##### 



EXHIBIT 99a


CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)




|        |                                               
|------- | ----------------------------------------------
|Item 8. | Financial Statements and Supplemental
    Data

CONSOLIDATED FINANCIAL STATEMENTS

CINGULAR WIRELESS LLC


Years Ended December 31, 2002 (restated),
2003 (restated) and 2004


with Report of Independent Registered Public
Accounting Firm


79



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)




|        |                                               
|------- | ----------------------------------------------
|Item 8. | Financial Statements and Supplemental
    Data

CONSOLIDATED FINANCIAL STATEMENTS

Years Ended December 31, 2002 (Restated),
2003 (Restated) and 2004

|                                                                                         |  |  |    | 
|---------------------------------------------------------------------------------------- |  |  | -- | 
|Contents                                                                                 |  |  |    | 
|Report of Independent Registered Public
    Accounting Firm  Ernst & Young LLP          |  |  | 81 | 
|Report of Independent Registered Public
    Accounting Firm  PricewaterhouseCoopers LLP |  |  | 82 | 
|Audited Consolidated Financial Statements                                                |  |  |    | 
|Consolidated Balance Sheets                                                              |  |  | 83 | 
|Consolidated Statements of Income                                                        |  |  | 84 | 
|Consolidated Statements of Changes in
    Members Capital                               |  |  | 85 | 
|Consolidated Statements of Comprehensive Income                                          |  |  | 86 | 
|Consolidated Statements of Cash Flows                                                    |  |  | 87 | 
|Notes to Consolidated Financial Statements                                               |  |  | 88 | 

80



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)




|        |                                               
|------- | ----------------------------------------------
|Item 8. | Financial Statements and Supplemental
    Data

REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM

Board of Directors and Shareowners

Cingular Wireless Corporation, Manager of


Cingular Wireless
LLC


We have audited the accompanying consolidated
balance sheets of Cingular Wireless LLC as of December 31,
2003 and 2004 and the related consolidated statements of income,
changes in members capital, comprehensive income and cash
flows for each of the three years in the period ended
December 31, 2004. These financial statements are the responsibility of the
Companys management. Our responsibility is to express an
opinion on these financial statements based on our audits. The
financial statements of Omnipoint Facilities Network II,
LLC (Omnipoint), a wholly owned subsidiary of GSM Facilities,
LLC (an equity investee in which the Company has an approximate
60% interest at December 31, 2004), have been audited by
other auditors whose report has been furnished to us; insofar as
our opinion on the consolidated financial statements relates to
the 2003 and 2004 amounts included for Omnipoint, it is based
solely on their report. In the consolidated financial
statements, the Companys indirect investment in Omnipoint
is stated at $770 million and $880 million,
respectively, at December 31, 2003 and 2004, and the
Companys equity in net losses of Omnipoint is stated at
$100 million and $135 million, for the years then
ended.

We conducted our audits in accordance with
standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.

In our opinion, based on our audits and the
report of other auditors, the consolidated financial statements
referred to above present fairly, in all material respects, the
consolidated financial position of Cingular Wireless LLC and
subsidiaries at December 31, 2003 and 2004, and the
consolidated results of their operations and their cash flows
for each of the three years in the period ended
December 31, 2004, in conformity with U.S. generally
accepted accounting principles.

As described in Note 5 to the consolidated
financial statements, in 2002 the Company adopted Statement of
Financial Accounting Standards No. 142, Goodwill and
Other Intangible Assets.

As described in Note 2 to the consolidated
financial statements, the accompanying consolidated balance
sheet as of December 31, 2003 and the related consolidated
statements of income, changes in members capital,
comprehensive income and cash flows for each of the years ended
December 31, 2002 and 2003 have been restated.



| |                      
| | ---------------------
| | /s/ ERNST & YOUNG LLP

Atlanta, Georgia

March 4, 2005


81



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM

To the Members and Board of Directors of GSM
Facilities, LLC:

In our opinion, the accompanying balance sheets
and the related statements of operations, of members
equity and of cash flows (not presented separately herein)
present fairly, in all material respects, the financial position
of Omnipoint Facilities Network II, LLC (the Company) at
December 31, 2004 and 2003, and the results of its
operations and its cash flows for the years ended
December 31, 2004 and 2003 in conformity with accounting
principles generally accepted in the United States of America.
These financial statements are the responsibility of the
Companys management. Our responsibility is to express an
opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with the
standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant
estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

As described in Notes 1 and 5, the
Companys transactions are substantially with related
parties, who are the Companys member owners. Additionally,
as described in Note 1, the Company relies on its member
owners for funding requirements.

As described in notes 1 and 6, the
Companys assets were contributed to T-Mobile USA, Inc.
(T-Mobile) on January 5th, 2005, as part of an
agreement between T-Mobile and Cingular Wireless LLC to unwind
the operations of their joint venture, GSM Facilities, LLC.

As discussed in Note 2, the consolidated
financial statements for the years ended December 31, 2003
and 2002 have been restated.



| |                               
| | ------------------------------
| | /s/ PRICEWATERHOUSECOOPERS LLP

Seattle, Washington

March 3, 2005


82



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

CONSOLIDATED BALANCE SHEETS

|                                                 |                                                                                   |                       |        |       |   |   |        |        |  
|------------------------------------------------ | --------------------------------------------------------------------------------- | --------------------- | ------ | ----- | - | - | ------ | ------ | -
|                                                 |                                                                                   |                      
|                                                 |                                                                                   | December 31,         
|                                                 |                                                                                   |                      
|                                                 |                                                                                   | 2003                  |        | 2004 
|                                                 |                                                                                   |                       |        |      
|                                                 |                                                                                   |                      
|                                                 |                                                                                   | (Dollars in millions)
|                                                 |                                                                                   | (Restated)            |        |      
|ASSETS                                          
|Current assets:                                  |                                                                                   |                       |        |       |   |   |        |       
|                                                 | Cash and cash equivalents                                                         |                       | $      | 1,139 |   |   | $      | 352    |  
|                                                 | Accounts receivable  net of allowance
    for doubtful accounts of $130 and $317 |                       |        | 1,592 |   |   |        | 3,448  |  
|                                                 | Due from affiliates, net                                                          |                       |        |      |   |   |        | 138    |  
|                                                 | Inventories                                                                       |                       |        | 273   |   |   |        | 690    |  
|                                                 | Prepaid assets                                                                    |                       |        | 186   |   |   |        | 346    |  
|                                                 | Other current assets                                                              |                       |        | 110   |   |   |        | 596    |  
|                                                 |                                                                                   |                       |        |       |   |   |        |       
|Total current assets                             |                                                                                   |                       | 3,300  |       |   |   | 5,570  |       
|Property, plant and equipment, net               |                                                                                   |                       | 10,962 |       |   |   | 21,958 |       
|Licenses, net                                    |                                                                                   |                       | 7,769  |       |   |   | 24,762 |       
|Goodwill                                         |                                                                                   |                       | 849    |       |   |   | 21,637 |       
|Customer relationship intangibles, net           |                                                                                   |                       | 150    |       |   |   | 4,698  |       
|Other intangible assets, net                     |                                                                                   |                       | 5      |       |   |   | 241    |       
|Investments in and advances to equity affiliates |                                                                                   |                       | 2,269  |       |   |   | 2,676  |       
|Other assets                                     |                                                                                   |                       | 226    |       |   |   | 696    |       
|                                                 |                                                                                   |                       |        |       |   |   |        |       
|Total assets                                     |                                                                                   | $                     | 25,530 |       |   | $ | 82,238 |       
|                                                 |                                                                                   |                       |        |       |   |   |        |       
|LIABILITIES AND MEMBERS
    CAPITAL            
|Current liabilities:                             |                                                                                   |                       |        |       |   |   |        |       
|                                                 | Debt maturing within one year                                                     |                       | $      | 95    |   |   | $      | 2,158  |  
|                                                 | Accounts payable                                                                  |                       |        | 904   |   |   |        | 1,383  |  
|                                                 | Due to affiliates, net                                                            |                       |        | 54    |   |   |        |       |  
|                                                 | Advanced billing and customer deposits                                            |                       |        | 538   |   |   |        | 728    |  
|                                                 | Accrued liabilities                                                               |                       |        | 1,619 |   |   |        | 3,714  |  
|                                                 |                                                                                   |                       |        |       |   |   |        |       
|Total current liabilities                        |                                                                                   |                       | 3,210  |       |   |   | 7,983  |       
|Long-term debt:                                  |                                                                                   |                       |        |       |   |   |        |       
|                                                 | Debt due to members                                                               |                       |        | 9,678 |   |   |        | 9,628  |  
|                                                 | Other long-term debt, net of premium                                              |                       |        | 2,914 |   |   |        | 14,229 |  
|                                                 |                                                                                   |                       |        |       |   |   |        |       
|Total long-term debt                             |                                                                                   |                       | 12,592 |       |   |   | 23,857 |       
|Deferred tax liabilities, net                    |                                                                                   |                       | 190    |       |   |   | 3,997  |       
|Other noncurrent liabilities                     |                                                                                   |                       | 546    |       |   |   | 1,256  |       
|                                                 |                                                                                   |                       |        |       |   |   |        |       
|Total liabilities                                |                                                                                   |                       | 16,538 |       |   |   | 37,093 |       
|Commitments and contingencies (see Note 18)      |                                                                                   |                       |        |       |   |   |        |       
|Minority interests in consolidated entities      |                                                                                   |                       | 659    |       |   |   | 609    |       
|Members capital:                                |                                                                                   |                       |        |       |   |   |        |       
|                                                 | Members capital                                                                  |                       |        | 8,513 |   |   |        | 44,714 |  
|                                                 | Receivable for properties to be contributed                                       |                       |        | (178  | ) |   |        | (178   | )
|                                                 | Accumulated other comprehensive loss, net of taxes                                |                       |        | (2    | ) |   |        |       |  
|                                                 |                                                                                   |                       |        |       |   |   |        |       
|Total members capital                           |                                                                                   |                       | 8,333  |       |   |   | 44,536 |       
|                                                 |                                                                                   |                       |        |       |   |   |        |       
|Total liabilities and members capital           |                                                                                   | $                     | 25,530 |       |   | $ | 82,238 |       
|                                                 |                                                                                   |                       |        |       |   |   |        |       

See accompanying notes.

83



---



##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

CONSOLIDATED STATEMENTS OF INCOME

|                                                                                        |                                                                                                     |                         |        |            |   |      |        |        |   |   |        |        |  
|--------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------- | ----------------------- | ------ | ---------- | - | ---- | ------ | ------ | - | - | ------ | ------ | -
|                                                                                        |                                                                                                     |                        
|                                                                                        |                                                                                                     | Year Ended December 31,
|                                                                                        |                                                                                                     |                        
|                                                                                        |                                                                                                     | 2002                    |        | 2003       |   | 2004
|                                                                                        |                                                                                                     |                         |        |            |   |     
|                                                                                        |                                                                                                     |                        
|                                                                                        |                                                                                                     | (Dollars in millions)  
|                                                                                        |                                                                                                     | (Restated)              |        | (Restated) |   |     
|Operating revenues:                                                                     |                                                                                                     |                         |        |            |   |      |        |        |   |   |        |       
|                                                                                        | Service revenues                                                                                    |                         | $      | 13,922     |   |      | $      | 14,223 |   |   | $      | 17,473 |  
|                                                                                        | Equipment sales                                                                                     |                         |        | 981        |   |      |        | 1,260  |   |   |        | 1,963  |  
|                                                                                        |                                                                                                     |                         |        |            |   |      |        |        |   |   |        |       
|Total operating revenues                                                                |                                                                                                     |                         | 14,903 |            |   |      | 15,483 |        |   |   | 19,436 |       
|Operating expenses:                                                                     |                                                                                                     |                         |        |            |   |      |        |        |   |   |        |       
|                                                                                        | Cost of services (excluding depreciation of
    $1,393, $1,670 and $2,259, which is included below) |                         |        | 3,594      |   |      |        | 3,681  |   |   |        | 4,608  |  
|                                                                                        | Cost of equipment sales                                                                             |                         |        | 1,535      |   |      |        | 2,031  |   |   |        | 2,874  |  
|                                                                                        | Selling, general and administrative                                                                 |                         |        | 5,429      |   |      |        | 5,428  |   |   |        | 7,349  |  
|                                                                                        | Depreciation and amortization                                                                       |                         |        | 1,849      |   |      |        | 2,089  |   |   |        | 3,077  |  
|                                                                                        |                                                                                                     |                         |        |            |   |      |        |        |   |   |        |       
|Total operating expenses                                                                |                                                                                                     |                         | 12,407 |            |   |      | 13,229 |        |   |   | 17,908 |       
|                                                                                        |                                                                                                     |                         |        |            |   |      |        |        |   |   |        |       
|Operating income                                                                        |                                                                                                     |                         | 2,496  |            |   |      | 2,254  |        |   |   | 1,528  |       
|Other income (expenses):                                                                |                                                                                                     |                         |        |            |   |      |        |        |   |   |        |       
|                                                                                        | Interest expense                                                                                    |                         |        | (911       | ) |      |        | (856   | ) |   |        | (900   | )
|                                                                                        | Minority interest in earnings of consolidated
    entities                                          |                         |        | (123       | ) |      |        | (101   | ) |   |        | (86    | )
|                                                                                        | Equity in net loss of affiliates                                                                    |                         |        | (274       | ) |      |        | (333   | ) |   |        | (415   | )
|                                                                                        | Other, net                                                                                          |                         |        | 29         |   |      |        | 41     |   |   |        | 16     |  
|                                                                                        |                                                                                                     |                         |        |            |   |      |        |        |   |   |        |       
|Total other income (expenses)                                                           |                                                                                                     |                         | (1,279 | )          |   |      | (1,249 | )      |   |   | (1,385 | )     
|                                                                                        |                                                                                                     |                         |        |            |   |      |        |        |   |   |        |       
|Income before provision for income taxes and
    cumulative effect of accounting change |                                                                                                     |                         | 1,217  |            |   |      | 1,005  |        |   |   | 143    |       
|Provision (benefit) for income taxes                                                    |                                                                                                     |                         | 12     |            |   |      | 28     |        |   |   | (58    | )     
|                                                                                        |                                                                                                     |                         |        |            |   |      |        |        |   |   |        |       
|Income before cumulative effect of accounting
    change                                |                                                                                                     |                         | 1,205  |            |   |      | 977    |        |   |   | 201    |       
|Cumulative effect of accounting change, net of tax                                      |                                                                                                     |                         | (32    | )          |   |      |       |        |   |   |       |       
|                                                                                        |                                                                                                     |                         |        |            |   |      |        |        |   |   |        |       
|Net income                                                                              |                                                                                                     | $                       | 1,173  |            |   | $    | 977    |        |   | $ | 201    |       
|                                                                                        |                                                                                                     |                         |        |            |   |      |        |        |   |   |        |       

See accompanying notes.

84



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

CONSOLIDATED STATEMENTS OF CHANGES IN
MEMBERS CAPITAL

|                                                         |                                                                              |                       |        |        |  
|-------------------------------------------------------- | ---------------------------------------------------------------------------- | --------------------- | ------ | ------ | -
|                                                         |                                                                              | (Dollars in millions)
|Balance at December 31, 2001, as originally
    reported |                                                                              | $                     | 5,850  |       
|                                                         | Effect of restatement on periods ending on or
    prior to December 31, 2001 |                       |        | (72    | )
|                                                         |                                                                              |                       |        |       
|Balance at December 31, 2001, as restated                |                                                                              |                       | 5,778  |       
|                                                         | Net income, as restated                                                      |                       |        | 1,173  |  
|                                                         | Contributions from members                                                   |                       |        | 484    |  
|                                                         |                                                                              |                       |        |       
|Balance at December 31, 2002, as restated                |                                                                              |                       | 7,435  |       
|                                                         | Net income, as restated                                                      |                       |        | 977    |  
|                                                         | Distributions to members, net                                                |                       |        | (79    | )
|                                                         |                                                                              |                       |        |       
|Balance at December 31, 2003, as restated                |                                                                              |                       | 8,333  |       
|                                                         | Net income                                                                   |                       |        | 201    |  
|                                                         | Contributions from members, net                                              |                       |        | 36,000 |  
|                                                         | Other, net                                                                   |                       |        | 2      |  
|                                                         |                                                                              |                       |        |       
|Balance at December 31, 2004                             |                                                                              | $                     | 44,536 |       
|                                                         |                                                                              |                       |        |       

85



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME

|                           |                                    |                                                                       |                                                                   |            |    |      |     |  |   |   |     |  |    |   | 
|-------------------------- | ---------------------------------- | --------------------------------------------------------------------- | ----------------------------------------------------------------- | ---------- | -- | ---- | --- |  | - | - | --- |  | -- | - | 
|                           |                                    |                                                                      
|                           |                                    | Year Ended December 31,                                              
|                           |                                    |                                                                      
|                           |                                    | 2002                                                                  |                                                                   | 2003       |    | 2004
|                           |                                    |                                                                       |                                                                   |            |    |     
|                           |                                    | (Restated)                                                            |                                                                   | (Restated) |    |     
|                           |                                    |                                                                       |                                                                   |            |    |     
|                           |                                    |                                                                      
|                           |                                    | (Dollars in millions)                                                
|Comprehensive Income       |                                    |                                                                       |                                                                   |            |    |      |     |  |   |   |     | 
|Net income                 |                                    | $                                                                     | 1,173                                                             |            |    | $    | 977 |  |   | $ | 201 | 
|                           | Other comprehensive income (loss): |                                                                       |                                                                   |            |    |      |     |  |   |   |     |  |   
|                           |                                    | Minimum pension liability adjustment, net of
    taxes of $1 in 2004  |                                                                   |            | (1 | )    |     |  |  |   |     |  | (4 | )
|                           |                                    | Net foreign currency translation adjustment, net
    of taxes of ($4) |                                                                   |            |   |      |     |  |  |   |     |  | 6  |  
|                           |                                    | Net unrealized gain (loss) on securities:                             |                                                                   |            |    |      |     |  |   |   |     |  |    |  
|                           |                                    |                                                                       | Reclassification adjustment for losses included
    in net income |            |    | 1    |     |  |   |  |     |  |    |  | 
|                           |                                    |                                                                       |                                                                   |            |    |      |     |  |   |   |     | 
|Total comprehensive income |                                    | $                                                                     | 1,173                                                             |            |    | $    | 977 |  |   | $ | 203 | 
|                           |                                    |                                                                       |                                                                   |            |    |      |     |  |   |   |     | 

See accompanying notes.

86



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

CONSOLIDATED STATEMENTS OF CASH
FLOWS

|                                                                                      |                                                            |                                                |        |            |      |      |        |       |      |   |         |       |      |  
|------------------------------------------------------------------------------------- | ---------------------------------------------------------- | ---------------------------------------------- | ------ | ---------- | ---- | ---- | ------ | ----- | ---- | - | ------- | ----- | ---- | -
|                                                                                      |                                                            |                                               
|                                                                                      |                                                            | Year Ended December 31,                       
|                                                                                      |                                                            |                                               
|                                                                                      |                                                            | 2002                                           |        | 2003       |      | 2004
|                                                                                      |                                                            |                                                |        |            |      |     
|                                                                                      |                                                            |                                               
|                                                                                      |                                                            | (Dollars in millions)                         
|                                                                                      |                                                            | (Restated)                                     |        | (Restated) |      |     
|Operating activities                                                                  |                                                            |                                                |        |            |      |      |        |       |      |   |         |      
|Net income                                                                            |                                                            | $                                              | 1,173  |            |      | $    | 977    |       |      | $ | 201     |      
|Adjustments to reconcile net income to net cash
    provided by operating activities: |                                                            |                                                |        |            |      |      |        |       |      |   |         |      
|                                                                                      | Depreciation and amortization                              |                                                |        | 1,849      |      |      |        | 2,089 |      |   |         | 3,077 |     
|                                                                                      | Provision for doubtful accounts                            |                                                |        | 404        |      |      |        | 259   |      |   |         | 423   |     
|                                                                                      | Asset impairments                                          |                                                |        | 151        |      |      |        |      |      |   |         | 4     |     
|                                                                                      | Minority interest in earnings of consolidated
    entities |                                                |        | 123        |      |      |        | 101   |      |   |         | 86    |     
|                                                                                      | Equity in net loss of affiliates                           |                                                |        | 274        |      |      |        | 333   |      |   |         | 415   |     
|                                                                                      | Cumulative effect of accounting change, net of tax         |                                                |        | 32         |      |      |        |      |      |   |         |      |     
|                                                                                      | Amortization of debt discount (premium), net               |                                                |        | 1          |      |      |        | 1     |      |   |         | (43   | )   
|                                                                                      | Deferred income taxes                                      |                                                |        | (3         | )    |      |        | (1    | )    |   |         | (74   | )   
|                                                                                      | Changes in operating assets and liabilities:               |                                                |        |            |      |      |        |       |      |   |         |       |     
|                                                                                      |                                                            | Accounts receivable                            |        |            | (280 | )    |        |       | (331 | ) |         |       | (336 | )
|                                                                                      |                                                            | Inventories                                    |        |            | 63   |      |        |       | (147 | ) |         |       | (189 | )
|                                                                                      |                                                            | Other current assets                           |        |            | (42  | )    |        |       | (83  | ) |         |       | (18  | )
|                                                                                      |                                                            | Accounts payable and other current liabilities |        |            | (411 | )    |        |       | 278  |   |         |       | (512 | )
|                                                                                      |                                                            | Pensions and post-employment benefits          |        |            | 91   |      |        |       | 55   |   |         |       | 88   |  
|                                                                                      | Other, net                                                 |                                                |        | 167        |      |      |        | 155   |      |   |         | 198   |     
|                                                                                      |                                                            |                                                |        |            |      |      |        |       |      |   |         |      
|Net cash provided by operating activities                                             |                                                            |                                                | 3,592  |            |      |      | 3,686  |       |      |   | 3,320   |      
|Investing activities                                                                  |                                                            |                                                |        |            |      |      |        |       |      |   |         |      
|Construction and capital expenditures                                                 |                                                            |                                                | (3,085 | )          |      |      | (2,734 | )     |      |   | (3,449  | )    
|Investments in and advances to equity affiliates,
    net                             |                                                            |                                                | (450   | )          |      |      | (616   | )     |      |   | (422    | )    
|Dispositions of assets                                                                |                                                            |                                                | 6      |            |      |      | 7      |       |      |   | 188     |      
|Acquisition of AT&T Wireless, net of cash
    received                                |                                                            |                                                |       |            |      |      |       |       |      |   | (35,543 | )    
|Acquisitions of other businesses and licenses,
    net of cash received               |                                                            |                                                | (6     | )          |      |      | (25    | )     |      |   | (1,632  | )    
|Contractor engineering deposit                                                        |                                                            |                                                | (50    | )          |      |      |       |       |      |   |        |      
|Purchases of held-to-maturity investments                                             |                                                            |                                                |       |            |      |      |       |       |      |   | (219    | )    
|                                                                                      |                                                            |                                                |        |            |      |      |        |       |      |   |         |      
|Net cash used in investing activities                                                 |                                                            |                                                | (3,585 | )          |      |      | (3,368 | )     |      |   | (41,077 | )    
|Financing activities                                                                  |                                                            |                                                |        |            |      |      |        |       |      |   |         |      
|Net borrowings under revolving credit agreement                                       |                                                            |                                                |       |            |      |      |       |       |      |   | 1,667   |      
|Net repayment of commercial paper                                                     |                                                            |                                                | (27    | )          |      |      |       |       |      |   |        |      
|Net repayment of long-term debt                                                       |                                                            |                                                | (59    | )          |      |      | (64    | )     |      |   | (530    | )    
|Repayment of long-term debt due to members                                            |                                                            |                                                |       |            |      |      |       |       |      |   | (50     | )    
|Net distributions to minority interests                                               |                                                            |                                                | (79    | )          |      |      | (33    | )     |      |   | (141    | )    
|Contributions from members                                                            |                                                            |                                                | 499    |            |      |      | 10     |       |      |   | 36,024  |      
|                                                                                      |                                                            |                                                |        |            |      |      |        |       |      |   |         |      
|Net cash provided by (used in) financing
    activities                               |                                                            |                                                | 334    |            |      |      | (87    | )     |      |   | 36,970  |      
|                                                                                      |                                                            |                                                |        |            |      |      |        |       |      |   |         |      
|Net increase (decrease) in cash and cash
    equivalents                              |                                                            |                                                | 341    |            |      |      | 231    |       |      |   | (787    | )    
|Cash and cash equivalents at beginning of period                                      |                                                            |                                                | 567    |            |      |      | 908    |       |      |   | 1,139   |      
|                                                                                      |                                                            |                                                |        |            |      |      |        |       |      |   |         |      
|Cash and cash equivalents at end of period                                            |                                                            | $                                              | 908    |            |      | $    | 1,139  |       |      | $ | 352     |      
|                                                                                      |                                                            |                                                |        |            |      |      |        |       |      |   |         |      

See accompanying notes.

87



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##### 



CINGULAR WIRELESS LLC




PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

Years Ended December 31, 2002, 2003, and
2004


(Dollars in Millions)




|   |                                               
|-- | ----------------------------------------------
|1. | Summary of Significant Accounting
    Policies



| |                                         
| | ----------------------------------------
| | Background and Basis of
    Presentation

Cingular Wireless LLC (the Company) is a Delaware
limited liability company formed in 2000 by SBC Communications
Inc. (SBC) and BellSouth Corporation (BellSouth) as the
operating company for their U.S. wireless joint venture.
SBC and BellSouth, through their wholly owned subsidiaries,
respectively, own approximate 60% and 40% economic interests in
the Company. Cingular Wireless Corporation (the Manager), which
is directed equally by SBC and BellSouth, acts as the
Companys manager and controls the Companys
management and operations. The Company provides wireless voice
and data communications services, including local, long-distance
and roaming services using both cellular and personal
communications services (PCS), and equipment to customers in
44 states, including service to all 100 of the largest
U.S. metropolitan areas. All of the Companys
operations, which primarily serve customers in the U.S., are
conducted through subsidiaries or joint ventures. Through
roaming arrangements with other carriers, the Company provides
its customers service in regions where it does not have network
coverage and is thus able to serve customers in virtually the
entire U.S. and over 170 foreign countries.

In October 2004, the Company acquired AT&T
Wireless Services, Inc. (AT&T Wireless) for an aggregate
consideration of approximately $41,000 in cash. AT&T
Wireless, which has been renamed New Cingular Wireless Services,
Inc. but will continue to be referred to herein as AT&T
Wireless, is now a direct wholly owned subsidiary of the
Company. The assets and operations of AT&T Wireless are
being integrated with those of the Company, and the business is
conducted under the Cingular brand name. See
Note 3 for further discussion of the acquisition.

As provided for in the original Contribution and
Formation Agreement between the Company, SBC and BellSouth,
contributions of wireless operations and assets in certain
markets were made during 2000 and 2001. The contribution by SBC
of wireless operations and assets in the Arkansas markets, or an
equivalent amount in cash if such assets are not contributed,
was still pending as of December 31, 2004. The Company has
recorded amounts to be contributed as Receivable for
properties to be contributed in the consolidated balance
sheets. Until such time as the contribution is made, the Company
continues to manage the properties for a fee. Fees received for
managing the Arkansas markets for the years ended
December 31, 2002, 2003 and 2004 were $22, $30 and $40,
respectively.

These consolidated financial statements include
charges from SBC and BellSouth for certain expenses pursuant to
various agreements (see Notes 12 and 17). These expenses
are considered to be a reasonable reflection of the value of
services provided or the benefits received by the Company.



| |                 
| | ----------------
| | Use of Estimates

The preparation of financial statements in
conformity with accounting principles generally accepted in the
U.S. (GAAP) requires management to make estimates and
assumptions that affect the amounts reflected in the
consolidated financial statements and accompanying notes. The
Company bases its estimates on historical experience, where
applicable, and other assumptions that management believes are
reasonable under the circumstances. Actual results could differ
from those estimates under different assumptions or conditions.
Estimates are used when accounting for certain items such as
revenue, allowance for doubtful accounts, useful lives of
property, plant and equipment and amortization periods for
intangible assets, asset

88



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


impairments, inventory reserves, legal and tax
contingencies, employee compensation programs, evaluation of
minimum lease term for operating leases, fair values of
investments and intangible assets, asset impairment charges and
deferred income taxes, including income tax valuation
allowances. Additionally, estimates are used when recording the
fair values of assets acquired and liabilities assumed in a
purchase business combination.



| |                            
| | ---------------------------
| | Principles of Consolidation

The consolidated financial statements include the
accounts of the Company, variable interest entities in which the
Company is the primary beneficiary as defined by Financial
Accounting Standards Board (FASB) Interpretation
No. 46R, Consolidation of Variable Interest Entities, an
interpretation of ARB No. 51(FIN 46R), and voting
interest entities in which the Company exercises control. Other
parties interests in consolidated entities are reported as
minority interests. All significant intercompany transactions
are eliminated in the consolidation process.

