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  **UNITED STATES SECURITIES AND EXCHANGE COMMISSION****Washington, D.C. 20549** **Form 10-K**   (Mark One)  þ     **ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE    SECURITIES EXCHANGE ACT OF 1934**   **For the fiscal year ended December 31, 2005** **or** **o** **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE    SECURITIES EXCHANGE ACT OF 1934**   **For the transition period    from           to****Commission File Number 001-31673** **Cingular Wireless LLC****Formed under the laws of the State of Delaware***I.R.S. Employer Identification Number 74-2955068***5565 Glenridge Connector, Atlanta, Georgia 30342****Telephone Number: (404) 236-6000****Securities registered pursuant to Section 12(b) of theAct:**   **Title of Each Class** **Name of Each Exchange on Which Registered**       5.625% Senior Notes Due 2006     New York Stock Exchange    6.50% Senior Notes Due 2011     New York Stock Exchange    7.125% Senior Notes Due 2031     New York Stock ExchangeIndicate by check mark if the registrant is a well-knownseasoned issuer, as defined in Rule 405 of the SecuritiesAct.     Yes o          No þIndicate by check mark if the registrant is not required to filereports pursuant to Section 13 or Section 15(d) of theAct.     Yes o          No þIndicate by check mark whether the registrant (1) has filedall reports required to be filed by Section 13 or 15(d) ofthe Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrantwas required to file such reports), and (2) has beensubject to such filing requirements for the past90 days.     Yes þ          No oIndicate by check mark if disclosure of delinquent filerspursuant to Item 405 ofRegulation S-K isnot contained herein, and will not be contained, to the best ofregistrant’s knowledge, in definitive proxy or informationstatements incorporated by reference in Part III of thisForm 10-K or anyamendment to thisForm 10-K.     þIndicate by check mark whether the registrant is a largeaccelerated filer, an accelerated filer, or a non-acceleratedfiler. See definition of “accelerated filer and largeaccelerated files” inRule 12b-2 of theExchange Act.Large acceleratedfiler o          Acceleratedfiler o          Non-acceleratedfiler þIndicate by check mark whether the registrant is a shell company(as defined inRule 12b-2 of theAct.)     Yes o          No þThe limited liability company ownership interests of theregistrant are not publicly traded. Therefore, there is noaggregate market value for the registrant’s outstandingequity that is readily determinable.  

 
**TABLE OF CONTENTS**           **Page**     ** PART I**     Item 1.      Business  2      Item 1A.      Risk Factors  23      Item 1B.      Unresolved Staff Comments  31      Item 2.      Properties  32      Item 3.      Legal Proceedings  32      Item 4.      Submission of Matters to a Vote of Security    Holders  34  ** PART II**     Item 5.      Market for Registrant’s Common Equity,    Related Stockholder Matters and Issuer Purchases of Equity    Securities  35      Item 6.      Selected Financial Data  35      Item 7.      Management’s Discussion and Analysis    of Financial Condition and Results of Operations  39      Item 7A.      Quantitative and Qualitative Disclosure    About Market Risk  71      Item 8.      Financial Statements and Supplementary    Data  73      Item 9.      Changes in and Disagreements with    Accountants on Accounting and Financial Disclosure  141      Item 9A.      Controls and Procedures  141      Item 9B.      Other Information  141  ** PART III**     Item 10.      Directors and Executive Officers of the    Registrant  142      Item 11.      Executive Compensation  145      Item 12.      Security Ownership of Certain Beneficial    Owners and Management and Related Stockholder Matters  155      Item 13.      Certain Relationships and Related    Transactions  155      Item 14.      Principal Accounting Fees and Services  165  ** PART IV**     Item 15.      Exhibits and Financial Statement    Schedules  166      Signatures  176  EX-12 STATEMENT OF COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES EX-21 SUBSIDIARIES OF THE REGISTRANT EX-24 POWERS OF ATTORNEY EX-31.1 SECTION 302, CERTIFICATION OF THE PRESIDENT AND CEO EX-31.2 SECTION 302, CERTIFICATION OF THE CFO EX-32.1 SECTION 906, CERTIFICATION OF THE PRESIDENT AND CEO EX-32.2 SECITON 906, CERTIFICATION OF THE CFO
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**CINGULAR WIRELESS LLC** **PART I****Item 1.****Business****Overview**Throughout this document, Cingular Wireless LLC and itssubsidiaries are referred to as “Cingular” or“we”.We provide a wide array of wireless services for individual,business and governmental users. We are the largest provider ofwireless voice and data communications services in the UnitedStates (U.S.) in terms of subscribers and revenues. We recentlyreported:•     U.S. wireless cellular service and personal communication    services (PCS) subscribers totaling 54.1 million at    December 31, 2005; •     over 24 million active users of our data services at    December 31, 2005; •     revenues of $34.4 billion in 2005; and •     net income of $333 million in 2005.We have access to licenses, either through owned or leasedlicenses or licenses owned by joint ventures and affiliates, toprovide cellular or PCS wireless communications servicescovering an aggregate of 294 million in population (POPs)or approximately 99% of the U.S. population, including allof the 100 largest U.S. metropolitan areas. Wesupplement our own networks with roaming agreements that allowour subscribers to use other providers’ wireless servicesin regions where we do not have network coverage. We refer tothe area covered by our network “footprint” androaming agreements as our coverage area. Through roamingagreements with foreign carriers, we provide our subscribersequipped with multi-band devices and the largest global coverageof any U.S. wireless carrier, with service available inover 180 countries. We also offer multi-band devices andaccessories that allow our subscribers to access networks usingboth the cellular and PCS frequencies across the U.S., as wellas international networks around the world.Our primary digital networks utilize Global System for MobileCommunication (GSM) technology and Time Division MultipleAccess (TDMA) technology. As of December 31, 2005, 86%of our subscriber base was GSM-equipped and 95% of our totalminutes were carried on our GSM network. We also provide voiceservice on our analog network, as mandated by the FederalCommunications Commission (FCC).We plan to continue to expand our service and coverage area andincrease the capacity and quality of our digital network throughnew network construction, acquisitions, joint ventures, androaming arrangements with other wireless providers.In October 2004, we completed the acquisition of AT&TWireless Services, Inc. (AT&T Wireless) for an aggregateconsideration of approximately $41 billion in cash.Immediately following the acquisition of AT&T Wireless, werepositioned the Cingular brand with RAISING THEBARsm.Under that umbrella we also branded our network as theALLOVERsmnetwork, utilizing the slogan MORE BARS IN MOREPLACESsm.Along with completing the integration of AT&T Wireless, ourprimary business initiatives for 2006 include the development ofthe Business Markets Group, expansion of our voice and datanetworks and the continuing deployment of high-speed UniversalMobile Telephone System (UMTS) third-generation (3G)service throughout the majority of the largestU.S. metropolitan markets where it has not yet beendeployed.**Code of Ethics**We have adopted a written code of conduct applicable to alldirectors, officers and employees. In addition, we have aseparate Code of Ethics that is applicable to our principalexecutive, financial and accounting
