  obligation  under  these put  options was
              recorded as other  long-term  liabilities  on the balance sheet at
              fair value,  with gains or losses  resulting  from changes in fair
              value being recorded as a component of other income  (expense).  A
              charge of  approximately  $21 was recorded in the third quarter of
              2000 to reflect the increase in fair value of the put options.

              Also, in connection with the distribution agreements through 2008,
              AT&T obtained the right to purchase up to approximately 25 million
              Excite@Home  Series A shares  and 25 million  Series B shares.  In
              addition,  Cox and  Comcast  each will  receive  new  warrants  to
              purchase  two  Series A shares  for each home its  system  passes.
              These  warrants  will  vest  in  installments   every  six  months
              beginning in June 2001,  and be fully vested in June 2006,  if Cox
              and  Comcast  elect  to  continue  their  extended   non-exclusive
              distribution agreements through that period.

              As a result of the  consolidation  of Excite@Home,  AT&T's balance
              sheet as of September  30, 2000,  reflected  minority  interest of
              approximately   $5.4  billion,   goodwill  of  approximately  $8.7
              billion,  short-term  liabilities of  approximately  $2.4 billion,
              other net assets of approximately  $1.0 billion and the removal of
              our investment in Excite@Home of approximately $1.9 billion.

(d)           NET RESTRUCTURING AND OTHER CHARGES
              During the quarter  AT&T  recorded  $24 of net  restructuring  and
              other charges.  These charges  represent cash severance  costs for
              approximately  490  employees  recorded  in  conjunction  with the
              synergies created by the MediaOne merger.  Approximately  one-half
              of the  individuals  were  management  employees and one-half were
              non-management  employees.   Approximately  30%  of  the  affected
              employees have left their  positions as of September 30, 2000, and
              the remaining employees will leave the company by the end of 2000.

              Net  restructuring  and other  charges for the nine  months  ended
              September   30,   2000,   totaled   $797.   The  charge   included
              restructuring  and exit costs of $706 and a $91 charge  related to
              the mandated disposition of AT&T Communications (U.K.) Ltd. (Comms
              U.K.), which would have competed directly with Concert, our global
              venture with British  Telecommunication plc. The restructuring and
              exits  costs  related to actions  across  several of our  business
              units.  These  actions  were  primarily  driven by our  continuing
              efforts to streamline operations and reduce costs by $2 billion by
              the end of the year.

<PAGE>

                                                         AT&T Form 10-Q - Part I


              The charge for the nine months ended September 30, 2000,  included
              cash termination  benefits of $482 associated with the involuntary
              separation of about 6,700 employees. Approximately one-half of the
              individuals   were   management   employees   and  one-half   were
              non-management  employees.   Approximately  50%  of  the  affected
              employees have left their positions as of September 30, 2000.

              The charge also included $62 of network  lease and other  contract
              termination  costs  associated with penalties  incurred as part of
              notifying vendors of the termination of these contracts during the
              first quarter of 2000.

              The  following  table  displays  the  activity and balances of the
              restructuring   liability   accounts  from  January  1,  2000,  to
              September 30, 2000:

                                  Jan. 1,                              Sept. 30,
                                   2000                                  2000
              Type of Cost        Balance    Additions    Deductions    Balance
              Employee
                separations        $150        $482         $(333)        $299
              Facility closings     239           -           (53)         186
              Other                  21          62           (39)          44
              Total                $410        $544         $(425)        $529

              Deductions  reflect cash payments of $337 and noncash  utilization
              of $88.  The cash outlay was  primarily  funded  through cash from
              operations.   Noncash  utilization   included  deferred  severance
              primarily related to executive terminations.

              Also  included in the charge for the nine months  ended  September
              30, 2000, was $144 of benefit  curtailment  costs  associated with
              employee separations as part of these exit plans. We also recorded
              an asset  impairment  charge of $18 related to the  write-down  of
              unrecoverable  assets in certain  businesses in which the carrying
              value is no longer supported by future cash flows.

              As a  result  of our  merger  with  MediaOne  and as  part  of our
              objective to benefit from the synergies  created by the merger, we
              expect to record  additional  restructuring  charges  for exit and
              separation plans in the fourth quarter.

              Net  restructuring  and other  charges for the nine  months  ended
              September  30, 1999,  totaled $702.  The charge  included a pretax
              in-process  research and development charge of $594 related to the
              TCI acquisition, a $128 pretax net charge primarily related to our
              exit from certain joint ventures that would have competed directly
              with  Concert and a $50 pretax  charge  related to a  contribution
              agreement entered into by Broadband to satisfy certain liabilities
              of Phoenixstar,  Inc. These charges were partially offset by a $70
              pretax gain related to the settlement of pension  obligations  for
              former   employees  who  accepted  AT&T's   voluntary   retirement
              incentive program offer.

<PAGE>

                                                         AT&T Form 10-Q - Part I


(e)           EARNINGS PER COMMON SHARE AND POTENTIAL COMMON SHARE
              Earnings  (losses)  attributable to  the different classes of AT&T
              common stock is as follows:

                                            For the Three        For the Nine
                                             Months Ended        Months Ended
                                             September 30,       September 30,
                                            2000      1999      2000      1999
              AT&T Common Stock Group      $1,319    $1,633    $4,805    $4,297
              AT&T Wireless Group              (3)        -        19         -
              Liberty Media Group           1,756      (217)    2,965      (818)
              Net income                   $3,072    $1,416    $7,789    $3,479

              Basic earnings per share (EPS) for AT&T Common Stock Group for the
              three and nine months  ended  September  30,  2000 and 1999,  were
              computed by dividing  earnings  attributable  to AT&T Common Stock
              Group  shareowners by the  weighted-average  number of AT&T common
              shares outstanding during the period.

              Diluted EPS for AT&T Common  Stock Group was  computed by dividing
              earnings  attributable  to AT&T Common  Stock  Group  shareowners,
              adjusted for the conversion of securities, by the weighted-average
              number of AT&T common shares and dilutive  potential common shares
              outstanding  during  the  period,   assuming   conversion  of  the
              potential common shares at the beginning of the periods presented.
              Shares   issuable   upon   conversion   of   preferred   stock  of
              subsidiaries,   convertible   debt  securities  of  a  subsidiary,
              convertible  put  options,  stock  options  and other  performance
              awards  have  been   included  in  the  diluted   calculation   of
              weighted-average shares to the extent that the assumed issuance of
              such shares would have been dilutive,  as illustrated  below.  The
              convertible    quarterly   income   preferred    securities   were
              antidilutive  and were  excluded from the  computation  of diluted
              EPS. The dividends on these securities have an after-tax impact to
              quarterly  earnings of approximately  $40. Assuming the conversion
              of these securities,  the dividends would no longer be included as
              a reduction to net income and the  securities  would  convert into
              approximately 67 million shares of AT&T common stock.

              A  reconciliation  of the income and share  components for diluted
              EPS  calculations  with  respect to AT&T Common  Stock Group is as
              follows:

                                                 For the Three     For the Nine
                                                 Months Ended      Months Ended
                                                 September 30,     September 30,
                                                2000      1999    2000      1999
              AT&T Common Stock Group:
              Income available                $1,319    $1,633  $4,805    $4,297
              Income impact of assumed
                conversion of preferred stock
                of subsidiary                      8         8      24        18
              Income impact of mark-to-market on
                convertible put options           13         -      13         -
              Income available adjusted for
                conversion of securities      $1,340    $1,641  $4,842    $4,315

<PAGE>

                                                         AT&T Form 10-Q - Part I


              Shares in millions
              Weighted-average common
                shares                         3,752     3,195   3,397     3,045
              Stock options                       17        32      23        37
              Preferred stock of subsidiary       40        40      40        30
              Convertible debt securities of
                subsidiary                         -         -       -         2
              Convertible put options             33         -      11         -
              Weighted-average common shares
                and potential common shares    3,842     3,267   3,471     3,114

              Basic EPS for AT&T  Wireless  Group for the third  quarter and for
              the period from the date of the initial  public  offering  through
              September   30,   2000,   was  computed  by  dividing  the  income
              attributable   to  AT&T   Wireless   Group   shareowners   by  the
              weighted-average  number of shares  outstanding  of AT&T  Wireless
              Group of 360 million. Potentially dilutive securities consisted of
              approximately 73 million stock options, which were antidilutive at
              September 30, 2000.

              Basic EPS for LMG was  computed by dividing  the  earnings  (loss)
              attributable to LMG shareowners by the weighted-average  number of
              shares outstanding of LMG of 2,578 million and 2,530 million,  for
              the three months ended September 30, 2000 and 1999,  respectively,
              and 2,573  million and 2,514  million  for the nine  months  ended
              September  30,  2000,  and from the  date of  acquisition  through
              September 30, 1999, respectively.

              Potentially  dilutive  securities,  including  fixed and nonvested
              performance awards and stock options,  have not been factored into
              the dilutive  calculations because past history has indicated that
              these  contracts  are  generally  settled  in cash.  There were 98
              million and 104 million of these potentially  dilutive  securities
              outstanding  at  September  30, 2000 and 1999,  respectively.  The
              diluted  earnings per share  calculation  for the third quarter of
              2000 also excludes approximately 700 thousand warrants outstanding
              at September 30, 2000,  which were  antidilutive.  Since LMG had a
              loss in the quarter and  year-to-date  periods of 1999, the impact
              of any potential shares would have been antidilutive.

(f)           LONG-TERM DEBT

              EXCHANGEABLE NOTES
              During  1999 and 1998,  MediaOne  issued  debt  (the  Exchangeable
              Notes) which is mandatorily  redeemable at MediaOne's  option into
              (i) Vodafone American Depository Receipts (ADRs) held by MediaOne,
              (ii)  the cash  equivalent,  or  (iii) a  combination  of cash and
              Vodafone ADRs. The maturity value of the Exchangeable Notes varies
              based upon the fair market value of a Vodafone ADR.

<PAGE>

                                                         AT&T Form 10-Q - Part I


              Following  is a summary of the  Exchangeable Notes  outstanding by
              year of issue:

                                                      Year of Issue

              EXCHANGEABLE NOTES                  1999             1998
              Proceeds                            $1,129           $1,686
              Interest Rate                       7.0%             6.25%
              Maturity Date                       Nov. 15, 2002    Aug. 15, 2001
              Carrying Value                      $1,055           $2,395


              The  redemption  formula  for the  1999  Exchangeable  Notes is as
              follows:

                   (a)  If the fair market  value of a  Vodafone ADR is  greater
                        than or  equal to $51.2563,  each 1999 Exchangeable Note
                        is equivalent to 0.8475 of a  Vodafone ADR;

                   (b)  If  the fair market value of a Vodafone ADR is less than
                        or equal to  $43.4375,  each 1999  Exchangeable  Note is
                        equivalent to one Vodafone  ADR; or

                   (c)  If the fair market value of a Vodafone ADR  is less than
                        $51.2563 but  greater  than  $43.4375  per  share,  each
                        1999  Exchangeable Note is equivalent to a  fraction  of
                        a  Vodafone ADR  equal to (i)  $43.4375 divided  by (ii)
                        the fair market value of one Vodafone ADR.

              The number of Vodafone  ADRs to be  exchanged at maturity for each
              1998  Exchangeable  Note will be based upon a redemption  value of
              $9.00 in cash plus 2 1/2 times the fair market value of a Vodafone
              ADR (the Maturity Price), as follows:

                   (a)  If the Maturity Price is greater than or equal to $71.75
                        per  share,  each 1998 Exchangeable  Note is  equivalent
                        to  0.8101 of the Maturity Price;

                   (b)  If the  Maturity Price is less than or equal to  $58.125
                        per share,  each 1998 Exchangeable Note is equivalent to
                        the Maturity Price; or

                   (c)  If the Maturity Price is less  than $71.75 per share but
                        greater than  $58.125 per share, each  1998 Exchangeable
                        Note is equivalent to $58.125.

              The  Exchangeable  Notes are being  accounted  for as indexed debt
              instruments since the maturity value of the Exchangeable  Notes is
              dependent  upon the fair market value of the  underlying  Vodafone
              ADRs. For the 1999 debt issuance,  the market risk of a decline in
              value of Vodafone ADRs below $43.4375 per share on 26.0 million of
              the  148.3  million  Vodafone  ADRs  held  by  MediaOne  has  been
              eliminated. In addition,  MediaOne has limited the market gains it
              may earn to 15.25% of the fair market  value in excess of $51.2563
              per  share  on 26.0  million  Vodafone  ADRs.  For the  1998  debt
              issuance,  the market risk of a decline in value of Vodafone  ADRs
              below  $19.65  per  share on 72.5  million  of the  148.3  million
              Vodafone ADRs held by MediaOne has been  eliminated.  In addition,
              MediaOne has limited the market gains it may earn to approximately
              19% of the fair market value in excess of $25.10 per share on 72.5
              million Vodafone ADRs.

<PAGE>

                                                         AT&T Form 10-Q - Part I


              Since  the  Vodafone  ADRs  are a  cost  method  investment  being
              accounted for as  "available-for-sale"  securities under Statement
              of Financial  Accounting Standards (SFAS) No. 115, "Accounting for
              Certain Investments in Debt and Equity Securities," changes in the
              maturity  value of the  Exchangeable  Notes are being  recorded as
              unrealized gains or losses, net of tax, within other comprehensive
              income as a component of shareowners' equity.

              The  Exchangeable  Notes are  unsecured  obligations  of MediaOne,
              ranking  equally in right of payment with all other  unsecured and
              unsubordinated obligations of MediaOne.

              FLOATING RATE DEBT

              Two subsidiaries of MediaOne, MediaOne SPC IV and MediaOne SPC VI,
              entered into a series of purchased and written options on Vodafone
              ADRs  contributed  to them by MediaOne  and issued  floating  rate
              debt.  The carrying  value of debt  outstanding  at September  30,
              2000,  was  $1,739,  which pays  interest  at  three-month  London
              Inter-Bank  Offering Rate (LIBOR) plus 0.5%.  This debt matures in
              equal quarterly installments beginning in 2003 and ending in 2005.
              The assets of MediaOne  SPC IV, which are  primarily  29.1 million
              Vodafone ADRs, are only available to pay the creditors of MediaOne
              SPC IV.  Likewise,  the  assets  of  MediaOne  SPC VI,  which  are
              primarily  18.0 million  Vodafone  ADRs, are only available to pay
              the creditors of MediaOne SPC VI.