The equity method is used to account for
investments that are not consolidated but in which the Company
exercises significant influence. Investments in which the
Company does not have the ability to exercise significant
influence are accounted for under the cost method.



| |         
| | --------
| | Segments

The Company manages the business as one
reportable business segment, wireless communications services,
which also is a single operating segment. The Company operates
primarily in the U.S.



| |                    
| | -------------------
| | Revenue Recognition

The Company earns service revenues by providing
access to its wireless network (access revenue) and for usage of
its wireless system (airtime revenue). Access revenue from
postpaid customers is billed either in advance or arrears and
recognized ratably over the service period. Airtime revenue,
including roaming revenue and long-distance revenue, is billed
in arrears based on minutes of use and is recognized when the
service is rendered. Prepaid airtime sold to customers and
revenue collected from pay-in-advance customers is recorded as
deferred revenue prior to the commencement of services, and
revenue is recognized when airtime is used or expires. Access
and airtime services provided are billed throughout the month
according to the bill cycle in which a particular subscriber is
placed. As a result of bill cycle cut-off times, the Company is
required to make estimates for service revenues earned but not
yet billed at the end of each month, and for advanced billings.
These estimates are based primarily upon historical minutes of
use.

The Companys ROLLOVER® rate plans
include a feature whereby unused anytime minutes do not expire
each month but rather are available, under certain conditions,
for future use for a period not to exceed one year from the date
of purchase. The Company defers revenue based on an estimate of
the portion of unused minutes expected to be utilized prior to
expiration. Historical subscriber usage patterns, which have
been consistent and which the Company views to be reliable for
purposes of gauging predictive behavior, allow the Company to
estimate the number of unused minutes to be utilized, as well as
those which are likely to expire or be forfeited. No deferral of
revenue is recorded for the minutes that are expected to

89



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


expire or be forfeited, as no future performance
is expected to be required by the Company, nor is there any
obligation to refund or redeem for value expired minutes. During
the second quarter of 2004, the Company modified its estimate
for calculating the deferral to incorporate more refined
customer data and usage patterns, which in the Companys
view more accurately reflects the estimate of future utilization
of those minutes based on historical trends. This change in
estimate resulted in a $63 decrease in the deferral recorded as
of December 31, 2004, and a corresponding increase to
services revenue, as compared to the deferral that would have
been recorded prior to making the change. The balance of the
deferral as of December 31, 2003 and 2004 was $103 and
$146, respectively, and has been included in Advanced
billings and customer deposits in the consolidated balance
sheets.

Service revenues include revenues from Company
customers who roam outside their selected home coverage area,
referred to as incollect roaming revenues, and
revenues from other wireless carriers for roaming by their
customers on the Companys network, referred to as
outcollect roaming revenues.

The Company offers enhanced services including
caller ID, call waiting, call forwarding, three-way calling, no
answer/busy transfer, text messaging and voice mail. Generally,
these enhanced features generate additional service revenues
through monthly subscription fees or increased wireless usage
through utilization of the features. Other optional services,
such as mobile-to-mobile calling, roadside assistance and
handset insurance, may also be provided for a monthly fee. These
enhanced features and optional services may be bundled with
package rate plans or sold separately. Revenues for enhanced
services and optional features are recognized as earned. Service
revenues also include billings to our customers for Universal
Service Fund (USF) and other regulatory fees.

Equipment sales consist principally of revenues
from the sale of wireless handsets and accessories to new and
existing customers and to agents and other third-party
distributors. The revenue and related expenses associated with
the sale of wireless handsets and accessories through our
indirect sales channels are recognized when the products are
delivered and accepted by the agent or third-party distributor,
as this is considered to be a separate earnings process from the
sale of wireless services and probability of collection is
likely. Shipping and handling costs for wireless handsets sold
to agents and other third-party distributors are classified as
costs of equipment sales.

Effective July 1, 2003, the Company adopted
Emerging Issues Task Force (EITF) No. 00-21,
Accounting for Revenue Arrangements with Multiple
Deliverables, which is being applied on a prospective basis.
The consensus addresses how to account for arrangements that may
involve the delivery or performance of multiple products,
services and/or rights to use assets. Revenue arrangements with
multiple deliverables are required to be divided into separate
units of accounting if the deliverables in the arrangement meet
certain criteria. Arrangement consideration must be allocated
among the separate units of accounting based on their relative
fair values. The consensus also supersedes certain guidance set
forth in Securities and Exchange Commission (SEC) Staff
Accounting Bulletin Number 101, Revenue Recognition in
Financial Statements (SAB 101). SAB 101 was amended in
December 2003 by Staff Accounting Bulletin Number 104
(SAB 104).

The Company determined that the sale of wireless
services through its direct sales channels with an accompanying
handset constitutes a revenue arrangement with multiple
deliverables. Upon adoption of EITF No. 00-21, the Company
began dividing these arrangements into separate units of
accounting,

90



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


including the wireless service and handset.
Arrangement consideration received for the handset is recognized
as equipment sales when the handset is delivered and accepted by
the subscriber. Arrangement consideration received for the
wireless service is recognized as service revenues when earned.
As the non-refundable, up-front activation fee charged to the
subscriber does not meet the criteria as a separate unit of
accounting, the Company allocates the additional arrangement
consideration received from the activation fee to the handset
(the delivered item) to the extent that the aggregate handset
and activation fee proceeds do not exceed the fair value of the
handset. Any activation fees not allocated to the handset would
be deferred upon activation and recognized as service revenue on
a straight-line basis over the expected customer relationship
period. The Company determined that the sale of wireless
services through its indirect sales channels (agents) does
not constitute a revenue arrangement with multiple deliverables.
For indirect channel sales, the Company continues to defer
non-refundable, up-front activation fees and associated costs to
the extent of the related revenues in accordance with
SAB 104. These deferred fees and costs are amortized on a
straight line basis over the estimated customer relationship
period, which is currently estimated to be three years. The
Company has recorded deferred revenues and deferred expenses of
equal amounts in the consolidated balance sheets. As of
December 31, 2003 and 2004, SAB 104 deferred revenues
and expenses were $104 and $124, respectively.



| |             
| | ------------
| | Income Taxes

The Company is not a taxable entity for federal
income tax purposes. Federal taxable income or loss is included
in our respective members federal income tax returns. The
Companys provision (benefit) for income taxes includes
federal and state income taxes for our corporate subsidiaries,
as well as for certain states which impose income taxes upon
non-corporate legal entities. The acquisition of AT&T
Wireless resulted in a significant increase in our pre-tax
income (loss) from our corporate subsidiaries. AT&T Wireless
retained its corporation status; however, after the acquisition,
AT&T Wireless transferred the majority of its assets and
liabilities to Cingular Wireless II, LLC (CW II),
which it owns jointly with the Company. In exchange for the
assets and liabilities transferred to CW II, AT&T
Wireless received a 43% ownership interest in CW II, from
which any income (loss) is allocated accordingly and is subject
to federal and state income taxes. The remaining 57% of the
income (loss) from CW II is allocated to the Company and
flows through to the members or partners who are taxed at their
level pursuant to federal and state income tax laws.

The Company recognizes deferred tax assets and
liabilities based on differences between the financial reporting
and tax bases of assets and liabilities, applying enacted
statutory rates in effect for the year in which the differences
are expected to reverse. Pursuant to the provisions of Statement
of Financial Accounting Standards (SFAS) No. 109,
Accounting For Income Taxes, the Company provides
valuation allowances for deferred tax assets for which it does
not consider realization of such assets to be more likely than
not. See Note 16 for further information.



| |                       
| | ----------------------
| | Required Distributions

The Company is required to make periodic
distributions to its members on a pro rata basis in accordance
with each members ownership interest in amounts sufficient
to permit members to pay the tax liabilities resulting from
allocations of income tax items from the Company. Since the
Company did not generate

91



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


taxable income in 2002, 2003 or 2004, the Company
made no distributions for tax liabilities in 2002, 2003 or 2004.



| |                          
| | -------------------------
| | Cash and Cash Equivalents

Cash and cash equivalents include all highly
liquid investments with original maturities of three months or
less. Outstanding checks and drafts of $74 and $169 have been
included in Accounts payable in the consolidated
balance sheets as of December 31, 2003 and 2004,
respectively.



| |                       
| | ----------------------
| | Short-Term Investments

Short-term investments primarily include
investments with original maturities of generally more than
three months and less than one year. The Companys
short-term investments primarily related to assets placed in
trust for the redemption of certain debt acquired in the
AT&T Wireless acquisition (see Note 9) and for employee
benefit obligations (see Note 17). These investments, which
are classified as held-to-maturity and totaled $233 as of
December 31, 2004, are carried at cost, which approximates
fair value, and are included in Other current assets
in the consolidated balance sheets.



| |                    
| | -------------------
| | Accounts Receivable

Accounts receivable consist principally of trade
accounts receivable from customers and are generally unsecured
and due within 30 days. Credit losses relating to these
receivables consistently have been within managements
expectations. Expected credit losses are recorded as an
allowance for doubtful accounts in the consolidated balance
sheets. Estimates of expected credit losses are based primarily
on historical write-off experience, net of recoveries, and on
the aging of the accounts receivable balances. The collection
policies and procedures of the Company vary by credit class and
prior payment history of customers. Provisions for uncollectible
receivables are included in selling, general and administrative
expenses.



| |            
| | -----------
| | Inventories

Inventories consist principally of wireless
handsets and accessories and are valued at the lower of cost or
market value. Market value is determined using replacement cost.
The Company maintains inventory valuation reserves for
obsolescence and slow moving inventory. These reserves are
determined based on analysis of inventory agings.



| |                              
| | -----------------------------
| | Property, Plant and Equipment

Property, plant and equipment are stated at cost
less accumulated depreciation and amortization. The cost of
additions and substantial improvements is capitalized. Interest
expense and network engineering costs incurred during the
construction phase of the Companys wireless network are
capitalized as part of property, plant and equipment until the
projects are completed and the assets are placed into service.
The cost of maintenance and repairs is charged to operating
expenses. Property, plant and equipment are depreciated using
the straight-line method over their estimated useful lives.
Leasehold improvements, including cell site acquisition and
other site construction improvements, are depreciated over the
shorter of their estimated useful lives or lease terms that are
reasonably assured. Depreciation lives may be

92



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


accelerated due to changes in technology, the
rate of migration of the Companys subscriber base from its
Time Division Multiple Access (TDMA) network to its Global
System for Mobile Communication (GSM) network or other
industry conditions. Upon sale or retirement of an asset, the
related costs and accumulated depreciation are removed from the
accounts and any gain or loss is recognized and included in
Cost of services.



| |                        
| | -----------------------
| | Software Capitalization

The Company capitalizes certain costs incurred in
connection with developing or obtaining internal use software in
accordance with American Institute of Certified Public
Accountants Statement of Position 98-1, Accounting for
the Costs of Computer Software Developed or Obtained for
Internal Use. Capitalized costs include direct development
costs associated with internal use software, including internal
direct labor costs and external costs of materials and services.
These capitalized software costs are included in Property,
plant and equipment, net in the consolidated balance
sheets and are being amortized on a straight-line basis over a
period not to exceed five years. Costs incurred during the
preliminary project stage, as well as maintenance and training
costs, are expensed as incurred.



| |                  
| | -----------------
| | Intangible Assets

Intangible assets consist primarily of customer
relationships, FCC spectrum licenses and the excess of
consideration paid over the fair value of net assets acquired in
purchase business combinations (goodwill). Additionally, in
conjunction with the Companys acquisition of AT&T
Wireless in October 2004, the Company established intangible
assets associated with trade names, trade marks and lease
contracts.

Customer relationships represent values placed on
customers of acquired businesses and have a finite life. The
majority of the Companys customer relationship intangible
assets are amortized over a five-year period using the
sum-of-the-years digits method.

Goodwill and other indefinite-lived intangible
assets are not amortized in accordance with
SFAS No. 142, Goodwill and Other Intangible Assets(SFAS 142). The Company has determined that its FCC
spectrum licenses, except for those used in the Mobitex data
business, which it sold in the fourth quarter of 2004 (see
Note 3), and those held by foreign subsidiaries, should be
treated as indefinite-lived intangible assets (see Note 5).
The FCC issues spectrum licenses that authorize wireless
carriers to provide service in specific geographic service
areas. The FCC grants licenses for terms of up to ten years. In
1993, the FCC adopted specific standards to apply to wireless
renewals, concluding it will award a license renewal to a
licensee that meets certain standards of past performance.
Historically, the FCC has granted license renewals routinely.
The licenses held by the Company expire at various dates. The
Company believes that it will be able to meet all requirements
necessary to secure renewal of its wireless licenses.

Finite-lived licenses, which included those
formerly used in the Mobitex data business and those held by
foreign subsidiaries, are amortized using the straight-line
method over their estimated useful lives. Licenses held by
foreign subsidiaries are not subject to FCC jurisdiction.

The Company tests goodwill and other
indefinite-lived intangible assets for impairment on an annual
basis. Additionally, goodwill will be tested for impairment
between annual tests if an event occurs or circumstances change
that would more likely than not reduce the Companys fair
value below its carrying

93



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


value. Indefinite-lived intangible assets will be
tested between annual tests if events or changes in
circumstances indicate that the asset might be impaired. These
events or circumstances would include a significant change in
the business climate, legal factors, operating performance
indicators, competition, sale or disposition of a significant
portion of the business or other factors. See Note 5 for
discussion of the goodwill and indefinite-lived intangible asset
impairment tests.



| |                                   
| | ----------------------------------
| | Valuation of Long-lived
    Assets

Long-lived assets, including property, plant and
equipment and intangible assets with finite lives, are reviewed
for impairment in accordance with SFAS No. 144,
Accounting for the Impairment or Disposal of Long-Lived
Assets(SFAS 144), whenever events or changes in
circumstances indicate that the carrying amount may not be
recoverable. It is reasonably possible that these assets could
become impaired as a result of technological or other industry
changes. In analyzing potential impairment, the Company uses
projections of future cash flows from the asset group. These
projections are based on the Companys views of forecasted
growth rates, anticipated future economic conditions,
appropriate discount rates relative to risk and estimates of
residual values. If the total of the expected future
undiscounted cash flows from the asset group the Company intends
to hold and use is less than the carrying amount of the asset
group, a loss is recognized for the difference between the fair
value and carrying amount of the asset group. The asset group to
be held and used represents the lowest level for which
identifiable cash flows are largely independent of the cash
flows of other groups of assets and liabilities. The Company has
determined the lowest level for which cash flows are largely
independent of the cash flows of other groups is the
consolidated company level. For assets the Company intends to
dispose of, a loss is recognized if the carrying amount of the
assets in the disposal group is more than fair value, net of the
costs of disposal. The Company principally uses the discounted
cash flow method to estimate the fair value of its long-lived
assets. The discount rate applied to the undiscounted cash flows
is consistent with the Companys weighted-average cost of
capital.

The Company periodically evaluates the useful
lives of its wireless network equipment and other equipment and
finite-lived intangible assets based on technological and other
industry changes to determine whether events or changes in
circumstances warrant revisions to the useful lives (see
Notes 4 and 13).



| |                         
| | ------------------------
| | Valuation of Investments

The Company holds equity interests in certain
entities (see Note 6). These investments are primarily
accounted for under the equity method of accounting. In
accordance with Accounting Principles Board (APB) Opinion
No. 18, The Equity Method of Accounting for Investments
in Common Stock, the Company reviews its equity method
investments for impairment. These reviews are performed to
determine whether any decline in the fair value of an investment
below its carrying value is deemed to be other than temporary,
in which case an impairment charge would be recorded.



| |                         
| | ------------------------
| | Deferred Financing Costs

Debt financing costs are capitalized and
amortized over the terms of the underlying obligation using the
straight-line method, which approximates the effective interest
method. The net deferred financing costs

94



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


were $17 and $24 at December 31, 2003 and
2004, respectively. These deferred financing costs are included
in Other assets in the consolidated balance sheets.



| |                             
| | ----------------------------
| | Asset Retirement Obligations

The Company adopted SFAS No. 143,
Accounting for Asset Retirement
Obligations(SFAS 143) effective January 1, 2003.
This statement requires the Company to record the fair value of
a liability for an asset retirement obligation in the period in
which it is incurred and capitalize that amount as part of the
book value of the long-lived asset. Over time, the liability is
accreted to its present value each period, and the capitalized
cost is depreciated over the estimated useful life of the
related asset. Upon settlement of the liability, the Company
either settles the obligation for its recorded amount or incurs
a gain or loss.

The Company has certain legal obligations related
to network infrastructure, principally tower assets, which fall
within the scope of SFAS 143. These legal obligations
include obligations to remediate leased land on which the
Companys network infrastructure assets are located. The
significant assumptions used in estimating the Companys
asset retirement obligations include the following: a 25% to 80%
probability, depending upon the type of operating lease, that
the Companys assets with asset retirement obligations will
be remediated at the lessors directive; expected
settlement dates that coincide with lease expiration dates plus
estimates of lease extensions; remediation costs that are
indicative of what third party vendors would charge the Company
to remediate the sites; expected inflation rates that are
consistent with historical inflation rates; and credit-adjusted
risk-free rates that approximate the Companys incremental
borrowing rates.



| |                  
| | -----------------
| | Advertising Costs

Costs for advertising are expensed as incurred.
Total advertising expenses were $549, $643 and $973 for the
years ended December 31, 2002, 2003 and 2004, respectively.
Advertising expenses for 2004 include integration costs
associated with public relations activities and media coverage
to promote the combined company (see Note 14).



| |                 
| | ----------------
| | Operating Leases

The Company accounts for its operating leases in
accordance with SFAS No. 13, Accounting for Leasesand FASB Technical Bulletin No. 85-3,
Accounting for Operating Leases with Scheduled Rent
Increases. Rent expense is recorded on a straight-line basis
over the initial lease term and those renewal periods that are
reasonably assured. The difference between rent expense and rent
paid is recorded as deferred rent and is included in
Accrued liabilities and Other noncurrent
liabilities in the consolidated balance sheets.



| |                                     
| | ------------------------------------
| | Derivative Financial
    Instruments

In accordance with SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities,(SFAS 133), the Company recognizes all derivatives as
either assets or liabilities in the consolidated balance sheets
and measures those instruments at fair value. Gains and losses
resulting from changes in the fair values of those derivative
instruments will be recorded to earnings or other comprehensive
income (loss) depending on the use of the derivative instrument
and whether it qualifies for hedge accounting.

95



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


The Company also assesses, both at the inception
of the hedge and on an on-going basis, whether the derivatives
that are used in hedging transactions are effective. Should it
be determined that a derivative is not effective as a hedge, the
Company would discontinue the hedge accounting prospectively.

The Company formally documents all relationships
between hedging instruments and hedged items, as well as its
risk management objectives and strategies for undertaking
various hedge transactions.

In April 2003, the FASB issued
SFAS No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities(SFAS 149). This statement amends and clarifies
accounting for derivative instruments and for hedging activities
under SFAS 133. The adoption of this statement on
July 1, 2003 did not have a material impact on the
Companys results of operations, financial position and
cash flows.



| |           
| | ----------
| | Guarantees

In November 2002, the FASB issued Interpretation
No. 45, Guarantors Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others  an Interpretation of FASB
Statements No. 5, 57, and 107 and Rescission of FASB
Interpretation No. 34(FIN 45), which provides
additional accounting guidance and disclosure requirements for
most guarantees, including indemnifications. It requires that at
the time a company issues a guarantee, the company must
recognize an initial liability for the fair value of the
obligations it assumes under that guarantee if that amount is
reasonably estimable, and must disclose that information in its
interim and annual financial statements. The provisions for
initial recognition and measurement of the liability are to be
applied on a prospective basis to guarantees issued or modified
on or after January 1, 2003.



| |                         
| | ------------------------
| | New Accounting Standards

In May 2003, the FASB issued
SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity(SFAS 150). This statement establishes standards for
how an issuer classifies and measures financial instruments with
characteristics of both liabilities and equity. SFAS 150
requires that instruments that are redeemable upon liquidation
or termination of an issuing subsidiary that has a limited life
are considered mandatorily redeemable shares in the financial
statements of the parent. Accordingly, those non-controlling
interests are required to be classified as liabilities and
recorded at settlement value by SFAS 150. This statement
was effective beginning July 1, 2003. As a result of
concerns over implementation and measurement issues, on
November 7, 2003, FASB Staff Position (FSP) FAS 150-3
was issued deferring indefinitely the effective date for the
measurement provisions of paragraphs 9 and 10 of
SFAS 150, as they apply to mandatorily redeemable
non-controlling interests (e.g., minority interests) of
limited-life entities that are consolidated in financial
statements.

Certain of the Companys consolidated
entities with minority partners have finite lives. While there
are no provisions in the entity charter agreements that require
liquidation upon expiration of the entities stated lives,
the guidance in SFAS 150 still requires the minority
interest to be recorded on the balance sheet at settlement value
as if the minority interest will be liquidated at that time. The
impact on the Companys results of operations, financial
position and cash flows would not be material.

In September 2004, the EITF reached a consensus
on Issue No. 04-01, Accounting for Pre-existing
Contractual Relationships between the Parties to a Purchase
Business Combination(EITF 04-01). The

96



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


consensus requires companies to evaluate
pre-existing contractual relationships between two parties to a
business combination to determine whether settlement of the
pre-existing contractual relationship has occurred. Settlements
of a pre-existing contractual relationship should be accounted
for separately from the business combination. EITF 04-01 is
effective for business combinations consummated for reporting
periods beginning after October 2004 and is required to be
adopted in the first quarter of 2005. The Company adopted this
new pronouncement effective January 1, 2005. The impact to
the Companys ongoing results of operations and cash flows
as a result of adopting this new statement is not material.

In December 2004, the FASB issued
SFAS No. 153, Exchanges of Nonmonetary
Assets  An Amendment of APB Opinion No. 29,
Accounting for Nonmonetary Transactions(SFAS 153).
SFAS 153 eliminates the exception from fair value
measurement for nonmonetary exchanges of similar productive
assets in paragraph 21(b) of APB Opinion No. 29,
Accounting for Nonmonetary Transactions,and replaces it
with an exception for exchanges that do not have commercial
substance. SFAS 153 specifies that a nonmonetary exchange
has commercial substance if the future cash flows of the entity
are expected to change significantly as a result of the
exchange. SFAS 153 is effective for the fiscal periods
beginning after June 15, 2005 and is required to be adopted
by the Company in the third quarter of 2005. The Company is
currently evaluating the effect that the adoption of
SFAS 153 will have on its consolidated results of
operations and financial condition but does not expect it to
have a material impact.

Reclassifications

Certain amounts have been reclassified in the
2002 and 2003 consolidated financial statements to conform to
the current year presentation.

2.     Restatements

On February 18, 2005, Company management and
the Audit Committee of the board of directors of the Manager
concluded that the Companys financial statements for
fiscal periods ending December 31, 2000 through
December 31, 2003 and the first three interim periods of
2004 should be restated to correct certain errors relating to
accounting for operating leases. While management believes that
the impact of this error is not material to any previously
issued financial statements, it determined that the cumulative
adjustment required to correct this error was too large to
record in 2004.

The Company has operating leases, principally for
cell sites, that have escalating rentals during the initial
lease term and during succeeding optional renewal periods.
During the course of preparing its 2004 consolidated financial
statements, the Company determined that its method of accounting
for operating leases did not comply with the requirements of
SFAS No. 13, Accounting for Leases and FASB
Technical Bulletin No. 85-3, Accounting for
Operating Leases with Scheduled Rent Increases.
Historically, the Company has not assumed the exercise of
available renewal options in its accounting for operating
leases. The Company reevaluated its accounting for operating
leases and the related useful lives for depreciating leasehold
improvements following publication of a letter issued by the
Office of the Chief Accountant of the U.S. Securities and
Exchange Commission on February 7, 2005. In light of the
Companys investment in each cell site, including
acquisition costs and leasehold improvements, the Company has
determined that the exercise of certain renewal options was
reasonably assured at the inception of the leases. Accordingly,
the Company has corrected its accounting to recognize rent
expense, on a straight-line basis,

97



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


over the initial lease term and renewal periods
that are reasonably assured, and to depreciate the associated
leasehold improvements and other related assets over the lesser
of their useful lives or their respective lease terms. These
restated financial statements reflect these corrections.

The Companys network infrastructure venture
with T-Mobile USA, Inc. (T-Mobile), GSM Facilities LLC (GSMF),
accounted for under the equity method, reached a similar
conclusion with respect to operating leases, requiring
correction and restatement of its previously issued financial
statements for the years ended December 31, 2003 and 2002.
Accordingly, the Company also revised and restated its equity
accounting for the venture.

The impact of these restatements to the
Companys statements of income for the years ended
December 31, 2002 and December 31, 2003 was a decrease
to Net income of $34 and $45, respectively, as well as a
decrease to Members capital of $72 as of December 31,
2001. The impact associated with correcting the Companys
accounting for operating leases was an increase to lease expense
of $23 and $3, reflected in Costs of services and Selling,
general and administrative expenses, respectively, for the year
ended December 31, 2002 and of $29 and $6, respectively,
for the year ended December 31, 2003. The impact associated
with correcting the accounting for the operating leases and
useful lives of the Companys GSMF joint venture was an
increase in Equity in net loss of affiliates of $9 and $10,
respectively, for the same periods. The above correction also
had a de minimusimpact on Depreciation and amortization
to adjust for the lives used to depreciate certain leasehold
improvements. The restatements also impacted Property, plant and
equipment, net; Investments in and advances to equity
affiliates; Accrued liabilities; Other noncurrent liabilities;
and Members capital on the consolidated balance sheet as
of December 31, 2003.