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**CINGULAR WIRELESS LLC** **PART I****Item 1.****Business**officers, or our “Senior Financial Officers”,responsive to Section 406 of the Sarbanes-Oxley Act of 2002and the rules of the U.S. Securities and ExchangeCommission (SEC). The Senior Financial Officer Code of Ethics isavailable on our website. In the event that we make anysubstantive changes in, or provide any material waivers from,the provisions of this Code of Ethics, we intend to disclosesuch events on our website.**Contact Information**Cingular Wireless LLC is a Delaware limited liability companyand has its principal executive offices at Glenridge HighlandsTwo, 5565 Glenridge Connector, Atlanta, Georgia 30342 (telephonenumber 404-236-6000).Our Internet website is http://www.cingular.com. (This web siteaddress is an inactive textual reference included forinformation only and is not intended to be an active link or toincorporate any web site information into this document.) Wemake available, free of charge, through our website our annualreport to the SEC onForm 10-K, ourquarterly reports onForm 10-Q, ourcurrent reports onForm 8-K and allamendments to those reports as soon as reasonably practicableafter such reports are electronically filed with the SEC.**Organizational Structure*****Management and Governance***We were formed in April 2000 by SBC Communications Inc.(SBC) and BellSouth Corporation (BellSouth), whosemembership interests in us are held by their wholly ownedsubsidiaries. (SBC acquired AT&T Corp. on November 18,2005 and changed the name of the surviving entity to AT&TInc. When used herein, “AT&T” will refer to thesurviving entity and, prior to November 18, 2005, to SBC.AT&T Corp. will be referred to as “Old AT&T”prior to November 18, 2005.) In October 2000, SBC andBellSouth contributed substantially all of theirU.S. wireless businesses to us in exchange for economicownership interests in us of approximately 60% and 40%,respectively. We began doing business under the“Cingular” brand name in January 2001.AT&T and BellSouth jointly control Cingular WirelessCorporation, a holding company with no material assets of itsown other than a *de minimis*economic interest in us. Itsmain purpose is to act as our manager and thereby control ourmanagement and operations. We refer to Cingular WirelessCorporation as our “Manager”. Our officers areappointed by its board of directors.**Our Business*****Overview****Voice Services.* We offer a comprehensive range ofhigh-quality wireless voice communications services in a varietyof pricing plans, including national and regional rate plans aswell as prepaid service plans. Our voice offerings are tailoredto meet the communications needs of targeted customer segments,including youth, family, active professionals, local andregional businesses and major national corporate accounts. Themarketing and distribution plans for our voice services arefurther targeted to the specific geographic and demographiccharacteristics of each of our markets.*Data Services.* Wireless data continues to be a growingarea of our business, with its revenue representing anincreasing share of our overall subscriber revenue. Dataservices revenues comprised approximately 9% of our wirelessservice revenues in 2005, compared to 5% for 2004 and 3% for2003. We are experiencing solid growth from both consumer andenterprise wireless data solutions. We are continuing to upgradeour network and coordinate with equipment manufacturers andapplications developers in order to further
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**CINGULAR WIRELESS LLC** **PART I****Item 1.****Business**capitalize on the continued growth in the demand for wirelessdata services. We believe we are the largest provider ofwireless data in the U.S. wireless industry based on annualdata revenues for 2005.***Consumer Services****Postpaid Voice Service.* Consumer postpaid voice serviceis generally offered on a contract basis for one or two yearperiods. Under the terms of these contracts, service is billedand provided on a monthly basis according to the applicable rateplan chosen. Our wireless services include basic local wirelesscommunications service, long distance service and roamingservices. Roaming services enable our subscribers to utilizeother carriers’ networks when they are “roaming”outside our network footprint. We also charge fees to othercarriers for providing roaming services to their customers whentheir customers utilize our network. We had approximately46.3 million postpaid subscribers (excluding resellersubscribers) at December 31, 2005. In addition to basicwireless voice telephony services, we offer enhanced featureswith many of our pricing plans. These features include callerID, call waiting, call forwarding, three-way calling, noanswer/busy transfer and voice mail. In addition, many of ourpostpaid plans include unlimitedmobile-to-mobile andunlimited off-peak hour calling. In most markets, we also makeavailable additional services for a monthly fee, such as aPush-to-Talk voiceservice, discounted international roaming and international longdistance, expanded off-peak hours, roadside assistance andhandset insurance. Special handsets are required forPush-to-Talk andinternational roaming services.Our primary marketing emphasis is on enrolling subscribers inpostpaid service calling plans. Despite the relatively highercost of enrollment due to handset subsidies and sales commissionstructure, such subscribers generate higher revenue and have alower churn rate than prepaid service subscribers. Accordingly,a significant component of our strategy consists of developingvalue-added plan features, ancillary services, unique equipmentdevices and promotions to attract and retain postpaidsubscribers. In 2005, we continued to focus on simplifying andenhancing our national and international calling plans. Weemphasize national calling plans without roaming or longdistance charges due to the simplicity and value of the plansand expandedmobile-to-mobilecoverage areas to include non-Cingular network areas in thecalling plan area to take advantage of Cingular’s largecalling community. Thus, as our coverage and that of our GSMroaming partners expands, so does the calling area of oursubscribers, which further enhances our brand messages RAISINGTHEBARsm,theALLOVERsmnetwork and MORE BARS IN MOREPLACESsm.OurFAMILYTALK®*plans, which add lines at substantial discounts to normalpostpaid account prices, continue to be popular and tocontribute a significant portion of our postpaid subscribergrowth. TheROLLOVER®rate plans, which allow our subscribers to carry over any unused“anytime” minutes frommonth-to-month for upto one year, continue to be offered exclusively by Cingular. Weenhanced our international GSM voice roaming coverage to over180 countries for subscribers with compatible devices.Additionally in 2005, we introduced a new international servicesfeature package providing discounted voice roaming to WesternEurope and discounted international long distance dialing fromthe U.S.*Prepaid Voice Service.* We offer prepaid service to meetthe demands of distinct consumer segments, such as the youthmarket, families and small business customers, who prefer tocontrol usage or pay in advance. Our prepaid services aremarketed asGoPhone®branded services with payment options including “Pay As YouGo” and “Pick Your Plan”.GoPhone®Pick Your Plan allows predefined monthly minute replenishment tooccur automatically with pre-authorized charges against acustomer’s credit card, debit card or checking account. OurGoPhone®Pay As You Go is more of the traditional prepaid service whereprepaid minutes can be purchased online, through the wirelessdevice or through the purchase of prepaid * FAMILYTALK®is a registered service mark of Delaware Valley CellularCorporation.