              SUBSIDIARY-OBLIGATED  MANDATORILY REDEEMABLE  PREFERRED SECURITIES
              OF SUBSIDIARY  TRUSTS HOLDING SOLELY SUBORDINATED  DEBT SECURITIES
              OF AN AT&T SUBSIDIARY

              Certain  subsidiary  trusts of MediaOne (the MediaOne  Trusts) had
              preferred  securities   outstanding  at  September  30,  2000,  as
              follows:

                                                Interest   Maturity   Carrying
                  Subsidiary Trust                Rate       Date      Amount
                  MediaOne Financing I            7.96%      2025     $   30
                  MediaOne Financing II           8.25%      2036         28
                  MediaOne Financing I            9.30%      2025          -
                  MediaOne Finance II             9.50%      2036        214
                  MediaOne Finance III            9.04%      2038        504

                  Total                                               $  776

              The MediaOne Trusts exist for the exclusive purpose of issuing the
              Trust Preferred Securities and investing the proceeds thereof into
              Subordinated  Deferrable  Interest  Notes (the  Subordinated  Debt
              Securities)  of  MediaOne  Group  Funding,  Inc.,  a  wholly-owned
              subsidiary of MediaOne.  The Subordinated Debt Securities have the
              same  interest  rate  and  maturity  date as the  Trust  Preferred
              Securities to which they relate.  The Subordinated Debt Securities
              are fully and unconditionally  guaranteed by MediaOne.  All of the
              Subordinated  Debt  Securities  are  redeemable by MediaOne  Group
              Funding,  Inc.  or MediaOne  at a  redemption  price of $25.00 per
              security, plus accrued and unpaid interest. Upon redemption of the
              Subordinated Debt Securities, the Trust Preferred

<PAGE>

                                                         AT&T Form 10-Q - Part I


              Securities  will be mandatorily  redeemable,  at a price of $25.00
              per share,  plus accrued and unpaid  distributions.  The 9.30% and
              7.96%   Subordinated   Debt  Securities  became  redeemable  after
              September 11, 2000, and the 9.30%  securities  were fully redeemed
              by the end of the third quarter.  The 9.50% and 8.25% Subordinated
              Debt  Securities are redeemable  after October 29, 2001. The 9.04%
              Subordinated  Debt  Securities  are  redeemable  after October 28,
              2003. The Trust Preferred Securities are recorded within long-term
              debt in the accompanying consolidated balance sheet.

(g)           FINANCIAL INSTRUMENTS

              COLLARS
              Two subsidiaries of MediaOne, MediaOne SPC IV and MediaOne SPC VI,
              entered   into  a  series  of   purchased   and  written   options
              (collectively the collars) on Vodafone ADRs contributed to them by
              MediaOne  and issued  floating  rate debt.  The collars  have been
              designated  and  are  effective  as a  hedge  of the  market  risk
              associated  with the  investment in Vodafone ADRs. The collars are
              therefore  carried at intrinsic  value,  with unrealized  gains or
              losses,  net of tax,  being  recorded  within other  comprehensive
              income as a component of  shareowners'  equity,  together with any
              change in the fair value of the Vodafone  ADRs. The carrying value
              of the collars at September 30, 2000, was $515.

              At the  expiration of the MediaOne SPC IV collar,  we will receive
              cash  if  the  market  value  of  a  Vodafone  ADR  is  less  than
              approximately $34.00 per share,  effectively  eliminating downside
              risk on the stock  below  $34.00  per  share.  Conversely,  if the
              market  value of a  Vodafone  ADR is  greater  than  approximately
              $49.00 per share,  we will be required to pay cash,  which will be
              offset by the corresponding  increase in the value of the Vodafone
              ADR. This collar expires quarterly beginning in 2003 and ending in
              2005.

              At the  expiration of the MediaOne SPC VI collar,  we will receive
              cash  if  the  market  value  of  a  Vodafone  ADR  is  less  than
              approximately $40.00 per share,  effectively  eliminating downside
              risk on the stock  below  $40.00  per  share.  Conversely,  if the
              market  value of a  Vodafone  ADR is  greater  than  approximately
              $58.00 per share,  we will be required to pay cash,  which will be
              offset by the corresponding  increase in the value of the Vodafone
              ADR. This collar expires quarterly beginning in 2003 and ending in
              2005.

              INTEREST RATE SWAPS
              In  connection  with the floating rate debt issued by MediaOne SPC
              IV and VI,  interest  rate  swaps  were  entered  into to swap the
              floating  rate debt to fixed rate debt.  The  interest  rate swaps
              have the same maturities as the debt and mature in equal quarterly
              installments  beginning  in 2003  and  ending  in  2005.  MediaOne
              prepaid  the  fixed  interest   payments   pursuant  to  the  swap
              agreements;  the costs of which were deferred and are amortized as
              adjustments to the interest  expense over the term of the debt. As
              a result of the swaps and related  amortization,  MediaOne expects
              to have a fixed  effective  interest rate of 5.91% on the MediaOne
              SPC IV debt and 6.02% on the MediaOne SPC VI debt. The unamortized
              prepaid  interest rate swap balance was  approximately  $441 as of
              September 30, 2000.

<PAGE>

                                               AT&T Form 10-Q - Part I


              LETTERS OF CREDIT
              At  September  30,  2000,  we had  letters of credit of $641.  The
              increase from December 31, 1999, was primarily  related to letters
              of credit to support  subsidiary debt as well as letters of credit
              MediaOne had entered into prior to the merger.

              EQUITY HEDGES
              We enter into equity  hedges to manage our  exposure to changes in
              equity  prices  associated  with  stock  appreciation   rights  of
              affiliated  companies.  The fair value of our equity  hedges as of
              September 30, 2000, was approximately $4.

(h)           MINORITY INTEREST IN CENTAUR FUNDING CORPORATION
              Centaur Funding Corporation  (Centaur),  a subsidiary of MediaOne,
              issued  three   series  of   preferred   shares  prior  to  AT&T's
              acquisition  of  MediaOne.  Centaur was created for the  principal
              purpose of raising  capital  through  the  issuance  of  preferred
              shares and investing  those proceeds into notes issued by MediaOne
              SPC II, a subsidiary of MediaOne.  Principal and interest payments
              from the notes are  expected to be Centaur's  principal  source of
              funds to make  dividend and  redemption  payments on the preferred
              shares. In addition,  the dividend and certain redemption payments
              on the  preferred  shares will be  determined  by reference to the
              dividend  and  redemption  activity  of  the  preferred  stock  of
              AirTouch  Communications,  Inc.  (ATI Shares) held by MediaOne SPC
              II.  Payments on the preferred  shares are neither  guaranteed nor
              secured by MediaOne or AT&T.  The assets of MediaOne SPC II, which
              includes the ATI shares,  are only  available to pay the creditors
              of MediaOne SPC II.

              These  securities  remained  outstanding at September 30, 2000, as
              follows:

                                 Dividend Rate   Maturity Date   Carrying Amount

              Series A           Variable        None            $  100
              Series B           9.08%           4/21/2020          927
              Series C           None            4/21/2020          115
              Total                                              $1,142

              The Auction Market Preference Shares, Series A, have a liquidation
              value  of $250  thousand  per  share  and  dividends  are  payable
              quarterly  when  declared by Centaur's  Board of Directors  out of
              funds legally available.

              The  9.08%  Cumulative   Preference  Shares,   Series  B,  have  a
              liquidation  value of $1  thousand  per  share and  dividends  are
              payable  quarterly in arrears when declared by Centaur's  Board of
              Directors out of funds legally available.  In addition,  dividends
              may be declared  and paid only to the extent that  dividends  have
              been declared and paid on the ATI shares.

              The Preference  Shares,  Series C, have a liquidation  value of $1
              thousand per share at maturity.  The value of the Series C will be
              accreted  to  reach  its  liquidation  value  upon  maturity.

              The  preferred  shares  issued  by  Centaur  are  recorded  within
              Minority Interest in the accompanying consolidated balance sheets.

<PAGE>


                                                         AT&T Form 10-Q - Part I


(i)           RELATED PARTY TRANSACTIONS
              AT&T has various  related  party  transactions  with  Concert as a
              result of the closure of this global venture in early January.

              Included in revenue for the three and nine months ended  September
              30, 2000, are $269 and $819,  respectively,  for services provided
              to Concert.

              Included in access and other connection expenses for the three and
              nine months ended  September  30,  2000,  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 $568
              and $1,728, respectively.

              During the first  quarter of 2000,  AT&T  loaned  $1.0  billion to
              Concert which is included within  investments and related advances
              in the accompanying consolidated balance sheet. Interest income of
              $18 and $48 was  recognized  for the three and nine  months  ended
              September 30, 2000, respectively.

              Included  in  accounts  receivable  and  other  current  assets at
              September 30, 2000,  was $455 and $908,  respectively,  related to
              transactions with Concert.  Included in accounts payable and other
              current  liabilities  at September 30, 2000,  was $413 and $1,259,
              respectively, also related to transactions with Concert.

              In addition, Broadband had various related party transactions with
              LMG.  Included in costs of services and products were  programming
              expenses  related to services  from LMG which  amounted to $69 and
              $184 for the three  and nine  months  ended  September  30,  2000,
              respectively, and $55 and $168 for the three and nine months ended
              September 30, 1999, respectively.

              Included in investment in LMG and related receivables was $113 and
              $27 at September  30, 2000,  and December 31, 1999,  respectively,
              primarily  related to taxes  pursuant to a tax  sharing  agreement
              between LMG and Broadband, which existed prior to the TCI merger.

              AT&T pays  certain  expenses  on behalf of LA  Cellular,  which is
              owned through our equity  interest in AB Cellular  Holding LLC (AB
              Cellular). Accounts receivable included approximately $167 related
              to these receivables at September 30, 2000.

(j)           GUARANTEE OF PREFERRED SECURITIES
              TCI Securities:
              Prior  to  the   consummation  of  the  TCI  merger,   TCI  issued
              mandatorily  redeemable  preferred  securities  through subsidiary
              trusts  that  held  subordinated  debt  securities  of  TCI.  AT&T
              provides a full and  unconditional  guarantee  on the  outstanding
              securities issued by TCI Communications Financing I, II and IV. At
              September 30, 2000, $1,247 of the guaranteed  redeemable preferred
              securities  remained  outstanding.  Following  is a summary of the
              results of TCI which have been included in the  financial  results
              of AT&T for each corresponding  period.  The summarized  financial
              information  includes  transactions with AT&T that were eliminated
              in consolidation.

<PAGE>

                                                         AT&T Form 10-Q - Part I


                                       For the Nine          For the Seven
                                       Months Ended          Months Ended
                                    September 30, 2000    September 30, 1999
              Revenue                    $ 4,755               $ 3,489
              Operating loss                (226)                 (744)
              Net income (loss)            1,775                (2,406)

                                           As of                 As of
                                    September 30, 2000     December 31, 1999
              Current assets             $   802               $   468
              Noncurrent assets           98,460                93,798
              Current liabilities          4,803                 2,814
              Noncurrent liabilities      39,898                37,853
              Minority interest            7,450                 2,175

              MediaOne Securities:
              Prior to the consummation of the MediaOne merger,  MediaOne issued
              mandatorily   redeemable   exchangeable   notes  and   mandatorily
              redeemable  preferred  securities  through  subsidiary trusts that
              held  subordinated  debt  securities of MediaOne.  AT&T provides a
              full and unconditional  guarantee on these outstanding  securities
              issued  by  MediaOne.   At  September  30,  2000,  $4,227  of  the
              guaranteed securities remained outstanding. Following is a summary
              of the  results  of  MediaOne  which  have  been  included  in the
              financial  results of AT&T since the date of  acquisition  on June
              15,  2000.   The   summarized   financial   information   includes
              transactions with AT&T that were eliminated in consolidation.

                                      For the period from
                                       June 15, 2000 to
                                      September 30, 2000

              Revenue                       $  914
              Operating loss                  (303)
              Net loss                        (286)

                                             As of
                                          September 30,
                                              2000

              Current assets               $ 6,267
              Noncurrent assets             65,442
              Current liabilities            3,793
              Noncurrent liabilities        22,700
              Minority interest              1,143


(k)           SEGMENT REPORTING
              AT&T's  results are  segmented  according to the way we manage our
              business:  Business Services, Consumer Services, Wireless Services
              and Broadband.  Our existing  segments reflect certain  managerial
              changes  since the  publication  of our 1999 annual  results.  All
              prior period  results have been restated to reflect these changes.
              In addition,  2000 results  reflect the  acquisition  of MediaOne,
              included in the Broadband  segment from the June 15, 2000, date of
              acquisition,  and the impact of assets and businesses  contributed
              to Concert, which were included in 1999 results.

              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.

<PAGE>
                                                         AT&T Form 10-Q - Part I


              REVENUE

                                                   Three               Nine
                                                Months Ended       Months Ended
                                               September 30,      September 30,
                                               2000     1999      2000     1999
              Business services external
                revenue                     $ 6,895  $ 6,859   $20,818  $19,715
              Business services internal
                revenue                         213      197       573      553
              Total business services
                revenue                       7,108    7,056    21,391   20,268
              Consumer services external
                revenue                       4,672    5,578    14,715   16,527
              Wireless services external
                revenue                       2,799    2,050     7,474    5,490
              Broadband external revenue      2,417    1,505     5,691    3,479

              Total reportable segments
                revenue                      16,996   16,189    49,271   45,764

              Corporate and Other revenue (a)   (21)     144      (174)     438
              Total revenue                 $16,975  $16,333   $49,097  $46,202

              (a) Included in Corporate and Other is revenue from  international
              operations and ventures,  Excite@Home,  other corporate operations
              and the elimination of internal revenue.