98



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


The following schedules reconcile the amounts as
originally reported in the Companys consolidated balance
sheet as of December 31, 2003 and the consolidated
statements of income, comprehensive income, changes in
members capital and cash flows for the years ended
December 31, 2002 and 2003:

Consolidated Balance Sheet

|                                                 |                                                                          |                         |        |             |  |            |     |    |  |   |        |       | 
|------------------------------------------------ | ------------------------------------------------------------------------ | ----------------------- | ------ | ----------- |  | ---------- | --- | -- |  | - | ------ | ----- | 
|                                                 |                                                                          |                        
|                                                 |                                                                          | As of December 31, 2003
|                                                 |                                                                          |                        
|                                                 |                                                                          | (Reported)              |        | Adjustments |  | (Restated)
|                                                 |                                                                          |                         |        |             |  |           
|                                                 |                                                                          |                        
|                                                 |                                                                          | (Dollars in millions)  
|ASSETS                                          
|Current assets:                                  |                                                                          |                         |        |             |  |            |     |    |  |   |        |      
|                                                 | Cash and cash equivalents                                                |                         | $      | 1,139       |  |            |     |   |  |   | $      | 1,139 | 
|                                                 | Accounts receivable  net of allowance
    for doubtful accounts of $130 |                         |        | 1,592       |  |            |     |   |  |   |        | 1,592 | 
|                                                 | Inventories                                                              |                         |        | 273         |  |            |     |   |  |   |        | 273   | 
|                                                 | Prepaid assets                                                           |                         |        | 186         |  |            |     |   |  |   |        | 186   | 
|                                                 | Other current assets                                                     |                         |        | 110         |  |            |     |   |  |   |        | 110   | 
|                                                 |                                                                          |                         |        |             |  |            |     |    |  |   |        |      
|Total current assets                             |                                                                          |                         | 3,300  |             |  |            |    |    |  |   | 3,300  |      
|Property, plant and equipment, net               |                                                                          |                         | 10,939 |             |  |            | 23  |    |  |   | 10,962 |      
|Licenses, net                                    |                                                                          |                         | 7,769  |             |  |            |    |    |  |   | 7,769  |      
|Goodwill                                         |                                                                          |                         | 849    |             |  |            |    |    |  |   | 849    |      
|Customer relationship intangibles, net           |                                                                          |                         | 150    |             |  |            |    |    |  |   | 150    |      
|Other intangible assets, net                     |                                                                          |                         | 5      |             |  |            |    |    |  |   | 5      |      
|Investments in and advances to equity affiliates |                                                                          |                         | 2,288  |             |  |            | (19 | )  |  |   | 2,269  |      
|Other assets                                     |                                                                          |                         | 226    |             |  |            |    |    |  |   | 226    |      
|                                                 |                                                                          |                         |        |             |  |            |     |    |  |   |        |      
|Total assets                                     |                                                                          | $                       | 25,526 |             |  |            | 4   |    |  | $ | 25,530 |      
|                                                 |                                                                          |                         |        |             |  |            |     |    |  |   |        |      
|LIABILITIES AND MEMBERS
    CAPITAL            
|Current liabilities:                             |                                                                          |                         |        |             |  |            |     |    |  |   |        |      
|                                                 | Debt maturing within one year                                            |                         | $      | 95          |  |            |     |   |  |   | $      | 95    | 
|                                                 | Accounts payable                                                         |                         |        | 904         |  |            |     |   |  |   |        | 904   | 
|                                                 | Due to affiliates, net                                                   |                         |        | 54          |  |            |     |   |  |   |        | 54    | 
|                                                 | Advanced billing and customer deposits                                   |                         |        | 538         |  |            |     |   |  |   |        | 538   | 
|                                                 | Accrued liabilities                                                      |                         |        | 1,596       |  |            |     | 23 |  |   |        | 1,619 | 
|                                                 |                                                                          |                         |        |             |  |            |     |    |  |   |        |      
|Total current liabilities                        |                                                                          |                         | 3,187  |             |  |            | 23  |    |  |   | 3,210  |      

99



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


|                                            |                                                              |                         |        |             |   |            |      |      |   |   |        |       |  
|------------------------------------------- | ------------------------------------------------------------ | ----------------------- | ------ | ----------- | - | ---------- | ---- | ---- | - | - | ------ | ----- | -
|                                            |                                                              |                        
|                                            |                                                              | As of December 31, 2003
|                                            |                                                              |                        
|                                            |                                                              | (Reported)              |        | Adjustments |   | (Restated)
|                                            |                                                              |                         |        |             |   |           
|                                            |                                                              |                        
|                                            |                                                              | (Dollars in millions)  
|Long-term debt:                             |                                                              |                         |        |             |   |            |      |      |   |   |        |      
|                                            | Debt due to members                                          |                         |        | 9,678       |   |            |      |     |   |   |        | 9,678 |  
|                                            | Other long-term debt, net of premium                         |                         |        | 2,914       |   |            |      |     |   |   |        | 2,914 |  
|                                            |                                                              |                         |        |             |   |            |      |      |   |   |        |      
|Total long-term debt                        |                                                              |                         | 12,592 |             |   |            |     |      |   |   | 12,592 |      
|Deferred tax liabilities, net               |                                                              |                         | 190    |             |   |            |     |      |   |   | 190    |      
|Other noncurrent liabilities                |                                                              |                         | 414    |             |   |            | 132  |      |   |   | 546    |      
|                                            |                                                              |                         |        |             |   |            |      |      |   |   |        |      
|Total liabilities                           |                                                              |                         | 16,383 |             |   |            | 155  |      |   |   | 16,538 |      
|Minority interests in consolidated entities |                                                              |                         | 659    |             |   |            |     |      |   |   | 659    |      
|Members capital:                           |                                                              |                         |        |             |   |            |      |      |   |   |        |      
|                                            | Members capital                                             |                         |        | 8,664       |   |            |      | (151 | ) |   |        | 8,513 |  
|                                            | Receivable for properties to be contributed                  |                         |        | (178        | ) |            |      |     |   |   |        | (178  | )
|                                            | Accumulated other comprehensive loss, net of
    taxes of $0 |                         |        | (2          | ) |            |      |     |   |   |        | (2    | )
|                                            |                                                              |                         |        |             |   |            |      |      |   |   |        |      
|Total members capital                      |                                                              |                         | 8,484  |             |   |            | (151 | )    |   |   | 8,333  |      
|                                            |                                                              |                         |        |             |   |            |      |      |   |   |        |      
|Total liabilities and members capital      |                                                              | $                       | 25,526 |             |   |            | 4    |      |   | $ | 25,530 |      
|                                            |                                                              |                         |        |             |   |            |      |      |   |   |        |      

Consolidated Statements of Income

|                         |                                     |                              |        |                              |  |            |     |            |   |             |        |            |  |  |        |        |  |  |     |    |  |  |        |        | 
|------------------------ | ----------------------------------- | ---------------------------- | ------ | ---------------------------- |  | ---------- | --- | ---------- | - | ----------- | ------ | ---------- |  |  | ------ | ------ |  |  | --- | -- |  |  | ------ | ------ | 
|                         |                                     |                              |        |                             
|                         |                                     | Year Ended December 31, 2002 |        | Year Ended December 31, 2003
|                         |                                     |                              |        |                             
|                         |                                     | (Reported)                   |        | Adjustments                  |  | (Restated) |     | (Reported) |   | Adjustments |        | (Restated)
|                         |                                     |                              |        |                              |  |            |     |            |   |             |        |           
|                         |                                     |                             
|                         |                                     | (Dollars in millions)       
|Operating revenues:      |                                     |                              |        |                              |  |            |     |            |   |             |        |            |  |  |        |        |  |  |     |    |  |  |        |       
|                         | Service revenues                    |                              | $      | 13,922                       |  |            | $   |           |   |             | $      | 13,922     |  |  | $      | 14,223 |  |  | $   |   |  |  | $      | 14,223 | 
|                         | Equipment sales                     |                              |        | 981                          |  |            |     |           |   |             |        | 981        |  |  |        | 1,260  |  |  |     |   |  |  |        | 1,260  | 
|Total operating revenues |                                     |                              | 14,903 |                              |  |            |    |            |   |             | 14,903 |            |  |  | 15,483 |        |  |  |    |    |  |  | 15,483 |       
|Operating expenses:      |                                     |                              |        |                              |  |            |     |            |   |             |        |            |  |  |        |        |  |  |     |    |  |  |        |       
|                         | Cost of services                    |                              |        | 3,571                        |  |            |     | 23         |   |             |        | 3,594      |  |  |        | 3,652  |  |  |     | 29 |  |  |        | 3,681  | 
|                         | Cost of equipment sales             |                              |        | 1,535                        |  |            |     |           |   |             |        | 1,535      |  |  |        | 2,031  |  |  |     |   |  |  |        | 2,031  | 
|                         | Selling, general and administrative |                              |        | 5,426                        |  |            |     | 3          |   |             |        | 5,429      |  |  |        | 5,422  |  |  |     | 6  |  |  |        | 5,428  | 
|                         | Depreciation and amortization       |                              |        | 1,850                        |  |            |     | (1         | ) |             |        | 1,849      |  |  |        | 2,089  |  |  |     |   |  |  |        | 2,089  | 
|Total operating expenses |                                     |                              | 12,382 |                              |  |            | 25  |            |   |             | 12,407 |            |  |  | 13,194 |        |  |  | 35  |    |  |  | 13,229 |       
|Operating income         |                                     |                              | 2,521  |                              |  |            | (25 | )          |   |             | 2,496  |            |  |  | 2,289  |        |  |  | (35 | )  |  |  | 2,254  |       

100



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


|                                                                                        |                                                            |                              |       |                              |   |            |     |            |   |             |       |            |   |   |       |        |   |   |     |     |   |   |       |        |  
|--------------------------------------------------------------------------------------- | ---------------------------------------------------------- | ---------------------------- | ----- | ---------------------------- | - | ---------- | --- | ---------- | - | ----------- | ----- | ---------- | - | - | ----- | ------ | - | - | --- | --- | - | - | ----- | ------ | -
|                                                                                        |                                                            |                              |       |                             
|                                                                                        |                                                            | Year Ended December 31, 2002 |       | Year Ended December 31, 2003
|                                                                                        |                                                            |                              |       |                             
|                                                                                        |                                                            | (Reported)                   |       | Adjustments                  |   | (Restated) |     | (Reported) |   | Adjustments |       | (Restated)
|                                                                                        |                                                            |                              |       |                              |   |            |     |            |   |             |       |           
|                                                                                        |                                                            |                             
|                                                                                        |                                                            | (Dollars in millions)       
|Other income (expenses):                                                                |                                                            |                              |       |                              |   |            |     |            |   |             |       |            |   |   |       |        |   |   |     |     |   |   |       |       
|                                                                                        | Interest expense                                           |                              |       | (911                         | ) |            |     |           |   |             |       | (911       | ) |   |       | (856   | ) |   |     |    |   |   |       | (856   | )
|                                                                                        | Minority interest in earnings of consolidated
    entities |                              |       | (123                         | ) |            |     |           |   |             |       | (123       | ) |   |       | (101   | ) |   |     |    |   |   |       | (101   | )
|                                                                                        | Equity in net loss of affiliates                           |                              |       | (265                         | ) |            |     | (9         | ) |             |       | (274       | ) |   |       | (323   | ) |   |     | (10 | ) |   |       | (333   | )
|                                                                                        | Other, net                                                 |                              |       | 29                           |   |            |     |           |   |             |       | 29         |   |   |       | 41     |   |   |     |    |   |   |       | 41     |  
|                                                                                        | Total other income (expenses)                              |                              |       | (1,270                       | ) |            |     | (9         | ) |             |       | (1,279     | ) |   |       | (1,239 | ) |   |     | (10 | ) |   |       | (1,249 | )
|Income before provision for income taxes and
    cumulative effect of accounting change |                                                            |                              | 1,251 |                              |   |            | (34 | )          |   |             | 1,217 |            |   |   | 1,050 |        |   |   | (45 | )   |   |   | 1,005 |       
|Provision for income taxes                                                              |                                                            |                              | 12    |                              |   |            |    |            |   |             | 12    |            |   |   | 28    |        |   |   |    |     |   |   | 28    |       
|Income before cumulative effect of accounting
    change                                |                                                            |                              | 1,239 |                              |   |            | (34 | )          |   |             | 1,205 |            |   |   | 1,022 |        |   |   | (45 | )   |   |   | 977   |       
|Cumulative effect of accounting change, net of tax                                      |                                                            |                              | (32   | )                            |   |            |    |            |   |             | (32   | )          |   |   |      |        |   |   |    |     |   |   |      |       
|Net income                                                                              |                                                            | $                            | 1,207 |                              |   | $          | (34 | )          |   | $           | 1,173 |            |   | $ | 1,022 |        |   | $ | (45 | )   |   | $ | 977   |       

Consolidated Statements of Comprehensive
Income

|                           |                                   |                                                  |                                                                   |                              |    |            |     |            |   |             |       |            |    |   |       |  |   |   |     |   |   |   |     |  |   |   | 
|-------------------------- | --------------------------------- | ------------------------------------------------ | ----------------------------------------------------------------- | ---------------------------- | -- | ---------- | --- | ---------- | - | ----------- | ----- | ---------- | -- | - | ----- |  | - | - | --- | - | - | - | --- |  | - | - | 
|                           |                                   |                                                  |                                                                   |                             
|                           |                                   | Year Ended December 31, 2002                     |                                                                   | Year Ended December 31, 2003
|                           |                                   |                                                  |                                                                   |                             
|                           |                                   | (Reported)                                       |                                                                   | Adjustments                  |    | (Restated) |     | (Reported) |   | Adjustments |       | (Restated)
|                           |                                   |                                                  |                                                                   |                              |    |            |     |            |   |             |       |           
|                           |                                   |                                                 
|                           |                                   | (Dollars in millions)                           
|Comprehensive Income       |                                   |                                                  |                                                                   |                              |    |            |     |            |   |             |       |            |    |   |       |  |   |   |     |   |   |   |     | 
|Net income                 |                                   | $                                                | 1,207                                                             |                              |    | $          | (34 | )          |   | $           | 1,173 |            |    | $ | 1,022 |  |   | $ | (45 | ) |   | $ | 977 | 
|                           | Other comprehensive income (loss) |                                                  |                                                                   |                              |    |            |     |            |   |             |       |            |    |   |       |  |   |   |     |   |   |   |     |  |  
|                           |                                   | Minimum pension liability adjustment, net of tax |                                                                   |                              | (1 | )          |     |            |  |             |       |            | (1 | ) |       |  |  |   |     |   |  |   |     |  |  |  
|                           |                                   | Net unrealized gain (loss) on securities:        |                                                                   |                              |    |            |     |            |   |             |       |            |    |   |       |  |   |   |     |   |   |   |     |  |   |  
|                           |                                   |                                                  | Reclassification adjustment for losses included
    in net income |                              |    | 1          |     |            |   |            |       |            |    | 1 |       |  |   |  |     |   |   |  |     |  |   |  | 
|                           |                                   |                                                  |                                                                   |                              |    |            |     |            |   |             |       |            |    |   |       |  |   |   |     |   |   |   |     | 
|Total comprehensive income |                                   | $                                                | 1,207                                                             |                              |    | $          | (34 | )          |   | $           | 1,173 |            |    | $ | 1,022 |  |   | $ | (45 | ) |   | $ | 977 | 
|                           |                                   |                                                  |                                                                   |                              |    |            |     |            |   |             |       |            |    |   |       |  |   |   |     |   |   |   |     | 

101



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CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


Consolidated Statements of Cash
Flows

|                                                                                      |                                                            |                                                |        |                              |      |            |     |            |   |             |        |            |      |   |        |       |      |   |     |    |     |   |        |       |      |  
|------------------------------------------------------------------------------------- | ---------------------------------------------------------- | ---------------------------------------------- | ------ | ---------------------------- | ---- | ---------- | --- | ---------- | - | ----------- | ------ | ---------- | ---- | - | ------ | ----- | ---- | - | --- | -- | --- | - | ------ | ----- | ---- | -
|                                                                                      |                                                            |                                                |        |                             
|                                                                                      |                                                            | Year Ended December 31, 2002                   |        | Year Ended December 31, 2003
|                                                                                      |                                                            |                                                |        |                             
|                                                                                      |                                                            | (Reported)                                     |        | Adjustments                  |      | (Restated) |     | (Reported) |   | Adjustments |        | (Restated)
|                                                                                      |                                                            |                                                |        |                              |      |            |     |            |   |             |        |           
|                                                                                      |                                                            |                                               
|                                                                                      |                                                            | (Dollars in millions)                         
|Operating activities                                                                  |                                                            |                                                |        |                              |      |            |     |            |   |             |        |            |      |   |        |       |      |   |     |    |     |   |        |      
|Net income                                                                            |                                                            | $                                              | 1,207  |                              |      | $          | (34 | )          |   | $           | 1,173  |            |      | $ | 1,022  |       |      | $ | (45 | )  |     | $ | 977    |      
|Adjustments to reconcile net income to net cash
    provided by operating activities: |                                                            |                                                |        |                              |      |            |     |            |   |             |        |            |      |   |        |       |      |   |     |    |     |   |        |      
|                                                                                      | Depreciation and amortization                              |                                                |        | 1,850                        |      |            |     | (1         | ) |             |        | 1,849      |      |   |        | 2,089 |      |   |     |   |     |   |        | 2,089 |     
|                                                                                      | Provision for doubtful accounts                            |                                                |        | 404                          |      |            |     |           |   |             |        | 404        |      |   |        | 259   |      |   |     |   |     |   |        | 259   |     
|                                                                                      | Asset impairments                                          |                                                |        | 151                          |      |            |     |           |   |             |        | 151        |      |   |        |      |      |   |     |   |     |   |        |      |     
|                                                                                      | Minority interest in earnings of consolidated
    entities |                                                |        | 123                          |      |            |     |           |   |             |        | 123        |      |   |        | 101   |      |   |     |   |     |   |        | 101   |     
|                                                                                      | Equity in net loss of affiliates                           |                                                |        | 265                          |      |            |     | 9          |   |             |        | 274        |      |   |        | 323   |      |   |     | 10 |     |   |        | 333   |     
|                                                                                      | Cumulative effect of accounting change, net of tax         |                                                |        | 32                           |      |            |     |           |   |             |        | 32         |      |   |        |      |      |   |     |   |     |   |        |      |     
|                                                                                      | Amortization of debt discount, net                         |                                                |        | 1                            |      |            |     |           |   |             |        | 1          |      |   |        | 1     |      |   |     |   |     |   |        | 1     |     
|                                                                                      | Deferred income taxes                                      |                                                |        | (3                           | )    |            |     |           |   |             |        | (3         | )    |   |        | (1    | )    |   |     |   |     |   |        | (1    | )   
|                                                                                      | Changes in operating assets and liabilities:               |                                                |        |                              |      |            |     |            |   |             |        |            |      |   |        |       |      |   |     |    |     |   |        |       |     
|                                                                                      |                                                            | Accounts receivable                            |        |                              | (280 | )          |     |            |  |             |        |            | (280 | ) |        |       | (331 | ) |     |    |    |   |        |       | (331 | )
|                                                                                      |                                                            | Inventories                                    |        |                              | 63   |            |     |            |  |             |        |            | 63   |   |        |       | (147 | ) |     |    |    |   |        |       | (147 | )
|                                                                                      |                                                            | Other current assets                           |        |                              | (42  | )          |     |            |  |             |        |            | (42  | ) |        |       | (83  | ) |     |    |    |   |        |       | (83  | )
|                                                                                      |                                                            | Accounts payable and other current liabilities |        |                              | (420 | )          |     |            | 9 |             |        |            | (411 | ) |        |       | 290  |   |     |    | (12 | ) |        |       | 278  |  
|                                                                                      |                                                            | Pensions and post-employment benefits          |        |                              | 91   |            |     |            |  |             |        |            | 91   |   |        |       | 55   |   |     |    |    |   |        |       | 55   |  
|                                                                                      | Other, net                                                 |                                                |        | 150                          |      |            |     | 17         |   |             |        | 167        |      |   |        | 108   |      |   |     | 47 |     |   |        | 155   |     
|                                                                                      |                                                            |                                                |        |                              |      |            |     |            |   |             |        |            |      |   |        |       |      |   |     |    |     |   |        |      
|Net cash provided by operating activities                                             |                                                            |                                                | 3,592  |                              |      |            |    |            |   |             | 3,592  |            |      |   | 3,686  |       |      |   |    |    |     |   | 3,686  |      
|Investing activities                                                                  |                                                            |                                                |        |                              |      |            |     |            |   |             |        |            |      |   |        |       |      |   |     |    |     |   |        |      
|Construction and capital expenditures                                                 |                                                            |                                                | (3,085 | )                            |      |            |    |            |   |             | (3,085 | )          |      |   | (2,734 | )     |      |   |    |    |     |   | (2,734 | )    
|Investments in and advances to equity affiliates,
    net                             |                                                            |                                                | (450   | )                            |      |            |    |            |   |             | (450   | )          |      |   | (616   | )     |      |   |    |    |     |   | (616   | )    
|Disposition of assets                                                                 |                                                            |                                                | 6      |                              |      |            |    |            |   |             | 6      |            |      |   | 7      |       |      |   |    |    |     |   | 7      |      

102



---



##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


|                                                                  |  |                              |        |                              |  |            |   |            |  |             |        |            |  |   |        |   |  |   |   |  |  |   |        |  
|----------------------------------------------------------------- |  | ---------------------------- | ------ | ---------------------------- |  | ---------- | - | ---------- |  | ----------- | ------ | ---------- |  | - | ------ | - |  | - | - |  |  | - | ------ | -
|                                                                  |  |                              |        |                             
|                                                                  |  | Year Ended December 31, 2002 |        | Year Ended December 31, 2003
|                                                                  |  |                              |        |                             
|                                                                  |  | (Reported)                   |        | Adjustments                  |  | (Restated) |   | (Reported) |  | Adjustments |        | (Restated)
|                                                                  |  |                              |        |                              |  |            |   |            |  |             |        |           
|                                                                  |  |                             
|                                                                  |  | (Dollars in millions)       
|Acquisitions of businesses and licenses, net of
    cash received |  |                              | (6     | )                            |  |            |  |            |  |             | (6     | )          |  |   | (25    | ) |  |   |  |  |  |   | (25    | )
|Contractor engineering deposit                                    |  |                              | (50    | )                            |  |            |  |            |  |             | (50    | )          |  |   |       |   |  |   |  |  |  |   |       |  
|                                                                  |  |                              |        |                              |  |            |   |            |  |             |        |            |  |   |        |   |  |   |   |  |  |   |        |  
|Net cash used in investing activities                             |  |                              | (3,585 | )                            |  |            |  |            |  |             | (3,585 | )          |  |   | (3,368 | ) |  |   |  |  |  |   | (3,368 | )
|Financing activities                                              |  |                              |        |                              |  |            |   |            |  |             |        |            |  |   |        |   |  |   |   |  |  |   |        |  
|Net repayment of commercial paper                                 |  |                              | (27    | )                            |  |            |  |            |  |             | (27    | )          |  |   |       |   |  |   |  |  |  |   |       |  
|Net repayment of long-term debt                                   |  |                              | (59    | )                            |  |            |  |            |  |             | (59    | )          |  |   | (64    | ) |  |   |  |  |  |   | (64    | )
|Net distributions to minority interests                           |  |                              | (79    | )                            |  |            |  |            |  |             | (79    | )          |  |   | (33    | ) |  |   |  |  |  |   | (33    | )
|Contributions from members                                        |  |                              | 499    |                              |  |            |  |            |  |             | 499    |            |  |   | 10     |   |  |   |  |  |  |   | 10     |  
|                                                                  |  |                              |        |                              |  |            |   |            |  |             |        |            |  |   |        |   |  |   |   |  |  |   |        |  
|Net cash provided by (used in) financing
    activities           |  |                              | 334    |                              |  |            |  |            |  |             | 334    |            |  |   | (87    | ) |  |   |  |  |  |   | (87    | )
|                                                                  |  |                              |        |                              |  |            |   |            |  |             |        |            |  |   |        |   |  |   |   |  |  |   |        |  
|Net increase in cash and cash equivalents                         |  |                              | 341    |                              |  |            |  |            |  |             | 341    |            |  |   | 231    |   |  |   |  |  |  |   | 231    |  
|Cash and cash equivalents at beginning of period                  |  |                              | 567    |                              |  |            |  |            |  |             | 567    |            |  |   | 908    |   |  |   |  |  |  |   | 908    |  
|                                                                  |  |                              |        |                              |  |            |   |            |  |             |        |            |  |   |        |   |  |   |   |  |  |   |        |  
|Cash and cash equivalents at end of period                        |  | $                            | 908    |                              |  | $          |  |            |  | $           | 908    |            |  | $ | 1,139  |   |  | $ |  |  |  | $ | 1,139  |  
|                                                                  |  |                              |        |                              |  |            |   |            |  |             |        |            |  |   |        |   |  |   |   |  |  |   |        |  

The restated consolidated statements of income by
quarter for 2003 and 2004 are presented below:

|                         |                                     |                       |       |            |  |            |       |            |  |  |       |       |  |  |       |       | 
|------------------------ | ----------------------------------- | --------------------- | ----- | ---------- |  | ---------- | ----- | ---------- |  |  | ----- | ----- |  |  | ----- | ----- | 
|                         |                                     | First                 |       | Second     |  | Third      |       | Fourth    
|                         |                                     | Quarter               |       | Quarter    |  | Quarter    |       | Quarter   
|                         |                                     |                       |       |            |  |            |       |           
|                         |                                     | (Restated)            |       | (Restated) |  | (Restated) |       | (Restated)
|                         |                                     |                      
|                         |                                     | (Dollars in millions)
|2003 (Unaudited)         |                                     |                       |       |            |  |            |       |            |  |  |       |       |  |  |       |      
|Operating revenues:      |                                     |                       |       |            |  |            |       |            |  |  |       |       |  |  |       |      
|                         | Service revenues                    |                       | $     | 3,394      |  |            | $     | 3,619      |  |  | $     | 3,676 |  |  | $     | 3,534 | 
|                         | Equipment sales                     |                       |       | 244        |  |            |       | 255        |  |  |       | 383   |  |  |       | 378   | 
|Total operating revenues |                                     |                       | 3,638 |            |  |            | 3,874 |            |  |  | 4,059 |       |  |  | 3,912 |      
|Operating expenses:      |                                     |                       |       |            |  |            |       |            |  |  |       |       |  |  |       |      
|                         | Cost of services                    |                       |       | 829        |  |            |       | 897        |  |  |       | 1,010 |  |  |       | 945   | 
|                         | Cost of equipment sales             |                       |       | 396        |  |            |       | 451        |  |  |       | 606   |  |  |       | 578   | 
|                         | Selling, general and administrative |                       |       | 1,218      |  |            |       | 1,271      |  |  |       | 1,442 |  |  |       | 1,497 | 
|                         | Depreciation and amortization       |                       |       | 488        |  |            |       | 508        |  |  |       | 521   |  |  |       | 572   | 
|                         |                                     |                       |       |            |  |            |       |            |  |  |       |       |  |  |       |      
|Total operating expenses |                                     |                       | 2,931 |            |  |            | 3,127 |            |  |  | 3,579 |       |  |  | 3,592 |      
|                         |                                     |                       |       |            |  |            |       |            |  |  |       |       |  |  |       |      
|Operating income         |                                     |                       | 707   |            |  |            | 747   |            |  |  | 480   |       |  |  | 320   |      

103



---



##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


|                                                                                               |                                                            |                       |      |            |   |            |      |            |   |   |      |      |   |   |      |      |  
|---------------------------------------------------------------------------------------------- | ---------------------------------------------------------- | --------------------- | ---- | ---------- | - | ---------- | ---- | ---------- | - | - | ---- | ---- | - | - | ---- | ---- | -
|                                                                                               |                                                            | First                 |      | Second     |   | Third      |      | Fourth    
|                                                                                               |                                                            | Quarter               |      | Quarter    |   | Quarter    |      | Quarter   
|                                                                                               |                                                            |                       |      |            |   |            |      |           
|                                                                                               |                                                            | (Restated)            |      | (Restated) |   | (Restated) |      | (Restated)
|                                                                                               |                                                            |                      
|                                                                                               |                                                            | (Dollars in millions)
|Other income (expenses):                                                                       |                                                            |                       |      |            |   |            |      |            |   |   |      |      |   |   |      |     
|                                                                                               | Interest expense                                           |                       |      | (225       | ) |            |      | (230       | ) |   |      | (197 | ) |   |      | (204 | )
|                                                                                               | Minority interest in earnings of consolidated
    entities |                       |      | (24        | ) |            |      | (35        | ) |   |      | (25  | ) |   |      | (17  | )
|                                                                                               | Equity in net loss of affiliates                           |                       |      | (74        | ) |            |      | (78        | ) |   |      | (90  | ) |   |      | (91  | )
|                                                                                               | Other, net                                                 |                       |      | 26         |   |            |      | 7          |   |   |      | 4    |   |   |      | 4    |  
|                                                                                               |                                                            |                       |      |            |   |            |      |            |   |   |      |      |   |   |      |     
|Total other income (expenses)                                                                  |                                                            |                       | (297 | )          |   |            | (336 | )          |   |   | (308 | )    |   |   | (308 | )   
|                                                                                               |                                                            |                       |      |            |   |            |      |            |   |   |      |      |   |   |      |     
|Income (loss) before provision for income taxes
    and cumulative effect of accounting change |                                                            |                       | 410  |            |   |            | 411  |            |   |   | 172  |      |   |   | 12   |     
|Provision (benefit) for income taxes                                                           |                                                            |                       | 2    |            |   |            | 12   |            |   |   | 6    |      |   |   | 8    |     
|                                                                                               |                                                            |                       |      |            |   |            |      |            |   |   |      |      |   |   |      |     
|Net income (loss)                                                                              |                                                            | $                     | 408  |            |   | $          | 399  |            |   | $ | 166  |      |   | $ | 4    |     
|                                                                                               |                                                            |                       |      |            |   |            |      |            |   |   |      |      |   |   |      |     

The previously reported consolidated statements
of income by quarter for 2003 are:

|                         |                                     |                       |       |            |  |            |       |            |  |  |       |       |  |  |       |       | 
|------------------------ | ----------------------------------- | --------------------- | ----- | ---------- |  | ---------- | ----- | ---------- |  |  | ----- | ----- |  |  | ----- | ----- | 
|                         |                                     | First                 |       | Second     |  | Third      |       | Fourth    
|                         |                                     | Quarter               |       | Quarter    |  | Quarter    |       | Quarter   
|                         |                                     |                       |       |            |  |            |       |           
|                         |                                     | (Reported)            |       | (Reported) |  | (Reported) |       | (Reported)
|                         |                                     |                      
|                         |                                     | (Dollars in millions)
|2003 (Unaudited)         |                                     |                       |       |            |  |            |       |            |  |  |       |       |  |  |       |      
|Operating revenues:      |                                     |                       |       |            |  |            |       |            |  |  |       |       |  |  |       |      
|                         | Service revenues                    |                       | $     | 3,394      |  |            | $     | 3,619      |  |  | $     | 3,676 |  |  | $     | 3,534 | 
|                         | Equipment sales                     |                       |       | 244        |  |            |       | 255        |  |  |       | 383   |  |  |       | 378   | 
|Total operating revenues |                                     |                       | 3,638 |            |  |            | 3,874 |            |  |  | 4,059 |       |  |  | 3,912 |      
|Operating expenses:      |                                     |                       |       |            |  |            |       |            |  |  |       |       |  |  |       |      
|                         | Cost of services                    |                       |       | 821        |  |            |       | 890        |  |  |       | 1,003 |  |  |       | 938   | 
|                         | Cost of equipment sales             |                       |       | 396        |  |            |       | 451        |  |  |       | 606   |  |  |       | 578   | 
|                         | Selling, general and administrative |                       |       | 1,217      |  |            |       | 1,269      |  |  |       | 1,441 |  |  |       | 1,495 | 
|                         | Depreciation and amortization       |                       |       | 488        |  |            |       | 508        |  |  |       | 521   |  |  |       | 572   | 
|                         |                                     |                       |       |            |  |            |       |            |  |  |       |       |  |  |       |      
|Total operating expenses |                                     |                       | 2,922 |            |  |            | 3,118 |            |  |  | 3,571 |       |  |  | 3,583 |      
|                         |                                     |                       |       |            |  |            |       |            |  |  |       |       |  |  |       |      
|Operating income         |                                     |                       | 716   |            |  |            | 756   |            |  |  | 488   |       |  |  | 329   |      