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**CINGULAR WIRELESS LLC** **PART I****Item 1.****Business**cards. As of December 31, 2005, retail prepaid usersrepresented approximately 6% of our total subscribers. Webelieve our prepaid service offering benefits from being part ofa national brand, particularly with regard to distribution. Ourprepaid strategy focuses on increasing the profitability ofthese prepaid subscribers through offering a wider array ofservices and features to increase revenue and retention of thesesubscribers. Our prepaid services offer subscribers manyfeatures available on our postpaid plans, including unlimitednights and weekends, long distance, caller ID, call waiting,voicemail and roaming, as well as enhanced features like textmessaging, downloadable graphics and ringtones, games andinformation alerts. At the same time, the subscriber retains thebenefits of no credit check and enhanced ability to controlspending, and ourGoPhone®subscribers also have no contract or monthly billing. Inaddition, we continue to focus on increasing the distribution ofour prepaid offering to include the Internet, automatedreplenishment services and strategic retail partners that allowour prepaid service to be truly a product of convenience.Consistent with the industry, we experience higher subscriberchurn rates and lower revenue per subscriber with prepaidsubscribers than our postpaid subscribers; however, theseimpacts are somewhat offset by the higher revenue per minuteearned, the absence of significant payment defaults and a lowercost of acquiring new prepaid subscribers, including lowerhandset subsidies.*Data Services.* We offer a wide array of consumer dataservices, such as wireless Internet browsing, wireless email,text messaging, instant messaging, multi-media messaging and theability to download content and applications. We continue tofocus on improving the customer experience through deployingadvanced data capable devices, enhancing the user interface onthese devices and making the provisioning of data services onthese devices as seamless as possible. To foster the continuedgrowth in the consumer data business, we continue to upgrade thetools and applications that facilitate greater usage.We significantly upgraded our MEdiaNettmservice, dramatically simplifying the way customers access thewireless Internet on their mobile phones. With just one or twoclicks on the phone’s keypad, customers can gain access tonews and entertainment headlines, sports scores, financialquotes, local weather and more. On select phones, a live tickerfeature constantly scrolls headline content across the handsetidle screen. In December 2005, we announced the launch ofCingularVideotm,an on-demand streaming video service that delivers fast,personalized access to high-quality video clips on high-speedcapable phones. Cingular also announced a partnership with HBOto produce exclusive mobile content. The deployment of nextgeneration devices, the improved customer browsing and downloadexperience and the expanded variety of content and applicationsare expected to contribute to continued revenue growth.Text messaging remains a core contributor to our overallconsumer data revenue stream. Messaging growth is extending intonew areas, as our base of subscribers is steadily adoptingenhanced messaging services such as instant messaging andpicture messaging. Simple pricing and the ongoing deployment ofadvanced data devices, witheasy-to-use digitalcamera technology and instant messaging services through AOL,Yahoo! and MSN, have helped drive this growth. In addition totext messaging, wireless email access is adding to revenuegrowth. Cingular has launched a java application that allowssubscribers to conveniently access email from Yahoo!, Microsoftor AOL on their wireless handset. This program comespre-installed on many new phones that we sell and is alsoavailable to download onto certain handsets.In December 2005, Cingular introduced its 3G network in 16markets across the U.S., branded as “BroadbandConnect”to business subscribers. This network technology is UMTS/ HSDPA(Universal Mobile Telephone System/ High Speed Downlink PacketAccess) and provides average mobile data connection speeds from400 to 700 kilobits per second (Kbps) on the downlink and burststo more than three megabit per second. The first 3G product,“LaptopConnect” combines a laptop modem card,Cingular’s Communication Manager software and a DataConnect plan for use on laptops. Customers can
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**CINGULAR WIRELESS LLC** **PART I****Item 1.****Business**use their laptops to access the Internet or email, downloadlarge files and attachments and run corporate businessapplications at broadband speeds in areas covered byBroadbandConnect. Where UMTS/ HSDPA is not available, the laptopmodem card will seamlessly fall back to our EDGE (Enhanced DataRates for Global Evolution) and GPRS (General Packet RadioService) networks but at lower speeds. We will continue todeploy 3G service throughout the majority of the largestU.S. metropolitan markets in 2006.*Equipment Sales.* We sell a wide variety of handsets andpersonal computer wireless data cards manufactured by varioussuppliers for use with our voice and data services. We also sellaccessories, such as carrying cases, hands-free devices,batteries, battery chargers and other items, to consumers, aswell as to agents and other third-party distributors for resale.We provide postpaid contract subscribers substantial equipmentsubsidies to initiate or upgrade service.***Enterprise Services****Corporate Wireless Solutions.* At the core of ourbusiness-to-business(B2B) activities is the Business Markets Group (BMG) whichis a completely separate, nationally focused B2B organizationthat gives business subscribers access to sales and supportprofessionals in the areas of sales, customer care, ordering,product and offer development and solutions deployment. BMGremains focused on these specialized needs.We provide a comprehensive set of corporate wireless managementservices and solutions to a large roster of businesssubscribers, including 95% of the Fortune 100 and more than 80%of the Fortune 500 companies, as well as well over 1,200federal, state and local government agencies. These solutionsare designed to meet the needs ofsmall-to-mid-sizebusinesses, large corporations and government agencies, andprovide business-specific rate plans, volume and equipmentdiscounts and wireless management tools for ordering,activation, support, billing and reporting. We also offer aprogram that allows an enterprise’s eligible employees toset up their own wireless services. Their usage then appliestowards a corporation’s discounted volume.*Enterprise Voice Service.* Our business subscribers cantake advantage of consumer postpaid voice plans, as well as anumber of business-specific devices and features, and pooled andflat rate plans. We were the industry pioneer in offering pooledrate plans that allow enterprises to share minutes and megabytesacross their employee base to optimize total cost of ownership.In 2005, we introduced two innovative voice solutions to ourbusiness subscriber base — GSM-voice based virtualprivate network service andpush-to-talk servicewith unique and differentiated features for enterprise users. Weare also working on a portfolio of converged wireless/wirelinesolutions in collaboration with our parent companies, AT&Tand BellSouth.*Enterprise Data Services.* We provide wireless data accessto corporate business applications for our subscribers who havemobile field personnel. Our wireless solutions allow salesmanagers to access corporate email when away from the office andtechnicians to solve problems and access corporate databasesfrom the field. To deliver these services, we offer a wide rangeof wireless data devices for business needs. We support allmajor operating system platforms —BlackBerry®,WindowsMobile®,Palm®andSymbian®and a wide range of devices — data-enabled handsets,integrated personal digital assistants (PDAs) (such asBlackBerry handhelds), personal computer data cards and specialpurpose devices.* In 2005, we transitioned our business devicesportfolio to EDGE and introduced BroadbandConnect-enabled PCcards, taking advantage of our new 3G network. In addition, Sonybegan offering in spring 2005 itsVAIO®*TX Series notebook PCs with our EDGE high-speed wireless datatechnology * Trademarks used herein are marks of their respectiveowners.
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**CINGULAR WIRELESS LLC** **PART I****Item 1.****Business**built in, and Dell and Lenovo recently announced that, beginningin 2006, they will begin offering notebook computers with ourBroadbandConnect service built in.We believe we are the industry leader in corporate wirelessemail and messaging service solutions. These solutions providewireless access to a wide range of email applications forbusinesses and individuals who have a need for timely datacommunications to maintain a competitive advantage or increasedpersonal productivity. We have the largest base of BlackBerrysubscribers and the largest share of activations in the world.In fact, in 2005 we became the first wireless carrier in theworld to offer the new BlackBerry 8700c handheld, Research InMotion’s first EDGE-enabled device. See “RiskFactors — Factors Relating to Our Business —Our wireless data business could be severely disrupted if we areprohibited from providing service over one of our most popularwireless data devices”. We added a second powerfulcorporate email solution to our portfolio in 2005 when we beganoffering the popularGoodLinktmservice from Good Technology directly to our business subscriberbase. For small businesses and individual mobile professionalslooking for a cost-effective, easy to set-up, highly flexible,real-time corporate and/or personal email that supports multipledevices, we offer Cingular Xpress Mail, which can be deployedwithout purchasing or installing additional hardware orsoftware. We also have sales, marketing and product developmentalliances with Microsoft and IBM to assist enterprises withwirelessly enabling existing email and messaging infrastructure.We continue to be a leader in providing wireless data servicesfor a focused set of vertical industries, targeting specificbusiness processes where real-time wireless connectivity createsthe most business value. For example, we work with property andcasualty insurance carriers in wirelessly enabling claimmanagement business processes; we assist the nation’s foodand beverage manufacturers with real-time enablement ofdirect-store delivery and help wirelessly enable field servicefor telecommunications, utility and high-tech companies. We alsobegan offering in 2005 the first commercially available solutionto provide companies with a diverse and secure high-speedwireless back-up totheir wireline data connections. Also in 2005, we continued tosignificantly expand our comprehensive portfolio ofnetwork-compatible special purpose devices, certified softwaresolutions and system integrator alliances. This approach helpsincreasespeed-to-market, reduceimplementation risk and drive solid growth in wireless datasales.*Reseller Service.* We offer wholesale services toresellers, who purchase wireless services from us for resale totheir subscribers. As of December 31, 2005, the number ofsubscribers served through resellers represented approximately8% of our total subscribers. Revenues from our resellersubscribers, who most often buy a prepaid service, are lowerthan are generated by our postpaid contract subscribers;however, subscriber acquisition and servicing costs aresignificantly lower, resulting in favorable economics from ourreseller arrangements.*Equipment Sales.* We sell a wide variety of handsets,integrated PDAs and wireless PC card modems manufactured byvarious suppliers for use with our service. We also provide oursubscribers and resellers with subscriber identity modules(SIM) cards that store unique subscriber accountinformation such as the subscriber’s phone number and codesneeded to grant subscribers access to the network. When anactivated SIM card is inserted into a compatible GSM device, thedevice is recognized by the network and becomes enabled forservice. This technology allows our subscribers to swap devicesat their convenience simply by moving the SIM card from onedevice to another. It also allows subscribers to activatespecial purpose devices that they can buy directly fromequipment manufacturers in addition to those that are availabledirectly from us. We have tested a broad portfolio of thesespecial purpose devices — from rugged PDAs and laptopsto fleet management and telemetry solutions — fornetwork compatibility, ensuring a solid functioning foundationfor our subscribers to run their applications.