              RECONCILIATION  OF  EARNINGS  BEFORE INTEREST  AND TAXES (EBIT) TO
              INCOME BEFORE INCOME TAXES

                                                    Three              Nine
                                                 Months Ended      Months Ended
                                                September 30,     September 30,
                                                2000     1999     2000     1999
              Business services               $1,733   $1,509   $4,870   $4,536
              Consumer services                1,854    2,159    5,425    5,852
              Wireless services                  105       54      551      128
              Broadband                         (627)    (310)    (717)  (1,187)
                Total reportable segments'
                  EBIT                         3,065    3,412   10,129    9,329
              Corporate and Other EBIT           (40)    (398)  (1,020)  (1,165)
              Liberty Media Group equity
                earnings (losses)              1,756     (217)   2,965     (818)
              Interest expense                   946      493    2,158    1,188
                Total income before income
                  taxes                       $3,835   $2,304   $9,916   $6,158

<PAGE>
                                                         AT&T Form 10-Q - Part I


              ASSETS

                                                  At Sept. 30,  At Dec. 31,
                                                       2000         1999
              Business services                    $ 33,360     $ 32,010
              Consumer services                       4,945        6,279
              Wireless services                      33,045       23,312
              Broadband                             117,289       53,810
                Total reportable segments           188,639      115,411

              Corporate and Other:
                Other segments                        6,962        3,386
                Prepaid pension costs                 2,978        2,464
                Deferred taxes                        1,183          899
                Other corporate assets               13,361        8,786
              Investment in Liberty Media Group
                and related receivables, net         39,229       38,460

              Total assets                         $252,352     $169,406


(l)           NEW ACCOUNTING PRONOUNCEMENTS
              In June 1998,  the  Financial  Accounting  Standards  Board (FASB)
              issued SFAS No. 133,  "Accounting  for Derivative  Instruments and
              Hedging  Activities."  Among other  provisions,  it requires  that
              entities recognize all derivatives as either assets or liabilities
              in  the   statement  of  financial   position  and  measure  those
              instruments at fair value. Gains and losses resulting from changes
              in the fair values of those  derivatives  would be  accounted  for
              depending  on the use of the  derivative  and whether it qualifies
              for hedge  accounting.  The  effective  date for this standard was
              delayed via the issuance of SFAS No. 137. The  effective  date for
              SFAS No.  133 is now for  fiscal  years  beginning  after June 15,
              2000,  though  earlier  adoption  is  encouraged  and  retroactive
              application is prohibited.  For AT&T, this means that the standard
              must be adopted no later than January 1, 2001.

              In June  2000,  the FASB  issued  SFAS No.  138,  "Accounting  for
              Certain Derivative  Instruments and Certain Hedging Activities" as
              an   amendment   to  SFAS  No.  133.   This   statement   provides
              clarification with regard to certain  implementation  issues under
              SFAS No. 133 on specific types of hedges.

              The impact of the adoption of SFAS No. 133, as amended by SFAS No.
              138, on AT&T's  results of operations  is dependent  upon the fair
              values of our derivatives and related financial instruments at the
              date of adoption  and could  result in more  pronounced  quarterly
              fluctuations in other income (expense) in future periods. However,
              had we adopted SFAS No. 133 in the third quarter of 2000, we would
              have recorded a cumulative effect of an accounting  change, net of
              applicable  taxes, of approximately  $325 of income,  or $0.08 per
              diluted share, primarily attributable to fair value adjustments of
              debt instruments acquired in conjunction with the MediaOne merger,
              as well as to our warrant portfolio.

<PAGE>

                                                         AT&T Form 10-Q - Part I

              Management  does not expect the impact of the adoption of SFAS No.
              133 on our interest rate swap and foreign  exchange  portfolios to
              be material to AT&T's results of operations,  financial condition,
              or cash flows.

              In addition,  management is currently  reassessing the appropriate
              classification of certain investment securities that support debt,
              which is indexed to those  securities.  Had these  securities been
              reclassified from  available-for-sale to trading securities during
              the third  quarter,  a charge of $235, or $0.06 per diluted share,
              net of applicable taxes,  would have been recorded to other income
              (expense),  concurrently  with the adoption of SFAS No. 133. As an
              available-for-sale  security,  changes in fair value are  included
              within other comprehensive income.

              In December 1999, the  Securities and Exchange  Commission  issued
              Staff  Accounting   Bulletin  No.  101  (SAB  No.  101),  "Revenue
              Recognition in Financial  Statements." The SEC delayed the date by
              which  registrants  must  apply  the  accounting  and  disclosures
              described  in SAB No.  101  until  the  fourth  quarter  of  2000.
              Management  does not expect the  adoption of SAB No. 101 to have a
              material impact on our results of operations.


(m)           SUBSEQUENT EVENTS

              RESTRUCTURING PLAN
              On October 25, 2000, AT&T announced a restructuring  plan designed
              to create four publicly  traded  companies  from each of our major
              operating units.  AT&T  shareowners  would ultimately own stock in
              each of the four  businesses.  Upon  completion of the plan,  AT&T
              Wireless, AT&T Broadband, AT&T Consumer and AT&T Business will all
              be represented by asset-based or tracking stocks.

              In the first  phase of the  restructuring  plan,  AT&T  intends to
              offer AT&T  shareowners  the  opportunity  to exchange  their AT&T
              common stock for AT&T Wireless  Group tracking  stock.  We plan to
              distribute  our remaining  interest in AT&T Wireless Group to AT&T
              shareowners in 2001.

              AT&T  also  plans  to  create a new  class  of stock to track  the
              economic  performance  of our AT&T Consumer  business and plans to
              distribute  100% of the tracking stock to AT&T  shareowners in the
              second half of 2001. In addition,  depending on market conditions,
              AT&T plans to conduct an  initial  public  offering  of stock that
              will track the economic  performance  of our Broadband unit during
              the summer of 2001. AT&T's ownership  interest in Excite@Home will
              be part of the Broadband  entity.  AT&T plans to recapitalize  the
              Broadband  tracking stock into an asset-based  common stock within
              twelve months of the initial public offering.

<PAGE>
                                                         AT&T Form 10-Q - Part I


              AT&T Business will be the legal owner of the AT&T brand,  which it
              will  license to the other  companies.  It will also be the parent
              company of the AT&T Consumer business.

              The board of directors is  reviewing  the dividend  policy of AT&T
              before the end of 2000 and AT&T expects that AT&T's dividend prior
              to the creation of the four new  companies as well as the combined
              dividend of the four new  companies  will be  substantially  lower
              than our current dividend.

              AT&T does not expect  significant  downsizing  to result  from our
              plans,  although each company will continue to size its operations
              as appropriate.  AT&T expects these  transactions will be tax-free
              to U.S.  shareholders.  Certain aspects of the above  transactions
              remain subject to regulatory and other approvals.

              OTHER EVENTS
              AT&T  currently  holds a 55.62%  equity  interest in AB  Cellular,
              which was formed in 1998 with BellSouth,  with each party having a
              50% voting  interest.  AB Cellular  owns,  controls and supervises
              wireless properties in Los Angeles, Houston and Galveston.  Public
              documents filed by BellSouth  indicate that BellSouth  anticipates
              exercising an option available to them pursuant to the AB Cellular
              LLC Agreement,  which would result in AB Cellular redeeming AT&T's
              interest in AB Cellular in consideration of 100% of the net assets
              of the Los Angeles property. If this transaction takes place, AT&T
              anticipates  recording  a gain and will  begin  consolidating  the
              results of the Los Angeles property.

              On November 13, 2000, two of AT&T's wireless affiliates,  TeleCorp
              PCS, Inc.  (TeleCorp) and Tritel,  Inc., merged as part of a stock
              transaction.  In connection with the merger,  AT&T  contributed to
              TeleCorp rights to acquire wireless licenses in Wisconsin and Iowa
              and $20 in cash in exchange for  approximately  9.3 million shares
              of  common  stock  in  the  newly  merged  entity.  In a  separate
              transaction,  AT&T exchanged  certain wireless licenses and rights
              to acquire licenses in the Wisconsin and Iowa markets,  and made a
              cash payment of  approximately  $80 in return for certain TeleCorp
              PCS licenses and wireless  systems in several New England markets.
              AT&T expects that these transactions will result in a gain.

<PAGE>
                                                         AT&T Form 10-Q - Part I

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

OVERVIEW
AT&T Corporation (AT&T) is among the world's communications  leaders,  providing
voice, data and video telecommunications services to large and small businesses,
consumers and government  agencies.  We provide domestic and international  long
distance, regional, local and wireless communications services, cable television
and Internet communications services. We also provide directory and calling-card
services to support our communications business.

On June 15, 2000, AT&T completed a merger with MediaOne Group,  Inc.  (MediaOne)
in a cash and stock transaction  valued at approximately  $56 billion.  For each
share of MediaOne stock, MediaOne shareholders received, in the aggregate,  0.95
of a share of AT&T  common  stock and  $36.27 per share in cash,  consisting  of
$30.85 per share as stipulated in the merger agreement and $5.42 per share based
on AT&T's  stock price  preceding  the merger,  which was below a  predetermined
amount.  AT&T issued  approximately 603 million shares of common stock, of which
approximately  60 million were  treasury  shares.  The merger with  MediaOne was
accounted for under the purchase method of accounting, accordingly the operating
results  of  MediaOne  have  been  included  in  the  accompanying  consolidated
financial  statements  since the date of  acquisition  as part of our  Broadband
segment.

On April  27,  2000,  AT&T  created a new class of stock  when we  completed  an
initial  public  offering of 360 million  shares of AT&T Wireless Group tracking
stock.  This  stock is  designed  to track the  economic  performance  of AT&T's
wireless  services  business and  represented a 15.6% interest in that business.
AT&T  retained the  remaining  84.4%  interest in the AT&T  Wireless  Group.  In
connection  with our first quarter 1999 merger with  Tele-Communications,  Inc.,
(TCI) renamed AT&T Broadband (Broadband), we issued a separate tracking stock to
reflect the  economic  performance  of Liberty  Media Group  (LMG),  Broadband's
former programming and technology investment businesses. All other businesses of
AT&T comprise AT&T Common Stock Group,  including AT&T's retained 84.4% interest
in AT&T Wireless Group, the economic performance of which is represented by AT&T
common stock.

The consolidated  results of AT&T include AT&T Wireless Group in its entirety on
a fully consolidated  basis. We do not have a controlling  financial interest in
Liberty Media Group for financial accounting purposes;  therefore, our ownership
in LMG is reflected as an  investment  accounted  for under the equity method in
AT&T's consolidated financial statements.

The earnings attributable to AT&T Wireless Group represent 15.6% of the earnings
for the third  quarter,  and 15.6% of the earnings from April 27, 2000, the date
of the initial public offering, through September 30, 2000, for the year-to-date
period. The remaining earnings of AT&T's wireless services business are included
in the earnings attributable to AT&T Common Stock Group. Similarly, the earnings
or losses related to LMG are excluded from the earnings available to AT&T Common
Stock Group.

Ownership of shares of AT&T common stock,  AT&T Wireless Group tracking stock or
Liberty Media Group tracking stock does not represent a direct legal interest in
the assets and  liabilities of any of these groups,  but an ownership of AT&T in
total. Each of these shares  represents an interest in the economic  performance
of each of these groups.

<PAGE>
                                                         AT&T Form 10-Q - Part I


On January 5, 2000,  AT&T and  British  Telecommunications,  plc (BT)  announced
financial closure of Concert,  their global  communications joint venture.  AT&T
contributed all of its international  gateway-to-gateway assets and the economic
value of approximately 270 multinational  customers. In addition, we contributed
our international settlement business (revenue and expenses) to Concert. Results
for 2000 reflect the impact of these contributions.

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  and cash  flows  for the three  and nine  months  ended
September 30, 2000 and 1999,  and financial  condition as of September 30, 2000,
and December 31, 1999.

FORWARD-LOOKING STATEMENTS
Except  for  the  historical   statements  and  discussions   contained  herein,
statements herein constitute "forward-looking  statements" within the meaning of
Section 27A of the  Securities  Act of 1933 and  Section  21E of the  Securities
Exchange  Act  of  1934,  including   statements   concerning  future  operating
performance,  AT&T's  share  of new and  existing  markets,  AT&T's  short-  and
long-term  revenue and earnings growth rates,  and general industry growth rates
and AT&T's performance relative thereto.  These forward-looking  statements rely
on a number of assumptions concerning future events,  including the adoption and
implementation  of balanced and effective  rules and  regulations by the Federal
Communications  Commission (FCC) and the state public regulatory  agencies,  and
AT&T's ability to achieve a significant market penetration in new markets. These
forward-looking  statements are subject to a number of  uncertainties  and other
factors,  many of which are  outside  AT&T's  control  that could  cause  actual
results to differ materially from such statements.  AT&T disclaims any intention
or obligation to update or revise any forward-looking  statements,  whether as a
result of new information, future events or otherwise.

CONSOLIDATED RESULTS OF OPERATIONS

REVENUE

                                        Three Months         Nine Months
                                           Ended                Ended
                                        September 30,        September 30,
                                       2000      1999       2000      1999
Dollars in Millions
Business Services                   $ 7,108   $ 7,056    $21,391   $20,268
Consumer Services                     4,672     5,578     14,715    16,527
Wireless Services                     2,799     2,050      7,474     5,490
Broadband                             2,417     1,505      5,691     3,479
Corporate and Other                     (21)      144       (174)      438
Total revenue                       $16,975   $16,333    $49,097   $46,202

Revenue increased $642 million in the third quarter of 2000, or 3.9%, to $16,975
million compared with the third quarter of 1999, and increased $2,895 million in
the first nine months of 2000,  or 6.3%,  to $49,097  million  compared with the
first nine months of 1999.  Normalized  revenue,  which adjusts  revenue for the
acquisitions of MediaOne and the IBM Global Network (renamed AT&T Global Network
Services,  or AGNS),  the  impact of  businesses  contributed  to  Concert,  the
elimination of per-line  charges by the FCC, the  consolidation of At Home Corp.
(Excite@Home), certain international divestments, and closed cable partnerships,
increased  $612  million in the third  quarter of 2000,  or 3.7%,  from  $16,363
million in the third quarter of 1999.

<PAGE>
                                                         AT&T Form 10-Q - Part I

The increase was led by Wireless  Services,  Broadband,  and Business  Services,
partially offset by a decline in Consumer Services. For the first nine months of
2000  normalized  revenue,  which also adjusts for the  acquisition of TCI, rose
$2,261 million,  or 4.7%, from $48,234 million in the first nine months of 1999.
The increase was led by Wireless  Services,  Business  Services,  and Broadband,
partially offset by a decline in Consumer Services.

OPERATING EXPENSES

                                        Three Months          Nine Months
                                    Ended September 30,   Ended September 30,
                                       2000      1999       2000       1999
Dollars in Millions
Access and other connection          $3,255    $3,654    $10,460    $11,054

Access and other connection  expenses decreased 10.9%, to $3,255 million for the
three  months  ended  September  30,  2000.  Included  within  access  and other
connection  expenses  are costs  that we pay to  connect  domestic  calls on the
facilities of other service  providers.  These costs decreased  primarily due to
mandated  reductions in per-minute  access costs and decreased  per-line charges
(Primary  Interexchange  Carrier  Charges).  Effective  July 1,  2000,  per-line
charges  AT&T pays for  residential  and  single-line  business  customers  were
eliminated by the FCC. These decreases were partially offset by volume increases
and higher Universal Service Fund contributions.