104



---



##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


|                                                                                               |                                                            |                       |      |            |   |            |      |            |   |   |      |      |   |   |      |      |  
|---------------------------------------------------------------------------------------------- | ---------------------------------------------------------- | --------------------- | ---- | ---------- | - | ---------- | ---- | ---------- | - | - | ---- | ---- | - | - | ---- | ---- | -
|                                                                                               |                                                            | First                 |      | Second     |   | Third      |      | Fourth    
|                                                                                               |                                                            | Quarter               |      | Quarter    |   | Quarter    |      | Quarter   
|                                                                                               |                                                            |                       |      |            |   |            |      |           
|                                                                                               |                                                            | (Reported)            |      | (Reported) |   | (Reported) |      | (Reported)
|                                                                                               |                                                            |                      
|                                                                                               |                                                            | (Dollars in millions)
|Other income (expenses):                                                                       |                                                            |                       |      |            |   |            |      |            |   |   |      |      |   |   |      |     
|                                                                                               | Interest expense                                           |                       |      | (225       | ) |            |      | (230       | ) |   |      | (197 | ) |   |      | (204 | )
|                                                                                               | Minority interest in earnings of consolidated
    entities |                       |      | (24        | ) |            |      | (35        | ) |   |      | (25  | ) |   |      | (17  | )
|                                                                                               | Equity in net loss of affiliates                           |                       |      | (72        | ) |            |      | (76        | ) |   |      | (87  | ) |   |      | (88  | )
|                                                                                               | Other, net                                                 |                       |      | 26         |   |            |      | 7          |   |   |      | 4    |   |   |      | 4    |  
|                                                                                               |                                                            |                       |      |            |   |            |      |            |   |   |      |      |   |   |      |     
|Total other income (expenses)                                                                  |                                                            |                       | (295 | )          |   |            | (334 | )          |   |   | (305 | )    |   |   | (305 | )   
|                                                                                               |                                                            |                       |      |            |   |            |      |            |   |   |      |      |   |   |      |     
|Income (loss) before provision for income
    taxes and cumulative effect of accounting change |                                                            |                       | 421  |            |   |            | 422  |            |   |   | 183  |      |   |   | 24   |     
|Provision (benefit) for income taxes                                                           |                                                            |                       | 2    |            |   |            | 12   |            |   |   | 6    |      |   |   | 8    |     
|                                                                                               |                                                            |                       |      |            |   |            |      |            |   |   |      |      |   |   |      |     
|Net income (loss)                                                                              |                                                            | $                     | 419  |            |   | $          | 410  |            |   | $ | 177  |      |   | $ | 16   |     
|                                                                                               |                                                            |                       |      |            |   |            |      |            |   |   |      |      |   |   |      |     

The effect of the restatement adjustments
(unaudited) on the Companys previously issued 2003
quarterly income statements are presented as follows:

|                                  |                                     |         |     |         |   |         |     |         |   |   |     |    |   |   |    |    |  
|--------------------------------- | ----------------------------------- | ------- | --- | ------- | - | ------- | --- | ------- | - | - | --- | -- | - | - | -- | -- | -
|                                  |                                     | First   |     | Second  |   | Third   |     | Fourth 
|                                  |                                     | Quarter |     | Quarter |   | Quarter |     | Quarter
|                                  |                                     |         |     |         |   |         |     |        
|Net income as originally reported |                                     | $       | 419 |         |   | $       | 410 |         |   | $ | 177 |    |   | $ | 16 |   
|Restatement adjustments:          |                                     |         |     |         |   |         |     |         |   |   |     |    |   |   |    |   
|                                  | Cost of services                    |         |     | 8       |   |         |     | 7       |   |   |     | 7  |   |   |    | 7  |  
|                                  | Selling, general and administrative |         |     | 1       |   |         |     | 2       |   |   |     | 1  |   |   |    | 2  |  
|                                  | Equity in net loss of affiliates    |         |     | (2      | ) |         |     | (2      | ) |   |     | (3 | ) |   |    | (3 | )
|                                  |                                     |         |     |         |   |         |     |         |   |   |     |    |   |   |    |   
|Net income as restated            |                                     | $       | 408 |         |   | $       | 399 |         |   | $ | 166 |    |   | $ | 4  |   
|                                  |                                     |         |     |         |   |         |     |         |   |   |     |    |   |   |    |   

The impacts of these restatements to the
Companys statements of income for the quarters ended
March 31, 2003, June 30, 2003, September 30, 2003
and December 31, 2003 were decreases to Net income of $11,
$11, $11 and $12, respectively. The impact associated with
correcting the Companys accounting for operating leases on
network facilities was as an increase to rent expense, reflected
in Cost of services; for operating leases on retail and
administrative facilities, such increases in rent expense are
reflected in Selling, general and administrative expenses. The
correction also had a de minimusimpact on Depreciation
and amortization to adjust for the lives used to depreciate
certain leasehold improvements. The impact associated with
correcting the accounting for the operating leases and useful
lives of the Companys GSMF joint venture was an increase
in Equity in net loss of affiliates.

105



---



##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


|                                                                                               |                                                            |                       |       |            |   |            |       |       |   |   |       |       |  
|---------------------------------------------------------------------------------------------- | ---------------------------------------------------------- | --------------------- | ----- | ---------- | - | ---------- | ----- | ----- | - | - | ----- | ----- | -
|                                                                                               |                                                            | First                 |       | Second     |   | Third     
|                                                                                               |                                                            | Quarter               |       | Quarter    |   | Quarter   
|                                                                                               |                                                            |                       |       |            |   |           
|                                                                                               |                                                            | (Restated)            |       | (Restated) |   | (Restated)
|                                                                                               |                                                            |                      
|                                                                                               |                                                            | (Dollars in millions)
|2004 (Unaudited)                                                                               |                                                            |                       |       |            |   |            |       |       |   |   |       |      
|Operating revenues:                                                                            |                                                            |                       |       |            |   |            |       |       |   |   |       |      
|                                                                                               | Service revenues                                           |                       | $     | 3,558      |   |            | $     | 3,801 |   |   | $     | 3,838 |  
|                                                                                               | Equipment sales                                            |                       |       | 384        |   |            |       | 354   |   |   |       | 419   |  
|Total operating revenues                                                                       |                                                            |                       | 3,942 |            |   |            | 4,155 |       |   |   | 4,257 |      
|Operating expenses:                                                                            |                                                            |                       |       |            |   |            |       |       |   |   |       |      
|                                                                                               | Cost of services                                           |                       |       | 930        |   |            |       | 951   |   |   |       | 1,072 |  
|                                                                                               | Cost of equipment sales                                    |                       |       | 537        |   |            |       | 505   |   |   |       | 585   |  
|                                                                                               | Selling, general and administrative                        |                       |       | 1,372      |   |            |       | 1,463 |   |   |       | 1,567 |  
|                                                                                               | Depreciation and amortization                              |                       |       | 553        |   |            |       | 565   |   |   |       | 573   |  
|                                                                                               |                                                            |                       |       |            |   |            |       |       |   |   |       |      
|Total operating expenses                                                                       |                                                            |                       | 3,392 |            |   |            | 3,484 |       |   |   | 3,797 |      
|                                                                                               |                                                            |                       |       |            |   |            |       |       |   |   |       |      
|Operating income                                                                               |                                                            |                       | 550   |            |   |            | 671   |       |   |   | 460   |      
|Other income (expenses):                                                                       |                                                            |                       |       |            |   |            |       |       |   |   |       |      
|                                                                                               | Interest expense                                           |                       |       | (198       | ) |            |       | (199  | ) |   |       | (200  | )
|                                                                                               | Minority interest in earnings of consolidated
    entities |                       |       | (27        | ) |            |       | (41   | ) |   |       | (20   | )
|                                                                                               | Equity in net loss of affiliates                           |                       |       | (108       | ) |            |       | (95   | ) |   |       | (98   | )
|                                                                                               | Other, net                                                 |                       |       | 4          |   |            |       | 1     |   |   |       |      |  
|                                                                                               |                                                            |                       |       |            |   |            |       |       |   |   |       |      
|Total other income (expenses)                                                                  |                                                            |                       | (329  | )          |   |            | (334  | )     |   |   | (318  | )    
|                                                                                               |                                                            |                       |       |            |   |            |       |       |   |   |       |      
|Income (loss) before provision for income taxes
    and cumulative effect of accounting change |                                                            |                       | 221   |            |   |            | 337   |       |   |   | 142   |      
|Provision (benefit) for income taxes                                                           |                                                            |                       | 6     |            |   |            | (2    | )     |   |   |      |      
|                                                                                               |                                                            |                       |       |            |   |            |       |       |   |   |       |      
|Net income (loss)                                                                              |                                                            | $                     | 215   |            |   | $          | 339   |       |   | $ | 142   |      
|                                                                                               |                                                            |                       |       |            |   |            |       |       |   |   |       |      

106



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


The previously reported consolidated statements
of income by quarter for 2004 are presented below:

|                                                                                               |                                                            |                       |       |            |   |            |       |       |   |   |       |       |  
|---------------------------------------------------------------------------------------------- | ---------------------------------------------------------- | --------------------- | ----- | ---------- | - | ---------- | ----- | ----- | - | - | ----- | ----- | -
|                                                                                               |                                                            | First                 |       | Second     |   | Third     
|                                                                                               |                                                            | Quarter               |       | Quarter    |   | Quarter   
|                                                                                               |                                                            |                       |       |            |   |           
|                                                                                               |                                                            | (Reported)            |       | (Reported) |   | (Reported)
|                                                                                               |                                                            |                      
|                                                                                               |                                                            | (Dollars in millions)
|2004 (Unaudited)                                                                               |                                                            |                       |       |            |   |            |       |       |   |   |       |      
|Operating revenues:                                                                            |                                                            |                       |       |            |   |            |       |       |   |   |       |      
|                                                                                               | Service revenues                                           |                       | $     | 3,558      |   |            | $     | 3,801 |   |   | $     | 3,838 |  
|                                                                                               | Equipment sales                                            |                       |       | 384        |   |            |       | 354   |   |   |       | 419   |  
|Total operating revenues                                                                       |                                                            |                       | 3,942 |            |   |            | 4,155 |       |   |   | 4,257 |      
|Operating expenses:                                                                            |                                                            |                       |       |            |   |            |       |       |   |   |       |      
|                                                                                               | Cost of services                                           |                       |       | 922        |   |            |       | 943   |   |   |       | 1,072 |  
|                                                                                               | Cost of equipment sales                                    |                       |       | 537        |   |            |       | 505   |   |   |       | 585   |  
|                                                                                               | Selling, general and administrative                        |                       |       | 1,372      |   |            |       | 1,462 |   |   |       | 1,567 |  
|                                                                                               | Depreciation and amortization                              |                       |       | 552        |   |            |       | 565   |   |   |       | 572   |  
|                                                                                               |                                                            |                       |       |            |   |            |       |       |   |   |       |      
|Total operating expenses                                                                       |                                                            |                       | 3,383 |            |   |            | 3,475 |       |   |   | 3,796 |      
|                                                                                               |                                                            |                       |       |            |   |            |       |       |   |   |       |      
|Operating income                                                                               |                                                            |                       | 559   |            |   |            | 680   |       |   |   | 461   |      
|Other income (expenses):                                                                       |                                                            |                       |       |            |   |            |       |       |   |   |       |      
|                                                                                               | Interest expense                                           |                       |       | (198       | ) |            |       | (199  | ) |   |       | (200  | )
|                                                                                               | Minority interest in earnings of consolidated
    entities |                       |       | (27        | ) |            |       | (41   | ) |   |       | (20   | )
|                                                                                               | Equity in net loss of affiliates                           |                       |       | (105       | ) |            |       | (92   | ) |   |       | (96   | )
|                                                                                               | Other, net                                                 |                       |       | 4          |   |            |       | 1     |   |   |       |      |  
|                                                                                               |                                                            |                       |       |            |   |            |       |       |   |   |       |      
|Total other income (expenses)                                                                  |                                                            |                       | (326  | )          |   |            | (331  | )     |   |   | (316  | )    
|                                                                                               |                                                            |                       |       |            |   |            |       |       |   |   |       |      
|Income (loss) before provision for income
    taxes and cumulative effect of accounting change |                                                            |                       | 233   |            |   |            | 349   |       |   |   | 145   |      
|Provision (benefit) for income taxes                                                           |                                                            |                       | 6     |            |   |            | (2    | )     |   |   |      |      
|                                                                                               |                                                            |                       |       |            |   |            |       |       |   |   |       |      
|Net income (loss)                                                                              |                                                            | $                     | 227   |            |   | $          | 351   |       |   | $ | 145   |      
|                                                                                               |                                                            |                       |       |            |   |            |       |       |   |   |       |      

107



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CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


The effect of the restatement adjustments
(unaudited) on the Companys previously issued 2004
quarterly income statements are presented as follows:

|                                  |                                     |         |     |         |   |         |     |    |   |   |     |    |  
|--------------------------------- | ----------------------------------- | ------- | --- | ------- | - | ------- | --- | -- | - | - | --- | -- | -
|                                  |                                     | First   |     | Second  |   | Third  
|                                  |                                     | Quarter |     | Quarter |   | Quarter
|                                  |                                     |         |     |         |   |        
|Net income as originally reported |                                     | $       | 227 |         |   | $       | 351 |    |   | $ | 145 |   
|Restatement adjustments:          |                                     |         |     |         |   |         |     |    |   |   |     |   
|                                  | Cost of services                    |         |     | 8       |   |         |     | 8  |   |   |     |   |  
|                                  | Selling, general and administrative |         |     |        |   |         |     | 1  |   |   |     |   |  
|                                  | Depreciation and amortization       |         |     | 1       |   |         |     |   |   |   |     | 1  |  
|                                  | Equity in net loss of affiliates    |         |     | (3      | ) |         |     | (3 | ) |   |     | (2 | )
|                                  |                                     |         |     |         |   |         |     |    |   |   |     |   
|Net income as restated            |                                     | $       | 215 |         |   | $       | 339 |    |   | $ | 142 |   
|                                  |                                     |         |     |         |   |         |     |    |   |   |     |   

The impacts of these restatements to the
Companys statements of income for the quarters ended
March 31, 2004, June 30, 2004, and September 30,
2004 were decreases to Net income of $12, $12, and $3,
respectively. The impact associated with correcting the
Companys accounting for operating leases on network
facilities was as an increase to rent expense, reflected in Cost
of services; for operating leases on retail and administrative
facilities, such increases in rent expense are reflected in
Selling, general and administrative expenses. The correction
also had a de minimus impact on Depreciation and
amortization to adjust for the lives used to depreciate certain
leasehold improvements. The impact associated with correcting
the accounting for the operating leases and useful lives of the
Companys GSMF joint venture was an increase in Equity in
net loss of affiliates.



|   |                              
|-- | -----------------------------
|3. | Acquisitions and Dispositions

During 2004, 2003 and 2002, the Company completed
certain transactions as part of its overall strategy to expand
its wireless footprint and divest itself of nonstrategic assets,
as well as divestitures required by regulatory agencies.

Acquisitions



| |              
| | -------------
| | AT&T Wireless

In October 2004, the Company acquired AT&T
Wireless in a transaction accounted for under the purchase
method under SFAS No. 141, Business Combinations(SFAS 141). AT&T Wireless was a provider of
wireless voice and data services and products primarily in the
U.S. and served nearly 22 million subscribers as of the
acquisition date. AT&T Wireless also held equity interests
in U.S. and international communications ventures, corporations
and partnerships. The acquisition created the largest wireless
communications company in the U.S., based upon the number of
subscribers.

The aggregate consideration paid to AT&T
Wireless shareholders to complete the AT&T Wireless
acquisition was approximately $41,000 in cash. Under the merger
agreement, each common shareholder of AT&T Wireless received
$15 (whole dollars) in cash per common share and the AT&T
Wireless preferred shareholders received the then applicable
liquidation preference of their preferred shares. In addition,
the Company incurred $42 of direct costs for legal, financial
advisory and other services related to the

108



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


transaction, which costs were capitalized as part
of the purchase price. The Company received $36,024 in equity
funding from SBC and BellSouth to finance the acquisition in
proportion to their respective economic interests. The remaining
portion of the purchase price was funded with AT&T Wireless
cash on hand. The results of AT&T Wireless operations
have been included in the Companys consolidated financial
statements since the acquisition date.

The acquisition was structured as a merger of a
wholly-owned subsidiary of the Manager with and into AT&T
Wireless, following which AT&T Wireless became a direct
wholly-owned subsidiary of the Manager, and as the surviving
entity, AT&T Wireless retained all its assets and
liabilities. Following the merger, the Manager sold all its
interests in AT&T Wireless to the Company, and AT&T
Wireless then became its direct wholly-owned subsidiary.
Subsequently, a significant portion of the operations, including
assets, liabilities and subsidiary entities, were transferred
from the Company and AT&T Wireless to CW II. The
Company and CW II executed supplemental indentures to
AT&T Wirelesss two indentures under which its Senior
Notes are outstanding to become co-obligated for all obligations
thereunder, and AT&T Wireless and CW II executed
supplemental indentures to the Companys indenture under
which the Companys Senior Notes are outstanding to become
co-obligated for all obligations thereunder. As a result,
CW II, AT&T Wireless and the Company are co-obligated
on all of the Companys and AT&T Wireless Senior
Notes.

The Company paid a premium (i.e.,
goodwill) over the fair value of the net tangible and identified
intangible assets acquired for a number of reasons, including
but not limited to the following:



|  |                                                                                                                                                                                                                
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | AT&T Wireless fills in the Companys
    licensed spectrum and network footprints by covering areas where
    it did not have licenses or network infrastructure;                                              
| 
| | AT&T Wireless adds depth to the
    Companys licensed spectrum position in existing markets,
    enhancing the Companys ability to offer future high-speed
    data services and reduce capital expenditures;
| 
| | AT&T Wireless customer base, which has
    a stronger business customer component than that of the Company,
    adds a complementary customer mix to the Companys customer
    base;                         
| 
| | AT&T Wireless average revenue per user,
    or ARPU, had historically been higher than the ARPU
    of the Companys customers;                                                                             
| 
| | AT&T Wireless gives the Company added size
    and scale to compete more effectively in the industry and to
    procure more significant cost economies from vendors; and                                      
| 
| | the acquisition will reduce the Companys
    incollect roaming costs because of the broader post-acquisition
    footprint.                                                                                   



| |                             
| | ----------------------------
| | Allocation of Purchase Price

The application of purchase accounting under
SFAS 141 requires that the total purchase price be
allocated to the fair value of assets acquired and liabilities
assumed based on their fair values at the acquisition date. The
allocation process requires an analysis of acquired contracts,
customer relationships, contractual commitments and legal
contingencies to identify and record the fair value of all
assets acquired and liabilities assumed. In valuing acquired
assets and assumed liabilities, fair values are based on, but
are not

109



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


limited to: future expected cash flows; current
replacement cost for similar capacity for certain fixed assets;
market rate assumptions for contractual obligations; settlement
plans for litigation and contingencies; and appropriate discount
rates and growth rates.

The approach to the estimation of the fair values
of the AT&T Wireless intangible assets involved the
following steps:



|  |                                                                                                                                         
|- | ----------------------------------------------------------------------------------------------------------------------------------------
| | Preparation of discounted cash flow analyses;                                                                                           
| 
| | Deduction of the fair values of tangible assets;                                                                                        
| 
| | Determination of the fair value of identified
    significant intangible assets;                                                        
| 
| | Allocation of the excess purchase price over the
    fair value of the identifiable assets and liabilities acquired
    to goodwill; and
| 
| | Reconciliation of the individual assets
    returns with the weighted average cost of capital.                                         

Under the purchase method of accounting, the
assets and liabilities of AT&T Wireless were recorded at
their respective fair values as of the date of acquisition. The
Company is in the process of obtaining third-party valuations of
property, plant and equipment, intangible assets, debt and
certain other liabilities. Given the size of the AT&T
Wireless transaction and proximity to year end, the values of
certain assets and liabilities are based on preliminary
valuations and are subject to adjustment as additional
information is obtained. Such additional information includes,
but may not be limited to, the following: valuations and
physical counts of property, plant and equipment, disposition of
acquired inventory, plans relative to the disposition of certain
assets acquired, exit from certain contractual arrangements and
the involuntary termination of employees. Changes to the
valuation of property, plant and equipment may result in
adjustments to the fair value of certain identifiable intangible
assets acquired. When finalized, adjustments to goodwill may
result. The following table summarizes the preliminary estimated
fair values of the assets acquired and liabilities assumed and
related deferred income taxes as of the respective acquisition
date.

|                 |                                               |                       |   |        |        | 
|---------------- | --------------------------------------------- | --------------------- | - | ------ | ------ | 
|                 |                                               | AT&T                 
|                 |                                               | Wireless             
|                 |                                               |                      
|Assets acquired: |                                               |                       |   |       
|                 | Current assets                                |                       | $ | 8,457  | (1)   
|                 | Property, plant and equipment                 |                       |   | 10,314 |       
|                 | Intangible assets not subject to amortization |                       |   |        |       
|                 |  Licenses                                    |                       |   | 15,540 |       
|                 | Intangible assets subject to amortization     |                       |   |        |       
|                 |  Customer relationships                      |                       |   | 5,010  |       
|                 |  Other intangible assets                     |                       |   | 312    |       
|                 | Investments in unconsolidated subsidiaries    |                       |   | 898    |       
|                 | Other assets                                  |                       |   | 447    |       
|                 | Goodwill                                      |                       |   | 20,468 |       
|                 |                                               |                       |   |       
|                 |                                               | Total assets acquired |   |        | 61,446 | 

110



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


|                     |                                                                      |                           |        |        |        | 
|-------------------- | -------------------------------------------------------------------- | ------------------------- | ------ | ------ | ------ | 
|                     |                                                                      | AT&T                     
|                     |                                                                      | Wireless                 
|                     |                                                                      |                          
|Liabilities assumed: |                                                                      |                           |        |       
|                     | Current liabilities, excluding current portion of
    long-term debt |                           |        | 3,261  |       
|                     | Long-term debt                                                       |                           |        | 12,172 |       
|                     | Deferred income taxes                                                |                           |        | 3,938  |       
|                     | Other non-current liabilities                                        |                           |        | 811    |       
|                     |                                                                      |                           |        |       
|                     |                                                                      | Total liabilities assumed |        |        | 20,182 | 
|Net assets acquired  |                                                                      | $                         | 41,264 |       
|                     |                                                                      |                           |        |       



---



|    |                                                             
|--- | ------------------------------------------------------------
|(1) | Includes $5,240 of cash used to finance the
    acquisition.

Goodwill resulting from the acquisition of
AT&T Wireless was assigned to the Companys one
reportable business segment. Goodwill includes a portion of
value for assembled workforce which is not separately classified
from goodwill in accordance with SFAS 141. None of the
non-goodwill intangible assets are tax deductible; therefore,
deferred tax liabilities were recorded on all intangible assets
except goodwill. The deferred tax liabilities related to
finite-lived intangible assets will be reflected as a tax
benefit in the consolidated statements of income in proportion
to and over the amortization period of the related intangible
assets.

Substantially all of the licenses acquired have
an indefinite life, and accordingly, are not subject to
amortization. The majority of customer relationship intangible
assets are being amortized over a weighted-average period of
five years using the sum-of-the-years digits method. This
method best reflects the estimated pattern in which the economic
benefits will be consumed. Other intangible assets and other
noncurrent liabilities include lease and sublease contracts,
which are amortized over the remaining terms of the underlying
leases and have a weighted-average amortization period of
seven years. Other intangibles also includes the right to
use the AT&T brand trade name, which is amortized over a six
month period, and represents the use period under the Brand
License Agreement with AT&T Corp., as amended. Trademarks
are amortized over their expected remaining economic lives,
ranging from five to six years, and have a weighted-average
amortization period of 5.6 years. See Note 5 for
disclosure of expected amortization expense related to
intangible assets.

The Company has not identified any material
pre-acquisition contingencies where the related asset, liability
or impairment is probable and the amount of the asset, liability
or impairment can be reasonably estimated. Prior to the end of
the purchase price allocation period, if information becomes
available which would indicate it is probable that such events
had occurred and the amounts can be reasonably estimated, such
items will be included in the purchase price allocation.



| |                           
| | --------------------------
| | Triton Wireless Properties

In September 2004, the Company and AT&T
Wireless and Triton PCS Holdings, Inc. (Triton) signed an
agreement providing for the acquisition by the Company of
Tritons wireless properties in Virginia (the
Virginia properties) in exchange for certain of
AT&T Wireless properties in North Carolina, Puerto

111



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


Rico and the U.S. Virgin Islands (the
NC/ PR properties). In addition, the Company agreed
to pay Triton $176 in cash. The exchange of network properties
closed on December 1, 2004 and is accounted for as a
purchase in accordance with SFAS 141. The FCC licenses were
retained by the respective parties pending FCC approval for the
transfer. Prior to FCC approval, each party will lease the
retained FCC licenses to the other party. The results of the
Virginia properties have been included in, and the results of
the exchanged properties have been excluded from, the
Companys consolidated financial statements since the
closing date. Upon completion of this transaction, the Company
operates in all of the 100 largest markets in the U.S. The
exchange of the FCC spectrum licenses will be effected following
FCC approval, which the Company expects in the second quarter of
2005.

Under the purchase method of accounting, the
assets and liabilities of the Virginia properties were recorded
at their respective fair values as of the date of acquisition.
The value of certain assets and liabilities of the Virginia
properties are also based on preliminary valuations and are
subject to adjustment. The following table summarizes the
estimated fair values of the assets and liabilities exchanged as
of the acquisition date.

|                                |                                                                        |                                      |     |            |     |          |      |      |      |   |     |      |     |  
|------------------------------- | ---------------------------------------------------------------------- | ------------------------------------ | --- | ---------- | --- | -------- | ---- | ---- | ---- | - | --- | ---- | --- | -
|                                |                                                                        | Virginia                             |     | NC/PR      |     | Combined
|                                |                                                                        | Properties                           |     | Properties |     | Totals  
|                                |                                                                        |                                      |     |            |     |         
|Assets acquired (disposed):     |                                                                        |                                      |     |            |     |          |      |      |      |   |     |     
|                                | Current assets                                                         |                                      | $   | 32         |     |          | $    | (62  | )    |   | $   | (30  | )  
|                                | Property, plant and equipment                                          |                                      |     | 147        |     |          |      | (285 | )    |   |     | (138 | )  
|                                | Intangible assets subject to
    amortization  Customer relationships |                                      |     | 48         |     |          |      | (68  | )    |   |     | (20  | )  
|                                | Goodwill                                                               |                                      |     | 438        |     |          |      | (117 | )    |   |     | 321  |    
|                                |                                                                        |                                      |     |            |     |          |      |      |      |   |     |     
|                                |                                                                        | Total assets acquired (disposed)     |     |            | 665 |          |      |      | (532 | ) |     |      | 133 |  
|Liabilities assumed (disposed): |                                                                        |                                      |     |            |     |          |      |      |      |   |     |     
|                                | Current liabilities                                                    |                                      |     | 13         |     |          |      | 4    |      |   |     | 17   |    
|                                | Noncurrent liabilities                                                 |                                      |     |           |     |          |      | (60  | )    |   |     | (60  | )  
|                                |                                                                        |                                      |     |            |     |          |      |      |      |   |     |     
|                                |                                                                        | Total liabilities assumed (disposed) |     |            | 13  |          |      |      | (56  | ) |     |      | (43 | )
|                                |                                                                        |                                      |     |            |     |          |      |      |      |   |     |     
|Net assets acquired (disposed)  |                                                                        | $                                    | 652 |            |     | $        | (476 | )    |      | $ | 176 |     
|                                |                                                                        |                                      |     |            |     |          |      |      |      |   |     |     

In addition to the wireless property exchange,
AT&T Wireless and Triton, through wholly-owned subsidiaries,
signed an agreement in July 2004 to terminate their
stockholders agreement which would terminate a market
exclusivity arrangement between the parties. As of the close of
the AT&T Wireless acquisition, the Company had wireless
operations in markets where AT&T Wireless was prohibited
from operating under the exclusivity arrangement. In exchange
for the termination of the stockholders agreement,
AT&T Wireless agreed to surrender to Triton its equity
interest in Triton valued at $194. This transaction closed on
October 26, 2004, immediately following the acquisition of
AT&T Wireless. With the consummation of this agreement, the
Company is able to provide on its network continuing service in
areas where Triton currently has operations. The Company
recognized no gain or loss on the transaction.

112



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


Pro Forma
Financial Information

The following unaudited pro forma consolidated
results of operations of the Company for the years ended
December 31, 2003 and 2004 assume that the acquisitions of
AT&T Wireless and the Virginia properties were completed as
of January 1 in each fiscal year shown below:

|                                         |  |              |        |      |  |   |        | 
|---------------------------------------- |  | ------------ | ------ | ---- |  | - | ------ | 
|                                         |  |             
|                                         |  | Year Ended  
|                                         |  | December 31,
|                                         |  |             
|                                         |  | 2003         |        | 2004
|                                         |  |              |        |     
|                                         |  |             
|                                         |  | (Unaudited) 
|Revenues                                 |  | $            | 31,238 |      |  | $ | 32,179 | 
|Income before provision for income taxes |  |              | 1,626  |      |  |   | 232    | 
|Net income                               |  |              | 1,353  |      |  |   | 193    | 

The pro forma amounts represent the historical
operating results of AT&T Wireless and the Virginia
properties with appropriate adjustments that give effect to
depreciation and amortization, interest expense, income taxes,
and the elimination of intercompany roaming activity between the
Company, AT&T Wireless and the Virginia properties. The
effects of other non-acquisition related items discussed in
Notes 14 and 20 are included in the pro forma amounts
presented above. The pro forma amounts are not necessarily
indicative of the operating results that would have occurred if
the acquisitions and related transactions had been completed at
the beginning of the applicable periods presented. In addition,
the pro forma amounts are not necessarily indicative of
operating results in future periods, in which the Company might
realize revenue enhancements and cost savings.