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**CINGULAR WIRELESS LLC** **PART I****Item 1.****Business***Mobitex.* In October 2004, we sold Cingular Interactive,L.P. (Cingular Interactive), a data messaging business utilizingthe proprietary “Mobitex” packet switched network. Weretained Cingular Interactive’s direct email subscribers,as well as several other major accounts. We have continued tooffer Mobitex data products pursuant to a reseller agreementwith the buyer of the Mobitex network.**Our Network*****Licenses***We have access to licenses to provide cellular and PCS wirelessservices, both voice and data. We provide both analog anddigital cellular services over the 850 megahertz (MHz) band anddigital PCS services over the 1900 MHz band. We obtainedaccess to spectrum through applications, lotteries, mergers,acquisitions, exchanges, joint ventures, FCC auctions anduncontested application grants of cellular licenses.***Technology****Cellular/ PCS Technology.* In the U.S. wirelesstelecommunications industry, there are two principal frequencybands currently licensed by the FCC for transmitting two-wayvoice and data signals — the 850 MHz band and the1900 MHz band. The services provided over these twofrequency bands are commonly referred to as cellular and PCS,respectively. PCS infrastructure is characterized by shortertransmission distances and the need for closer spacing of cellsand towers than in a cellular network to accommodate thedifferent characteristics of the PCS radio signals. However, PCSservice does not differ functionally to the user from digitalcellular service. Handsets contain receivers and transmittersthat allow the user to seamlessly access both 850 and1900 MHz networks utilizing the same technology as that ofthe network infrastructure.First generation cellular systems operating in the 850 MHzband provided service solely by means of analog transmissions.Digital technology offers substantial advantages over analogservice and now constitutes over 99% of our total usage, basedon minutes of use. The requirement for cellular systemsoperating in the 850 MHz band to provide analog servicesexpires on February 18, 2008, unless the FCC extends thatdate.***2G Cellular/ PCS Technology:***Currently, the four largest U.S. wireless communicationsproviders use the following principal 2nd generation (2G)digital technologies:• *GSM —*used by us and    T-Mobile. GSM is a    digital wireless technology originally developed by the European    operator community and later adopted by operators around the    world to become the world’s most dominant wireless    technology serving more than one and a half billion users and    accounting for 78% of the world’s wireless market. Hardware    and software enhancements utilizing GPRS or EDGE technology    allow higher speed packet data communications. UMTS is the 3G    technology upgrade to GSM that is seamlessly compatible to GSM,    GPRS and EDGE. Including UMTS in the GSM category increases its    worldwide market share to over 80% of all users. • *TDMA —*used by us in some markets pending    subscriber migration to GSM-based technologies. Approximately 3%    of the world’s wireless market currently utilize TDMA    technology. • *Code Division Multiple Access (CDMA) —*used by    Verizon Wireless (Verizon) and Sprint Nextel (Sprint    subscribers). CDMA is a technology originally developed by the    military but adapted for commercial usage. CDMA subscribers    represent approximately 13% of the world’s wireless market.
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**CINGULAR WIRELESS LLC** **PART I****Item 1.****Business**• *integrated Digital Enhanced Network    (iDEN®)* —    used by Sprint Nextel (previously offered to Nextel subscribers)    and makes up approximately 1% of the world’s wireless    market.TDMA, iDEN and GSM technologies work by dividing a single radiofrequency into multiple time slots so it can support multiplecalls. TDMA allows for up to three calls per frequency (30kilohertz (kHz) of spectrum), iDEN allows up to six, and GSMallows for up to eight (200 kHz of spectrum). CDMA and UMTStechnology works by encoding individual conversations all on thesame frequency using different codes. This is analogous to beingin a room where every pair of speakers is having a conversationbut in a different language, and each is able to understand or“decode” only the other person speaking the samelanguage as them. These technologies are not currentlycompatible or interchangeable with each other and requireseparate types of wireless phones and network infrastructure.Prior to 2002, our network consisted of both TDMA (approximately70%) and GSM (approximately 30%) technologies. In late 2001, webegan to overlay GSM/ GPRS throughout our TDMA network andupgrade our data network to EDGE. EDGE, which delivers 2 to 3times higher data rates than GPRS technology, provides oursubscribers with greater connectivity and communicationscapabilities, including faster speeds for accessing the wirelessInternet. The GSM overlay was completed in early 2004 and, atDecember 31, 2005, more than 86% of our subscriber base wasGSM-equipped and 95% of our minutes were being carried by ourGSM network.***3G Cellular/ PCS Technology***Although many advances are still underway for enhanced capacity,performance and features in GSM/ GPRS/ EDGE deployedtechnologies, Cingular is building a network offering 3Gtechnology to support significantly higher data speeds andcapacity. UMTS also supports voice, so building this 3G networkwill obviate the need to separately augment our voice radiocapacity and spectrum from our packet data radio capacity andspectrum as both networks grow. When we acquired AT&TWireless in October 2004, they had deployed UMTS systems in sixmarkets which allowed user average data download speeds between220-320 Kbps. This provided the capability for a variety ofservices such as streaming audio, video and simultaneous voiceand data applications. Much like our EDGE system, UMTS allowsfor packet data, enabling “always on” connectivity,which is useful for receiving email when it arrives, versus theneed to set aside time for an email download, and allowingbilling based on the amount of data transferred, rather than theamount of time a given device is connected.In January 2005, Cingular field tested an improved version ofUMTS called “High Speed Downlink Packet Access”(HSDPA), which we intend to offer in all of our UMTS markets.HSDPA has average mobile data throughput speed in the400-700 Kbps range and theoretical data speeds of14 Mbps. Development and deployment of UMTS with HSDPAcontinued throughout 2005, and in December 2005 Cingularcommercially launched these 3G networks in Austin, Baltimore,Boston, Chicago, Dallas, Houston, Las Vegas, Phoenix, Portland,Salt Lake City, San Diego, San Francisco,San Jose, Seattle, Tacoma and Washington DC. This includedreplacement of the six UMTS systems which had been previouslydeployed by AT&T Wireless. We plan to deploy UMTS/ HSDPA inmost major metropolitan areas by the end of 2006. Verizon andSprint Nextel are also deploying a 3G cellular/ PCS technologyin markets across the United States using an evolution of CDMAtechnology called 1xEV-DO (evolution, data-optimized or“EV-DO”).***Network Integration***The acquisition of AT&T Wireless provided Cingular with anadditional network of cell sites and significantly morespectrum. To reduce costs and improve customer experience, weare in the process of