Also  included  within  access and other  connection  expenses are costs paid to
foreign  telephone   companies  to  connect  calls  made  to  foreign  countries
(international  settlements).  As result of the  commencement  of  operations of
Concert,  most of our  international  settlements  are  incurred by Concert.  In
addition,  most of our  foreign  billed  revenue is now earned by  Concert.  The
amount charged by Concert in 2000 is lower than interconnection expense incurred
in 1999, since AT&T recorded these transactions  within revenue and expense,  as
applicable. Concert bills us a net expense comprised of international settlement
(interconnection)  expense and foreign billed revenue.  Partially offsetting the
decline were costs incurred  related to Concert  products that AT&T now sells to
its customers.

Access and other connection  expenses decreased 5.4%, to $10,460 million for the
nine months ended September 30, 2000. The decrease was primarily attributable to
lower  net  interconnection  expense  largely  related  to the  commencement  of
operations of Concert.

Also contributing to the decrease were mandated  reductions in per-minute access
costs as well as the sale of ACC International, more efficient network usage and
reduced Primary  Interexchange Carrier Charges resulting from the elimination of
certain per-line charges by the FCC effective July 1, 2000. These decreases were
partially  offset  by  volume  increases  and  higher  Universal   Service  Fund
contributions.

                                        Three Months          Nine Months
                                    Ended September 30,   Ended September 30,
                                       2000      1999       2000       1999
Dollars in Millions
Costs of services and products       $4,547    $3,932    $12,578    $10,660

Costs of services and products  increased  15.7%, to $4,547 million in the third
quarter of 2000 compared with the third quarter of 1999. Excluding the impact of

<PAGE>
                                                         AT&T Form 10-Q - Part I


the  acquisitions  of MediaOne  and AGNS,  the  formation  of  Concert,  certain
international  divestments  and  the  consolidation  of  Excite@Home,  costs  of
services and  products  increased  approximately  8% in the third  quarter.  The
increase was primarily due to higher  equipment costs associated with the growth
of  the  wireless  subscriber  base,   increased  costs  to  support  growth  in
outsourcing  contracts and increased broadband  programming expenses due to rate
increases.  These  increases  were  partially  offset by continued  cost control
efforts  and a higher  pension  credit  in 2000,  primarily  driven  by a higher
pension trust asset base resulting from increased investment returns.

Costs of services and products  increased 18.0%, to $12,578 million in the first
nine months of 2000 compared with the same period in 1999.  Excluding the impact
of the acquisitions of TCI, MediaOne and AGNS, the formation of Concert, certain
international  divestments  and  the  consolidation  of  Excite@Home,  costs  of
services and products  increased  approximately  8%. This increase was primarily
due to higher costs  associated  with our growing  wireless  subscriber base and
wireless network, increased costs to support growth in outsourcing contracts and
higher  video  programming  costs  principally  due  to  rate  increases.  These
increases were  partially  offset by continued  cost control  efforts,  a higher
pension credit and a lower provision for uncollectible  receivables primarily in
Consumer Services.

                                        Three Months          Nine Months
                                    Ended September 30,   Ended September 30,
                                       2000      1999       2000      1999
Dollars in Millions
Selling, general and administrative  $3,397    $3,442     $9,796    $10,060

Selling,  general and administrative (SG&A) expenses decreased 1.3% in the third
quarter of 2000,  and decreased  2.6% for the first nine months of 2000 compared
with the same periods of 1999.  Excluding the impact of the acquisitions of TCI,
MediaOne and AGNS, the formation of Concert,  certain international  divestments
and the consolidation of Excite@Home, SG&A expenses declined approximately 6% in
both periods.  The decrease was primarily the result of cost control  efforts as
well as a larger  pension  credit  in  2000.  These  were  partially  offset  by
increased  customer  acquisition and customer care expenses  associated with our
growth businesses of wireless and broadband.

                                        Three Months          Nine Months
                                    Ended September 30,   Ended September 30,
                                       2000      1999       2000      1999
Dollars in Millions
Depreciation and other amortization  $1,919    $1,558     $5,182    $4,408

Depreciation  and  other  amortization  expenses  increased  23.2% in the  third
quarter of 2000 and  increased  17.5% in the first nine months of 2000  compared
with the same periods in 1999.  Excluding the impact of the acquisitions of TCI,
MediaOne and AGNS, the formation of Concert,  certain international  divestments
and the  consolidation  of  Excite@Home,  depreciation  and  other  amortization
expenses increased  approximately 12% in the third quarter of 2000 and increased
approximately  11% in the  first  nine  months  of 2000.  These  increases  were
primarily due to a higher asset base  resulting  from  continued  infrastructure
investment.  Capital  expenditures  were $3.6  billion  for the  third  quarter,
bringing  year-to-date  capital  expenditures  to $10.1 billion.  We continue to
focus the majority of our capital spending on our growth businesses of wireless,
broadband, data and Internet Protocol (IP) and local voice.

<PAGE>
                                                         AT&T Form 10-Q - Part I


                                        Three Months          Nine Months
                                    Ended September 30,   Ended September 30,
                                       2000      1999       2000      1999
Dollars in Millions
Amortization of goodwill, franchise
  costs and other purchased
  intangibles                          $879      $358     $1,661      $900

Amortization  of goodwill,  franchise  costs,  and other  purchased  intangibles
increased  $521  million to $879 million in the third  quarter of 2000  compared
with the third quarter of 1999. The increase was primarily  attributable  to the
consolidation of Excite@Home beginning September 1, 2000, and the acquisition of
MediaOne in 2000.  In the first nine months of 2000,  amortization  of goodwill,
franchise costs and other purchased intangibles increased $761 million to $1,661
million  compared  with the  first  nine  months of 1999,  primarily  due to the
acquisition of MediaOne in 2000, the  acquisitions  of TCI and AGNS in 1999, and
the consolidation of Excite@Home in 2000.

AT&T  also  has  amortization  of  goodwill   associated  with   nonconsolidated
investments  recorded as a reduction of other income.  This totaled $238 million
and $164  million in the third  quarter  of 2000,  and 1999,  respectively,  and
totaled  $471  million  and $356  million  for the first nine months of 2000 and
1999, respectively.

                                        Three Months          Nine Months
                                    Ended September 30,   Ended September 30,
                                       2000      1999       2000      1999
Dollars in Millions
Net restructuring and other charges     $24       $ -       $797      $702

During the third quarter of 2000, AT&T recorded $24 million of net restructuring
and other charges, which had a minimal impact on diluted earnings per share. The
charge  resulted from synergies  associated with the MediaOne merger and related
to cash termination benefits associated with the involuntary separation of about
490  employees.  Approximately  one-half  of  the  individuals  were  management
employees and one-half were nonmanagement employees.

This  restructuring  initiative  is  projected  to  yield a net cash  payout  of
approximately  $18 million in 2000, with  approximately  $27 million per year in
cash savings per year thereafter,  as well as earnings before interest and taxes
(EBIT) savings of approximately $6 million in 2000 and approximately $27 million
per year thereafter. We expect that increased spending in growth businesses will
largely  offset  these  cash  and EBIT  savings.  The  EBIT  savings,  primarily
attributable  to reduced  personnel-related  expenses,  will be realized in SG&A
expenses and costs of services and products.

Net  restructuring  and other  charges for the nine months ended  September  30,
2000,  totaled $797 million,  which had an approximate  $0.14 impact on earnings
per diluted  share.  The charge  included  restructuring  and exit costs of $706
million and a $91 million  charge  related to the mandated  disposition  of AT&T
Communications (U.K.) Ltd. (Comms U.K.), which would have competed directly with
Concert.  The  restructuring and exit costs related to actions across several of
our business  units and included  severance  costs  associated  with about 6,700
employees.  These actions were  primarily  driven by our  continuing  efforts to
streamline operations and reduce costs by $2 billion by the end of the year.

<PAGE>
                                                         AT&T Form 10-Q - Part I


The charge for the nine months  ended  September  30,  2000,  also  included $62
million of network lease and other contract  termination  costs  associated with
penalties  incurred as part of  notifying  vendors of the  termination  of these
contracts  during the first quarter of 2000.  Additionally,  the charge included
$144 million of benefit  curtailment costs associated with employee  separations
as part of these exit plans.  We also recorded an $18 million  asset  impairment
charge related to the write-down of unrecoverable  assets in certain  businesses
in which the carrying value is no longer supported by future cash flows.

Net  restructuring  and other  charges for the nine months ended  September  30,
1999,  totaled $702 million,  which had an approximate  $0.21 impact on earnings
per  diluted  share.  The  charge  included  a pretax  in-process  research  and
development  charge  of $594  million  related  to the TCI  acquisition,  a $128
million  pretax net charge  primarily  related  to the exit from  certain  joint
ventures that would have competed directly with Concert and a $50 million pretax
charge related to a contribution  agreement entered into by Broadband to satisfy
certain liabilities of Phoenixstar,  Inc. These charges were partially offset by
a $70 million pretax gain related to the settlement of pension  obligations  for
former  employees who accepted AT&T's  voluntary  retirement  incentive  program
offer.

The $594  million  in-process  research and  development  charge  reflected  the
estimated fair value of research and development projects at TCI, as of the date
of the acquisition,  which had not yet reached technological feasibility or that
had no  alternative  future  use.  Although  there are  technological  issues to
overcome  to  successfully   complete  the  acquired   in-process  research  and
development,  we believe we are on track for successful completion. The projects
identified  related to  efforts to offer  voice  over  Internet  Protocol  (IP),
product-integration  efforts for advanced set-top devices,  cost-savings efforts
for cable  telephony  implementation  and  in-process  research and  development
related  to  Excite@Home.  We expect to test IP  telephony  equipment  for field
deployment and begin field trials related to our product integration efforts for
set-top devices late in the fourth quarter into early 2001.  In addition, trials
related to our telephony  cost  reductions are complete and  implementation  has
begun in certain markets.

                                        Three Months          Nine Months
                                    Ended September 30,   Ended September 30,
                                       2000      1999       2000      1999
Dollars in Millions
Operating Income                     $2,954    $3,389     $8,623    $8,418

Operating income decreased 12.9% in the third quarter of 2000 primarily due to a
decline in Consumer  Services  revenue,  the  acquisition  of  MediaOne  and the
consolidation of Excite@Home.  These decreases were partially offset by a higher
pension credit in 2000 and cost control efforts within Business Services.

Operating income increased 2.4% for the first nine months of 2000, primarily due
to operational  efficiencies  within Business  Services and Wireless Services as
well as corporate  staff  functions,  and a higher  pension  credit in 2000. The
year-to-date  increase was partially  offset by the  acquisition of MediaOne,  a
decline in Consumer  Services  revenue,  the  consolidation of Excite@Home,  the
acquisition of TCI and higher  restructuring  charges.  Operating  income margin
(operating  income as a percent of revenue) was 17.4% for the third  quarter and
17.6% for the nine months  ended  September  30, 2000,  compared  with 20.8% and
18.2% in the comparable 1999 periods, respectively.

<PAGE>
                                                         AT&T Form 10-Q - Part I


                                        Three Months          Nine Months
                                    Ended September 30,   Ended September 30,
                                       2000      1999       2000      1999
Dollars in Millions
Other income (expense)                  $71     $(375)      $486     $(254)

Other income  (expense)  increased  $446 million to income of $71 million in the
third  quarter of 2000,  compared  with an expense of $375  million in the third
quarter of 1999.  The increase was  primarily  attributable  to higher  minority
interest  and  lower  equity   losses  on   investments   associated   with  the
consolidation of Excite@Home  effective  September 1, 2000. Also contributing to
the increase was higher  interest and dividend income and greater gains on sales
of businesses and investments.

Other income (expense)  increased $740 million to income of $486 million for the
nine months ended  September 30, 2000,  compared with an expense of $254 million
for the same prior year  period.  The  increase was  primarily  attributable  to
greater gains on sales of businesses  and  investments  and higher  interest and
dividend income.  Further contributing to the increase were equity earnings from
Concert.  These  increases  were  partially  offset by  higher  losses on equity
investments, primarily from Excite@Home through August 31, 2000.

                                        Three Months          Nine Months
                                    Ended September 30,   Ended September 30,
                                       2000      1999       2000      1999
Dollars in Millions
EBIT, excluding LMG                  $3,025    $3,014     $9,109    $8,164

EBIT,  excluding LMG,  remained  essentially  flat for the third quarter of 2000
compared with the third quarter of 1999, with the increase in other income being
virtually offset by the decrease in operating income.  For the first nine months
of 2000,  EBIT grew  11.6%  compared  with the same  period  in 1999,  which was
attributable  to increases in both other income and operating  income.  The EBIT
growth  was  impacted  by  gains on sales of  businesses  and  investments,  our
ownership interests in Cablevision  Systems Corp.  (Cablevision) and Time Warner
Entertainment  (TWE) and net  restructuring  and other charges.  Excluding these
items,  EBIT  increased  6.8% and 11.3% for the third  quarter and  year-to-date
periods,  respectively.  The  improvement  for the third  quarter was  primarily
attributable  to  increased  other  income  partially  offset by a  decrease  in
operating income. The improvement for the year-to-date  period was primarily due
to both higher other income and operating income.

                                        Three Months          Nine Months
                                    Ended September 30,   Ended September 30,
                                       2000      1999       2000      1999
Dollars in Millions
Equity earnings (losses) from
  Liberty Media Group                $1,756     $(217)    $2,965     $(818)

Equity  earnings  from  Liberty  Media  Group were  $1,756  million in the third
quarter of 2000,  compared  with  losses of $217  million in the same prior year
quarter.  The  increase  was  primarily  due  to  a  gain  associated  with  the
acquisition  of TV Guide by  Gemstar - TV Guide  International,  Inc.  (Gemstar)
reflecting the difference between the carrying value of LMG's interest in TV

<PAGE>
                                                         AT&T Form 10-Q - Part I


Guide, Inc. (TV Guide) and the fair value of the Gemstar securities  received in
the  acquisition.  Equity  earnings from LMG for the nine months ended September
30, 2000,  were $2,965 million  compared with losses of $818 million in 1999. In
addition to the gain associated with the TV Guide  acquisition,  the increase in
equity  earnings for the nine months ended September 30, 2000, was also impacted
by a gain  associated  with the  acquisition  of Flextech  p.l.c.  (Flextech) by
Telewest   Communications   plc  (Telewest)  and  a  gain  associated  with  the
acquisition of General Instrument  Corporation (General Instrument) by Motorola,
Inc. (Motorola).  These gains also represent the difference between the carrying
value of LMG's interest in the acquired company and the fair value of securities
received in the merger.  These gains were partially offset by impairment charges
recorded on Liberty  Media's  investments in Teligent,  Inc.  (Teligent) and ICG
Communications, Inc. (ICG) to reflect other than temporary declines in value.