Acquisition
of NextWave Licenses

In August 2003, the Company executed an agreement
with NextWave Telecom, Inc. and certain of its affiliates for
the purchase of FCC licenses for wireless spectrum in
34 markets for $1,400 in cash. The transaction closed in
April 2004, and the Company recorded this cost as additional
licenses in the consolidated balance sheet. The funding for this
transaction consisted of $900 in existing cash on hand and $500
from commercial paper, which was repaid prior to
December 31, 2004.

Puerto Rico
Joint Venture

In April 2002, the Company and an affiliate of
SBC completed a transaction with T-Mobile in which T-Mobile
contributed assets for a 6% equity interest in the
Companys Puerto Rico wireless communications operations.
No gain or loss was recognized on this transaction. This
transaction resulted in a decrease in the Companys
ownership interest in the Puerto Rico business from 50% to 47%.
Due to the fact that all existing control provisions have been
retained by the Company, consolidation of the financial
statements of the Puerto Rico business continues. On each of the
fifth, seventh and tenth anniversaries of this transaction,
T-Mobile and the Company have fair market value put and call
options, respectively, related to T-Mobiles 6% equity
interest.

113



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


Dispositions

Investment in
Cincinnati Bell Wireless

In August 2004, the Company and Cincinnati Bell
Inc. (Cincinnati Bell) signed an agreement, amended in February
2005, that allows the Company the right to put to Cincinnati
Bell, any time on or after January 31, 2006, AT&T
Wireless 19.9% equity interest in Cincinnati Bells
wireless subsidiary, Cincinnati Bell Wireless LLC (CBW), for
$83. The agreement also allows Cincinnati Bell the right to call
the equity any time before January 31, 2006, for $85 plus
interest. On and after January 31, 2006, Cincinnati Bell
has the right to call the equity for $83 plus interest.

Additionally, the Company, AT&T Wireless and
Cincinnati Bell amended the CBW operating agreement to remove
the exclusivity arrangement applicable to AT&T Wireless,
which allows the Company to provide continuing service over its
network following the closing of the Companys acquisition
of AT&T Wireless in areas where CBW currently has
operations. By its terms, this amendment was effective on
October 26, 2004, immediately following the Companys
acquisition of AT&T Wireless.

Upon consummation of the AT&T Wireless
acquisition, the Company and Cincinnati Bell also amended
certain provisions of the CBW operating agreement to eliminate
the right of the Company to appoint any members of the member
committee and limit the circumstances in which the Company will
retain approval rights over the actions of CBW. As a result, the
Company accounts for its investment in CBW under the cost
method. This investment, which has a carrying amount of $81 at
December 31, 2004, is included in Other assets
in the consolidated balance sheets.

Mobitex Data
Business

Pursuant to an agreement signed in September
2004, the Company sold Cingular Interactive, L.P. (Cingular
Interactive), a data messaging business utilizing the
proprietary Mobitex packet switched network, to
newly formed affiliates of Cerberus Capital Management, L.P.
(Buyer) for $45. The Company retained Cingular
Interactives direct e-mail customers, as well as several
other major accounts. The Company will continue its involvement
in this data business based upon Mobitex technology
as a reseller of the Buyers services. The FCC licenses of
Cingular Interactive were retained by the Company and leased to
the Buyer pending FCC approval for the transfer. The sale
transaction closed in October 2004 and the license transfer
closed in December 2004.

In connection with its agreement to sell Cingular
Interactive, the Company evaluated the Cingular Interactive
long-lived asset carrying values, including property, plant and
equipment and FCC licenses, for recoverability. Based on the
results of the recoverability test, the Company adjusted the
carrying values of the Cingular Interactive long-lived assets to
their fair value in September 2004, resulting in a loss of $31.
Fair value was determined using the agreed upon sale price for
the Cingular Interactive assets, less costs to sell. The
write-down of the long-lived assets is included in Cost of
services in the consolidated statements of income and
Other, net in the consolidated statements of cash
flows. The loss recognized on sale of Cingular Interactive in
October 2004 was not significant.

114



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


4.     Property,
Plant and Equipment

Property, plant and equipment is summarized as
follows:

|                                               |  |              |       |              |  |      |        |   |  |   |         |  
|---------------------------------------------- |  | ------------ | ----- | ------------ |  | ---- | ------ | - |  | - | ------- | -
|                                               |  |              |       |             
|                                               |  |              |       | December 31,
|                                               |  | Estimated    |       |             
|                                               |  | Useful Lives |       | 2003         |  | 2004
|                                               |  |              |       |              |  |     
|                                               |  | (In years)   |       | (Restated)   |  |     
|Land                                           |  |              |      |              |  | $    | 55     |   |  | $ | 95      |  
|Buildings and building improvements            |  |              | 10-25 |              |  |      | 3,426  |   |  |   | 6,182   |  
|Operating and other equipment                  |  |              | 2-15  |              |  |      | 15,844 |   |  |   | 25,388  |  
|Furniture and fixtures                         |  |              | 3-10  |              |  |      | 348    |   |  |   | 450     |  
|Construction in progress                       |  |              |      |              |  |      | 364    |   |  |   | 810     |  
|                                               |  |              |       |              |  |      |        |   |  |   |         |  
|                                               |  |              |       |              |  |      | 20,037 |   |  |   | 32,925  |  
|Less accumulated depreciation and amortization |  |              |       |              |  |      | (9,075 | ) |  |   | (10,967 | )
|                                               |  |              |       |              |  |      |        |   |  |   |         |  
|Property, plant and equipment, net             |  |              |       |              |  | $    | 10,962 |   |  | $ | 21,958  |  
|                                               |  |              |       |              |  |      |        |   |  |   |         |  

Depreciation expense, capitalized interest and
network engineering costs incurred during the construction phase
of the Companys wireless network are summarized as follows:

|                                      |  |                         |       |      |  |      |       |  |  |   |       | 
|------------------------------------- |  | ----------------------- | ----- | ---- |  | ---- | ----- |  |  | - | ----- | 
|                                      |  |                        
|                                      |  | Year Ended December 31,
|                                      |  |                        
|                                      |  | 2002                    |       | 2003 |  | 2004
|                                      |  |                         |       |      |  |     
|                                      |  | (Restated)              |       |      |  |     
|Depreciation expense                  |  | $                       | 1,661 |      |  | $    | 1,927 |  |  | $ | 2,562 | 
|Capitalized interest costs            |  |                         | 27    |      |  |      | 15    |  |  |   | 16    | 
|Capitalized network engineering costs |  |                         | 127   |      |  |      | 103   |  |  |   | 134   | 

The net book value of assets recorded under
capital leases was $928 and $916 at December 31, 2003 and
2004, respectively. These capital leases principally relate to
communications towers and other operating equipment.
Amortization of assets recorded under capital leases is included
in depreciation expense. Capital lease additions for the years
ended December 31, 2002, 2003 and 2004 were $121, $143 and
$94, respectively.

The Companys cellular/PCS networks are
currently equipped with GSM and TDMA digital transmission
technologies. In the second quarter of 2004, the Company
completed a two-year overlay of GSM equipment throughout its
TDMA markets to provide a common voice standard. As a part of
this project, the Company added high-speed technologies for data
services known as General Packet Radio Service (GPRS) and
Enhanced Data Rates for GSM Evolution (EDGE). Effective
January 1, 2003, the Company implemented the results of a
review of the estimated service lives of its remaining TDMA
network assets. The Company determined that a reduction in the
useful lives of TDMA assets was warranted based on the projected
transition of network traffic to its GSM network. Useful lives
were shortened to fully depreciate all TDMA equipment by
December 31, 2008. Depreciation expense increased by $91
for the year ended December 31, 2003 as a result of the
change in estimate.

115



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


Due to the accelerated migration of traffic to
its GSM network experienced in 2004, the Company again evaluated
the estimated useful lives of its TDMA equipment. This review
was completed in the fourth quarter and, effective
October 1, 2004, useful lives were further shortened to
fully depreciate all TDMA equipment by December 31, 2007.
This change in estimate increased depreciation expense in the
fourth quarter of 2004 by $61 and is estimated to increase 2005
depreciation expense by approximately $246. The Company will
continue to monitor the rate of transition of its existing
customers and acquired AT&T Wireless customers to GSM, and,
therefore, additional changes to shorten depreciable lives may
be necessary. The finalization of certain AT&T Wireless
integration plans in the first and second quarters of 2005 may
also result in the need to shorten estimated useful lives of
network and other property, plant and equipment.

During 2002, the Company provided a $50 security
deposit to a contract engineering vendor that is being utilized
to perform construction work on the Companys network. The
security deposit bears interest at LIBOR plus 10 basis
points and is collateralized by a bank letter of credit. The
security deposit, which was returned to the Company in January
2005, is included in Other assets in the
consolidated balance sheets as of December 31, 2004.



|   |                  
|-- | -----------------
|5. | Intangible Assets

Effective January 1, 2002, the Company
adopted SFAS 142. In conjunction with this adoption, the
Company reassessed the useful lives of previously recognized
intangible assets. A significant portion of its intangible
assets are FCC licenses that provide the Company with the
exclusive right to utilize certain radio frequency spectrum to
provide wireless communications services. While FCC licenses are
issued for only a fixed time, generally 10 years, such
licenses are subject to renewal by the FCC. Renewals of FCC
licenses have occurred routinely and at nominal cost. Moreover,
the Company has determined that there are currently no legal,
regulatory, contractual, competitive, economic or other factors
that limit the useful lives of its FCC licenses. As a result,
the FCC licenses are treated as an indefinite-lived intangible
asset under the provisions of SFAS 142 and are not
amortized but rather are tested for impairment annually or when
events and circumstances warrant. The Company continues to
reevaluate the useful life determination for FCC licenses each
reporting period to determine whether events and circumstances
continue to support an indefinite useful life.

The Company completed the transition impairment
test of its indefinite-lived intangible assets as of
January 1, 2002 and determined that no impairment existed.
In accordance with EITF 02-7, Unit of Accounting for
Testing Impairment of Indefinite-Lived Intangible Assets,this impairment test was performed on an aggregate basis,
consistent with the Companys management of the business on
a national scope. The Company utilized a fair value approach,
incorporating discounted cash flows, to complete the test. This
approach determines the fair value of the FCC licenses and,
accordingly, incorporates cash flow assumptions regarding the
investment in a network, the development of distribution
channels and other inputs for making the business operational.
As these inputs are included in determining free cash flows of
the business, the present value of the free cash flows is
attributable to the licenses. The discount rate applied to the
cash flows is consistent with the Companys
weighted-average cost of capital.

The Company completed the transition impairment
test of goodwill as of January 1, 2002 using a two-step
process. The first step screens for potential impairment, while
the second step measures the amount of the impairment, if any.
In the first quarter of 2002, the Company completed the first
step of the goodwill impairment transition tests as of
January 1, 2002 for its reporting units. For goodwill
related to the

116



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


Companys cellular/ PCS business, the first
step indicated no impairment in value. For goodwill related to
the Mobitex data business, the first step indicated an
impairment in value. To measure any impairment, in the second
quarter of 2002, the Company completed the second step of the
goodwill impairment transition test for the Mobitex data
business using a discounted cash flow approach. Based on the
results of this test, the Company recognized an impairment of
the entire goodwill balance related to its Mobitex data
business, with a carrying value of $32, and reflected the
impairment as a cumulative effect of a change in accounting
principle in the first quarter of 2002. The Company believes
that the decline in the fair value of its Mobitex business was
due to the development of new wireless data technologies.

Using methodologies consistent with those applied
for its transitional impairment tests performed as of
January 1, 2002, the Company completed its annual
impairment tests for goodwill and indefinite-lived FCC licenses
during the fourth quarters of 2002, 2003 and 2004. These annual
impairment tests, prepared as of October 1, resulted in no
impairment of the Companys goodwill or indefinite-lived
FCC licenses. The annual impairment test conducted in 2004 did
not include the goodwill and indefinite-lived FCC licenses that
were recorded as a result of the Companys acquisition of
AT&T Wireless on October  26, 2004 (see
Note 3).

Summarized below are the carrying values for the
major classes of intangible assets that will continue to be
amortized under SFAS 142, as well as the carrying values of
those intangible assets deemed to have indefinite lives:

|                                               |                                       |            |  |                   |  |                   |       |          |  |              |        |      |   |   |       |        |  |   |      |      |  
|---------------------------------------------- | ------------------------------------- | ---------- |  | ----------------- |  | ----------------- | ----- | -------- |  | ------------ | ------ | ---- | - | - | ----- | ------ |  | - | ---- | ---- | -
|                                               |                                       |            |  |                   |  |                  
|                                               |                                       |            |  | December 31, 2003 |  | December 31, 2004
|                                               |                                       |            |  |                   |  |                  
|                                               |                                       | Estimated  |  | Gross             |  |                   |       | Gross    |  |             
|                                               |                                       | Useful     |  | Carrying          |  | Accumulated       |       | Carrying |  | Accumulated 
|                                               |                                       | Lives      |  | Amount            |  | Amortization      |       | Amount   |  | Amortization
|                                               |                                       |            |  |                   |  |                   |       |          |  |             
|                                               |                                       | (In years) |  |                   |  |                   |       |          |  |             
|Intangible assets subject to amortization:     |                                       |            |  |                   |  |                   |       |          |  |              |        |      |   |   |       |        |  |   |      |     
|                                               | FCC licenses used in Mobitex business |            |  | 4                 |  |                   | $     | 28       |  |              | $      | (7   | ) |   | $     |       |  |   | $    |     |  
|                                               | Foreign licenses                      |            |  | 9-18              |  |                   |       |         |  |              |        |     |   |   |       | 14     |  |   |      |     |  
|                                               | Customer relationships                |            |  | 5                 |  |                   |       | 1,070    |  |              |        | (920 | ) |   |       | 5,273  |  |   |      | (575 | )
|                                               | Other                                 |            |  | 1-10              |  |                   |       | 147      |  |              |        | (143 | ) |   |       | 312    |  |   |      | (73  | )
|                                               |                                       |            |  |                   |  |                   |       |          |  |              |        |      |   |   |       |        |  |   |      |     
|Total                                          |                                       |            |  |                   |  | $                 | 1,245 |          |  | $            | (1,070 | )    |   | $ | 5,599 |        |  | $ | (648 | )   
|                                               |                                       |            |  |                   |  |                   |       |          |  |              |        |      |   |   |       |        |  |   |      |     
|Intangible assets not subject to amortization: |                                       |            |  |                   |  |                   |       |          |  |              |        |      |   |   |       |        |  |   |      |     
|                                               | FCC licenses                          |            |  |                   |  |                   | $     | 7,748    |  |              | $      |     |   |   | $     | 24,748 |  |   | $    |     |  
|                                               |                                       |            |  |                   |  |                   |       |          |  |              |        |      |   |   |       |        |  |   |      |     
|                                               | Goodwill                              |            |  |                   |  |                   | $     | 849      |  |              | $      |     |   |   | $     | 21,637 |  |   | $    |     |  
|                                               |                                       |            |  |                   |  |                   |       |          |  |              |        |      |   |   |       |        |  |   |      |     

The weighted average estimated useful lives of
intangible assets subject to amortization was 5.0 years for
the year ended December 31, 2004, with remaining useful
lives of approximately 4.8 years.

117



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


The changes in the carrying value of goodwill for
the year ended December 31, 2004 are as follows; changes in
goodwill for the year ended December 31, 2003 are
immaterial.

|                           |                      |   |        |        |  
|-------------------------- | -------------------- | - | ------ | ------ | -
|Balance, December 31, 2003 |                      | $ | 849    |       
|                           | Goodwill acquired    |   |        | 20,906 |  
|                           | Goodwill disposed of |   |        | (118   | )
|Balance, December 31, 2004 |                      | $ | 21,637 |       

The following table presents current and
estimated amortization expense for each of the following periods:

|                                                        |                     |  |   |       | 
|------------------------------------------------------- | ------------------- |  | - | ----- | 
|Aggregate amortization expense for the year ended:      |                     |  |   |      
|                                                        | 2002                |  | $ | 188   | 
|                                                        | 2003                |  |   | 162   | 
|                                                        | 2004                |  |   | 515   | 
|Estimated amortization expense for the year
    ending: |                     |  |   |      
|                                                        | 2005                |  |   | 1,763 | 
|                                                        | 2006                |  |   | 1,322 | 
|                                                        | 2007                |  |   | 960   | 
|                                                        | 2008                |  |   | 606   | 
|                                                        | 2009 and thereafter |  |   | 300   | 

In addition to the SFAS 142 intangible
assets noted above, the Company recorded $1 of intangible assets
in each of 2003 and 2004 in connection with the recognition of
an additional minimum liability for its bargained pension plan
and/or other unqualified benefit plans as required by
SFAS No. 87, Employers Accounting for
Pensions, (SFAS 87) (see Note 17).



|   |                                                     
|-- | ----------------------------------------------------
|6. | Investments in and Advances to Equity
    Affiliates

The Company has investments in affiliates and has
made advances to entities that provide the Company access to
additional U.S. and international wireless markets. The Company
does not have a controlling interest in these investments, nor
do these investments meet the criteria for consolidation under
FIN 46R. Substantially all of these investments are
accounted for under the equity method of accounting. The most
significant of these investments was GSMF, a jointly controlled
network infrastructure venture with T-Mobile for networks in the
New York City metropolitan area, California and Nevada.

At December 31, 2004, the Companys
investments in equity method unconsolidated subsidiaries also
included investments obtained in the Companys purchase of
AT&T Wireless (see Note 3). At December 31, 2003,
the carrying value of the Companys investments accounted
for under the equity method was less than the Companys
share of the underlying reported net assets by $86; at
December 31, 2004, the carrying value exceeded the
Companys share of the underlying reported net assets by
$56. The Company received cash distributions from its equity
method unconsolidated subsidiaries of $142 for the year ended
December 31, 2004, primarily from Atlantic West B.V. as a
result of the sale of its interest in Eurotel Bratislava a.s.

118



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


Investments in and advances to equity affiliates
consist of the following:

|                                               |  |                 |       |      |  |   |       | 
|---------------------------------------------- |  | --------------- | ----- | ---- |  | - | ----- | 
|                                               |  |                
|                                               |  | At December 31:
|                                               |  |                
|                                               |  | 2003            |       | 2004
|                                               |  |                 |       |     
|                                               |  | (Restated)      |       |     
|Investment in GSMF                             |  | $               | 2,234 |      |  | $ | 2,108 | 
|Investment in Atlantic West B.V. (Netherlands) |  |                 |      |      |  |   | 349   | 
|Investment in IDEA Cellular Ltd. (India)       |  |                 |      |      |  |   | 210   | 
|Other                                          |  |                 | 35    |      |  |   | 9     | 
|                                               |  |                 |       |      |  |   |       | 
|                                               |  | $               | 2,269 |      |  | $ | 2,676 | 
|                                               |  |                 |       |      |  |   |       | 

GSMF

In November 2001, the Company and T-Mobile formed
GSMF and contributed to it portions of their existing network
infrastructures in the California, Nevada and New York City
metropolitan area markets. Management control of GSMF was vested
in a four-member management committee, to which each company had
the right to appoint two members. GSMF was not a variable
interest entity as defined by FIN 46R nor did the Company
have the unilateral ability to control any actions of GSMF. As a
result, the Companys interest in GSMF was accounted for as
an equity method investment. Both companies bought network
services from GSMF but retained ownership and control of their
own licenses in those markets. The Company and T-Mobile
independently marketed their services to customers using their
respective brand names and utilized their own sales, marketing,
billing and customer care operations. In July 2002, the Company
began marketing its commercial service in the New York City
market and T-Mobile began service in California and Nevada.

On May 25, 2004, the Company and T-Mobile
announced their intent to terminate the network infrastructure
joint venture, with the Company selling the California and
Nevada network and certain licenses to T-Mobile. The transaction
closed on January 5, 2005. See Note 20 for additional
information.

The Company and T-Mobile jointly funded capital
expenditures of GSMF. Pursuant to the operating agreements, the
Company and T-Mobile procured services and network equipment on
behalf of GSMF in the respective markets. Network equipment was
contributed to GSMF at prices which were mutually agreed upon by
the parties and which approximated fair value. The Company
deferred any resulting profits and recorded them as part of the
Companys investments in and advances to equity affiliates.
The Company recognized the intercompany profit over the
estimated useful lives of the related assets as a reduction of
equity in net loss of affiliates.

Capital contributions to GSMF were generally
determined by the Companys proportionate share of the
annual capital expenditure requirements based on each
partys incremental growth in network usage, and such
contributions were accounted for as an increase to the
Companys investment. During 2002, 2003 and 2004, the
Company made net capital contributions to GSMF of $707, $612 and
$290, respectively.

The Company had contractual commitments to
contribute cash of $225 to GSMF in each of 2002 and 2003. The
2002 and 2003 capital contribution amounts above include $225 of
cash contributions made in

119



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


each year by the Company in satisfaction of the
Companys contractual commitments. Upon dissolution of the
joint venture, a portion of this contribution was distributed to
T-Mobile (see Note 20).

The Company incurred and charged to GSMF certain
network operating costs. The monthly operating expenses of GSMF,
including monthly cash payments made on tower capital lease
obligations, were then charged back to the Company and T-Mobile
based upon each partys proportionate share of licensed
spectrum in each market. Through a separate reciprocal home
roaming agreement, the Company and T-Mobile charged each other
for usage that was not in the same proportion as the
spectrum-based allocations. This usage charge was primarily
based upon the Companys and T-Mobiles share of the
total minutes of use on the respective networks. These charges
for network services are included in Cost of
services in the consolidated statements of income. These
transactions are summarized as follows:

|                                         |  |                         |     |      |  |      |     |  |  |   |     | 
|---------------------------------------- |  | ----------------------- | --- | ---- |  | ---- | --- |  |  | - | --- | 
|                                         |  |                        
|                                         |  | Year Ended December 31,
|                                         |  |                        
|                                         |  | 2002                    |     | 2003 |  | 2004
|                                         |  |                         |     |      |  |     
|Network operating costs charged to GSMF  |  | $                       | 225 |      |  | $    | 320 |  |  | $ | 385 | 
|Network services received based on usage |  |                         | 216 |      |  |      | 254 |  |  |   | 253 | 

At December 31, 2003 and 2004, the Due
(to) from affiliates, net caption in the consolidated
balance sheets included the following amounts related to
transactions between the Company and GSMF:

|                   |                                   |              |   |      |   |  |   |     | 
|------------------ | --------------------------------- | ------------ | - | ---- | - |  | - | --- | 
|                   |                                   |             
|                   |                                   | At          
|                   |                                   | December 31,
|                   |                                   |             
|                   |                                   | 2003         |   | 2004
|                   |                                   |              |   |     
|Due (to)/from for: |                                   |              |   |      |   |  |   |    
|                   | Settlement of Capital Obligations |              | $ | (17  | ) |  | $ | 125 | 
|                   | Settlement of Operating Expenses  |              |   | 20   |   |  |   | 13  | 

GSMF incurred net losses due to depreciation,
deferred rent and interest expense, which are not reimbursed by
the Company or T-Mobile. For the years ended December 31,
2002, 2003 and 2004, the Company recorded equity in the net loss
of GSMF of $250 (restated), $335 (restated) and $416,
respectively. At December 31, 2004, the Companys
economic interest in GSMF approximated 60%.

At December 31, 2004, the Company remained
obligated with respect to $31 of capital lease obligations
included in the non-current liabilities caption of GSMFs
summarized balance sheet information below. These capital lease
obligations relate to tower space leased from an affiliate of
SBC (see Note 19).

120



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


Summarized financial information with respect to
GSMF is as follows:

|                              |  |              |       |      |  |   |       | 
|----------------------------- |  | ------------ | ----- | ---- |  | - | ----- | 
|                              |  |             
|                              |  | December 31,
|                              |  |             
|                              |  | 2003         |       | 2004
|                              |  |              |       |     
|                              |  | (Restated)   |       |     
|Balance Sheet Information:    |  |              |       |      |  |   |       | 
|Current assets                |  | $            | 9     |      |  | $ | 139   | 
|Property, plant and equipment |  |              | 3,588 |      |  |   | 4,133 | 
|Current liabilities           |  |              | 9     |      |  |   | 139   | 
|Noncurrent liabilities        |  |              | 273   |      |  |   | 330   | 
|Members capital              |  |              | 3,315 |      |  |   | 3,803 | 

|                                            |  |                         |      |            |  |      |      |   |  |   |      |  
|------------------------------------------- |  | ----------------------- | ---- | ---------- |  | ---- | ---- | - |  | - | ---- | -
|                                            |  |                        
|                                            |  | Year Ended December 31,
|                                            |  |                        
|                                            |  | 2002                    |      | 2003       |  | 2004
|                                            |  |                         |      |            |  |     
|                                            |  | (Restated)              |      | (Restated) |  |     
|Income Statement Information:               |  |                         |      |            |  |      |      |   |  |   |      |  
|Revenues                                    |  | $                       | 325  |            |  | $    | 451  |   |  | $ | 554  |  
|Costs and expenses (excluding depreciation) |  |                         | 327  |            |  |      | 452  |   |  |   | 578  |  
|Depreciation expense                        |  |                         | 324  |            |  |      | 454  |   |  |   | 589  |  
|Operating loss                              |  |                         | (326 | )          |  |      | (455 | ) |  |   | (613 | )
|Interest expense                            |  |                         | 17   |            |  |      | 19   |   |  |   | 20   |  
|Other expense                               |  |                         |     |            |  |      | 5    |   |  |   | 18   |  
|Net loss                                    |  |                         | (343 | )          |  |      | (479 | ) |  |   | (651 | )

Current assets are comprised primarily of amounts
due from T-Mobile. Current liabilities are comprised primarily
of amounts due to the Company. Noncurrent liabilities are
comprised primarily of capital lease obligations.



| |                   
| | ------------------
| | Atlantic West B.V.

Atlantic West B.V. (AWBV) is a 50/50 joint
venture between the Company and Verizon Communications, Inc.
(Verizon). AWBV owned a 49% interest in Eurotel Bratislava a.s.
(Bratislava), a wireless operating entity in Slovakia prior to
its sale in December 2004. In December 2004, AWBV sold its
interest in Bratislava to Slovak Telecom a.s. for total cash
proceeds of $315. The Companys share of proceeds from the
sale totaled $158. AWBV distributed $280 of the proceeds upon
completion of the sale, of which $140 was distributed to the
Company. AWBV holds the remaining $35 in cash, along with $662
in cash from a prior sale, which will be distributed equally to
the Company and Verizon upon completion of a repatriation plan
which qualifies under the American Jobs Creation Act of 2004
(see Note 16). The Company recognized no gain or loss on
the sale transaction as the assumed fair value of the
investment, in conjunction with its purchase of AT&T
Wireless, equaled the transaction sale proceeds.

121



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)




| |                   
| | ------------------
| | IDEA Cellular Ltd.

In December 2004, the Company signed an agreement
to sell its indirect 32.9% interest in IDEA Cellular Ltd.
(IDEA), a cellular telecommunications company in India, to a
joint venture between STT Communications Ltd. and TM
International Sdn, a wholly-owned subsidiary of Telekom Malaysia
Berhd. The Company will, upon closing of the transaction,
receive the U.S. dollar equivalent of Rupees 9,108,628,130
based upon the exchange rate two business days before the
transaction closes. The U.S. dollar equivalent was
approximately $210 as of December 31, 2004. The Company
recorded a pretax currency translation adjustment of $10 within
other comprehensive income (loss) at December 31, 2004 for
the increase in the U.S. dollar equivalent which occurred
between the Companys acquisition of AT&T Wireless and
December 31, 2004. The transaction is subject to, among
other things, approval by several regulatory agencies in India
as well as the lenders of IDEA Cellular Ltd.

See Note 3 for a discussion of the equity
interest in Triton, which the Company received in conjunction
with its acquisition of AT&T Wireless and which was
subsequently surrendered to Triton.



|   |                           
|-- | --------------------------
|7. | Variable Interest Entities

The Company has variable interests in several
entities for which it is deemed to be the primary beneficiary.
These variable interests typically consist of a combination of
any or all of voting equity interests, nonvoting equity
interests, loans and put options that provide the other owners
the right to require the Company to purchase their ownership
interest if and when certain events occur. These entities were
formed to acquire licenses that were restricted by FCC rule to
businesses with limited assets and revenues, and to provide a
means through which disqualified large businesses, such as the
Company or AT&T Wireless, could invest in these licenses. To
date, the activities of these entities have consisted primarily
of acquiring licenses through acquisitions and FCC auctions and
network construction.



| |       
| | ------
| | Salmon

In November 2000, the Company and Crowley Digital
Wireless, LLC (Crowley Digital) entered into an agreement,
pursuant to which Salmon was formed to bid as a very small
business for certain 1900 MHz band PCS licenses
auctioned by the FCC. The auction ended in January 2001. Salmon
was the successful bidder for, and at the conclusion of the
auction proceedings was granted, 45 licenses, for which Salmon
paid $241.