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**CINGULAR WIRELESS LLC** **PART I****Item 1.****Business**fully integrating the two networks of former Cingular andAT&T Wireless where they had overlapping coverage. In theselocations, we are retaining the best cell sites,de-commissioning the others and incorporating the combinedspectrum position. We expect that this combined network willhave higher average signal strength and greater network depth,thus improving network quality by reducing dropped and blockedcalls, and enhancing the transmission quality. In thisintegration process we also expect to reduce costs byeliminating approximately 7,600 cell sites. Nearly a third ofthe cell sites in overlap areas were integrated by the end of2005, and we expect to substantially finalize networkintegration by the end of 2006.***Spectrum Capacity and Coverage***We own licenses for spectrum in the 850 MHz and1900 MHz bands. We own or lease cellular or PCS licenses,or otherwise have license access through joint ventures andaffiliates in all 100 of the largest U.S. metropolitanareas, covering an aggregate of 294 million POPs, orapproximately 99% of the U.S. population. In addition, wehave signed numerous roaming agreements to ensure oursubscribers can receive wireless service in many areas in theU.S. where we do not have a network footprint.As shown in the table below, as of December 31, 2005,approximately 99% of the U.S. population was covered by anaverage spectrum depth owned by us or our affiliates of over50 MHz.                     **Total** **Licensed %**    **Licensed** **Licensed** **of Total** **Average****MSAs/ RSAs(1)** **Markets** **POPs** **U.S. POPs(2)** **Spectrum**             Top 10  10   75 million   100%   61 MHz     Top 50  50   148 million   100%   59 MHz     Top 100  100   183 million   100%   58 MHz     Total (734)  705   294 million   99%   52 MHz  (1)     MSA — metropolitan statistical area; RSA —    rural service area (2)     Based on total 2005 estimated U.S. POPs of 297 millionCompared to other wireless carriers in the U.S., Cingular hasthe greatest average cellular/ PCS spectrum depth, but we expectthe demand for our wireless services will grow over the nextseveral years as the demand for both traditional wireless voiceservices and wireless data, including Internet connectivity,increases. We anticipate needing access to additional spectrumin selected densely populated markets to meet demand forexisting services and to provide UMTS/ HSDPA. In order to gainaccess to additional spectrum, we may participate in future FCCauctions and exchange spectrum with, and lease or purchasespectrum licenses from, other wireless carriers. We may alsoobtain additional spectrum capacity through mergers andacquisitions, joint ventures and alliances. Further, we expectto receive on January 1, 2007 10 MHz of New York spectrumin connection with the dissolution of the joint venture withT-Mobile as describedin “Acquisitions, Dispositions, Joint Ventures and SpectrumExchanges — Termination of GSM Facilities, LLC(GSMF) Network Infrastructure Joint Venture” below.**Acquisitions, Dispositions, Joint Ventures and SpectrumExchanges*****Integration of AT&T Wireless***In October 2004, we acquired AT&T Wireless, which servednearly 22 million subscribers as of the acquisition date.AT&T Wireless also held equity interests in U.S. andinternational communications ventures, corporations andpartnerships. The acquisition created the largest wirelesscommunications company in the U.S. in terms of number ofboth subscribers and revenues.
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**CINGULAR WIRELESS LLC** **PART I****Item 1.****Business**The acquisition was advantageous to us for a number of reasons:•     AT&T Wireless supplemented our licensed spectrum and network    footprints by covering areas where Cingular did not have    licenses or network infrastructure; •     AT&T Wireless added depth to our licensed spectrum position    in existing markets, thus enhancing our ability to offer future    high-speed data services and reduce capital expenditures; •     AT&T Wireless’ subscriber base, which had a stronger    business subscriber component than ours, added a complementary    subscriber mix to our subscriber base; •     AT&T Wireless’ average revenue per user (ARPU) had    historically been higher than the ARPU of our subscribers; •     AT&T Wireless gave us added size and scale to compete more    effectively in the industry and to procure more significant cost    economies from vendors; and •     the acquisition reduced our incollect roaming costs because of    the broader post-acquisition footprint.***Termination of GSM Facilities, LLC (GSMF) Network    Infrastructure Joint Venture***In 2001, we andT-Mobile formed ourGSMF joint venture to share infrastructure covering themetropolitan New York market known as the New York Basic TradingArea (BTA) and most of California and parts of Nevada knownas the Los Angeles and San Francisco Major Trading Areas(MTAs). With the acquisition of AT&T Wireless and thesubstantial spectrum and infrastructure covering those BTAs andMTAs, our GSMF venture became unnecessary as a long-termsolution to serving those areas. Consequently, in January 2005,we and T-Mobiledissolved GSMF. As part of the dissolution, we sold toT-Mobile our ownershipof the California/ Nevada MTA network assets. We retained theright to utilize those networks during a four-year transitionperiod and committed to purchase a minimum number of minutesover this term with a purchase commitment value of$1.2 billion. Our remaining purchase commitment wasapproximately $520 million at December 31, 2005. Weand T-Mobile retainedall of our respective subscribers in each market. Additionally,we sold 10 MHz of spectrum toT-Mobile in each of theSan Francisco, Sacramento and Las Vegas BTAs as part of thedissolution.As part of the original joint venture agreement, we andT-Mobile were each toreceive 50% of the spectrum used in the operation of the jointventure following its dissolution. Spectrum licenses were notcontributed to the joint venture upon its formation in 2001, butrather were subject to a separate agreement governing their use.In connection with the dissolution, we andT-Mobile arecontractually required to exchange certain spectrum licenses andwe expect the spectrum licenses to be exchanged on January 1,2007. We will receive 10 MHz of spectrum in the New YorkBTA and 2.5 MHz of spectrum in the Las Vegas, Nevada BTA,and T-Mobile willreceive 5 MHz of spectrum in each of nine BTAs inCalifornia, the largest of which is San Diego.T-Mobile also has theoption to purchase an additional 10 MHz of spectrum in theLos Angeles and San Diego BTAs commencing January 2007.***Exchange of Properties with Triton***AT&T Wireless had an interest in Triton PCS Holdings, Inc.(Triton), which owned wireless properties in Virginia. After weacquired AT&T Wireless, we swapped AT&T Wireless’properties in North Carolina, Puerto Rico and theU.S. Virgin Islands for Triton’s Virginia properties.Upon completion of that transaction, our network footprintincluded all of the 100 largest markets in the U.S.
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**CINGULAR WIRELESS LLC** **PART I****Item 1.****Business*****Investment in Cincinnati Bell Wireless***AT&T Wireless also had an interest in Cincinnati BellWireless, LLC (CBW). Pursuant to an agreement negotiated inconnection with the AT&T Wireless acquisition, we havedisposed of our interest in CBW as of February 2006.***Edge Mobile Wireless, LLC***In November 2004, Cingular and Edge Mobile Wireless, LLC formedEdge Mobile, LLC (Edge) to bid as an “entrepreneur”for certain 1900 MHz band PCS licenses auctioned by theFCC. In February 2005, Edge had submitted the highest bid for,and was subsequently awarded, 21 licenses.***Contribution of Arkansas Assets and Operations***In May 2005, AT&T contributed to us the wireless operationsand assets in certain Arkansas markets that it had withheld atthe time of our formation in 2000.***Sale of Mobitex Data Business***We previously offered mobile data services over the proprietary“Mobitex” packet switched network. With thedevelopment of our wireless data business over our GSM/ GPRSnetworks and the impending construction of a 3G network upgrade,we sold our Mobitex business in the fourth quarter of 2004.***Sale of Bermuda and Caribbean Operations and    Licenses***In June 2005, we signed an agreement to sell former AT&TWireless operations and licenses in Bermuda and certainCaribbean markets. As of December 31, 2005, a majority ofthe transaction had closed. The remainder of the transaction isexpected to close upon governmental and regulatory approvals inthe respective markets.***Sale of Eurotel Bratislava a.s. (Bratislava)    Investment***Also in connection with the acquisition of AT&T Wireless, weacquired an interest in a wireless business in Bratislava. Wesold this interest in the fourth quarter of 2004.***IDEA Cellular Ltd.***In September 2005, we sold our 32.9% interest in IDEA CellularLtd. (IDEA), a cellular telecommunications company in India theinterest in which we acquired in the AT&T Wirelessacquisition.***Domestic Divestitures***We have completed a series of transactions disposing of domesticwireless assets required to be divested by the FCC and theU.S. Department of Justice (DOJ) in connection withour acquisition of AT&T Wireless. We also sold to Alltel,20 MHz of spectrum and network assets formerly held byAT&T Wireless in Wichita, Kansas, which we were not requiredto divest. These divested assets did not have a material impacton our ability to provide services in these markets.