                                        Three Months          Nine Months
                                    Ended September 30,   Ended September 30,
                                       2000      1999       2000      1999
Dollars in Millions
Interest expense                       $946      $493     $2,158    $1,188

Interest  expense  increased  92.2% to $946 million in the third quarter of 2000
compared with the third quarter of 1999,  primarily due to a higher average debt
balance as a result of our June 15, 2000,  acquisition  of  MediaOne,  including
outstanding debt of MediaOne and debt issued to fund the MediaOne acquisition.

Interest  expense  increased  81.6% to $2,158  million for the nine months ended
September 30, 2000,  compared with the nine months ended September 30, 1999. The
increase was primarily  due to a higher  average debt balance as a result of our
March  1999  acquisition  of TCI,  and our June 2000  acquisition  of  MediaOne,
including  outstanding  debt of MediaOne  and debt  issued to fund the  MediaOne
acquisition.

                                        Three Months          Nine Months
                                    Ended September 30,   Ended September 30,
                                       2000      1999       2000      1999
Dollars in Millions
Provision for income taxes             $763      $888     $2,127    $2,679

The provision for income taxes decreased $125 million, or 14.2%, to $763 million
in the third  quarter  of 2000  compared  with the third  quarter  of 1999.  The
decrease was primarily due to lower earnings before taxes, partially offset by a
slightly higher effective tax rate. The effective tax rate for the third quarter
of 2000 was 36.7%,  up from 35.2% in the third quarter of 1999. The increase was
due to impact of the consolidation of Excite@Home, which is unable to record tax
benefits on its pretax losses, as well as the positive impact of certain foreign
legal entity restructurings in 1999.

The  provision  for income taxes for the nine months ended  September  30, 2000,
decreased $552 million  compared with the same period in 1999. The effective tax
rate for the nine months ended  September 30, 2000,  was 30.6%,  down from 38.4%
for the same prior year period.  In 2000,  the effective tax rate was positively
impacted  by a tax-free  gain  resulting  from an  exchange of AT&T stock for an
entity owning  certain  cable  systems and other assets with Cox  Communications
Inc.  (Cox),  and the  benefit of the  write-off  of the  related  deferred  tax
liability.  The 1999  effective  rate was  negatively  impacted by an in-process
research and development  charge which was not tax deductible,  which was offset
by the positive

<PAGE>
                                                         AT&T Form 10-Q - Part I


impact of a change in net operating loss  utilization  tax rules.  Excluding the
impacts of the Cox transaction,  the in-process research and development charge,
and the change in the net operating loss rules,  the effective  income tax rates
were 36.8% and 36.4% for the nine  months  ended  September  30,  2000 and 1999,
respectively.

                                        Three Months         Nine Months
                                      Ended September 30,  Ended September 30,
                                        2000      1999       2000      1999

AT&T Common Stock Group earnings per
 AT&T common share:
  Basic                               $ 0.35    $ 0.51      $1.41    $ 1.41
  Diluted                             $ 0.35    $ 0.50      $1.40    $ 1.39
AT&T Wireless Group earnings per AT&T
 common share:
  Basic and diluted                   $(0.01)        -      $0.05    $    -
Liberty Media Group earnings (loss)
 per share:
  Basic and diluted                   $ 0.68    $(0.09)     $1.15    $(0.33)

As reported,  diluted earning per share (EPS)  attributable to AT&T Common Stock
Group decreased  30.0% to $0.35 in the third quarter of 2000,  compared with the
third quarter of 1999. The decrease was primarily  driven by the  acquisition of
MediaOne, including the impact of shares issued, additional interest expense and
operating  losses  generated by MediaOne  largely  attributable  to depreciation
expense and  amortization  of  franchise  costs,  goodwill  and other  purchased
intangibles.  The decrease was  partially  offset by an increase in other income
primarily associated with higher interest and dividend income and gains on sales
of businesses and investments.

As reported,  diluted EPS attributable to AT&T Common Stock Group increased 0.7%
to $1.40 in the nine months ended  September  30, 2000,  compared  with the nine
months ended  September 30, 1999. The increase was primarily due to higher other
income,  and  improved  operating  income in the period  resulting  from  margin
improvements.  These  improvements  were partially  offset by the acquisition of
MediaOne, including the impact of shares issued, additional interest expense and
operating  losses  generated by MediaOne  largely  attributable  to depreciation
expense and  amortization  of  franchise  costs,  goodwill  and other  purchased
intangibles.

Included in EPS for the third quarter are the following items:
 ..Losses of $0.03 in the third quarter of 2000 and $0.02 in the third quarter of
  1999,  reflecting   the  earnings  impact  of  our  investments   in  TWE  and
  Cablevision;
 ..Gain on sale of a business of $0.02 in the third quarter of 1999.

Included  in EPS for the first  nine  months of 2000 and 1999 are the  following
items:
 ..Net  restructuring and other charges of $0.14 in the first nine months of 2000
  and $0.21 in the same period of 1999;
 ..Losses of $0.05 in the first nine months of 2000 and $0.05 in  the same period
  of 1999,  reflecting the earnings impact of our investments in Cablevision and
  TWE;
 ..Net gains on sales of  businesses  and  investments  and other of $0.21 in the
  first nine months of 2000 and $0.07 in the same period of 1999;
 ..A $0.02  benefit  in the first nine  months of 1999 from  changes in tax rules
  with respect to the utilization of acquired net operating losses.

<PAGE>
                                                         AT&T Form 10-Q - Part I


The total  impact of these  items to diluted EPS was a decrease of $0.03 for the
three months  ended  September  30, 2000,  and an increase of $0.02 for the nine
months ended  September  30, 2000.  These items had no net impact to diluted EPS
for the third  quarter of 1999 and  decreased  diluted EPS by $0.17 for the nine
months ended  September  30, 1999.  We quantify the impact on our results of our
investments  in  Cablevision  and TWE  since  these  businesses  have  financial
information  publicly available and their results can be reviewed  independently
of AT&T's results.

EPS  excluding  these items was $0.38 per diluted  share in the third quarter of
2000, a decrease of 24.0%, or $0.12, over the comparable prior year quarter. EPS
excluding  these  items was $1.38 per diluted  share for the nine  months  ended
September 30, 2000,  compared with $1.56 for the same period in 1999, a decrease
of 11.5%.

EPS for  Liberty  Media  Group was $0.68  per share for the three  months  ended
September 30, 2000, compared with a loss of $0.09 per share for the three months
ended  September 30, 1999. The increase in EPS for the third quarter of 2000, is
primarily due to a gain  associated  with the acquisition of TV Guide by Gemstar
reflecting  the  difference  between the carrying  value of LMG's interest in TV
Guide and the fair value of the Gemstar securities  received in the acquisition.
EPS for  Liberty  Media  Group was $1.15 per share for the first nine  months of
2000,  compared with a loss of $0.33 per share in 1999. The first nine months of
2000 results  include nine months of Liberty Media Group  results  compared with
seven months in 1999,  reflecting the March 1999  acquisition of TCI by AT&T. In
addition to the gain associated with the TV Guide  acquisition,  the increase in
EPS for the nine months ended  September  30, 2000,  was also impacted by a gain
associated  with the  acquisition of Flextech by Telewest and a gain  associated
with the  acquisition  of  General  Instrument  by  Motorola.  These  gains also
represent the  difference  between the carrying  value of LMG's  interest in the
acquired company and the fair value of securities received in the mergers. These
gains were partially  offset by impairment  charges  recorded on Liberty Media's
investments  in Teligent  and ICG to reflect  other than  temporary  declines in
value.

SEGMENT RESULTS

In support of the  services we provide,  we segment our results by the  business
units that support our primary lines of business:  Business  Services,  Consumer
Services,  Wireless  Services and  Broadband.  A fifth  category,  Corporate and
Other,  includes  corporate staff  functions,  the elimination of  inter-segment
business as well as the results of  international  operations  and  ventures and
Excite@Home. Although not a segment, we also discuss the results of LMG.

The discussion of segment results includes  revenue;  earnings,  including other
income,  before  interest and taxes (EBIT);  earnings,  including  other income,
before interest,  taxes,  depreciation and  amortization,  and minority interest
(EBITDA);  total assets;  and capital  additions.  The  discussion of EBITDA for
Wireless  Services and Broadband is modified to exclude other income  (expense).
Total assets for each segment generally  exclude  intercompany  assets.  Prepaid
pension assets and  corporate-owned  or leased real estate are generally held at
the corporate level and therefore are included in the Corporate and Other group.
Shared  network  assets are  allocated  to the  segments  and  reallocated  each
January,  based on two years of  volumes.  Capital  additions  for each  segment
include capital expenditures for property, plant and equipment,  acquisitions of
licenses, additions to nonconsolidated investments, increases in franchise costs
and additions to internal-use software.

<PAGE>
                                                         AT&T Form 10-Q - Part I


EBIT 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.  AT&T  calculates  EBIT as operating  income plus other income.  In
addition,  management also uses EBITDA as a measure of segment profitability and
performance,  and is  defined as EBIT plus  depreciation  and  amortization  and
minority  interest.  Interest and taxes are not factored into the  profitability
measure used by the chief operating decision makers; therefore, trends for these
items  are  discussed  on a  consolidated  basis.  Management  believes  EBIT is
meaningful to investors  because it is used by AT&T's chief  operating  decision
makers  and  provides a measure  of return on total  capitalization.  We believe
EBITDA is meaningful to investors as a measure of each  segment's  liquidity and
is utilized by our chief operating decision makers. In addition, we believe that
both EBIT and EBITDA allow  investors a means to evaluate the financial  results
of each segment in relation to AT&T.  Our  calculation of EBIT and EBITDA may or
may not be consistent  with the  calculation  of these  measures by other public
companies.  EBIT and EBITDA should not be viewed by investors as an  alternative
to  generally  accepted  accounting  principles  (GAAP)  measures of income as a
measure of performance or to cash flows from operating,  investing and financing
activities  as a measure of  liquidity.  In addition,  EBITDA does not take into
account changes in certain assets and liabilities that can affect cash flow.

Our existing segments reflect certain  managerial  changes since the publication
of our 1999 annual  results.  All prior  period  results  have been  restated to
reflect these changes.

To provide comparability,  we normalize revenue to reflect the impact of certain
1999 and 2000  transactions.  For  example,  when we normalize  for Concert,  we
remove the revenue associated with  businesses/customers  contributed to Concert
from 1999  results.  The  acquisitions  of TCI,  AGNS and  MediaOne  and certain
international  divestments are normalized as if those  acquisitions/dispositions
occurred on January 1, 1999. The  elimination of per-line  charges by the FCC is
normalized  in 1999  results  as if the  elimination  occurred  on July 1, 1999.
Finally, certain 2000 Broadband cable swaps are normalized in 1999 results as if
those swaps happened on the corresponding date in 1999.

BUSINESS SERVICES
Our Business Services segment offers a variety of global communications services
including long distance, local and data and Internet Protocol (IP) networking to
small and medium-sized  businesses,  large domestic and multinational businesses
and government agencies. Business Services is also a provider of voice, data and
IP transport to service resellers  (wholesale  services).  Also included in this
segment is AT&T  Solutions,  which is composed of the Solutions  outsourcing and
network  management  business unit and the internal AT&T Information  Technology
Services unit.

                                  For the Three        For the Nine
                                  Months Ended         Months Ended
                                  September 30,        September 30,

Dollars in Millions             2000       1999      2000       1999
External revenue             $ 6,895    $ 6,859   $20,818    $19,715
Internal revenue                 213        197       573        553
Total revenue                  7,108      7,056    21,391     20,268

EBIT                           1,733      1,509     4,870      4,536
EBITDA                         2,664      2,347     7,594      6,948

<PAGE>
                                                         AT&T Form 10-Q - Part I


OTHER ITEMS
Capital additions            $ 1,517    $ 1,963   $ 4,169    $ 4,544

                          At September 30,      At December 31,
                                2000                 1999
Total assets                 $33,360              $32,010


REVENUE
Business Services revenue  increased $52 million,  or 0.7%, in the third quarter
of 2000,  and increased  $1,123  million,  or 5.5%, for the first nine months of
2000,  compared with the prior year.  Normalized for the impact of Concert,  the
1999  acquisition of AGNS and the elimination of PICC for  single-line  business
customers  by the FCC,  revenue  increased  2.5% and  4.1% for the  quarter  and
year-to-date  periods,  respectively.  The  increases  were driven  primarily by
strength in data/IP and outsourcing  services,  partially offset by a decline in
long distance voice services.

Normalized data/IP services revenue grew over 20% for the quarter, led by growth
in frame relay,  high-speed  private line and IP services.  For the year-to-date
period,  normalized  data/IP  services  revenue grew at a high-teens rate led by
growth in frame relay,  IP and high-speed  private line  services.  IP services,
which include AT&T WorldNet services and Virtual Private Network Services (VPN),
grew over 50% for both the three  and nine  months  ended  September  30,  2000,
compared with the same periods in 1999.  On a combined  basis,  packet  services
(frame relay,  ATM  (Asynchronous  Transfer  Mode) and IP) grew over 50% for the
quarter and over 45% for the year-to-date period, compared with the same periods
in 1999.

AT&T Solutions outsourcing revenue, normalized for the acquisition of AGNS, grew
20.2% in the third quarter of 2000,  and grew 22.5% for the first nine months of
2000,  compared with the same periods in the prior year.  These  increases  were
primarily  due to growth from new  contract  signings and add-on  business  from
existing clients.

Normalized long distance voice revenue declined at a mid  single-digit  rate for
the third  quarter,  as  pricing  declines  outpaced  high  single-digit  volume
increases.  For the year-to-date period,  normalized long distance voice revenue
declined  at a low  single-digit  rate,  as  pricing  declines  outpaced  volume
increases of over 10%.  Business  services revenue  continues to shift to higher
growth products such as data/IP and  outsourcing.  This shift, and the continued
pricing pressures, have resulted in a decline in long distance voice revenue. We
expect competition and the resulting pricing pressures to continue to negatively
impact Business Services long distance voice revenue.

Normalized local voice revenue grew at a mid-teen rate for the quarter, and grew
over 20% for the year-to-date period. Revenue growth was negatively impacted, in
the year-to-date period, by the settlement of public utility commission rulings.
There were eight additional switches activated in third quarter,  for a total of
29 new local switches activated  year-to-date  through September 30, 2000. These
local switches  enhance  AT&T's  network  capacity for the provision of business
local voice services. AT&T's integrated business local operations added over 130
thousand  access  lines in the third  quarter  bringing  total  access  lines in
service as of  September  30, 2000,  to almost 2.1 million.  Access lines enable
AT&T to provide local service to customers by allowing  direct  connection  from
customer equipment to the AT&T network.  On-net buildings  (buildings where AT&T
owns the fiber that runs into the building) totaled 5,969 at September 30, 2000,
a 4.1% increase over September 30, 1999.