The Company made secured loans to Salmon to fund
the purchase of the 45 licenses. Net advances and loans made for
the year ended December 31, 2002 were $25. In 2002, the FCC
refunded to Salmon the auction deposits pertaining to 34
additional licenses for which it was the highest bidder but the
award of which was later invalidated by a decision of the
U.S. Supreme Court. Salmon used these proceeds to repay
$421 in principal and interest to the Company. The Company
recognized interest income on the loan balance of $22 for the
year ended December 31, 2002.

Crowley Digital has the right to put its
approximate 20% economic interest in Salmon to the Company at a
cash price equal to Crowley Digitals initial investment
plus a specified rate of return. The put right can be exercised
at certain times, and the Company estimates that the earliest
exercise period will begin in February 2006 and the latest
exercise period will end in April 2008. The Companys
maximum liability for

122



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


the purchase of Crowley Digitals interest
in Salmon under this put right is $225. The fair values of this
put obligation, estimated at $139 and $155 as of
December 31, 2003 and 2004, respectively, are included in
Other noncurrent liabilities in the consolidated
balance sheets.

Management control of Salmon is vested in Crowley
Digital under the terms of Salmons limited liability
company agreement as Crowley Digital appoints three of the five
members of Salmons management committee. The Company does
not have the unilateral ability to control any actions by
Salmon. As a result, the Companys approximate 80%
non-controlling economic interest in Salmon had historically
been accounted for as an equity method investment through
December 31, 2002. For the year ended December 31,
2002, the Company recorded equity losses of $29 associated with
its investment in Salmon.

As described in Note 1, the Company adopted
the provisions of FIN 46, effective January 1, 2003.
The Company determined that Salmon meets the definition of a
variable interest entity and that the Company is the primary
beneficiary of the Salmon variable interests. Accordingly, the
Company consolidated the financial position, results of
operations and cash flows of Salmon, effective January 1,
2003. Consolidation of Salmon in the Companys financial
statements is solely for purposes of complying with FIN 46
and does not reflect any change in voting control over Salmon.
The Company initially measured the assets, liabilities and
noncontrolling interests of Salmon at their carrying amounts.
The equity interest of Crowley Digital is included in
Minority interests in consolidated entities in the
accompanying consolidated balance sheets. The Company did not
restate any previously issued financial statements. The income
statement and cash flow impacts of the Salmon consolidation for
the year ended December 31, 2002 would not have been
material.



| |                                             
| | --------------------------------------------
| | AT&T Wireless Variable Interest
    Entities

As a result of the AT&T Wireless acquisition,
the Companys consolidated financial statements include
other variable interest entities, similar to Salmon, for which
the Company is deemed to be the primary beneficiary. The
Companys maximum liability related to these entities as of
December 31, 2004 was approximately $145, which represents
the gross payment under the put options that provide the other
owners the right to require the Company to purchase their
ownership interests under certain circumstances. Also, through
its acquisition of AT&T Wireless, the Company acquired a
variable interest and was deemed to be the primary beneficiary
in an entity engaged in leasing activities (see Note 9).

The Company has no significant variable interests
for which it is not deemed to be the primary beneficiary.

123



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)




|   |                    
|-- | -------------------
|8. | Accrued Liabilities

Accrued liabilities are summarized as follows:

|                                      |  |              |       |      |  |   |       | 
|------------------------------------- |  | ------------ | ----- | ---- |  | - | ----- | 
|                                      |  |             
|                                      |  | December 31,
|                                      |  |             
|                                      |  | 2003         |       | 2004
|                                      |  |              |       |     
|                                      |  | (Restated)   |       |     
|Accrued fixed asset purchases         |  | $            | 498   |      |  | $ | 822   | 
|Taxes, other than income              |  |              | 355   |      |  |   | 387   | 
|Payroll and other related liabilities |  |              | 256   |      |  |   | 697   | 
|Agent commissions                     |  |              | 170   |      |  |   | 329   | 
|Advertising                           |  |              | 88    |      |  |   | 231   | 
|Accrued interest                      |  |              | 6     |      |  |   | 232   | 
|Other                                 |  |              | 246   |      |  |   | 1,016 | 
|                                      |  |              |       |      |  |   |       | 
|Total accrued liabilities             |  | $            | 1,619 |      |  | $ | 3,714 | 
|                                      |  |              |       |      |  |   |       | 



|   |     
|-- | ----
|9. | Debt



| |                              
| | -----------------------------
| | Debt Maturing Within One Year



| |                           
| | --------------------------
| | Revolving Credit Agreement

Effective August 1, 2004, the Company
entered into a revolving credit agreement with SBC and BellSouth
for them to provide unsubordinated short-term financing on a pro
rata basis at an interest rate of LIBOR plus .05% for the
Companys ordinary course operations based upon the
Companys budget and forecasted cash needs. The agreement
provides that in the event that the Company has available cash
(as defined) on any business day, such amount shall first be
applied to the repayment of the revolving loans, and any
remaining excess then shall be loaned to SBC and BellSouth, pro
rata, and ultimately applied on the first day of the subsequent
month to the repayment of the Subordinated Notes from SBC and
BellSouth (member loans; see Debt Due to Members
below) if the Company does not then require a cash advance under
the agreement. In addition, the agreement provides that free
cash flow (as defined) after repayment of the revolving loans
and the member loans will be distributed to SBC and BellSouth.
For the quarter ended September 30, 2004, the Company had
advances to members of $50 under this agreement, which were used
to repay a portion of the Companys subordinated member
loans in October 2004. As of December 31, 2004, the members
had advanced $1,667 to the Company under the agreement to fund
operations, of which $899 was repaid through February 2005. The
initial term of the agreement expires in July 2005. The
agreement provides that SBC and BellSouth may extend its term,
and the Company expects them to do so for the foreseeable
future. The weighted average annual interest rate under this
agreement for the period August 1, 2004 through
December 31, 2004 was 2.3%. At December 31, 2004, the
rate was 2.4%.

124



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)




| |                                                                
| | ---------------------------------------------------------------
| | Commercial Paper Program and Revolving Bank
    Credit Facility

At December 31, 2003, the Company had a
commercial paper program and an unsecured 364-day revolving bank
credit facility of $1,000 to support its commercial paper
program. At December 31, 2003, the Company had no
outstanding borrowings under the commercial paper program or the
credit facility and was in compliance with all covenants under
the credit facility. During 2004, the Company borrowed, and
subsequently repaid, $500 under the commercial paper program to
fund the purchase of NextWave licenses (see Note 3).
Following the execution of the revolving credit agreement with
SBC and BellSouth and the full repayment of outstanding
commercial paper, the Company terminated both its commercial
paper program and revolving bank credit facility.



| |                                          
| | -----------------------------------------
| | Accounts Receivable Secured
    Borrowing

In December 2003, the Company established an
accounts receivable secured borrowing program that it could use
to obtain financing not to exceed $400, collateralized by
customer trade accounts receivable and related contract rights.
As of December 31, 2003, the Company was in compliance with
the covenants and had no amounts outstanding under this
financing arrangement. The Company never utilized this facility,
and, effective June 29, 2004, the Company terminated its
accounts receivable secured borrowing program.



| |               
| | --------------
| | Long-term Debt

Long-term debt is summarized as follows:

|                                                                   |                                        |              |       |      |  |   |       |       | 
|------------------------------------------------------------------ | -------------------------------------- | ------------ | ----- | ---- |  | - | ----- | ----- | 
|                                                                   |                                        |             
|                                                                   |                                        | December 31,
|                                                                   |                                        |             
|                                                                   |                                        | 2003         |       | 2004
|                                                                   |                                        |              |       |     
|Due to members  Subordinated Notes                                |                                        | $            | 9,678 |      |  | $ | 9,628 |      
|Due to external parties  Cingular
    Wireless LLC, maker:        |                                        |              |       |      |  |   |       |      
|                                                                   | 5.625% Senior Notes, due December 2006 |              |       | 500  |  |   |       | 500   | 
|                                                                   | 6.5% Senior Notes, due December 2011   |              |       | 750  |  |   |       | 750   | 
|                                                                   | 7.125% Senior Notes, due December 2031 |              |       | 750  |  |   |       | 750   | 
|Due to external parties  AT&T
    Wireless Services, Inc., maker: |                                        |              |       |      |  |   |       |      
|                                                                   | 6.875% Senior Notes, due April 2005    |              |       |     |  |   |       | 250   | 
|                                                                   | 7.35% Senior Notes, due March 2006     |              |       |     |  |   |       | 1,000 | 
|                                                                   | 7.5% Senior Notes, due May 2007        |              |       |     |  |   |       | 750   | 
|                                                                   | 7.875% Senior Notes, due March 2011    |              |       |     |  |   |       | 3,000 | 
|                                                                   | 8.125% Senior Notes, due May 2012      |              |       |     |  |   |       | 2,000 | 
|                                                                   | 8.75% Senior Notes, due March 2031     |              |       |     |  |   |       | 2,500 | 

125



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


|                                                                                      |                                                                                                       |              |        |      |  |   |        |       | 
|------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------- | ------------ | ------ | ---- |  | - | ------ | ----- | 
|                                                                                      |                                                                                                       |             
|                                                                                      |                                                                                                       | December 31,
|                                                                                      |                                                                                                       |             
|                                                                                      |                                                                                                       | 2003         |        | 2004
|                                                                                      |                                                                                                       |              |        |     
|Due to external parties  TeleCorp
    Wireless, Inc., maker:                         |                                                                                                       |              |        |      |  |   |        |      
|                                                                                      | 10.625% Senior Subordinated Notes, due July
    2010                                                  |              |        |     |  |   |        | 200   | 
|                                                                                      | Capital leases, 6.0% to 9.6%                                                                          |              |        | 908  |  |   |        | 1,007 | 
|                                                                                      | Capital leases, Japanese Yen and U.S. Dollar
    denominated, 4.86%  7.08% in 2003 and 5.56% in 2004 |              |        | 47   |  |   |        | 4     | 
|                                                                                      | Other                                                                                                 |              |        | 64   |  |   |        | 52    | 
|                                                                                      |                                                                                                       |              |        |      |  |   |        |      
|Total long-term debt, including current maturities                                    |                                                                                                       |              | 12,697 |      |  |   | 22,391 |      
|Unamortized premium (discount) on Senior
    Notes and Senior Subordinated Notes, net |                                                                                                       |              | (11    | )    |  |   | 1,963  |      
|Unamortized discount on other Notes                                                   |                                                                                                       |              |       |      |  |   | (3     | )    
|Current maturities of long-term debt                                                  |                                                                                                       |              | (95    | )    |  |   | (491   | )    
|Interest rate swap fair value adjustment (see
    Note 10)                            |                                                                                                       |              | 1      |      |  |   | (3     | )    
|                                                                                      |                                                                                                       |              |        |      |  |   |        |      
|Total long-term debt                                                                  |                                                                                                       | $            | 12,592 |      |  | $ | 23,857 |      
|                                                                                      |                                                                                                       |              |        |      |  |   |        |      



| |                    
| | -------------------
| | Debt Due to Members

The long-term debt due to members represents
loans due to SBC and BellSouth. Interest accrues and is payable
monthly. Interest expense on the member loans and the revolving
credit agreement for the years ended December 31, 2002,
2003 and 2004 was $726, $653 and $586, respectively. As of
July 1, 2003, the Company executed amended, restated and
consolidated subordinated promissory notes to modify the terms
of the Companys member loans. The amendment reduced the
fixed interest rate from 7.5% to 6.0% and extended the maturity
date to June 30, 2008. The Company may, however, prepay the
member loans at any time, subject to the provisions described
below, and is obligated to prepay the member loans to the extent
of excess cash from operations (as defined). See Revolving
Credit Agreement above.

SBC and BellSouth have agreed to subordinate
their repayment rights applicable to the member loans to the
repayment rights of the Companys senior debt. Senior debt
includes the Companys Senior Notes, including Senior Notes
of AT&T Wireless and other borrowings from external parties
designated as senior debt to which SBC and BellSouth have
specifically agreed to be subordinate. The payment of principal
and interest on the subordinated member loans by the Company is
prohibited in the event of bankruptcy or an event of default in
the payment or prepayment of any principal of or interest on any
senior debt, or in the event of an acceleration of the
subordinated debt upon its default, until the senior debt has
been repaid in full.



| |                                          
| | -----------------------------------------
| | Senior Notes of Cingular Wireless
    LLC

In December 2001, the Company completed the
private placement of $2,000 of Senior Notes under
Regulation D of the Securities Act of 1933. The Senior
Notes are unsecured obligations and rank equally with all other
unsecured and unsubordinated indebtedness. In 2002, the Company
filed with the SEC a registration statement on Form S-4
pertaining to the exchange of the private placement Senior Notes
for

126



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


Senior Notes that are registered under the
securities laws in identical principal amounts and with
substantially identical terms. Interest on the Senior Notes is
payable in arrears semi-annually on June 15 and December 15.

The Senior Notes are governed by an indenture
with J.P. Morgan Trust Company, N.A., which acts as
trustee. The indenture contains a negative pledge
provision that the Company will not subject its property or
assets to any mortgage or other encumbrance unless the Senior
Notes are secured equally and ratably with other indebtedness
that is secured by that property or assets, unless secured
debt would not exceed 15% of consolidated net
tangible assets (as such terms are defined in the
indenture). There is no sinking fund or mandatory redemption
applicable to the Senior Notes. The Senior Notes are redeemable,
in whole or in part, at the Companys option, at any time
at a price equal to their principal amount plus any accrued
interest and premium. CW II and AT&T Wireless became
co-obligated on the Companys Senior Notes following the
Companys acquisition of AT&T Wireless (see
Note 3).



| |                              
| | -----------------------------
| | Senior Notes of AT&T Wireless

Following the Companys acquisition of
AT&T Wireless in October 2004 (see Note 3), the
Company, along with CW II, became co-obligated on $9,500 of
Senior Notes of AT&T Wireless (see further discussion below
and in Note 3). Included in the Senior Notes of AT&T
Wireless are $6,500 of unsecured and unsubordinated Senior Notes
issued under a March 2001 private placement, with $1,000
maturing on March 1, 2006; $3,000 maturing on March 1,
2011; and $2,500 maturing on March 1, 2031. Fixed interest
rates range from 7.35% to 8.75% per annum, payable
semi-annually. Also included in the Senior Notes are $3,000 of
unsecured and unsubordinated Senior Notes issued through an
April 2002 registered public offering by AT&T Wireless, with
$250 maturing on April 18, 2005; $750 maturing on
May 1, 2007; and $2,000 maturing on May 1, 2012. Fixed
interest rates range from 6.875% to 8.125% per annum,
payable semi-annually.

The $9,500 of Senior Notes of AT&T Wireless
are governed under two separate indentures with U.S. Bank N.A.,
successor to the Bank of New York, as trustee. The Senior Notes
are unsecured unsubordinated obligations, ranking equally in
right with all other unsecured and unsubordinated obligations of
the Company. The Senior Notes are redeemable, as a whole or in
part, at the Companys option, at any time or from time to
time, at a price equal to their principal amount plus any
accrued interest and premium similar to that applicable to the
Companys Senior Notes. The Senior Notes are not subject to
any sinking fund requirements. With respect to both indentures,
covenants limit activity related to sale and leaseback
transactions (as defined) under certain circumstances and
contain a negative pledge provision similar to that
applicable to the Companys Senior Notes.



| |                                                                           
| | --------------------------------------------------------------------------
| | TeleCorp Wireless, Inc. and Tritel PCS, Inc.
    Senior Subordinated Notes

In conjunction with AT&T Wireless
acquisition of TeleCorp PCS, Inc. (TeleCorp PCS) in February
2002, AT&T Wireless assumed the debt of TeleCorp PCS
subsidiaries, TeleCorp Wireless, Inc. (TeleCorp) and Tritel PCS,
Inc. (Tritel). At the time of the Companys acquisition of
AT&T Wireless, principal amounts outstanding associated with
the senior subordinated notes of TeleCorp and Tritel were $200
of TeleCorps 10.625% Senior Subordinated Notes due
July 2010 and $206 of Tritels 10.375% Senior

127



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


Subordinated Notes due January 2011. Neither the
Company nor CW II became co-obligated on the TeleCorp and
Tritel Senior Subordinated Notes.

Concurrently with the Companys acquisition
of AT&T Wireless, the Company irrevocably deposited with the
TeleCorp trustee U.S. Treasury securities which upon
maturity will be sufficient to fund the redemption of the
principal amount and related premium of the TeleCorp Notes,
along with interest due prior to the Notes redemption date
(see Note 1). In compliance with the indenture, all of the
U.S. Treasury securities mature prior to the redemption
date of the TeleCorp Notes.

The trustee has been notified that the TeleCorp
Notes are being called for redemption in July 2005; as such, the
outstanding principal and related premium of these Notes is
reflected within Debt maturing within one year on
the consolidated balance sheets at December 31, 2004. In
accordance with SFAS No. 140, Accounting for
Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities, the TeleCorp Notes and corresponding assets
placed in trust remain on the Companys consolidated
balance sheets as of December 31, 2004 as the Company has
not met the criteria required to derecognize the liability.

The Company also irrevocably deposited with the
Tritel trustee U.S. Treasury securities which upon maturity
were sufficient to fund the redemption of the principal amounts
and related premium of the Tritel Notes, along with amounts of
interest due prior to the Notes redemption dates. In
November 2004, the Tritel Notes were redeemed by the trustee
pursuant to the exercise of the option on the acquisition date.



| |                     
| | --------------------
| | Other Long-term Debt

Also in conjunction with its acquisition of
AT&T Wireless, the Company assumed $132 in bank debt and $63
of debt held by a variable interest entity engaged in leasing
activities. The debts were repaid in December 2004.



| |                              
| | -----------------------------
| | Fair Values of Long-term Debt

At December 31, 2003 and 2004, the fair
values of the Senior Notes and Senior Subordinated Notes were
$2,156 and $13,879, respectively, based on their quoted market
prices. The carrying value of the long-term debt due to members
approximates fair value since the Company may prepay the debt at
any time, as described above, without penalty.

The above Senior Notes and Senior Subordinated
Notes assumed in the Companys acquisition of AT&T
Wireless were recorded at fair value on the acquisition date in
accordance with the purchase accounting requirements of
SFAS 141. The premium recorded at the acquisition date
totaled $2,045, of which $1,973 remains outstanding as of
December 31, 2004. The premium is being amortized under the
effective interest method which reflects market interest rates
on the date of the acquisition. Amortization of the premium is
recorded in the Companys financial statements as a
reduction to interest expense. For the year ended
December 31, 2004, this amortization totaled $44, which
resulted in an effective annual interest rate of 4.7% for the
acquired Senior Notes and Senior Subordinated Notes.

128



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)




| |               
| | --------------
| | Capital Leases

The Company has entered into capital leases
primarily for the use of communications towers. See Note 19
for further discussions regarding these towers.



| |                             
| | ----------------------------
| | Maturities of Long-Term Debt

Maturities of long-term debt outstanding,
including capital lease obligations, at December 31, 2004
are summarized below:

|                            |                                     |      |        |                |  |       |       |       |  |   |        |        | 
|--------------------------- | ----------------------------------- | ---- | ------ | -------------- |  | ----- | ----- | ----- |  | - | ------ | ------ | 
|                            |                                     | Debt |        | Capital Leases |  | Total
|                            |                                     |      |        |                |  |      
|Maturities:                 |                                     |      |        |                |  |       |       |       |  |   |        |       
|                            | 2005                                |      | $      | 474            |  |       | $     | 82    |  |   | $      | 556    | 
|                            | 2006                                |      |        | 1,515          |  |       |       | 82    |  |   |        | 1,597  | 
|                            | 2007                                |      |        | 760            |  |       |       | 86    |  |   |        | 846    | 
|                            | 2008                                |      |        | 9,633          |  |       |       | 90    |  |   |        | 9,723  | 
|                            | 2009                                |      |        | 3              |  |       |       | 95    |  |   |        | 98     | 
|                            | Thereafter                          |      |        | 9,005          |  |       |       | 2,485 |  |   |        | 11,490 | 
|                            |                                     |      |        |                |  |       |       |       |  |   |        |       
|Total minimum payments      |                                     | $    | 21,390 |                |  | $     | 2,920 |       |  | $ | 24,310 |       
|                            | Less capital lease imputed interest |      |        |               |  |       |       | 1,468 |  |   |        | 1,468  | 
|                            | Less capital lease executory costs  |      |        |               |  |       |       | 441   |  |   |        | 441    | 
|                            |                                     |      |        |                |  |       |       |       |  |   |        |       
|Total obligations           |                                     | $    | 21,390 |                |  | $     | 1,011 |       |  | $ | 22,401 |       
|Less current portion        |                                     |      | 474    |                |  |       | 6     |       |  |   | 480    |       
|                            |                                     |      |        |                |  |       |       |       |  |   |        |       
|Total long-term obligations |                                     | $    | 20,916 |                |  | $     | 1,005 |       |  | $ | 21,921 |       
|                            |                                     |      |        |                |  |       |       |       |  |   |        |       



| |                       
| | ----------------------
| | Cash Paid for Interest

Cash paid for interest on debt for the years
ended December 31, 2002, 2003 and 2004 was $905, $862 and
$892, respectively. These amounts include cash paid for interest
on member loans and the revolving credit agreement with the
members of $726, $665 and $582 for the years ended
December 31, 2002, 2003 and 2004, respectively.



|    |                      
|--- | ---------------------
|10. | Financial Instruments

The carrying amounts of cash and cash
equivalents, accounts receivable, accounts payable, advanced
billing and customer deposits and other current liabilities are
reasonable estimates of their fair value due to the short-term
nature of these instruments.

The Company uses interest rate swaps to manage
its interest rate exposure on its debt obligations. The Company
does not invest in derivative instruments for trading purposes.
In March 2003, the Company entered into two interest rate swap
contracts with banks to convert a portion of the fixed rate
exposure on its five-year Senior Notes due December 15,
2006 to variable rates without an exchange of the underlying

129



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


principal amount. Under the terms of the interest
rate swap contracts, the Company receives interest at a fixed
rate of 5.625% and pays interest at a variable rate equal to the
six-month LIBOR plus a specified margin, based on an aggregate
notional amount of $250. The six-month LIBOR rate on each
semi-annual reset date determines the variable portion of the
interest rate swaps. For the years ended December 31, 2003
and 2004, the effective interest rate associated with this
notional amount was 4.02% and 4.58%, respectively.

The Company has designated the swaps as fair
value hedges of its fixed rate debt. The terms of the interest
rate swap contracts and hedged items are such that effectiveness
can be measured using the short-cut method as defined in
SFAS 133. Hedge ineffectiveness, as determined in
accordance with SFAS 133, had no impact on results of
operations for the years ended December 31, 2003 and 2004.

In accordance with SFAS 133, the Company
recorded a fair value adjustment to the portion of its fixed
rate long-term debt that is hedged. This fair value adjustment
is recorded as an increase or decrease to long-term debt, with
the related value for the interest rate swaps non-current
portion recorded in Other assets or Other
noncurrent liabilities in the consolidated balance sheets.
Interest rate differentials associated with these interest rate
swaps are recorded as an adjustment to a current asset or
liability, with the offset to interest expense over the life of
the interest rate swaps.



|    |                       
|--- | ----------------------
|11. | Concentrations of Risk

The Company relies on local and long-distance
telephone companies and other companies to provide certain
communications services. Additionally, the Company relies on one
vendor to provide billing services for the postpaid subscribers
acquired in conjunction with the Companys acquisition of
AT&T Wireless (see Note 3). Although management
believes alternative vendors could be found in a timely manner,
any disruption of these services could potentially have an
adverse impact on operating results.

The Company relies on roaming agreements with
other wireless carriers to permit the Companys customers
to use their GSM/ GPRS/ EDGE and TDMA networks in areas not
covered by the Companys networks. If these providers
decide not to continue those agreements due to a change in
ownership or other circumstance, this could cause a loss of
service in certain areas and possible loss of customers.

Although the Company attempts to maintain
multiple vendors to the extent practicable, its handset
inventory and network infrastructure equipment, which are
important components of its operations, are currently acquired
from only a few sources. If the suppliers are unable to meet the
Companys needs as it continues to build out and upgrade
its network infrastructure and sell service and handsets, delays
and increased costs in the expansion of the Companys
network infrastructure or losses of potential customers could
result, which would adversely affect operating results.

Financial instruments that could potentially
subject the Company to credit risks consist principally of trade
accounts receivable. Concentrations of credit risk with respect
to these receivables are limited due to the composition of the
customer base, which includes a large number of individuals and
businesses. No customer accounted for more than 10% of
consolidated revenues in any year presented.

Approximately 22,000, or 31%, of the
Companys employees are represented by the Communications
Workers of America (CWA), with contracts expiring on various
dates between February 2005 and

130



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


February 2008. Approximately 5,700 of the
Companys employees are covered by contracts that expired
in February 2005. On March 2, 2005, the Company and the CWA
announced that they reached a tentative agreement on a labor
contract that covers bargained-for employees in 37 states.
The agreement is subject to ratification by union members. Most
of the contracts contain no-strike clauses. In most areas of the
country and with most job titles, the Company is contractually
required to maintain a position of neutrality and to allow
card-check balloting with respect to unionization and support
the determination of its employees.



|    |                           
|--- | --------------------------
|12. | Related Party Transactions

In addition to the affiliate transactions
described elsewhere in these financial statements, other
significant transactions with related parties are summarized in
the succeeding paragraphs.

In connection with the formation of Cingular, the
Company entered into wireless agency agreements with
subsidiaries of SBC and BellSouth. Such subsidiaries and any of
their affiliates that make an election to do so may act as
authorized agents exclusively on the Companys behalf for
the sale of its wireless services to customers in SBCs and
BellSouths respective incumbent service territories. The
Company is free to contract with other agents, including
retailers and other distributors, for the sale of its wireless
services in these territories and elsewhere throughout the
U.S. In addition to the unilateral rights of SBC and
BellSouth and their affiliates to terminate and to the
Companys right to terminate in certain events, each
wireless agency agreement terminates upon breach, mutual
agreement of the parties or on December 31, 2050. Agent
commissions and compensation charges are included in
Selling, general and administrative in the
consolidated statements of income.

The Company incurred local interconnect and long
distance charges from SBC and BellSouth and their affiliates
related to the provision of wireless services to its
subscribers, which are included in Cost of services
in the consolidated statements of income.

The Company incurred telecommunication and other
charges from SBC and BellSouth and their affiliates in
connection with its internal business operations, which are
primarily included in Selling, general and
administrative in the consolidated statements of income.

Related party charges incurred by the Company are
summarized as follows:

|                                     |  |                         |     |      |  |      |     |  |  |   |     | 
|------------------------------------ |  | ----------------------- | --- | ---- |  | ---- | --- |  |  | - | --- | 
|                                     |  |                        
|                                     |  | Year Ended December 31,
|                                     |  |                        
|Type of Service:                     |  | 2002                    |     | 2003 |  | 2004
|                                     |  |                         |     |      |  |     
|Agent commissions and compensation   |  | $                       | 46  |      |  | $    | 103 |  |  | $ | 67  | 
|Interconnect and long distance       |  |                         | 663 |      |  |      | 815 |  |  |   | 927 | 
|Telecommunications and other charges |  |                         | 85  |      |  |      | 77  |  |  |   | 97  | 

Additionally, the Company has purchase
commitments to SBC, BellSouth and their affiliates of $258 for
dedicated leased lines used to provide interconnection services
and $142 for telecommunications and other services (see
Note 18).

The Company had receivables from affiliates of
$81 and $247 and payables to affiliates of $135 and $109 at
December 31, 2003 and 2004, respectively, primarily with
SBC, BellSouth and GSMF (see Note 6).

131



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)




|    |                                
|--- | -------------------------------
|13. | Impairment of Long-lived Assets

During the fourth quarter of 2002, the Company
evaluated the recoverability of the long-lived assets, including
property, plant, and equipment and FCC licenses, of its Mobitex
data business. While the business continued to generate positive
operating cash flows, the timing of the Companys migration
to data services over its cellular/PCS networks, as well as
other competitive and technological factors, decreased the cash
flows that the Company expected to generate from continuing to
operate the Mobitex data network. In the fourth quarter of 2002,
the Company determined that the estimated future undiscounted
cash flows were less than the carrying value of the Mobitex data
business long-lived assets. Accordingly, the Company adjusted
the carrying values of the Mobitex data business long-lived
assets to their estimated fair value, resulting in a non-cash
impairment loss of $104. Fair value was determined using a
discounted cash flow approach. The impairment loss is included
in Cost of services in the consolidated statement of
income. The impairment loss was comprised of $71 of property,
plant and equipment and $33 of FCC licenses. In conjunction with
the impairment test, the Company reviewed the remaining useful
lives of the Mobitex data business long-lived assets and
determined the lives to be appropriate. During the fourth
quarter of 2003, the Company evaluated the recoverability of the
long-lived assets of its Mobitex data business and determined no
additional impairment existed. In connection with its agreement
to sell its Mobitex data business, the Company adjusted the
carrying values of the long-lived assets to their fair value in
the third quarter of 2004, resulting in a loss of $31 (see
Note 3).