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**CINGULAR WIRELESS LLC** **PART I****Item 1.****Business****Competition**There is substantial and increasing competition in all aspectsof the wireless communications industry. We expect this tocontinue as consolidation in the industry continues. We competefor customers based principally on our reputation, networkquality, customer service, price and service offerings.Our competitors are principally the other national providers ofcellular, PCS and other wireless communicationsservices — Verizon, Sprint Nextel andT-Mobile, whichtogether with us serve over 90% of the U.S. wirelessmarket. Our competitors also include regional carriers, such asAlltel and U.S. Cellular, niche carriers, such as MetroPCSand Cricket Communications Inc., and resellers. Some of theindirect retailers who sell our services also sell ourcompetitors’ services. We rank first among the fournational carriers in terms of both number of subscribers andrevenues. Verizon ranks second in terms of number of subscribersand revenues for 2005.Regulatory policies favor robust competition in wirelessmarkets. Wireless Local Number Portability (WLNP), which wasimplemented by the FCC late in 2003, has also increased thelevel of competition in the industry. WLNP allows subscribers toswitch carriers without having to change their telephone numbers.Consolidation, alliances and business ventures increasecompetition. Consolidation and the formation of alliances andbusiness ventures within the wireless communications industryhave occurred and we expect that this trend will continue.Consolidation may create larger, better-capitalized competitorswith substantial financial, technical, marketing, distributionand other resources to compete with our product and serviceofferings. In addition, global combinations of wireless carrierssuch as the joint venture between Sprint PCS and Virgin GroupLtd., Verizon, which is a joint venture between VerizonCommunications and Vodafone Group Plc,T-Mobile USA, which isthe U.S. arm of a global portfolio ofT-Mobile companies, andmergers and acquisitions, such as the mergers of SprintCorporation and Nextel, and Alltel and Western WirelessCorporation may give some domestic competitors better access tointernational technologies, marketing expertise and strategiesand diversified sources of capital. Other large, nationalwireless carriers have affiliations with a number of smaller,regional wireless carriers that offer wireless services underthe same national brand, thereby expanding the nationalcarrier’s perceived national scope.The traditional wireless industry continues to evolve. MobileVirtual Network Operators, or MVNOs, which historically offeredlow cost prepaid services, are currently launching postpaidofferings, which will introduce additional competition in thisarea. We also anticipate increased competitive pressures fromthe landline companies, cable television operators Wi-FI andvoice over Internet service providers.Our ability to compete successfully will depend, in part, on thequality of our network, customer service and sales anddistribution channels, as well as our marketing efforts and ourability to anticipate and respond to various competitive factorsaffecting the industry. These factors include the introductionof new services and technologies, changes in consumerpreferences, demographic trends, economic conditions, pricingstrategies of competitors and our ability to take advantage ofour relationship with AT&T and BellSouth. As a result ofcompetition, we have in the past and may in the future berequired to:•     increase our spending to retain subscribers; •     restructure our service packages to include more compelling    products and services; •     upgrade further our network infrastructure and the handsets we    offer; and •     increase our advertising, promotional spending, commissions and    other subscriber acquisition costs.
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**CINGULAR WIRELESS LLC** **PART I****Item 1.****Business**Verizon and Sprint Nextel are deploying 3G data-only networktechnology using the standard known as EV-DO. Verizon’s 3Gnetwork is reported to cover more than 150 million POPs atthe end of 2005; Sprint Nextel’s 3G service was reported tocover approximately 130 million POPs at the end of 2005;and T-Mobile has notyet announced a 3G deployment schedule beyond EDGE. We believethat we are well-positioned to offer competitive 3G services andthat our UMTS/ HSDPA technology is superior to EV-DO in terms ofpeak speed and applicability to voice as well as data telephony.Our investment in UMTS/ HSDPA, which can be used for bothcircuit switched voice as well as high speed packet data, givesus superior flexibility to utilize this for both voice and datagrowth.See “Factors Relating to Our Business —Substantial competition in all aspects of our business couldcontinue to cause reduced pricing and have adverse effects onour profit margins”.**Business Strategies**We intend to be the pre-eminent wireless communication companyin the U.S. Our business strategies to achieve that goalare to:• *Build the Best Network.* We believe that one of the most    significant factors that customers consider when making    decisions on wireless service is network quality. To that end,    we plan to continually improve and expand our network. We are in    the process of completing the integration of the Cingular and    AT&T Wireless networks under a plan that is designed to    achieve network quality and coverage performance to exceed that    of either of the former networks. We will accelerate the build    out of the network to improve coverage in suburban and    neighborhood areas and strengthen the in-building penetration in    urban areas. We will significantly expand the capacity and    coverage of our network in California and Nevada in order to    facilitate the transition to our network of subscribers that    continue to be served by the network assets that we sold to    T-Mobile, as well as to    accommodate future growth in those markets. In concert with the    network integration work, we will deploy UMTS/ HSDPA in major    markets across the country. This technology will increase the    capacity of our network to carry voice traffic and provide data    speeds that exceed those of the commercial offerings provided by    other competitive carriers today and will allow us to offer a    host of new broadband data applications. We will also work with    our rural roaming partners to improve and expand coverage    outside of our footprint and assist them in providing consistent    products and services to our subscribers that roam onto their    networks. • *Deliver Exceptional Customer Service.* Another key focus    area for us is delivering    best-in-class customer    care. We are implementing policies and procedures at every point    of contact with our subscribers to improve the customer    experience. We are deploying customer management and call    routing technologies in our call centers to improve the    accessibility and efficiency of our customer care    representatives. We are equipping our customers with    self-service tools to be able to access account information    directly via their handsets, the Internet or integrated voice    response systems. We continue to develop and implement    initiatives that make it easier for customers to order or change    products or features, upgrade or repair handsets and inquire    about or pay their bills. Our acquisition of AT&T Wireless    has given us not only the ability to choose and implement the    best practices of the two constituent companies but also the    challenge of efficiently integrating and rationalizing the    facilities and systems used by the companies in providing    customer care. One of the major contacts with customers is    through the billing process. A significant task in integrating    AT&T Wireless’ operations into ours is integrating and    streamlining the billing systems, which we anticipate will be    substantially complete by the end of 2006. These efforts will    produce substantial operational efficiencies for us. We believe    that by offering an exceptional customer experience to our    customers, they will choose to remain with us and be    instrumental in attracting new customers.