<PAGE>
                                                         AT&T Form 10-Q - Part I


EBIT/EBITDA
EBIT  increased  $224  million,  or 14.8%,  in the third  quarter  of 2000,  and
increased $334 million, or 7.4%, in the first nine months of 2000, compared with
the same prior year periods.  EBITDA  increased $317 million,  or 13.5%,  in the
third quarter of 2000,  and increased  $646 million,  or 9.3%, in the first nine
months of 2000,  compared  with the same prior year  periods.  Excluding a first
quarter 2000 restructuring charge of $93 million, EBIT increased 9.4% and EBITDA
increased 10.6% in the first nine months of 2000,  compared with the same period
of 1999.  The quarterly  increases  were  primarily  due to continued  SG&A cost
control  efforts  and  revenue  growth,  partially  offset by the  impact of the
customers contributed to Concert. The year-to-date  increases were primarily due
to revenue growth and continued SG&A cost control  efforts,  partially offset by
the  impact  of the  customers  contributed  to  Concert.  In  addition,  higher
depreciation  expense also  partially  offset the EBIT  improvement.  The equity
earnings of Concert are reported within Corporate and Other.

OTHER ITEMS
Capital  additions  decreased $446 million,  or 22.7%,  to $1,517 million in the
third quarter of 2000 compared with the third quarter of 1999.  The decrease was
primarily driven by reduced capital expenditures for network assets that support
long  distance  voice  and data  services.  For the first  nine  months of 2000,
capital  additions  decreased $375 million,  or 8.2%, to $4,169 million compared
with the first nine months 1999.  The decrease was  primarily  driven by reduced
capital  expenditures  for  network  assets that  support  long  distance  voice
services.

Total assets increased $1,350 million,  or 4.2%, to $33,360 million at September
30, 2000,  compared with December 31, 1999. The increase was primarily driven by
a higher accounts receivable balance due to timing of cash receipts, an increase
in the age of  outstanding  receivables  and higher  revenue in our  outsourcing
business.  In addition,  property,  plant and equipment increased as a result of
capital  expenditures,  partially offset by depreciation expense for the period,
as well as the contribution of assets to Concert.

CONSUMER SERVICES
Our Consumer Services segment provides a variety of any-distance  communications
services  including  long  distance,  local toll  (intrastate  calls outside the
immediate local area) and Internet access to residential customers. In addition,
Consumer Services provides transaction services such as prepaid calling card and
operator-handled  calling  services.  Local  phone  service is also  provided in
certain areas.

                                  For the Three        For the Nine
                                  Months Ended         Months Ended
                                  September 30,        September 30,
Dollars in Millions             2000       1999      2000       1999
Revenue                       $4,672     $5,578   $14,715    $16,527
EBIT                           1,854      2,159     5,425      5,852
EBITDA                         1,996      2,352     5,853      6,425

OTHER ITEMS
Capital additions             $   76      $ 133   $   204    $   341

                         At September 30,        At December 31,
                                2000                 1999
Total assets                  $4,945              $ 6,279


<PAGE>
                                                         AT&T Form 10-Q - Part I

REVENUE
Consumer  Services  revenue  decreased  16.2% in the third quarter of 2000,  and
declined 11.0% for the first nine months of 2000, compared with the same periods
in 1999.  Normalized  for the impact of Concert and the  elimination of per-line
charges,  revenue decreased 10.9% in the third quarter and declined 7.9% for the
first nine months of the year as long  distance  calling  volumes  continued  to
decline at a mid single-digit  rate during these periods.  These results reflect
the ongoing competitive nature of the consumer long distance industry, which has
resulted  in  pricing  pressures  and a loss of market  share.  Also  negatively
impacting revenue was product substitution and market migration away from direct
dial  wireline  and  calling  card  services  to the  rapidly  growing  wireless
services.  We  expect  competition  and  product  substitution  to  continue  to
negatively impact Consumer Services revenue.

EBIT/EBITDA
EBIT  declined  14.1% and EBITDA  declined  15.2% in the third  quarter of 2000,
compared  with the same  period of 1999.  For the first nine months of the year,
EBIT decreased 7.3% and EBITDA decreased 8.9%,  compared with the same period in
1999.  EBIT and EBITDA  continue  to be  negatively  impacted  by the decline in
revenue,  however,  reflecting  our cost  control  initiatives,  EBIT and EBITDA
margins continue to improve. The EBIT margin was 39.7% and the EBITDA margin was
42.7% in the third quarter of 2000, compared with an EBIT margin of 38.7% and an
EBITDA  margin of 42.2% for the same period in 1999.  EBIT and EBITDA  include a
$96 million  restructuring charge for the first nine months of 2000, and include
a $153  million  gain on the sale of  Language  Line  Services in the first nine
months of 1999.  Excluding these items,  the EBIT and EBITDA margins improved to
37.5% and 40.4%, respectively,  for the first nine months of 2000, compared with
34.5% and 37.9%, respectively, for the same period in 1999, primarily due to our
cost control initiatives, partially offset by lower revenue.

OTHER ITEMS
Capital  additions  declined $57 million,  or 43.0%, to $76 million in the third
quarter of 2000,  compared  with the third  quarter of 1999.  For the first nine
months of 2000,  capital additions  decreased $137 million,  or 40.1%,  compared
with the first nine months of 1999. These decreases were primarily  attributable
to reduced  capital  expenditures  for network assets that support long distance
voice services and decreased spending on internal-use software.

Total assets decreased $1,334 million,  or 21.3%, to $4,945 million at September
30,  2000,  compared  with  December 31,  1999,  primarily  due to a decrease in
property,  plant and equipment as a result of the contribution of certain assets
to Concert,  coupled with  depreciation  expense during the period. In addition,
accounts receivable declined as a result of lower revenue.

WIRELESS SERVICES
Our  Wireless  Services  segment  offers  wireless  voice and data  services and
products  to  customers  in our 850  megahertz  (cellular)  and  1900  megahertz
(Personal  Communications  Services,  or PCS)  markets.  Wireless  Services also
includes certain  interests in partnerships and affiliates that provide wireless
services  in the United  States  and  internationally,  aviation  communications
services, and fixed wireless. Fixed wireless provides high-speed Internet access
and  any-distance  voice services using wireless  technology to residential  and
small business customers.

<PAGE>
                                                         AT&T Form 10-Q - Part I


                                 For the Three        For the Nine
                                 Months Ended         Months Ended
                                 September 30,        September 30,

Dollars in Millions             2000       1999      2000       1999
Revenue                      $ 2,799     $2,050   $ 7,474     $5,490
EBIT                             105         54       551        128
EBITDA excluding other income    472        397     1,381        902

OTHER ITEMS
Capital additions            $ 1,028     $  704   $ 3,782     $1,564

                        At September 30,        At December 31,
                                2000                 1999
Total assets                 $33,045              $23,312


REVENUE
Wireless Services revenue grew $749 million,  or 36.6%, to $2,799 million in the
third quarter of 2000, compared with the third quarter of 1999, including growth
in  services  revenue  of 34.3% to  $2,509  million.  Revenue  increased  $1,984
million,  or 36.2%, to $7,474 million in the first nine months of 2000, compared
with the same period of 1999,  including  growth in services revenue of 36.8% to
$6,741  million.  Revenue,  adjusted  to exclude  the June 2000  acquisition  of
properties in the San Francisco Bay area from the quarter and year-to-date  2000
periods as well as the year-to-date  impact of Vanguard Cellular  Systems,  Inc.
for the months prior to the May 1999 acquisition,  grew 27.3% in the quarter and
29.7% for the first nine months of 2000.  The  increases  were due to subscriber
growth reflecting the continued successful execution of AT&T's wireless strategy
of targeting and retaining  specific customer  segments,  expanding the national
wireless footprint, focusing on digital service, and offering simple rate plans.
In addition,  an increase in average monthly revenue per user contributed to the
year-to-date  growth.  Equipment revenue grew 59.9% to $290 million in the third
quarter of 2000,  and grew 30.6% to $733  million  for the first nine  months of
2000, compared with the respective prior year periods.

AT&T continues to experience strong growth in wireless subscribers. Consolidated
subscribers  grew to over 12.6 million at September  30, 2000,  representing  an
increase  of 38.4%  over the prior year  quarter,  including  approximately  1.3
million subscribers  associated with the completed acquisitions of our remaining
interest in CMT Partners  (which owned wireless  properties in the San Francisco
Bay area),  Wireless  One Network,  L.P.  (which owned  wireless  properties  in
northwest  and  southwest  Florida) and  properties  in the San Diego area.  Net
consolidated   wireless  subscriber  additions  in  the  third  quarter  totaled
approximately  750,000,  a 195.1%  increase over the prior year  quarter.  Total
subscribers,  including  partnership  markets  in  which  AT&T  does  not  own a
controlling interest,  were nearly 15 million at the end of the third quarter, a
26.2% increase over the prior year quarter. This includes  approximately 450,000
subscribers  associated  with the  acquisition of American  Cellular in February
2000.  AT&T's average  monthly churn rate in the third quarter of 2000 was 2.9%,
compared with 2.6% in the third quarter of 1999.  AT&T's  average  monthly churn
rate in the first nine months of 2000 was 2.8%  compared  with 2.6% in the first
nine months of 1999.

<PAGE>
                                                         AT&T Form 10-Q - Part I


EBIT/EBITDA EXCLUDING OTHER INCOME
EBIT  increased $51 million,  or 97.2%,  to $105 million in the third quarter of
2000, and increased $423 million,  or 331.1%,  to $551 million in the first nine
months of the year, compared with the same prior year periods.  The year-to-date
increase was  impacted by a second  quarter 2000 gain of $95 million on the sale
of  Celumovil  and a second  quarter  1999  gain of $88  million  on the sale of
WOOD-TV.  Excluding these gains,  EBIT improved $416 million to $456 million for
the  first  nine  months of the  year.  The  improvement  for both  periods  was
primarily  the result of revenue  growth,  as well as higher other income due to
intercompany  interest income on the initial public offering proceeds attributed
to AT&T  Wireless  Group.  These were  partially  offset by  increased  customer
acquisition  and customer care costs and higher  depreciation  and  amortization
expenses as a result of an increased asset base.  Also partially  offsetting the
improvements were higher network costs attributable to the growth in subscribers
and  their  minutes  of use,  as well as  higher  information  technology  costs
associated with growth in the subscriber base.

EBITDA, excluding other income, increased $75 million, or 18.6%, to $472 million
in the third quarter of 2000,  and increased $479 million,  or 53.1%,  to $1,381
million for the first nine months of the year, compared with the same prior year
periods.  The  improvement  for both  periods  was  primarily  driven  by higher
revenue,  partially offset by increased  customer  acquisition and customer care
costs,  as well as higher  network  costs and increased  information  technology
costs.

OTHER ITEMS
In the third quarter of 2000, capital additions increased $324 million to $1,028
million  compared with the third  quarter of 1999.  For the first nine months of
2000, capital additions increased $2,218 million to $3,782 million compared with
the first nine months of 1999.  These increases were primarily driven by capital
expenditures  on capacity  upgrades and  improvements to network  quality.  Also
contributing  to the increase in capital  additions for the first nine months of
the year was our investment in American Cellular in the first quarter of 2000.

Total assets increased $9,733 million, or 41.8%, to $33,045 million at September
30, 2000,  compared with December 31, 1999. The increase was primarily driven by
the  acquisitions  of our  remaining  interest  in CMT  Partners,  Wireless  One
Network,  L.P. and properties in the San Diego area. These acquisitions resulted
in increases to licensing  costs,  goodwill,  property,  plant and equipment and
other assets.  Also  contributing  to the increase in assets was an intercompany
note receivable for the remaining initial public offering proceeds attributed to
the AT&T Wireless  Group, as well as higher  property,  plant and equipment as a
result of capital  expenditures in support of the continued  expansion and build
out of our wireless  network,  partially offset by depreciation  expense for the
period.

BROADBAND
Our Broadband  segment offers a variety of services  through our cable broadband
network,  including  traditional  analog video and new services  such as digital
video service, high-speed data service and telephony service.

<PAGE>
                                                         AT&T Form 10-Q - Part I


                                  For the Three        For the Nine
                                  Months Ended         Months Ended
                                  September 30,        September 30,

Dollars in Millions              2000       1999      2000       1999
Revenue                      $  2,417     $1,505   $ 5,691    $ 3,479
EBIT                             (627)      (310)     (717)    (1,187)
EBITDA excluding other income     514        389     1,253        420

OTHER ITEMS

Capital additions            $  1,247     $1,007   $ 3,577    $ 2,155

                          At September 30,       At December 31,
                                 2000                 1999
Total assets                 $117,289              $53,810

The three months ended September 30, 2000,  includes the results of MediaOne for
the full quarter and the nine months  ended  September  30,  2000,  includes the
results of MediaOne  since the June 15,  2000,  date of  acquisition,  while the
comparable periods for 1999 do not include any results of MediaOne. In addition,
year-to-date 2000 results include a full nine months of TCI results,  while 1999
includes only seven months of TCI results reflecting the March 1999 acquisition.

REVENUE
Broadband's  revenue increased $912 million,  or 60.7%, for the third quarter of
2000,  and  increased  $2,212  million,  or  63.6%,  for the nine  months  ended
September 30, 2000, compared with the same periods of last year. The increase in
revenue was primarily due to the inclusion of MediaOne results since the date of
acquisition,  higher revenue from new services  (digital video,  high-speed data
and  telephony) and a basic cable rate  increase.  In addition,  revenue for the
nine months ended  September 30, 2000, was impacted by the acquisition of TCI in
March of 1999. Revenue, normalized for the MediaOne acquisition and adjusted for
the net disposition of cable properties, increased 10.8% in the third quarter of
2000 compared with the third quarter of 1999.  Revenue for the nine months ended
September 30, 2000, on this same basis and normalized  for the TCI  acquisition,
increased 9.9% compared with the same prior year period.

Broadband  ended  the  third  quarter  of 2000 with  16.1  million  basic  cable
customers,  passing  approximately  28  million  homes,  more  than 2.5  million
digital-video  customers,  approximately 888,000 high-speed data customers,  and
provided  telephony  service  to  nearly  350,000  customers.  While  we  expect
Broadband  revenue to  continue  to grow,  the rate of growth may be impacted by
slower  than  anticipated  telephony  and  basic  subscriber  additions  due  to
increased competition.