The Companys cellular/PCS networks utilize
two digital transmission technologies, TDMA and GSM. The TDMA
technologies are deployed over two different spectrum
frequencies, 850 MHz (cellular) and 1900 MHz
(PCS). As discussed in Note 4, in 2002 the Company began
adding GSM equipment throughout its TDMA markets, to provide a
common transmission standard, and adding technologies for
high-speed data services. In the fourth quarter of 2002, the
Company finalized market specific execution strategies
concurrent with the development and approval of its 2003 capital
budget. In several smaller PCS markets, where the Company has
only 10 MHz of available spectrum, it did not have adequate
spectrum depth to concurrently provide wireless services using
both technologies. In these markets, the Company retired the
TDMA network assets in order to deploy GSM technology. The TDMA
network assets used in 1900 MHz markets are frequency
specific and cannot be redeployed for use in the Companys
other 850 MHz markets. Due to the anticipated near-term
removal of these assets from service during the period ranging
from the third quarter of 2003 to the fourth quarter of 2004,
the Company performed an impairment test as required by
SFAS 144 to determine whether the future cash flows of
these markets were sufficient to recover the carrying value of
the related TDMA assets as of December 31, 2002. In the
fourth quarter of 2002, the Company recognized a non-cash
impairment charge of $47 related to its 1900 MHz TDMA
assets in ten markets located in the southeastern and
southwestern U.S. The impairment loss was measured as the
difference between the carrying value of these assets at
December 31, 2002 and their fair value. Fair value was
determined using a discounted cash flow approach. The impairment
loss is included in Cost of services in the
consolidated statement of income.



|    |                                                     
|--- | ----------------------------------------------------
|14. | Acquisition-Related, Integration and Other
    Costs

Management plans to exit certain activities of
AT&T Wireless, including disposing of redundant facilities,
interests in certain foreign operations and domestic wireless
assets required to be divested by the FCC and

132



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


the U.S. Department of Justice in connection
with the acquisition (see Note 20), and to integrate the
acquired business (see Note 3) with the Company. These
plans affect many areas of the combined company, including sales
and marketing, network, information technology, customer care,
supply chain and general and administrative functions. In
connection therewith, the Company expects to incur significant
costs over the next several years associated with such
dispositions and integration activities. Management is in the
process of developing these plans and expects to complete them
in the first and second quarters of 2005. The Company expects
that the finalization of certain integration plans will result
in adjustments to the purchase price allocation for the acquired
assets and assumed liabilities of AT&T Wireless and may also
result in the need to shorten the useful lives of certain
network and other property, plant and equipment.

In the third and fourth quarters of 2004, the
Company incurred $288 of integration costs, including $101 of
costs to market the combined company, $75 of costs to prepare
systems for the launch of the common customer interfacing
systems and processes, $39 of costs to convert the branding of
AT&T Wireless stores and agent locations to the Cingular
brand, $17 related to employee retention and involuntary
terminations and $56 of other integration planning and execution
costs. These costs are primarily included in Selling,
general and administrative expenses in the consolidated
statements of income.

Employee termination benefits incurred in 2004
were $4 and include involuntary severance payments and related
benefits for certain former Cingular employees who have been
identified to be displaced in the first quarter of 2005.
Employee termination benefits to be paid were recorded in
accordance with SFAS No. 112, Employers
Accounting for Postemployment Benefits(SFAS 112).
Additional liabilities for termination benefits to be provided
to former Cingular employees are expected to be recognized under
SFAS 112 when such costs are probable and estimable.
Additional liabilities for termination benefits to be provided
to former AT&T Wireless employees are expected to be
recognized under EITF Issue No. 95-3, Recognition of
Liabilities in Connection with a Purchase Business Combination(EITF 95-3), as liabilities assumed in the purchase business
combination.



|    |                     
|--- | --------------------
|15. | Reorganization Costs

In August 2002, the Company announced plans
to reorganize its sales operations and to reduce its workforce
in these and other functional areas of the business. It was
expected that approximately 2,500 to 3,000 positions (employees,
contractors and temporary personnel) would be eliminated, with
more than one-third occurring through the elimination of
temporary positions and normal attrition. Substantially all
employees affected received notification in September 2002.
Approximately 1,600 employees were terminated under this
reorganization plan. Employee severance costs were accounted for
in accordance with SFAS 112. For other costs of the
reorganization, the Company adopted SFAS No. 146,
Accounting for Costs Associated with Exit or Disposal
Activities, in 2002 and accounts for the costs of the
reorganization when the liability is incurred. The costs
associated with the reorganization, principally severance, lease
termination and relocation, were not expected to exceed $70.
Substantially all activities associated with this reorganization
were complete as of June 30, 2003. Reorganization costs for
the years ended December 31, 2002 and 2003 were $41 and
$21, respectively, and are principally reflected in
Selling, general and administrative expenses in the
consolidated statements of income.

133



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)




|    |             
|--- | ------------
|16. | Income Taxes

The Company is not a taxable entity for federal
income tax purposes. Federal taxable income or loss is included
in the respective members federal income tax return. The
majority of states follow this treatment. Certain states,
however, impose taxes at the Company level and such taxes are
the responsibility of the Company and are included in the
Companys income tax provision (benefit). The consolidated
financial statements also include income tax provisions
(benefits) for federal and state income taxes for all
corporate subsidiaries of the Company.

Following the Companys acquisition of
AT&T Wireless and related restructuring, AT&T Wireless
became a direct wholly-owned subsidiary of the Company. The
Company and AT&T Wireless transferred significant portions
of their respective assets and liabilities to CW II.
Earnings or losses from CW II flow to its owners in
accordance with their respective ownership interests. The
structure retains AT&T Wireless as a tax-paying corporation
that is a 43% owner of CW II. The Company owns the
remaining 57% of CW II. The Company and CW II are
generally both considered partnerships for federal and state
income tax purposes. For partnerships, income tax items
generally flow through to their members and are taxed at the
member level pursuant to federal and state income tax laws.

Deferred income taxes are recorded using enacted
tax law and rates for the years in which the taxes are expected
to be paid or refunds received. Deferred income taxes are
provided for items when there is a temporary difference in
recording such items for financial reporting and income tax
reporting. A majority of these deferred taxes were recorded
through the required application of the purchase method of
accounting for the Companys acquisition of AT&T
Wireless. As part of purchase accounting, a significant portion
of the assets and liabilities acquired were recorded by the
Company at fair value (see Note 3). The difference between
the fair values recorded for these acquired assets (other than
goodwill) and liabilities and the tax basis of those assets and
liabilities determined the deferred income taxes that have been
recorded in the Companys financial statements.
Additionally, the Company assumed significant tax net operating
losses (NOLs) with its acquisition of AT&T Wireless.

134



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


The provision (benefit) for income taxes consists
of the following:

|                                     |                 |              |    |      |   |      |    |    |   |   |     |     |  
|------------------------------------ | --------------- | ------------ | -- | ---- | - | ---- | -- | -- | - | - | --- | --- | -
|                                     |                 |             
|                                     |                 | Year Ended  
|                                     |                 | December 31,
|                                     |                 |             
|                                     |                 | 2002         |    | 2003 |   | 2004
|                                     |                 |              |    |      |   |     
|Current:                             |                 |              |    |      |   |      |    |    |   |   |     |    
|                                     | Federal         |              | $  | 10   |   |      | $  | 26 |   |   | $   | 14  |  
|                                     | State and local |              |    | 5    |   |      |    | 3  |   |   |     | 2   |  
|                                     | International   |              |    |     |   |      |    |   |   |   |     |    |  
|                                     |                 |              |    |      |   |      |    |    |   |   |     |    
|                                     |                 |              | 15 |      |   |      | 29 |    |   |   | 16  |    
|Deferred:                            |                 |              |    |      |   |      |    |    |   |   |     |    
|                                     | Federal         |              |    | (5   | ) |      |    | (3 | ) |   |     | (67 | )
|                                     | State and local |              |    | 2    |   |      |    | 2  |   |   |     | (7  | )
|                                     | International   |              |    |     |   |      |    |   |   |   |     |    |  
|                                     |                 |              |    |      |   |      |    |    |   |   |     |    
|                                     |                 | $            | (3 | )    |   | $    | (1 | )  |   | $ | (74 | )  
|                                    
|Provision (benefit) for income taxes |                 | $            | 12 |      |   | $    | 28 |    |   | $ | (58 | )  
|                                     |                 |              |    |      |   |      |    |    |   |   |     |    

A reconciliation of the income tax provision
(benefit) computed at the statutory tax rate to the
Companys effective tax rate is as follows:

|                                                            |  |                         |      |      |  |      |      |   |  |   |        |   
|----------------------------------------------------------- |  | ----------------------- | ---- | ---- |  | ---- | ---- | - |  | - | ------ | --
|                                                            |  |                        
|                                                            |  | Year Ended December 31,
|                                                            |  |                        
|                                                            |  | 2002                    |      | 2003 |  | 2004
|                                                            |  |                         |      |      |  |     
|Federal statutory rate                                      |  |                         | 35   | %    |  |      | 35   | % |  |   | 35     | % 
|Income tax provision (benefit) at statutory rate            |  | $                       | 426  |      |  | $    | 352  |   |  | $ | 50     |   
|State income taxes, net of federal U.S. tax
    benefit     |  |                         | 49   |      |  |      | 40   |   |  |   | 6      |   
|LLC income not subject to federal or state income
    taxes |  |                         | (463 | )    |  |      | (364 | ) |  |   | (114   | ) 
|Provision (benefit) for income taxes                        |  | $                       | 12   |      |  | $    | 28   |   |  | $ | (58    | ) 
|Effective income tax rate                                   |  |                         | 0.99 | %    |  |      | 2.79 | % |  |   | (40.56 | )%

135



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


Deferred taxes arise because of differences
between the book and tax bases of certain assets and
liabilities. The significant components of the Companys
deferred tax assets and (liabilities) are as follows:

|                                              |                                                                |                                         |     |      |   |   |       |       |       |  
|--------------------------------------------- | -------------------------------------------------------------- | --------------------------------------- | --- | ---- | - | - | ----- | ----- | ----- | -
|                                              |                                                                |                                        
|                                              |                                                                | December 31,                           
|                                              |                                                                |                                        
|                                              |                                                                | 2003                                    |     | 2004
|                                              |                                                                |                                         |     |     
|Current deferred tax assets:                  |                                                                |                                         |     |      |   |   |       |      
|                                              | Other                                                          |                                         | $   |     |   |   | $     | 2     |      
|                                              |                                                                |                                         |     |      |   |   |       |      
|Total current deferred tax assets             |                                                                |                                         |    |      |   |   | 2     |      
|Noncurrent deferred tax assets:               |                                                                |                                         |     |      |   |   |       |      
|                                              | Noncurrent deferred income tax assets:                         |                                         |     |      |   |   |       |       |      
|                                              |                                                                | Net operating loss/credit carryforwards |     |      |  |   |       |       | 3,078 |  
|                                              |                                                                | Valuation allowances                    |     |      |  |   |       |       | (147  | )
|                                              |                                                                |                                         |     |      |   |   |       |      
|Total net noncurrent deferred tax assets      |                                                                |                                         |    |      |   |   | 2,931 |      
|Noncurrent deferred tax liabilities:          |                                                                |                                         |     |      |   |   |       |      
|                                              | Investment in Cingular Wireless II                             |                                         |     |     |   |   |       | 6,655 |      
|                                              | FCC licenses and goodwill                                      |                                         |     | 178  |   |   |       | 216   |      
|                                              | Investments in and advances to unconsolidated
    subsidiaries |                                         |     |     |   |   |       | 41    |      
|Other                                         |                                                                |                                         | 12  |      |   |   | 16    |      
|                                              |                                                                |                                         |     |      |   |   |       |      
|Total noncurrent deferred tax liabilities     |                                                                |                                         | 190 |      |   |   | 6,928 |      
|Total noncurrent net deferred tax liabilities |                                                                | $                                       | 190 |      |   | $ | 3,997 |      
|                                              |                                                                |                                         |     |      |   |   |       |      

The Company, through AT&T Wireless, has
federal and state NOL carryforwards of approximately $7,555 and
$9,341, respectively, which expire at various dates principally
from December 31, 2007 through December 31, 2024. At
December 31, 2004, the related tax effected NOLs for
federal and state income tax purposes were $2,644 and $394, net
of federal tax impacts, respectively. In addition, the Company
had tax effected NOLs of $10 related to its Puerto Rico
operations. The Company also has federal tax credit
carryforwards of $26 which expire between 2007 and 2024, and $4,
which are not subject to expiration. Internal Revenue Code
Section 382 places certain limitations on the annual amount
of NOL carryforwards that can be utilized if certain changes to
a companys ownership occur. The Company believes that its
purchase of AT&T Wireless was a change in ownership pursuant
to Section 382 of the Code, and that the NOL carryforwards
of AT&T Wireless are limited but more likely than not will
be used in future periods. As of December 31, 2004, the
Company had valuation allowances of $130 for NOLs and $17 for
tax credits which were more likely than not to expire unused.
The majority of the Companys deferred tax asset valuation
allowance would be applied to reduce goodwill in the event that
the tax benefits for the items are recognized.

On December 21, 2004, the FASB issued FSP
FAS 109-2, Accounting and Disclosure Guidance for the
Foreign Earnings Repatriation Provision within the American Jobs
Creation Act of 2004(the Act), to provide accounting and
disclosure guidance for the repatriation provision of the Act.
The Act creates a temporary incentive for U.S. corporations
to repatriate accumulated income earned abroad by providing an
85 percent dividends received deduction for certain
dividends from controlled foreign corporations that are
repatriated in either an enterprises last tax year that
began before the enactment date of October 22, 2004

136



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


or the first tax year that begins during the
one-year period beginning on the date of enactment. The
deduction is subject to a number of limitations and, as of
December 31, 2004, uncertainty remained as to how to
interpret numerous provisions in the Act. As of
December 31, 2004, the Company had deferred tax liabilities
of $108 related to undistributed foreign earnings totaling $350.
Based on the Companys analysis of the Act, although not
yet finalized, it is reasonably possible that under the
repatriation provision of the Act the Company may repatriate
some amount of earnings estimated to be between $300 to $350.
The related tax effects of such repatriation cannot reasonably
be estimated at this time. The effects of the repatriation on
deferred tax liabilities would result in adjustments to the
purchase price allocations that were recorded in connection with
the Companys acquisition of AT&T Wireless. We expect
the Company to be in a position to finalize its assessment
during the second quarter of 2005. Until this evaluation is
completed, the Company presumes that repatriation of those
foreign earnings will occur and has accordingly recognized a
deferred tax liability for the full amount of current and prior
years unremitted earnings without giving effect to the
repatriation provision of the Act.

At December 31, 2003 and 2004, the
Companys net assets at entities that are not taxpayers
exceed their tax bases by approximately $12,900 and $14,000,
respectively. For the year ended December 31, 2003, this
basis difference is principally attributable to the tax rules
used to determine depreciation and amortization of property,
plant and equipment and intangible assets. For the year ended
December 31, 2004, this basis difference principally
relates to the Companys investment in CW II.

Cash paid for income taxes for the years ended
December 31, 2002, 2003 and 2004 was $14, $23 and $22,
respectively.



|    |                  
|--- | -----------------
|17. | Employee Benefits



| |                                          
| | -----------------------------------------
| | Pensions and Post-Retirement
    Benefits

Approximately 43,000 of the Companys
employees are covered by one of two noncontributory qualified
pension plans. Participation in the Companys plans
commenced November 1, 2001, following the initial
contribution of employees and related obligations and
liabilities by SBC and BellSouth to the Company. In connection
with this contribution, SBC and BellSouth transferred pension
assets from the qualified trusts to the trusts established for
the Companys pension plans. Current employees of the
Company who were formerly employed by AT&T Wireless do not
participate in the pension plans.

Nonbargained and some bargained employees
participate in a cash balance plan, under which they can elect
to receive their pensions in a lump sum. The pension benefit
formula for many bargained employees is based on a flat dollar
amount per year of service according to job classification, and
these benefits are typically paid as an annuity.

The projected benefit obligation of the
Companys pension plans is the actuarial present value of
all benefits attributed by the pension benefit formula to
previously rendered employee service. It is measured based on
assumptions concerning future interest rates, employee
compensation levels, retirement date and mortality. Actual
experience may differ from the actuarial assumptions, and the
benefit obligation will be affected. The Company uses a
December 31 measurement date for its plans.

137



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


Nonbargained employees and their covered
dependents who meet certain eligibility requirements will be
provided access to post-retirement medical and dental benefits
at no cost to the Company. For bargained employees and a closed
group of nonbargained transitional employees, the Company
provides certain retiree medical, dental and life insurance
benefits under various plans and accrues actuarially determined
post-retirement benefit costs as active employees earn these
benefits. These post-retirement plans are not funded. Current
employees formerly employed by AT&T Wireless do not
participate in the Companys post-retirement benefit plans.

In accordance with FASB Staff Position
No. FAS 106-2, the Medicare Prescription Drug,
Improvement and Modernization Act of 2003 (Medicare
Modernization Act) has been reflected effective January 1,
2004. Due to expected future receipt of subsidies available
under the Act for plans that are determined to be actuarially
equivalent, the plans combined Accumulated Postretirement
Benefit Obligation was reduced by approximately $8 as of
January 1, 2004 and the combined 2004 Net Periodic Benefit
Cost was reduced by approximately $2.



| |                              
| | -----------------------------
| | Obligations and Funded Status

The pension plan and post-retirement benefit plan
funded status and amounts recognized in the consolidated balance
sheets at December 31, 2003 and 2004 are as follows:

|                                  |                                         |              |     |              |   |      |     |      |   |   |     |    |   |   |     |     |  
|--------------------------------- | --------------------------------------- | ------------ | --- | ------------ | - | ---- | --- | ---- | - | - | --- | -- | - | - | --- | --- | -
|                                  |                                         |              |     |              |   |     
|                                  |                                         |              |     | Post-       
|                                  |                                         | Pension      |     | Retirement  
|                                  |                                         | December 31, |     | December 31,
|                                  |                                         |              |     |             
|                                  |                                         | 2003         |     | 2004         |   | 2003 |     | 2004
|                                  |                                         |              |     |              |   |      |     |     
|Change in Benefit Obligation:     |                                         |              |     |              |   |      |     |      |   |   |     |    |   |   |     |    
|                                  | Benefit obligation at beginning of year |              | $   | 413          |   |      | $   | 456  |   |   | $   | 84 |   |   | $   | 114 |  
|                                  | Service cost                            |              |     | 61           |   |      |     | 65   |   |   |     | 9  |   |   |     | 10  |  
|                                  | Interest cost                           |              |     | 24           |   |      |     | 26   |   |   |     | 6  |   |   |     | 6   |  
|                                  | Amendments                              |              |     | (1           | ) |      |     | 2    |   |   |     | (2 | ) |   |     | (12 | )
|                                  | Impact of Medicare Modernization Act    |              |     |             |   |      |     |     |   |   |     |   |   |   |     | (8  | )
|                                  | Actuarial loss                          |              |     | 18           |   |      |     | 18   |   |   |     | 17 |   |   |     | 7   |  
|                                  | Benefits paid                           |              |     | (59          | ) |      |     | (31  | ) |   |     |   |   |   |     |    |  
|                                  |                                         |              |     |              |   |      |     |      |   |   |     |    |   |   |     |    
|Benefit obligation at end of year |                                         | $            | 456 |              |   | $    | 536 |      |   | $ | 114 |    |   | $ | 117 |    
|                                  |                                         |              |     |              |   |      |     |      |   |   |     |    |   |   |     |    

138



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


|                                         |                                                |              |     |              |   |      |     |      |   |   |   |   |  |   |   |   | 
|---------------------------------------- | ---------------------------------------------- | ------------ | --- | ------------ | - | ---- | --- | ---- | - | - | - | - |  | - | - | - | 
|                                         |                                                |              |     |              |   |     
|                                         |                                                |              |     | Post-       
|                                         |                                                | Pension      |     | Retirement  
|                                         |                                                | December 31, |     | December 31,
|                                         |                                                |              |     |             
|                                         |                                                | 2003         |     | 2004         |   | 2003 |     | 2004
|                                         |                                                |              |     |              |   |      |     |     
|Change in Plan Assets:                   |                                                |              |     |              |   |      |     |      |   |   |   |   |  |   |   |  
|                                         | Fair value of plan assets at beginning of year |              | $   | 450          |   |      | $   | 510  |   |   | $ |  |  |   | $ |  | 
|                                         | Actual return on plan assets                   |              |     | 103          |   |      |     | 47   |   |   |   |  |  |   |   |  | 
|                                         | Employer contribution                          |              |     | 16           |   |      |     |     |   |   |   |  |  |   |   |  | 
|                                         | Benefits paid                                  |              |     | (59          | ) |      |     | (31  | ) |   |   |  |  |   |   |  | 
|                                         |                                                |              |     |              |   |      |     |      |   |   |   |   |  |   |   |  
|Fair value of plan assets at end of year |                                                | $            | 510 |              |   | $    | 526 |      |   | $ |  |   |  | $ |  |  
|                                         |                                                |              |     |              |   |      |     |      |   |   |   |   |  |   |   |  

|                                                                        |  |              |    |                 |  |      |     |      |  |   |      |   |  |   |      |  
|----------------------------------------------------------------------- |  | ------------ | -- | --------------- |  | ---- | --- | ---- |  | - | ---- | - |  | - | ---- | -
|                                                                        |  |              |    |                
|                                                                        |  | Pension      |    | Post-Retirement
|                                                                        |  | December 31, |    | December 31,   
|                                                                        |  |              |    |                
|                                                                        |  | 2003         |    | 2004            |  | 2003 |     | 2004
|                                                                        |  |              |    |                 |  |      |     |     
|Funded status                                                           |  | $            | 54 |                 |  | $    | (10 | )    |  | $ | (114 | ) |  | $ | (117 | )
|Unrecognized prior service cost                                         |  |              | 15 |                 |  |      | 14  |      |  |   | 6    |   |  |   | (7   | )
|Unrecognized net actuarial loss                                         |  |              | 3  |                 |  |      | 12  |      |  |   | 31   |   |  |   | 29   |  
|                                                                        |  |              |    |                 |  |      |     |      |  |   |      |   |  |   |      |  
|Prepaid pension cost and accrued post-retirement
    benefit obligation |  | $            | 72 |                 |  | $    | 16  |      |  | $ | (77  | ) |  | $ | (95  | )
|                                                                        |  |              |    |                 |  |      |     |      |  |   |      |   |  |   |      |  

The accumulated benefit obligation for the
pension plans was $435 and $511 at December 31, 2003 and
2004, respectively. As of December 31, 2004, the bargained
pension plan had an accumulated benefit obligation that exceeded
the fair value of plan assets, and an additional minimum
liability of $6 was recorded in accordance with the provisions
of paragraphs 36 and 37 of SFAS No. 87,
Employers Accounting for Pensions(SFAS 87). Additional information for this plan is as
follows:

|                                                                         |  |              |    |      |  |   |    | 
|------------------------------------------------------------------------ |  | ------------ | -- | ---- |  | - | -- | 
|                                                                         |  |             
|                                                                         |  | December 31,
|                                                                         |  |             
|                                                                         |  | 2003         |    | 2004
|                                                                         |  |              |    |     
|Projected benefit obligation                                             |  | $            | 18 |      |  | $ | 26 | 
|Accumulated benefit obligation                                           |  |              | 16 |      |  |   | 22 | 
|Fair value of plan assets                                                |  |              | 16 |      |  |   | 17 | 
|Increase in minimum liability included in other
    comprehensive income |  |              |   |      |  |   | 4  | 

139



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)




| |                                            
| | -------------------------------------------
| | Components of Net Periodic Pension
    Cost

Net pension expense and post-retirement benefit
expense recognized is comprised of the following:

|                                             |  |         |     |                 |  |      |     |      |  |      |     |      |  |   |    |   |  |   |    |  |  |   |    | 
|-------------------------------------------- |  | ------- | --- | --------------- |  | ---- | --- | ---- |  | ---- | --- | ---- |  | - | -- | - |  | - | -- |  |  | - | -- | 
|                                             |  |         |     |                
|                                             |  | Pension |     | Post-Retirement
|                                             |  |         |     |                
|                                             |  | 2002    |     | 2003            |  | 2004 |     | 2002 |  | 2003 |     | 2004
|                                             |  |         |     |                 |  |      |     |      |  |      |     |     
|Service cost                                 |  | $       | 62  |                 |  | $    | 61  |      |  | $    | 65  |      |  | $ | 6  |   |  | $ | 9  |  |  | $ | 10 | 
|Interest cost                                |  |         | 24  |                 |  |      | 24  |      |  |      | 26  |      |  |   | 4  |   |  |   | 6  |  |  |   | 6  | 
|Expected return on plan assets               |  |         | (27 | )               |  |      | (36 | )    |  |      | (38 | )    |  |   |   |   |  |   |   |  |  |   |   | 
|Amortization of prior service cost           |  |         | 3   |                 |  |      | 3   |      |  |      | 3   |      |  |   | 2  |   |  |   | 1  |  |  |   | 1  | 
|Recognized actuarial gain                    |  |         |    |                 |  |      |    |      |  |      |    |      |  |   |   |   |  |   | 1  |  |  |   | 1  | 
|                                             |  |         |     |                 |  |      |     |      |  |      |     |      |  |   |    |   |  |   |    |  |  |   |    | 
|Net expense                                  |  | $       | 62  |                 |  | $    | 52  |      |  | $    | 56  |      |  | $ | 12 |   |  | $ | 17 |  |  | $ | 18 | 
|                                             |  |         |     |                 |  |      |     |      |  |      |     |      |  |   |    |   |  |   |    |  |  |   |    | 
|Curtailment and termination benefits         |  |         |     |                 |  |      |     |      |  |      |     |      |  |   | (1 | ) |  |   |   |  |  |   |   | 
|                                             |  |         |     |                 |  |      |     |      |  |      |     |      |  |   |    |   |  |   |    |  |  |   |    | 
|Adjusted net post-retirement benefit expense |  |         |     |                 |  |      |     |      |  |      |     |      |  | $ | 11 |   |  | $ | 17 |  |  | $ | 18 | 
|                                             |  |         |     |                 |  |      |     |      |  |      |     |      |  |   |    |   |  |   |    |  |  |   |    | 



| |            
| | -----------
| | Assumptions

Significant weighted-average assumptions used in
developing pension and post-retirement benefit obligations at
December 31 include:

|                                        |  |         |      |            |  |      |      |      |  |  |      |   |  |  |      |  
|--------------------------------------- |  | ------- | ---- | ---------- |  | ---- | ---- | ---- |  |  | ---- | - |  |  | ---- | -
|                                        |  |         |      |            |  |     
|                                        |  |         |      | Post-     
|                                        |  | Pension |      | Retirement
|                                        |  |         |      |           
|                                        |  | 2003    |      | 2004       |  | 2003 |      | 2004
|                                        |  |         |      |            |  |      |      |     
|Discount rate                           |  |         | 6.25 | %          |  |      | 5.75 | %    |  |  | 6.25 | % |  |  | 5.75 | %
|Composite rate of compensation increase |  |         | 6.00 | %          |  |      | 6.00 | %    |  |  | 6.00 | % |  |  | 6.00 | %

Significant weighted-average assumptions used to
determine net periodic pension and post-retirement cost for the
years ended December 31 include:

|                                         |  |         |      |                 |  |      |      |      |  |      |      |      |  |  |      |   |  |  |      |   |  |  |      |  
|---------------------------------------- |  | ------- | ---- | --------------- |  | ---- | ---- | ---- |  | ---- | ---- | ---- |  |  | ---- | - |  |  | ---- | - |  |  | ---- | -
|                                         |  |         |      |                
|                                         |  | Pension |      | Post-Retirement
|                                         |  |         |      |                
|                                         |  | 2002    |      | 2003            |  | 2004 |      | 2002 |  | 2003 |      | 2004
|                                         |  |         |      |                 |  |      |      |      |  |      |      |     
|Discount rate                            |  |         | 7.25 | %               |  |      | 6.75 | %    |  |      | 6.25 | %    |  |  | 7.25 | % |  |  | 6.75 | % |  |  | 6.25 | %
|Expected long-term return on plan assets |  |         | 8.50 | %               |  |      | 8.50 | %    |  |      | 8.50 | %    |  |  |     |   |  |  |     |   |  |  |     |  
|Composite rate of compensation increase  |  |         | 7.00 | %               |  |      | 6.00 | %    |  |      | 6.00 | %    |  |  | 7.00 | % |  |  | 6.00 | % |  |  | 6.00 | %

The expected long-term rate of return on assets
was derived using data from investment managers and reflects the
average rate of earnings expected on the funds invested, or to
be invested, to provide for the benefits included in the
projected benefit obligations. The Company considers many
factors, which include current market information on long-term
returns (e.g., long-term bond rates) and current and
target asset allocations between asset categories. The target
asset allocation is determined based on consultations with
external investment advisors.