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**CINGULAR WIRELESS LLC** **PART I****Item 1.****Business**• *Create an Unmatched Distribution Network.* The acquisition    of AT&T Wireless has resulted in a significant increase in    our number of distribution points. In 2005, we made significant    progress in rationalizing our distribution points. We will    continue to rationalize both our direct and indirect    distribution channels in 2006 and beyond. During this    integration process, we will seek to create an optimized mix of    direct and indirect sales channels that will balance the cost of    subscriber acquisition with the ability to be in high traffic    locations that drive higher sales volumes. Furthermore, we will    expand sales locations opportunistically in areas that have    higher growth prospects and scale back underperforming    distribution in heavily penetrated areas. We will continue to    drive our distribution capabilities deeper into emerging    channels like our    e-store and tele-sales    operations. Our goal is to be a world class retailer and to meet    our customers where they want to shop. By creating an unmatched    distribution network, we believe that we will be able to attract    an increasing number of new consumer and business subscribers. • *Offer Compelling Products and Services.* We believe that    it is increasingly important to create products and services    that are attractive to customers across a broad spectrum of    market segments. This includes developing compelling devices and    features, as well as pricing plans, that are differentiated from    our competitors. We will continue to pursue collaborative    relationships with our handset vendors to develop and market    devices that are equipped with the latest technology and    functionality that consumers demand. A selection of these    devices will be offered on an exclusive basis. Additionally, we    will continue to improve and expand the information, ringtones,    games and other content that our customers can access via their    handsets. We will continue to offer pricing plans that offer a    compelling value to consumers. Our    ROLLOVER®    rate plan feature is an example of how we provide a compelling    value to customers by allowing them to keep their unused minutes    for up to one year. Additionally, we will continue to develop    products and services designed to appeal specifically to certain    market segments like pre-paid hybrid plans, international    calling plans,    push-to-talk service    and handsets and integrated business products with our parent    companies. • *Drive Financial Results by Quickly and Efficiently    Integrating AT&T Wireless into Cingular.* We will    continue to improve our financial performance by progressing    with the integration of AT&T Wireless’ business and    operations into ours. We expect to achieve significant cost    savings by eliminating redundant resources and facilities and    more effectively and efficiently utilizing the best business    practices of both companies to drive subscriber growth and    revenues. We believe that there are opportunities to achieve    additional revenue and cost synergies and continued subscriber    growth and reduced churn through successful and timely    integration efforts.**Marketing**Our marketing strategy is focused on promoting the Cingularbrand. Key marketing communication messages will also articulateand build on our business strategies of building the bestnetwork, delivering great customer service, creating anunmatched sales and distribution network and offering compellingproducts and services. Additionally, we will communicate andemploy, through cross-marketing, the strengths of our parents,AT&T and BellSouth.Our advertising utilizes multiple media forms, includingtelevision, radio, newspaper, outdoor, Internet and point ofsale. Advertising objectives include:•     Increasing new subscriber growth by attracting prospective    subscribers to our sales channel best suited to the    subscribers’ needs; •     Aiding subscriber retention by reinforcing the value of an    existing relationship with Cingular;
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**CINGULAR WIRELESS LLC** **PART I****Item 1.****Business**•     Increasing existing subscriber usage of additional services    (cross-sell/up-sell opportunities) and added-value    features; and •     Encouraging new and existing subscribers to combine    (bundle) our wireless services with AT&T’s and    BellSouth’s wireline, Internet and video services.Immediately following the acquisition of AT&T Wireless werepositioned the brand with RAISING THEBARsm.Under that umbrella, we also branded our network — thelargest digital voice and data network in America — asthe ALLOVERSM network, utilizing the slogan MORE BARS IN MOREPLACESsm.Both elements dramatize our network and provide a compellingreason for potential customers — includingcompetitors’ customers — to choose Cingular astheir wireless provider. Our research indicates that key brandattributes and perceptions have been positively affected by thecommunication. We will continue to take advantage of our brandidentity by presenting more compelling and market specificreasons to choose Cingular.Our marketing strategy is to primarily sell our national voiceservices through our CingularNation®rate plans, while still providing regional plans for customerswho prefer them. The plans differ in terms of the geographicareas that are included as the local calling areas, with Nationplans offering unlimited free roaming and long-distance, as wellas unlimitedmobile-to-mobilecalling among our 54.1 million subscribers. We offerFAMILYTALK®shared minute plans, allowing subscribers to share their minuteswhile taking advantage of the size of our subscriber base withfree calling to all Cingular subscribers. The costs and terms ofeach plan depend on the subscriber’s location and the planselected. We also provide targeted plans for specific customersegments, such as prepaid service, marketed under theGOPHONE®brand. A host of plans targeted to various segments of thebusiness-to-businessmarket are also available.Our marketing plans also address the growing communicationsneeds of our existing subscribers, thereby increasing subscriberretention. We target specific customer segments with tailoredservices and offer them a range of high-quality handsets andenhanced features, including wireless data services, additionalwireless phones, accessories and new products. We also offer theconvenience of many added-value features, such as our *BAL# and*MIN# codes, which allow subscribers to check their balances andminutes used without having to call customer service. Many newhandsets are also being provisioned with this service built into the phone.Data services are becoming an increased focus of our business.Instant messaging through AOL and Yahoo!, Internet access, textmessaging/short messaging services, picture and video messagingand gaming are all now integral parts of the wireless industry.We are focused on this category as a high-growth area withcompetitive and fair rates to support customer needs. Inaddition, graphics, MP3/ Supertones and polyphonic ringtonescontinue to show strong growth, as customers look to customizetheir wireless devices. We serve business subscribers with arobust line-up ofbusiness data services from corporate messaging to customizedwireless application access. We market our business dataofferings to larger organizations, as well as small andmedium-sized businesses.**Sales & Distribution**Our sales and distribution strategy seeks to tailor the mix ofdirect, indirect and resale distribution channels to matchcustomer shopping preferences to increase subscriber growth andsatisfaction while reducing subscriber acquisition and retentioncosts. As of December 31, 2005, we had nearly 260,000distribution “points of presence”. These includeapproximately 2,100 company-owned stores and kiosks, over10,000 authorized agent locations, more than 4,100 nationalretail points of presence and over 241,000 national retailprepaid locations. In addition, we have access to thedistribution channels of AT&T and BellSouth as both saleschannels and bundlers of our wireless services with theirwireline product offerings.
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**CINGULAR WIRELESS LLC** **PART I****Item 1.****Business**AT&T’s TotalConnectionssmand BellSouthAnswerssmproduct offerings combine local phone service and features, longdistance, Internet access and Cingular Wireless services, withthe customer receiving one consolidated bill. In addition tothese traditional channels, we will continue to utilize andexpand other channels, such as the Internet and telemarketing.Not included in the 260,000 national retail points of presenceare approximately 5,000 RadioShack stores. In 2005, Cingularsigned a ten-year nationwide contract for RadioShack to sellCingular products and services commencing on January 1,2006.**Customer Care and Satisfaction**The cost of adding new subscribers is one of the mostsignificant cost elements in the wireless industry. Therefore,satisfying and retaining existing subscribers are critical toreducing churn and improving the financial performance ofwireless operators. The goal of our customer care, retention andsatisfaction programs is to ensure customer convenience and easeof use and to cultivate long-term relationships with ourcustomers. We offer our customers a full range of options formaking requests and inquiries to maximize convenience. We alsooffer customer care during extended business hours and emergencyservice after business hours, as well as a number of otherservices designed to enhance our relationship with our customers.In 2006, we will continue to pursue opportunities to enhancecustomer satisfaction. Our key initiatives include continuedexpansion of our knowledge base tools, improved call routinginitiatives and deployment of a contact management tool. We usea combination of internal and outsourced staffing for customercare and will transition onto a common customer care platformover time.**Environmental Matters**We are subject to various federal, state and local environmentalprotection and health and safety laws and regulations, and weincur costs to comply with those laws. Environmental laws holdcurrent or previous owners or operators of businesses and realproperty potentially liable for contamination on that property,even if they did not know of and were not responsible for thecontamination. Environmental laws may also impose liability onany person who disposes or arranges for the disposal ofhazardous substances for contamination at the disposal site,regardless of whether the disposal site is owned or operated bysuch person. Although we do not currently anticipate that thecosts of complying with environmental laws, including costs forremediating contaminated properties, if any, will be material,we cannot ensure that we will not incur material costs orliabilities in the future due to the discovery of new facts orconditions, the occurrence of new releases of hazardousmaterials or a change in environmental laws.**Employees**As of December 31, 2005, we had approximately 64,000employees. Approximately 35,000 of our employees are representedby the Communications Workers of America (CWA), with contractsexpiring on various dates between March 2006 and February 2009.The contract that expires in March 2006 covers approximately9,700 employees performing work in various functions such asCustomer Care, Sales, and Network Operations. All of thecontracts contain a no-strike clause. In most areas of thecountry and with many job titles, we are required contractuallyto maintain a position of neutrality and allow card checkballoting with respect to unionization and support thedetermination of the majority of our employees. In those areaswhere our employees are unionized, we have in place contractsthat we believe provide us with the flexibility to run ourbusiness in an increasingly competitive environment. We considerour relationship with our employees and the CWA to be good.