EBIT/EBITDA EXCLUDING OTHER INCOME
EBIT was a deficit of $627  million for the quarter  ended  September  30, 2000,
compared  with a deficit of $310  million in 1999.  Excluding  the impact of our
ownership  interests in Cablevision and TWE and restructuring and other charges,
EBIT for the third quarter of 2000, was a deficit of $431 million,  a decline of
$233 million from the third quarter of 1999.  This decrease was primarily due to
the acquisition of MediaOne,  increased spending associated with cable telephony
and high-speed data services and higher  programming costs. These were partially
offset by higher revenue and lower equity losses due to  dispositions of certain
investments  in 1999.  EBIT for the nine months ended  September 30, 2000, was a
deficit of $717 million compared with a deficit of $1,187 million in 1999.

<PAGE>
                                                         AT&T Form 10-Q - Part I


Excluding the impact of our ownership  interests in Cablevision and TWE, certain
gains and  restructuring  and other charges,  EBIT was a deficit of $720 million
for the nine months ended  September  30, 2000,  compared with a deficit of $439
million in 1999.  The decrease was primarily due to higher  expenses  associated
with  high-speed  data and telephony  services,  the acquisition of MediaOne and
increased  programming costs.  Partially  offsetting these decreases to EBIT was
higher  revenue  and lower  equity  losses  due to the  disposition  of  certain
investments in 1999.

EBITDA,  excluding  other income,  for the third  quarter was $514  million,  an
increase of 32.1%,  compared with the third quarter of 1999.  Excluding the 2000
restructuring and other charges, EBITDA, excluding other income, increased 38.2%
to $538 million in the third quarter of 2000. This increase was primarily due to
the MediaOne acquisition and higher revenue, partially offset by higher expenses
associated  with  high-speed  data and  telephony  services as well as increased
programming  costs.  EBITDA,  excluding  other  income for the nine months ended
September 30, 2000, was $1,253  million  compared with $420 million for the same
period of 1999.  Excluding the 2000 and 1999  restructuring  and other  charges,
EBITDA,  excluding other income, increased 42.1% to $1,293 million in 2000. This
increase  was  primarily  due to higher  revenue,  the  inclusion of a full nine
months of TCI and the  acquisition of MediaOne.  These  increases were partially
offset by higher expenses associated with high-speed data and telephony services
as well as increased programming costs.

OTHER ITEMS

Capital  additions  in the  third  quarter  of 2000  increased  23.8% to  $1,247
million,  and  increased  66.0% to  $3,577  million  for the nine  months  ended
September  30, 2000.  The  increases  were due to capital  expenditures  for the
launch of new services as well as the MediaOne acquisition. In addition, capital
expenditures  for the  year-to-date  period  increased  due to  spending  on the
upgrade of the cable plant.  Capital additions for the year-to-date  period were
also impacted by increased contributions to various nonconsolidated investments.

Total assets were $117,289 million at September 30, 2000,  compared with $53,810
million at December 31, 1999. The increase was due to the MediaOne  acquisition,
and an  increase  in  property,  plant  and  equipment  as a result  of  capital
expenditures,  partially  offset by depreciation  expense for the period.  These
increases were partially offset by a decrease in the mark-to-market valuation of
certain  investments and lower franchise costs and property,  plant property and
equipment as a result of the exchange of an entity owning  certain cable systems
and other assets with Cox for AT&T stock.

CORPORATE AND OTHER
This group reflects  corporate staff functions,  the elimination of transactions
between segments as well as the results of international operations and ventures
and Excite@Home.

                                  For the Three        For the Nine
                                  Months Ended         Months Ended
                                  September 30,        September 30,

Dollars in Millions             2000       1999      2000       1999
Revenue                      $   (21)      $144   $  (174)   $   438
EBIT                             (40)      (398)   (1,020)    (1,165)
EBITDA                           219       (180)     (398)      (642)

<PAGE>
                                                         AT&T Form 10-Q - Part I


OTHER ITEMS
Capital additions            $ 1,763       $832   $ 1,955    $ 1,298

                        At September 30,        At December 31,
                                2000                 1999
Total assets                 $24,484              $15,535

REVENUE
Revenue  for  Corporate  and  Other   primarily   includes  the  elimination  of
inter-segment  revenue of negative $222 million (an increase of $32 million from
the third quarter of 1999),  revenue from  Excite@Home of $79 million (which was
consolidated beginning on September 1, 2000), and revenue from our international
operations and ventures of $78 million (a decline of $242 million from the third
quarter of 1999). The international operations and ventures revenue decrease was
largely due to the revenue  impact of businesses  contributed to Concert and due
to  lower  revenue  associated  with the  divestment  of  certain  international
businesses.  Corporate and Other  revenue,  normalized  for the  divestments  of
international businesses, the impact of Concert and Excite@Home was negative $21
million in the third quarter of 2000, compared with negative $47 million for the
third quarter of 1999. The  improvement was primarily due to higher revenue from
Excite@Home.

For the first nine months of 2000,  revenue for  Corporate  and Other  primarily
included the elimination of  inter-segment  revenue of negative $585 million (an
increase of $29 million  from the first nine months of 1999),  revenue  from our
international operations and ventures of $262 million (a decline of $682 million
from the first nine months of 1999) and revenue from  Excite@Home of $79 million
(which  was  consolidated   beginning  September  1,  2000).  The  international
operations and ventures  revenue  decrease was largely due to the revenue impact
of businesses  contributed to Concert and due to lower revenue  associated  with
the divestment of certain international businesses. Corporate and Other revenue,
normalized  for the  divestments  of  international  businesses,  the  impact of
Concert and  Excite@Home,  was negative $174 million in the first nine months of
2000  compared  with  negative  $223  million for the first nine months of 1999,
primarily due to higher revenue from  Excite@Home as well as higher revenue from
international operations and ventures.

EBIT/EBITDA
EBIT and EBITDA for  Corporate  and Other  improved $358 million to a deficit of
$40 million and improved  $399  million to $219  million,  respectively,  in the
third quarter of 2000,  compared  with the third quarter of 1999.  Excluding the
third  quarter  1999 gain on the sale of AT&T Canada of $110  million,  EBIT and
EBITDA  for  Corporate  and  Other  increased  $468  million  and $509  million,
respectively,  in the third quarter of 2000,  compared with the third quarter of
1999.  The  increases  were  primarily  due to a larger  pension  credit in 2000
primarily  driven by a higher  pension trust asset base resulting from increased
investment  returns,  lower SG&A expenses,  including cost control efforts,  and
higher  other income as a result of  increased  gains on sales of  miscellaneous
investments.  In addition,  equity  earnings for Concert were $25 million during
the third quarter.

EBIT and EBITDA for  Corporate  and Other  improved $145 million to a deficit of
$1,020  million and  improved  $244  million to a deficit of $398 million in the
first nine months of 2000, compared with the same period in 1999, respectively.

<PAGE>
                                                         AT&T Form 10-Q - Part I


Excluding net restructuring  charges of $568 million in 2000 and $212 million in
1999, as well as the 1999 gain on the sale of AT&T Canada of $110 million,  EBIT
and EBITDA  increased  $611 million to a deficit of $452  million and  increased
$710 million to $170 million in the first nine months of 2000, compared with the
same period in 1999, respectively.  The increases were primarily due to a larger
pension  credit in 2000  primarily  driven by a higher  pension trust asset base
resulting from increased investment returns,  higher other income as a result of
increased  gains on sales of  miscellaneous  investments and higher interest and
dividend income as well as cost control  efforts.  In addition,  equity earnings
for  Concert  were $91 million  during the first nine months of 2000.  Partially
offsetting  these  improvements  were higher equity losses from  Excite@Home and
greater distributions on trust preferred securities.

OTHER ITEMS

Capital additions for corporate and other increased $931 million,  or 111.8%, to
$1,763  million in the third quarter of 2000,  compared with the same quarter of
1999.  For the first  nine  months of 2000,  capital  additions  increased  $657
million,  or 50.6%,  to $1,955  million  compared  with the first nine months of
1999.  The increase in both periods was  primarily  driven by our  investment in
Net2Phone,    partially   offset   by   lower   investments   in   international
nonconsolidated subsidiaries.

Total assets  increased  $8,949 million during the first nine months of 2000, to
$24,484  million  primarily  due  to  the  consolidation  of  Excite@Home,   our
investment in Concert, including the assets contributed by Business Services and
Consumer Services, and our investment in Net2Phone.

LIBERTY MEDIA GROUP RESULTS
Liberty  Media Group (LMG)  produces,  acquires and  distributes  entertainment,
educational and informational programming services through all available formats
and  media.  LMG is  also  engaged  in  electronic  retailing  services,  direct
marketing  services,   advertising  sales  relating  to  programming   services,
infomercials and transaction  processing.  Equity earnings (losses) from Liberty
Media Group were $1,756  million for the quarter ended  September 30, 2000,  and
were $(217) million in the comparable 1999 period. Equity earnings (losses) from
LMG were $2,965 million for the first nine months of 2000,  compared with $(818)
million for the period from the date of acquisition  through September 30, 1999.
These  increases were primarily due to gains  associated with the acquisition of
companies  that LMG has an investment  in. The gains  represent  the  difference
between the carrying  value of LMG's  interest in the  acquired  company and the
fair value of securities received in the acquisitions.  In particular,  TV Guide
was acquired by Gemstar in the third  quarter of 2000,  Flextech was acquired by
Telewest in the second  quarter of 2000 and General  Instrument  was acquired by
Motorola in the first quarter of 2000.  These gains were partially offset by the
impairment  charges recorded on LMG's investments in Teligent and ICG to reflect
other than temporary declines in value.

<PAGE>
                                                         AT&T Form 10-Q - Part I


LIQUIDITY

                                                              For the Nine
                                                              Months Ended
                                                              September 30,
Dollars in Millions                                         2000        1999
CASH FLOWS:
  Provided by operating activities                      $  9,174    $  7,050
  Used in investing activities                           (33,176)    (21,353)
  Provided by financing activities                        23,294      11,143

EBITDA                                                  $ 16,448    $ 13,921


Net cash provided by operating  activities increased $2,124 million for the nine
months ended  September  30,  2000,  compared  with the prior year  period.  The
increase  was  primarily  driven  by an  increase  in  operating  income  before
depreciation  and  amortization  expense  and a  decrease  in cash tax  payments
primarily  resulting  from the first quarter 1999 tax payment on the gain on the
1998 sale of Universal Card Services Inc. These were partially  offset by higher
interest payments in 2000.

Net cash used by investing  activities  for the nine months ended  September 30,
2000,  increased  $11,823  million  compared  with the prior  year  period.  The
increase was primarily  driven by increased  acquisitions in 2000,  particularly
MediaOne and various wireless properties, increased capital expenditures in 2000
primarily  attributable to growth in Wireless and Broadband,  and our investment
in Net2Phone,  partially  offset by the  contribution of $5.5 billion of cash to
LMG in 1999.

During the first nine months of 2000, net cash provided by financing  activities
increased by $12,151 million  compared with the prior year period.  The increase
was primarily due to higher  proceeds  from  issuance of  short-term  debt,  the
proceeds from the initial  public  offering of AT&T Wireless  Group shares and a
decrease in the purchase of treasury stock. These were partially offset by lower
proceeds from the issuance of long-term debt and redeemable securities in 1999.

At  September  30,  2000,  we had  current  assets of $15.5  billion and current
liabilities of $51.3 billion. A significant portion of the current  liabilities,
$32.3 billion,  relate to short-term notes, the majority of which was commercial
paper or debt with an original  maturity of one year or less.  We expect that we
will retire a portion of the  short-term  debt with funds that will be generated
from the expected  mid-2001  initial public offering of AT&T Broadband  tracking
stock.  In addition,  we continue to investigate  and negotiate  other financing
alternatives including, the monetization of publicly-held  securities,  sales of
certain non-strategic assets and investments, securitization of certain accounts
receivable,  and a potential  separate  debt  offering by AT&T  Wireless.  Since
September 30, 2000, we have monetized  certain publicly held securities  through
the issuance of approximately $1 billion of asset-backed  debt.  Lastly,  we are
presently  in  negotiations  to increase  our $10 billion  line of credit to $25
billion.  At  September  30,  2000,  all of the $10  billion  line of credit was
available for our use.  There can be no assurance that we will be able to obtain
financing on terms that are acceptable to us.

<PAGE>
                                                         AT&T Form 10-Q - Part I


As a result of the announced  restructuring  plans to create four new companies,
AT&T's debt ratings have been under review by the applicable rating agencies. As
a result of this review,  AT&T's ratings have been either downgraded and /or put
on credit watch with negative outlook. These actions will result in an increased
cost of future borrowings.

Also in connection with our restructuring,  we are reviewing our dividend policy
as it  relates  to each of the  new  companies  we will  create.  The  board  of
directors' review of AT&T's dividend policy will be completed and implemented by
the end of the year. We expect that AT&T's dividend prior to the creation of the
four new  companies as well as the combined  dividend of the four new  companies
will be substantially lower than our current dividend.

During the  quarter,  we granted  put  options  to Cox and  Comcast  Corporation
(Comcast)  on  shares  of  Excite@Home  Series A common  stock  having a maximum
combined put price of $2.9 billion. The put options provide Cox and Comcast with
the right to convert their Excite@Home  shares into either AT&T stock or cash at
their  option,  at any time  between  January 1, 2001 and June 4,  2002,  at the
higher of (i) $48 per share or (ii) the 30 day average trading price at the time
of the  exercise.  As a  result,  AT&T  could  be  required  to pay the  maximum
aggregate $2.9 billion put price in January,  2001.  Assuming a put price of $48
per share, the maximum number of Excite@Home  shares covered by the put would be
approximately 60.4 million shares.

Earnings,  including other income,  before  interest,  taxes,  depreciation  and
amortization,  and  minority  interest  (EBITDA)  is a measure of our ability to
generate  cash flow and  should  be  considered  in  addition  to,  but not as a
substitute for, other measures of financial  performance  reported in accordance
with generally accepted  accounting  principles.  EBITDA was $16,448 million for
the first  nine  months of the year,  an  increase  of 18.1% over the first nine
months  of last  year.  The  EBITDA  growth  was  impacted  by gains on sales of
businesses and investments and other, net restructuring  and other charges,  and
our ownership  interests in Cablevision and TWE.  Excluding these items,  EBITDA
increased $2,441 million,  or 16.9%,  over the first nine months of last year to
$16,841 million.  The improvement was primarily due to operational  efficiencies
which resulted in higher operating income before  depreciation and amortization,
and increased other income.