140



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


Assumed health care cost trend rates at
December 31 are as follows:

|                                                                                      |  |         |       |          |  |         |       |          |  |  |      |   |  |  |       |  
|------------------------------------------------------------------------------------- |  | ------- | ----- | -------- |  | ------- | ----- | -------- |  |  | ---- | - |  |  | ----- | -
|                                                                                      |  |         |       |         
|                                                                                      |  | 2003    |       | 2004    
|                                                                                      |  |         |       |         
|                                                                                      |  | Pre-Age |       | Post-Age |  | Pre-Age |       | Post-Age
|                                                                                      |  | 65      |       | 65       |  | 65      |       | 65      
|                                                                                      |  |         |       |          |  |         |       |         
|Health care cost trend rate assumed for next year                                     |  |         | 10.00 | %        |  |         | 11.00 | %        |  |  | 9.25 | % |  |  | 10.00 | %
|Rate to which the cost trend rate is assumed to
    decline (the ultimate trend rate) |  |         | 5.00  | %        |  |         | 5.00  | %        |  |  | 5.00 | % |  |  | 5.00  | %
|Year the rate reaches the ultimate trend rate                                         |  |         | 2011  |          |  |         | 2011  |          |  |  | 2011 |   |  |  | 2011  |  

The assumed dental cost trend rate is 5.0% in
2004 and future years. A one percentage-point change in the
assumed health care cost trend rate would have the following
effects:

|                                                            |  |                 |    |                 |  |   |     |  
|----------------------------------------------------------- |  | --------------- | -- | --------------- |  | - | --- | -
|                                                            |  | One Percentage- |    | One Percentage-
|                                                            |  | Point Increase  |    | Point Decrease 
|                                                            |  |                 |    |                
|Effect on total of service and interest cost
    components |  | $               | 4  |                 |  | $ | (3  | )
|Effect on post-retirement benefit obligation                |  |                 | 20 |                 |  |   | (16 | )

Plan
Assets

The Companys pension plans asset
allocations at December 31, by asset category are as
follows:

|               |                   |                |  |      |     |   |  |    |     |  
|-------------- | ----------------- | -------------- |  | ---- | --- | - |  | -- | --- | -
|               |                   |               
|               |                   | Plan Assets at
|               |                   | December 31,  
|               |                   |               
|               |                   | 2003           |  | 2004
|               |                   |                |  |     
|Asset Category |                   |                |  |      |     |   |  |   
|               | Equity securities |                |  | 66   | %   |   |  | 62 | %  
|               | Debt securities   |                |  | 28   |     |   |  | 28 |    
|               | Cash              |                |  | 1    |     |   |  |   |    
|               | Other             |                |  | 5    |     |   |  | 10 |    
|               |                   |                |  |      |     |   |  |   
|               |                   | Total          |  |      | 100 | % |  |    | 100 | %
|               |                   |                |  |      |     |   |  |   

The investment goal of the plans is to ensure the
availability of funds for the liabilities as they become due and
to meet the objectives with a prudent risk profile,
diversification and diligent management in accordance with
applicable statutory and regulatory constraints. Target
allocations for the pension plans are 35% large cap equity
(range of 30  40%), 10% small/mid cap equity (range
of 5  15%), 15% international equity (range of
10  20%), 30% domestic fixed income (range of
25  30%), 10% alternative investments
(range 5  15%) and 0% cash (0  2%)
range. The alternative investment allocation is comprised of
absolute return strategies. Absolute return strategies are
designed to return cash plus a premium regardless of market
direction and are included in the portfolio for diversification
purposes. Prohibited investments are outlined in each individual
managers agreement, and derivatives are allowed if in
compliance with the Companys internal derivative policy.
Derivatives may be used as a substitute for physical investing
or to manage duration and currency risk. Performance is reviewed
on a monthly basis.

141



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


Contributions

The Company does not expect to make any
contributions to its pension plans and its post-retirement
benefit plans in 2005.

Estimated Future
Benefit Payments

The following benefit payments, which reflect
expected future service, as appropriate, are expected to be
paid. Post-retirement benefit payments shown reflect estimated
payment amounts before the Medicare subsidy. The Medicare
subsidy for all years shown below totals less than $2 in
aggregate.

|          |  |          |     |            |  |   |    | 
|--------- |  | -------- | --- | ---------- |  | - | -- | 
|          |  |          |     | Post-     
|          |  | Pension  |     | retirement
|          |  | Benefits |     | Benefits  
|          |  |          |     |           
|2005      |  | $        | 86  |            |  | $ | 1  | 
|2006      |  |          | 45  |            |  |   | 1  | 
|2007      |  |          | 49  |            |  |   | 2  | 
|2008      |  |          | 52  |            |  |   | 2  | 
|2009      |  |          | 54  |            |  |   | 3  | 
|2010-2014 |  |          | 308 |            |  |   | 26 | 

Defined
Contribution Plans

The Company maintains several contributory
savings plans which cover substantially all employees. Effective
December 31, 2002, the plan covering bargained employees
was merged into the plan covering nonbargained employees.
Contributions made by the Company and the related costs are
determined as a percentage of covered employees eligible
contributions to the plans and totaled $56 in 2002, $46 in 2003
and $46 in 2004.

Current employees who were formerly employed by
AT&T Wireless will continue to participate in a legacy
savings plan until January 1, 2006. The plan matches a
percentage of employee contributions up to certain limits and
provides a fixed contribution percentage. The Company may also
provide discretionary or profit-sharing contributions.
Contributions under the plan totaled $13 from the acquisition
date of October 26, 2004 through December 31, 2004.

Stock Based
Compensation Plans

AT&T Wireless sponsored the 2001 Long Term
Incentive Plan, which provided for stock options, restricted
stock and performance shares. All of these awards vested and
accelerated upon the Companys acquisition of AT&T
Wireless and were settled in cash.

Supplemental
Retirement Plans

The Company also assumed the liabilities related
to nonqualified, unfunded supplemental retirement plans for
senior executives previously employed by SBC affiliates that
were contributed to the Company. Expenses related to these plans
were less than $2 in all years presented. Liabilities of $8 and
$8 related to

142



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


these plans, which include an additional minimum
pension liability of $2 and $3, have been included in
Other noncurrent liabilities in the consolidated
balance sheets at December 31, 2003 and 2004, respectively.
The consolidated balance sheets also include $1 in Other
intangible assets, net at December 31, 2003 and 2004
related to these plans.



| |                           
| | --------------------------
| | Deferred Compensation Plan

The Company provides certain management employees
with a nonqualified, unfunded deferred compensation plan. The
plan allows eligible participants to defer some of their
compensation on a pre-tax basis and receive a market-based
interest rate of return. In addition, the plan provides for a
stated matching contribution by the Company based on a
percentage of the compensation deferred. Deferred compensation
expenses for all years presented was not significant. The
long-term portions of liabilities related to this plan of $22
and $30 have been included in Other noncurrent
liabilities in the consolidated balance sheets at
December 31, 2003 and 2004, respectively.

Certain management employees who previously were
employees of AT&T Wireless are participants in a
nonqualified, unfunded deferred compensation plan, which allows
participants to defer a portion of their compensation on a
pre-tax basis, with earnings calculated based on valuation funds
selected by the participants. In addition, the plan provides for
contributions by the Company to participants whose matching and
profit sharing contributions to the qualified 401(k) plan were
capped by operation of the limitations imposed by tax laws. The
liability of the deferred compensation plan totaled $61 as of
December 31, 2004, of which $24 and $37 have been
classified as Accrued liabilities and Other
noncurrent liabilities, respectively, in the consolidated
balance sheets.

The liabilities associated with the AT&T
Wireless deferred compensation plan, along with other benefit
obligations, have been funded and are held in a grantor trust,
subject to the claims of the Companys creditors in the
event of the Companys insolvency. Upon the acquisition of
AT&T Wireless by the Company, the trust became irrevocable,
and the Company was required to contribute an amount to the
grantor trust equal to the present value of the total amount
owed to participants in the deferred compensation plan and other
benefit obligations. As of December 31, 2004, the grantor
trust held $110 in assets, of which $83 was invested in cash
equivalents and short term investments. The remaining $27
represented the cash surrender value of Company owned life
insurance policies. The assets held by the grantor trust were
included in Other assets in the consolidated balance
sheets as of December 31, 2004 (see Note 1).



| |                            
| | ---------------------------
| | Long-Term Compensation Plan

The Cingular Wireless Long-Term Compensation
Plan, as amended (the Plan), provides for incentive compensation
to eligible participants over periods that are two years or
longer in the form of performance units, stock appreciation
units and restricted stock units. Awards granted in any
particular year may be comprised of any combination of award
type provided for under the Plan, as approved by the plan
administrator. All awards are ultimately settled in cash. Grants
are made in April of the award year.

Performance units are tied to the achievement of
specified financial objectives over a three-year performance
period. The units have a stated value of $50 (whole dollars).
Performance units granted at

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CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


inception of a three-year performance period are
payable in the first quarter following the performance period,
with payouts ranging from 0% to 200% of the stated value of the
performance units for years prior to 2004 and 0% to 150% for
2004 grants. The number of performance units granted under the
Plan total approximately 1.2 million units in 2002 and
540,000 units in 2003. During the year ended
December 31, 2004, the Company granted approximately
732,000 performance units. As of December 31, 2004, the
Company has approximately 2.0 million outstanding
performance units. Expense is accrued ratably throughout the
performance period based upon managements estimate of the
compensation that will ultimately be earned under the Plan. As
performance is monitored against the financial objectives that
have been established throughout the respective three-year
performance periods, management may revise its estimate of the
compensation that will ultimately be earned under the Plan and
adjust its accrual accordingly.

Stock appreciation units granted under the Plan,
which approximate 3.3 million in total, are indexed to an
underlying share of BellSouth or SBC common stock. Each stock
appreciation unit has a grant price equal to the closing price
of BellSouth or SBC stock, as the case may be, based on the
closing New York Stock Exchange price on the grant date. Stock
appreciation units were granted to eligible employees on
April 1, 2003, 50% of which vest two years after the grant
date and the remaining 50% of which vest three years following
the grant date. As of December 31, 2004, the Company had
approximately 2.8 million outstanding stock appreciation
units. The units expire 10 years from the grant date.
Compensation cost is recognized over the period such units
remain outstanding based upon the change in the fair value of
the stock appreciation units at the end of each reporting period.

Restricted stock units granted under the Plan are
indexed to an underlying share of BellSouth or SBC common stock.
The value of the restricted stock units granted in 2004 will be
paid in cash to holders in March 2007 based on the average of
the closing stock prices of BellSouth and SBC common stock for
the last ten trading days of February 2007. Dividend equivalents
will be paid annually at the same rate as the dividend received
by all SBC and BellSouth shareholders, respectively. During the
year ended December 31, 2004, the Company granted
approximately 339,000 BellSouth restricted stock units and
378,000 SBC restricted stock units with an aggregate value on
the grant date of approximately $19. As of December 31,
2004, the Company had approximately 669,000 outstanding
restricted stock units. The value of the restricted stock units,
adjusted for changes in the value of the underlying BellSouth
and SBC common stock, is recognized as compensation expense over
the three year vesting period.

For the years ended December 31, 2003 and
2004, the Company recognized compensation expense of $14 and
$26, respectively, associated with the Plan. Former AT&T
Wireless employees who remain in the employment of the Company
and meet certain eligibility requirements will participate in
the Plan beginning in 2005.



|    |                              
|--- | -----------------------------
|18. | Commitments and Contingencies



| |       
| | ------
| | Leases

The Company entered into significant capital
leases primarily for the use of communications towers (see
Note 19). Capital lease obligations are included in
Note 9.

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PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


The Company also entered into operating leases
for facilities and equipment used in operations. These leases
typically include renewal options and escalation clauses. In
general, ground and collocation leases have five or ten year
initial terms with three to five renewal terms of five years.
Rental expense under operating leases for the years ended
December 31, 2002, 2003 and 2004 was $456, $512 and $699,
respectively.

The following table summarizes the approximate
future minimum rentals under noncancelable operating leases,
including renewals that are reasonably assured, in effect at
December 31, 2004:

|                |  |   |       | 
|--------------- |  | - | ----- | 
|At December 31, |  |   |       | 
|2005            |  | $ | 1,251 | 
|2006            |  |   | 1,094 | 
|2007            |  |   | 899   | 
|2008            |  |   | 729   | 
|2009            |  |   | 619   | 
|Thereafter      |  |   | 3,511 | 
|                |  |   |       | 
|Total           |  | $ | 8,103 | 
|                |  |   |       | 



| |            
| | -----------
| | Commitments

The Company has unconditional purchase
commitments for advertising and marketing, computer equipment
and services, roaming, long distance services, network equipment
and related maintenance, and software development and related
maintenance. These commitments totaled approximately $1,326 at
December 31, 2004. Included in this amount are commitments
of $142 to SBC, BellSouth and their affiliates for
telecommunications and other services. Also included are
commitments to AT&T Corp. (AT&T) which were assumed by
the Company in conjunction with its acquisition of AT&T
Wireless, as well as network-related commitments associated with
the brand license agreement. In August 2004, the Company,
AT&T Wireless and AT&T entered into a definitive
agreement to modify the brand license agreement between AT&T
Wireless and AT&T to provide the Company with certain
licensee rights to the AT&T brand for wireless services
during a six-month transition period following the acquisition.
As part of this agreement, the Company committed to purchase
$100 in network services from AT&T through December 31,
2005, of which $33 remained outstanding as of December 31,
2004.

The Company has commitments with local exchange
carriers for dedicated leased lines. The original terms of these
commitments vary from month-to-month up to five years. The
Companys related commitment to its primary carriers as of
December 31, 2004, was approximately $572, with payments
due in each of the five succeeding fiscal years as follows: $225
in 2005, $171 in 2006, $108 in 2007, $60 in 2008 and $8 in 2009.
Included in these amounts are commitments of $258 to SBC,
BellSouth and their affiliates.

The Company has commitments to Crown Castle
International for monitoring and maintenance services related to
its communication towers (see Note 19). The Companys
commitment at December 31, 2004 was approximately $276,
with payments due in each of the five succeeding fiscal years
and thereafter as follows: $86 in 2005, $61 in 2006, $42 in
2007, $27 in 2008, $16 in 2009 and $44 thereafter.

145



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CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


As discussed in Note 7, the Company has
interests in several variable interest entities which were
formed to acquire licenses that were restricted by the FCC to
businesses with limited assets and revenues. Two of these
variable interest entities, including Salmon and Alaska Native
Wireless, LLC (ANW), include terms within their venture
agreements, such that the other owners may elect to require the
Company to purchase their interests at specified time periods.
The other owner of Salmon, Crowley Digital, has the right to put
its approximate 20% economic interest in Salmon to the Company
at a cash price equal to Crowley Digitals initial
investment plus a specified rate of return. The put right can be
exercised at certain times, and the Company estimates that the
earliest exercise period will begin in February 2006 and the
latest exercise period will end in April 2008. The
Companys maximum liability for the purchase of Crowley
Digitals interest in Salmon under this put right is $225,
of which $155 was reflected in Other noncurrent
liabilities as of December 31, 2004. In accordance
with the terms of the ANW venture agreement, in March 2007, the
other owners of ANW may elect to require the Company to purchase
their interests in ANW for $145, of which $118 was reflected
within Other noncurrent liabilities as of
December 31, 2004. Under certain circumstances, this right
may be exercised earlier, in which case the amount payable would
be reduced by 5 percent per annum.

In connection with the termination of the
Companys GSMF network infrastructure joint venture with
T-Mobile (see Note 20), the Company has a $1,200 commitment
to purchase a minimum number of minutes from T-Mobile. This
commitment became effective in January 2005.

In November 2004, the Company and Edge Mobile
Wireless, LLC entered into a definitive agreement, pursuant to
which Edge Mobile, LLC (Edge) was formed to bid as an
entrepreneur for certain 1900 MHz band PCS
licenses auctioned by the FCC. The auction ended in February
2005. Edge was the successful bidder for, and, following the
filing and review of the standard applications, expects to be
granted 21 licenses. Edges total high bids for the
licenses in which the Company will have an indirect economic
interest amounted to $181, of which the Company is obligated to
fund $174. In December 2004, the Company contributed $31 in
equity to Edge, which will be used to pay for a portion of the
licenses. The Company will contribute equity and make advances
to Edge in March 2005 to cover its remaining obligation.



| |              
| | -------------
| | Contingencies

The Company and AT&T Wireless are defendants
in a lawsuit brought by Freedom Wireless Inc. alleging patent
infringement related to prepaid wireless service. The case is
pending in the U.S. District Court for the District of
Massachusetts, and the trial for this matter commenced in late
February 2005. It is expected that the trial could last at least
two months. The plaintiff is expected to seek approximately $250
in monetary damages from the Company and AT&T Wireless, as
well as injunctive relief. Boston Communications Group, Inc.
(BCGI), whose prepaid technology platform the Company has used
and whose technology is alleged to infringe two patents held by
Freedom Wireless, has agreed to indemnify the Company and
AT&T Wireless with respect to the claims asserted in this
litigation. Financial and other information regarding BCGI can
be obtained at www.bcgi.net. (This website address is an
inactive textual reference included for information only and is
not intended to be an active link to or incorporate any website
information into this document.)

146



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CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


The Company is subject to claims arising in the
ordinary course of business involving allegations of personal
injury, breach of contract, anti-competitive conduct, employment
law issues, regulatory matters and other actions. To the extent
that management believes that a loss arising from litigation or
regulatory proceedings is probable and can reasonably be
estimated, an amount is accrued on the financial statements for
the estimated loss. As additional information becomes available,
the potential liability related to the matter is reassessed and
the accruals are revised, if necessary. While complete assurance
cannot be given as to the outcome of any legal claims, the
Company believes that any financial impact would not be material
to its business, financial position or cash flows.



|    |                      
|--- | ---------------------
|19. | Communications Towers

In June 1999, as part of an agreement with Crown
Castle International (Crown), BellSouth subsidiaries leased to
Crown all unused space on 2,623 of their communications towers.
These subsidiaries were contributed to the Company on
October 2, 2000. Under these transactions, Crown assumed
all obligations for property taxes, insurance and maintenance
for the towers and agreed to reimburse the Company for ground
lease rentals. The Company has retained, outside of the leases,
a portion of the towers for use in operating its wireless
network and continues to own the towers and related
communications components, including switching equipment,
shelters and communications facilities. The Company entered into
a monitoring and maintenance agreement with Crown for these
towers. During 2002, 2003 and 2004, the Company paid $51, $50
and $60, respectively, to Crown for its monitoring and
maintenance services. Monitoring and maintenance fees are
escalated by 5% on the anniversary of each site commencement
date. The Company has the right to withdraw from the monitoring
and maintenance agreement for any tower on the tenth anniversary
of the transaction date and on each five-year anniversary
thereafter.

In August 2000, Southwestern Bell Mobile Systems,
Inc., which SBC transferred to the Company on October 2,
2000, agreed to transfer approximately 3,900 of its
communications towers (later reduced to 3,306), including those
owned by consolidated partnerships, to another SBC affiliate, in
connection with an agreement whereby the SBC affiliate would
lease its rights to use and lease space on the towers to
SpectraSite Inc. (SpectraSite, formerly SpectraSite Holdings,
Inc.). Under the arrangement, SpectraSite then subleases back to
the SBC affiliate space on the towers the Company uses. The SBC
affiliate further subleases that space to the Company or its
affiliates. The annual rent is escalated by 5% as of December 14
of every year. The term of the sublease is unique to each tower
and ranges from 13 to 32 years. The Company (as lessee) has
the right to withdraw from any lease on the tenth anniversary of
the lease date and on each five-year anniversary thereafter. The
Company accounts for its subleases of the tower space from the
SBC affiliate as capital leases.

As part of the Crown and SpectraSite agreements,
the Company had entered into build-to-suit (BTS) agreements
that provided for the development and construction of towers on
BTS sites and the performance of other services. In 2002, the
Company terminated its BTS agreements with SpectraSite and
Crown. Under the BTS agreement, 34 towers were completed and
became capital leases with SpectraSite. Certain other towers
under construction and other work-in-progress were transferred
to the Company during the transition period.

In February 2003, a subsidiary of the Company
acquired leasehold interests in 545 communication towers in
California and Nevada from SpectraSite for $81 in cash.
SpectraSite had previously acquired these

147



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CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


leasehold interests from an affiliate of SBC in
2000, and the Company had leased a portion of the tower space
indirectly from SpectraSite. Subsequent to February 2003, the
GSMF venture leased a portion of the space on these towers
directly from a subsidiary of the Company. In connection with
the dissolution of GSMF and the sale to T-Mobile of the
California/ Nevada network assets and certain spectrum, the
leasehold interests of the Company and GSMF in these 545
communications towers in California and Nevada were transferred
to T-Mobile (see Note 20).

In 2002, 2003 and 2004, the Company transferred
to the SBC affiliate 33, 94 and 187 towers, respectively.
Through December 31, 2004, a total of 3,265 towers having
an aggregate net book value of $190, have been transferred.



|    |                  
|--- | -----------------
|20. | Subsequent Events



| |                                                             
| | ------------------------------------------------------------
| | Termination of GSMF Network Infrastructure
    Joint Venture

In May 2004, the Company and T-Mobile entered
into an agreement, subject to regulatory and other customary
closing conditions and the closing of the acquisition of
AT&T Wireless, to dissolve GSMF, sell to T-Mobile certain
spectrum licenses and other assets and exchange certain other
spectrum licenses. The first stage of these transactions closed
in January 2005.

Pursuant to the agreement, the Company sold its
ownership of the California/ Nevada Major Trading Area
(MTA) network assets to T-Mobile for approximately $2,500
in cash. The proceeds from the sale will be used to fund capital
expenditures through June 2005 in order to receive favorable tax
treatment. In connection with the dissolution, the Company was
required to contribute an additional $200 to the venture to
equalize the capital accounts. The ownership of the New York
Basic Trading Area (BTA) network assets returned to
T-Mobile. The Company retained the right to utilize the
California/ Nevada and New York networks during a four year
transition period and has guaranteed to purchase a minimum
number of minutes over this term with a minimum purchase of
$1,200. The Company and T-Mobile retained all of their
respective customers in each market. The Company also sold
10 MHz of spectrum to T-Mobile in each of the
San Francisco, Sacramento and Las Vegas BTAs for $180.

As agreed to as part of the original joint
venture agreement, the Company and T-Mobile were each to receive
50% of the spectrum used in the operation of the joint venture
following its dissolution. Spectrum licenses were not
contributed to the joint venture upon its formation in 2001 but
rather were subject to a separate agreement governing their use.
In connection with the dissolution, the Company and T-Mobile are
contractually required to exchange certain spectrum licenses.
The Company expects the spectrum licenses to be exchanged on
January 1, 2007. The Company will receive 10 MHz of
spectrum in New York BTA in addition to the 10MHz of spectrum
the Company made available for use by GSMF and 2.5 MHz of
spectrum in the Las Vegas BTA, and T-Mobile will receive
5 MHz of spectrum in each of nine BTAs in California, the
largest of which is San Diego. T-Mobile also has the option
to purchase an additional 10 MHz of spectrum in the Los
Angeles and San Diego BTAs from the Company at the end of
two years, under certain circumstances.

The Company expects to recognize a gain on these
transactions, principally due to the value of the New York
spectrum to be received in connection with the consummation of
these transactions. The Company expects to recognize a gain upon
the completion of the spectrum exchange in 2007.

148



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CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)




| |                   
| | ------------------
| | Other Divestitures

In November 2004, in response to the
Companys agreement with the U.S. Department of
Justice and the FCC to divest certain assets and spectrum in
certain markets as a condition to receiving regulatory approval
to acquire AT&T Wireless, the Company entered into a number
of disposition agreements. An agreement with Alltel Corporation
(Alltel) involves the sale by the Company of certain former
AT&T Wireless assets and properties, including licenses,
network assets, and subscribers that the Company currently
operates in several markets, the largest of which is Oklahoma
City, Oklahoma. As part of this agreement, the Company also
agreed to sell 20 MHz of spectrum and the network assets
formerly held by AT&T Wireless in Wichita, Kansas, which it
was not required to divest. The Company also entered into a
disposition agreement with MetroPCS to sell 10 MHz of
former AT&T Wireless spectrum in each of Dallas, Texas and
Detroit, Michigan for $230. The Company entered into a
disposition agreement with Cellco Partnership (d/b/a Verizon
Wireless) to sell 10 MHz of former AT&T Wireless
spectrum in Knoxville, Tennessee for $20. Finally, the Company
has entered into other disposition agreements pertaining to
certain other former AT&T Wireless properties and assets in
four smaller transactions involving the sale of various
combinations of spectrum, network assets and accounts in
specific rural regions of Arkansas, Mississippi, Missouri and
Texas.

In February and March 2005, the Company closed
its transactions with MetroPCS and Verizon Wireless and one of
the four smaller transactions described above. The closings of
the remaining divestiture transactions are contingent upon
regulatory approval. The transaction with Alltel is expected to
close by the second quarter of 2005. The Company does not
anticipate recognizing any material gain or loss on these
divestiture transactions as the Companys assumed fair
value of the net assets in conjunction with its purchase of
AT&T Wireless equaled the sales proceeds from the respective
transactions.



|    |                                                  
|--- | -------------------------------------------------
|21. | Selected Quarterly Financial Data
    (Unaudited)

The unaudited quarterly results presented below
for 2003 and the first three quarters of 2004 have been restated
to reflect the correction of the Companys method of
accounting for its operating leases. See Note 2 for further
discussion of the restatement.

|                                                                                               |  |         |       |         |  |         |       |         |  |   |       |     |  |   |       |    
|---------------------------------------------------------------------------------------------- |  | ------- | ----- | ------- |  | ------- | ----- | ------- |  | - | ----- | --- |  | - | ----- | ---
|                                                                                               |  | First   |       | Second  |  | Third   |       | Fourth 
|2003                                                                                           |  | Quarter |       | Quarter |  | Quarter |       | Quarter
|                                                                                               |  |         |       |         |  |         |       |        
|Total operating revenues(a)                                                                    |  | $       | 3,638 |         |  | $       | 3,874 |         |  | $ | 4,059 |     |  | $ | 3,912 | (c)
|Operating income                                                                               |  |         | 707   | (b)     |  |         | 747   |         |  |   | 480   |     |  |   | 320   |    
|Income (loss) before provision for income taxes
    and cumulative effect of accounting change |  |         | 410   |         |  |         | 411   |         |  |   | 172   |     |  |   | 12    |    
|Net income (loss)                                                                              |  |         | 408   |         |  |         | 399   |         |  |   | 166   | (d) |  |   | 4     | (d)

149



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##### 



CINGULAR WIRELESS LLC





PART II (Dollars
in Millions)


Item
8.     Financial Statements and
Supplemental Data

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS  (Continued)

(Dollars in Millions)


|                                                                                               |  |         |       |         |  |         |       |            |  |   |       |     |  |   |       |     
|---------------------------------------------------------------------------------------------- |  | ------- | ----- | ------- |  | ------- | ----- | ---------- |  | - | ----- | --- |  | - | ----- | ----
|                                                                                               |  | First   |       | Second  |  | Third   |       | Fourth    
|2004                                                                                           |  | Quarter |       | Quarter |  | Quarter |       | Quarter(e)
|                                                                                               |  |         |       |         |  |         |       |           
|Total operating revenues                                                                       |  | $       | 3,942 |         |  | $       | 4,155 |            |  | $ | 4,257 |     |  | $ | 7,082 |     
|Operating income (loss)                                                                        |  |         | 550   |         |  |         | 671   |            |  |   | 460   | (f) |  |   | (153  | )(g)
|Income (loss) before provision for income taxes
    and cumulative effect of accounting change |  |         | 221   |         |  |         | 337   |            |  |   | 142   | (f) |  |   | (557  | )(g)
|Net income (loss)                                                                              |  |         | 215   |         |  |         | 339   |            |  |   | 142   | (f) |  |   | (495  | )(g)



---



|    |  |                                                                                                                                                                                                                                                                                                                                                                                            
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | Includes a reclassification to reflect billings
    to our customers for the USF and other regulatory fees as
    Operating revenues. The amounts reclassified for the
    first, second, and third quarters of 2003 were $48, $88 and
    $105, respectively.                                                                                                                           
|   
|(b) |  | Includes a reduction of $24 due to reorganization
    (see Note 15).                                                                                                                                                                                                                                                                                                                       
|   
|(c) |  | Operating revenues in the fourth quarter of 2003
    were $142 lower than the third quarter, due primarily to reduced
    roaming revenues as a result of lower negotiated rates and
    expected seasonality.                                                                                                                                                                             
|   
|(d) |  | Net income in the third and fourth quarters of
    2003 was impacted by increased customer acquisition costs
    associated with the two consecutive quarters of strong gross
    customer additions. Additionally, other cost increases impacting
    results included higher customer retention costs in preparation
    for wireless local number portability in the later part of 2003.
|   
|(e) |  | On October 26, 2004, the Company completed
    its acquisition of AT&T Wireless. Operating results for 2004
    for AT&T Wireless have been included in the consolidated
    financial statements subsequent to that date.                                                                                                                                                                 
|   
|(f) |  | Includes a reduction of $43 for integration
    planning costs and $31 loss on the writedown of the carrying
    value of the Companys Mobitex business.                                                                                                                                                                                                                                  
|   
|(g) |  | Fourth quarter 2004 operating results were
    impacted by an increase in customer acquisition costs associated
    with the highest gross and net customer additions in the
    Companys history, purchase accounting adjustments and
    related amortization (see Notes 3 and 5) and $245 of
    acquisition-related and integration costs (see Note 14).                              

150