<PAGE>
                                                         AT&T Form 10-Q - Part I


EURO CONVERSION
On January 1, 1999,  certain  members of the European  Union  established  fixed
conversion  rates between their  existing  currencies  and the European  Union's
currency (Euro).  The transition period is anticipated to extend between January
1, 1999,  and July 1, 2002.  We have  assessed the impact of the  conversion  on
information-technology  systems,  currency  exchange rate risk,  derivatives and
other financial instruments,  continuity of material contracts as well as income
tax and accounting issues. We do not expect the conversion during the transition
period to have a material impact on our consolidated financial statements.

FINANCIAL CONDITION
Total  assets  increased  $82,946  million,  or 49.0%,  to  $252,352  million at
September 30, 2000, compared with December 31, 1999, primarily due to the impact
of  the  MediaOne  acquisition  and  the  consolidation  of  Excite@Home.  Other
significant  activity included  increased  property,  plant and equipment due to
capital  expenditures,  net of  depreciation  expense;  an  increase in licenses
resulting  from  our  wireless   acquisitions,   increased  accounts  receivable
attributable  to  transactions  with Concert;  our investment in Net2Phone;  and
AT&T's investment in Concert,  consisting of $1.7 billion of property, plant and
equipment and a loan of $1.0 billion.

Total liabilities  increased  $45,102 million,  or 54.1%, to $128,490 million at
September 30, 2000, compared with December 31, 1999, primarily due to the impact
of the MediaOne  acquisition and the consolidation of Excite@Home.  In addition,
total debt increased due to borrowings to fund the MediaOne acquisition.

Minority   interest   increased  $6,655  million  to  $9,046  million  primarily
reflecting the minority interest of Excite@Home.

Total  shareowners'  equity  increased  $31,181  million,  or 39.5%, to $110,108
million at September 30, 2000, compared with December 31, 1999. The increase was
primarily  driven  by the  issuance  of  AT&T  common  stock  for  the  MediaOne
acquisition as well the issuance of AT&T Wireless Group tracking stock.

The ratio of total debt to total  capital,  excluding LMG (debt divided by total
debt and  equity  of AT&T,  excluding  LMG) was  45.0% at  September  30,  2000,
compared with 44.3% at December 31, 1999. The equity portion of this calculation
includes  convertible  trust  preferred  securities.  The increase was primarily
driven by higher debt  associated  with the  MediaOne  merger,  almost  entirely
offset by a higher equity base  associated with the MediaOne merger and the AT&T
Wireless Group initial public offering.  Included in debt is approximately  $5.2
billion of notes,  which are exchangeable  into or  collaterialized  by Vodafone
American  Depository  Receipts (ADRs) we own.  Excluding this debt, the ratio of
debt to total capital at September 30, 2000,  was 42.8%.  The ratio of debt (net
of cash) to  operational  EBITDA was 2.74X at September 30, 2000,  compared with
1.75X at December 31,  1999,  reflecting  additional  debt  associated  with the
MediaOne merger.

RISK MANAGEMENT

We are exposed to market risk from changes in interest,  foreign exchange rates,
and  equity  prices.  On a limited  basis we use  certain  derivative  financial
instruments,   including  interest  rate  swaps,  options,  forwards  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>
                                                         AT&T Form 10-Q - Part I


Assuming a 10% downward  shift in interest rates at September 30, 2000, the fair
value of unhedged debt would have increased by approximately $1.1 billion.

NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial  Accounting  Standards Board (FASB) issued Statement
of Financial  Accounting  Standards  (SFAS) No. 133,  "Accounting for Derivative
Instruments and Hedging  Activities."  Among other provisions,  it requires that
entities  recognize  all  derivatives  as either  assets or  liabilities  in the
statement of financial  position and measure  those  instruments  at fair value.
Gains and losses resulting from changes in the fair values of those  derivatives
would be accounted  for  depending on the use of the  derivative  and whether it
qualifies for hedge accounting. The effective date for this standard was delayed
via the issuance of SFAS No. 137. The effective date for SFAS No. 133 is now for
fiscal  years  beginning  after  June  15,  2000,  though  earlier  adoption  is
encouraged and retroactive application is prohibited.  For AT&T, this means that
the standard must be adopted no later than January 1, 2001.

In June 2000, the FASB issued SFAS No. 138,  "Accounting for Certain  Derivative
Instruments  and Certain  Hedging  Activities"  as an amendment to SFAS No. 133.
This  statement  provides  clarification  with regard to certain  implementation
issues under SFAS No. 133 on specific types of hedges.

The impact of the  adoption  of SFAS No.  133,  as amended by SFAS No.  138,  on
AT&T's  results  of  operations  is  dependent  upon  the  fair  values  of  our
derivatives and related financial  instruments at the date of adoption and could
result in more pronounced  quarterly  fluctuations in other income  (expense) in
future  periods.  However,  had we adopted SFAS No. 133 in the third  quarter of
2000, we would have recorded a cumulative effect of an accounting change, net of
applicable taxes, of approximately  $325 million of income, or $0.08 per diluted
share,  primarily  attributable  to fair value  adjustments  of  monetized  debt
instruments  acquired in conjunction with the MediaOne merger, as well as to our
warrant portfolio. Management does not expect the impact of the adoption of SFAS
No. 133 on our interest rate swap and foreign exchange portfolios to be material
to AT&T's results of operations, financial condition, or cash flows.

In addition,  management is currently reassessing the appropriate classification
of certain  investment  securities  that  support debt which is indexed to those
securities.  Had these securities been reclassified from  available-for-sale  to
trading securities during the third quarter, a charge of $235 million,  or $0.06
per diluted share,  net of applicable  taxes,  would have been recorded to other
income  (expense),  concurrently  with  the  adoption  of SFAS  No.  133.  As an
available-for-sale  security,  changes in fair value are  included  within other
comprehensive income.

In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101 (SAB No. 101), "Revenue  Recognition in Financial  Statements."
The SEC  delayed the date by which  registrants  must apply the  accounting  and
disclosures  described  in SAB  No.  101  until  the  fourth  quarter  of  2000.
Management does not expect the adoption of SAB No. 101 to have a material impact
on our results of operations.

<PAGE>
                                                         AT&T Form 10-Q - Part I


SUBSEQUENT EVENTS

RESTRUCTURING PLAN
On October 25, 2000, AT&T announced a restructuring plan designed to create four
publicly  traded  companies  from  each  of  our  major  operating  units.  AT&T
shareowners  would  ultimately  own stock in each of the four  businesses.  Upon
completion of the plan, AT&T Wireless,  AT&T  Broadband,  AT&T Consumer and AT&T
Business will all be represented by asset-based or tracking stocks.

In the  first  phase of the  restructuring  plan,  AT&T  intends  to offer  AT&T
shareowners  the  opportunity  to  exchange  their  AT&T  common  stock for AT&T
Wireless Group tracking stock.  We plan to distribute our remaining  interest in
AT&T Wireless Group to AT&T shareowners in 2001.

AT&T also plans to create a new class of stock to track the economic performance
of our AT&T Consumer business and plans to distribute 100% of the tracking stock
to AT&T shareowners in the second half of 2001. In addition, depending on market
conditions,  AT&T plans to conduct an initial public offering of stock that will
track the economic  performance of our Broadband unit during the summer of 2001.
AT&T's ownership  interest in Excite@Home will be part of the Broadband  entity.
AT&T plans to  recapitalize  the Broadband  tracking  stock into an  asset-based
common stock within twelve months of the initial public offering.

AT&T Business  will be the legal owner of the AT&T brand,  which it will license
to the other companies.  It will also be the parent company of the AT&T Consumer
business.

The board of directors is reviewing  the dividend  policy of AT&T before the end
of 2000 and AT&T expects that AT&T's  dividend prior to the creation of the four
new companies as well as the combined dividend of the four new companies will be
substantially lower than our current dividend.

AT&T does not expect significant  downsizing to result from our plans,  although
each company will continue to size its operations as  appropriate.  AT&T expects
these transactions will be tax-free to U.S. shareholders. Certain aspects of the
above transactions remain subject to regulatory and other approvals.

OTHER EVENTS

AT&T  currently  holds a 55.62% equity  interest in AB Cellular  Holding LLC (AB
Cellular), which was formed in 1998 with BellSouth, with each party having a 50%
voting interest.  AB Cellular owns,  controls and supervises wireless properties
in Los  Angeles,  Houston and  Galveston.  Public  documents  filed by BellSouth
indicate  that  BellSouth  anticipates  exercising  an option  available to them
pursuant to the AB Cellular  LLC  Agreement,  which would  result in AB Cellular
redeeming  AT&T's  interest in AB Cellular in  consideration  of 100% of the net
assets of the Los  Angeles  property.  If this  transaction  takes  place,  AT&T
anticipates recording a gain and will begin consolidating the results of the Los
Angeles property.

On November 13, 2000,  two of AT&T's  wireless  affiliates,  TeleCorp  PCS, Inc.
(TeleCorp)  and  Tritel,  Inc.,  merged  as  part  of a  stock  transaction.  In
connection  with the merger,  AT&T  contributed  to  TeleCorp  rights to acquire
wireless  licenses in Wisconsin and Iowa and $20 million in cash in exchange for
approximately  9.3 million shares of common stock in the newly merged entity. In
a separate  transaction,  AT&T exchanged certain wireless licenses and rights to
acquire  licenses in the Wisconsin and Iowa markets,  and made a cash payment of
approximately  $80  million in return for  certain  TeleCorp  PCS  licenses  and
wireless  systems  in several  New  England  markets.  AT&T  expects  that these
transactions will result in a gain.
<PAGE>
                                                        AT&T Form 10-Q - Part II

                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings.

MEDIAONE SHAREHOLDER LITIGATION
In March 1999,  several  putative  class action  complaints  were filed  against
MediaOne  Group,  Inc.  and certain of its  officers  and  directors in Delaware
Chancery  Court,  subsequently  consolidated  under the caption,  In re MediaOne
Group Inc. Shareholders  Litigation,  C.A. No. 17037, alleging that the MediaOne
directors  had  breached  their  fiduciary  duties to MediaOne  shareholders  by
causing  MediaOne to enter into a merger  agreement  with Comcast Corp.  without
taking the  necessary  steps to obtain the best price  available  upon a sale of
control of MediaOne.  A similar suit was filed in New York  Supreme  Court,  New
York County,  under the caption Krim v. Cote, et al., No.  99-602028.  After the
suits were filed,  MediaOne  terminated the Comcast merger agreement in order to
accept a  superior  proposal  from  AT&T.  Thereafter,  on August  13,  1999,  a
Consolidated and Amended Class Action Complaint was filed in the Delaware action
alleging that the MediaOne  directors could only fulfill their fiduciary  duties
in connection  with the AT&T merger if, among other things,  they caused AT&T to
issue one or more tracking stocks as part of the consideration in the merger. On
December 6, 1999, with the consent of MediaOne,  AT&T announced plans to issue a
new class of common stock to track its wireless  operations.  MediaOne's consent
was conditioned upon the agreement of AT&T that no distribution, or setting of a
record date for the  distribution,  of this tracking  stock to holders of common
stock of AT&T occur prior to the effective time of MediaOne's  merger with AT&T.
On June 15,  2000,  MediaOne  consummated  its  merger  with  AT&T and  became a
wholly-owned subsidiary of AT&T.

In  light  of these  events,  plaintiffs  in the  MediaOne  shareholder  actions
stipulated to the dismissal of the actions as moot. As part of the  stipulation,
AT&T agreed to pay and  plaintiffs'  attorneys  agreed to accept the sum of $340
thousand in full  satisfaction and discharge of their claim for compensation for
legal services  performed and  reimbursement of expenses  incurred in connection
with the prosecution of the actions.  On August 28, 2000, the Delaware  Chancery
Court  approved  the  dismissal  of the  Delaware  actions on mootness  grounds,
conditioned  upon the  dismissal  of the New York  action and the  provision  of
notice of the terms of the stipulation in AT&T's next Form 10-Q.

OTHER LITIGATION
On July 6, 1997,  MCI  Telecommunications  Corp.  and Ronald A. Katz  Technology
Licensing,  L.P.  filed suit in United States  District  Court in  Philadelphia,
Pennsylvania  against  AT&T.  The suit  alleged  that a number of AT&T  services
infringe patents owned by Katz but licensed to MCI for enforcement against AT&T.
On November 1, 2000,  without any  admission of liability or  wrongdoing  of any
kind, AT&T settled this matter for an undisclosed amount.

In October and  November  2000,  the Company was named as a defendant in several
purported  securities  class action lawsuits filed in the United States District
Courts for the District of New Jersey and for the Southern  District of New York
purportedly  filed on behalf of persons who purchased  securities of the Company
for various  periods from October 25, 1999 through May 1, 2000.  These  lawsuits
assert claims under Section  10(b) and 20(a) of the  Securities  Exchange Act of
1934,  as  amended,  and  allege,  among  other  things,  that during the period
referenced  above, the Company made materially  false and misleading  statements
and omitted to state material facts  concerning its future  business  prospects.
The complaints seek unspecified  damages. The Company believes that the lawsuits
are without merit and intends to defend them vigorously.

<PAGE>
                                                        AT&T Form 10-Q - Part II


Item 6. Exhibits and Reports on Form 8-K.

(a)           Exhibits

              Exhibit Number

                      12       Computation of Ratio of Earnings to Fixed Charges

                      27       Financial Data Schedule

                      99.1     Liberty Media Group financial results for the
                               three and nine months ended September 30, 2000
                               and 1999

                      99.2     AT&T Wireless Group financial results and
                               Management's Discussion and Analysis for the
                               three and nine months ended September 30,
                               2000 and 1999

(b)           Reports on Form 8-K

                     Form 8-K-A dated June 15, 2000 was filed pursuant to Item 5
                     (Other  Events)  and  Item  7  (Financial   Statements  and
                     Exhibits) on August 29, 2000.

<PAGE>
                                                        AT&T Form 10-Q - Part II




                                     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 13, 2000

<PAGE>
                                                                  AT&T Form 10-Q



                                  Exhibit Index

Exhibit
Number

12                          Computation of Ratio of Earnings to Fixed Charges

27                          Financial Data Schedule

99.1                        Liberty Media Group financial results for the three
                            and nine months ended September 30, 2000 and 1999

99.2                        AT&T Wireless Group financial results and
                            Management's Discussion and Analysis for the three
                            and nine months ended September 30, 2000 and 1999