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**CINGULAR WIRELESS LLC** **PART I****Item 1.****Business****Intellectual Property**We own the rights to the“Cingular®”brand name. We rely on a combination of copyright, patent,trademark, trade secret and other intellectual property rights,together with confidentiality and/or license agreements with ouremployees, customers and others to protect our proprietaryrights. Our trademarks cover our brand name and icon and namesof our service and product offerings and have a duration of10 years with renewal provisions. We also licensetrademarks for various products and services from eitherAT&T or BellSouth for varying terms. For more information onlicenses granted by our member companies to us and licenses wegrant to them, see Item 13, “Certain Relationships andRelated Transactions”. Our FCC licenses are discussed under“Regulatory Environment”.**Regulatory Environment**The FCC regulates the licensing, construction, operation,acquisition and transfer of wireless systems in theU.S. pursuant to the Communications Act of 1934(Communications Act) and its associated rules, regulations andpolicies.To obtain the authority to have the exclusive use of radiofrequency spectrum to provide Commercial Mobile Radio Service(CMRS) in an area subject to jurisdiction of the U.S.,wireless communications systems must be licensed by the FCC tooperate the wireless network and wireless devices in assignedspectrum segments and must comply with the rules and policiesgoverning the use of the spectrum as adopted by the FCC. Theserules and policies, among other things, (1) regulate ourability to acquire and hold radio spectrum licenses or to leasespectrum, (2) impose technical obligations on the operationof our network, (3) impose requirements on the ways weprovide service to and communicate with our subscribers,(4) regulate the interconnection of our network with thenetworks of other carriers, (5) obligate us to permitresale of our services by resellers, if we offer resaleopportunities, and to serve roaming subscribers of otherwireless carriers and (6) impose a variety of fees andcharges on our business that are used to finance numerousregulatory programs and a substantial part of the FCC’sbudget.Licenses are issued for only a fixed period of time, typically10 years for CMRS licenses. Consequently, we mustperiodically seek renewal of those licenses. The FCC will awarda renewal expectancy to a CMRS wireless licensee that hasprovided substantial service during its past license term andhas substantially complied with applicable FCC rules andpolicies and the Communications Act. The FCC has routinelyrenewed wireless licenses in the past. However, theCommunications Act provides that licenses may be revoked forcause and license renewal applications denied if the FCCdetermines that a renewal would not serve the public interest.Violations of FCC rules may also result in monetary penalties orother sanctions. FCC rules provide that applications competingwith a license renewal application may be considered incomparative hearings and establish the qualifications forcompeting applications and the standards to be applied inhearings.CMRS wireless systems are subject to Federal AviationAdministration and FCC regulations governing the location,lighting and construction of antenna structures on which ourantennas and associated equipment are located and are alsosubject to regulation under federal environmental laws and theFCC’s environmental regulations, including limits on radiofrequency radiation from wireless handsets and antennas ontowers. Zoning and land use regulations, including compliancewith historic preservation requirements, also apply to towersiting and construction activities.*Two-way Voice and Data Services.* We hold geographicservice area licenses granted by the FCC to provide cellular andbroadband PCS services. A cellular system operates on one of two25 MHz frequency blocks in the 850 MHz band licensedon an MSA or RSA basis, which the FCC allocates for cellular
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**CINGULAR WIRELESS LLC** **PART I****Item 1.****Business**radio service. Cellular systems principally are used for two-waymobile voice applications, although they may be used for dataapplications and fixed wireless services as well.A broadband PCS system operates under licenses issued in the1900 MHz band. Broadband PCS systems generally are used fortwo-way voice applications, although they may carry two-way datacommunications and fixed wireless services as well. For thepurpose of awarding PCS licenses, the FCC has divided theU.S. into 51 large regions called major trading areas, or“MTAs”, which are comprised of 493 smaller regionscalled basic trading areas, or “BTAs”. The FCC awardeda single PCS license for each major trading area, known as the“A” and “B” blocks, and a single PCS licensefor each BTA known as the “C”, “D”,“E” and “F” blocks. Thus, generally, six PCSlicenses and two cellular licenses are authorized for eachcounty in the U.S. The A and B block MTA licensesoriginally authorized the use of 30 MHz of PCS spectrum.One of the BTA licenses originally authorized the use of30 MHz of spectrum (the “C” block), and theother three licenses originally authorized the use of10 MHz each. The FCC permits a licensee to split itslicense and assign a portion, on either a geographic orfrequency basis or both, to another party or parties.We must continue to satisfy a range of FCC-specified coveragerequirements in order to continue to hold our licenses. Forexample, a cellular licensee was permitted five years followingthe initial grant of its license to provide service throughoutthe entire MSA or RSA. The area it actually served withspecified minimum signal strength at the end of the five-yearperiod became its licensed service area and the remainder of thearea within the MSA or RSA became available for application byother parties. All originally licensed 30 MHz PCS licenseesmust construct facilities that offer adequate coverage toone-third of the population of the entire MTA within five yearsof the original license grants and to two-thirds of thepopulation within 10 years. All originally licensed15 MHz and 10 MHz PCS licensees must constructfacilities that offer adequate coverage to one-fourth of thepopulation of the BTA within five years of the original licensegrants — no10-year constructionshowing is required. In lieu of these population-basedbenchmarks, all broadband PCS licenses can “make a showingof substantial service in their license area”. The licenseof a broadband PCS licensee that fails to meet the coveragerequirements is forfeited, absent a waiver.We use common carrierpoint-to-pointmicrowave facilities and dedicated facilities leased fromcommunications companies or other common carriers to connect ourwireless cell sites and to link them to the main switchingoffice. The FCC licensespoint-to-pointmicrowave facilities separately and they are subject toregulation as to technical parameters and service. Microwavelicenses must also be renewed every 10 years.*Transfers and Assignments of Wireless Licenses.* TheCommunications Act and the FCC rules require the FCC’sprior approval of the assignment of a license or transfer ofcontrol of a licensee of a wireless system. Before we cancomplete any such purchase or sale, we must file appropriateapplications with the FCC, and the public is by law granted aperiod of time, typically 30 days for major acquisitions,to oppose or comment on them. In addition, the FCC hasestablished transfer disclosure requirements that requirelicensees who assign or transfer control of a license acquiredthrough an auction within the first three years of their licenseterms to file associated sale contracts, option agreements,management agreements or other documents disclosing the totalconsideration that the licensee would receive in return for thetransfer or assignment of its license. Except for certain CMRSlicenses awarded to “designated entities” thatqualified for bidding credits in an auction or for whom certainlicenses were set aside, non-controlling minority interests inan entity that holds an FCC license generally may be bought orsold without FCC approval. However, notification and expirationor earlier termination of the applicable waiting period underSection 7A of the Clayton Act by either theU.S. Federal Trade Commission or the DOJ may be
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**CINGULAR WIRELESS LLC** **PART I****Item 1.****Business**required, as well as notification of state or local regulatoryauthorities having competent jurisdiction, if we sell or acquirewireless systems.The FCC eliminated the rules limiting the amount of CMRSspectrum a wireless carrier can own or control in a market,effective January 1, 2003. Except through a case-by-caseanalysis of individual transactions, such as our acquisition ofAT&T Wireless, as yet it has not replaced these spectrumlimits with published rules or guidelines setting forth how theFCC will review carriers’ spectrum aggregations. The FCCalso eliminated the prohibition on ownership of both cellularlicenses by a single-entity, except it will review on acase-by-case basis applications for authority to own bothcellular licenses in a rural area. Certain acquisitions ofspectrum would remain subject to approval of the DOJ.*Foreign Ownership.* Under existing law, no more than 20%of an FCC licensee’s capital stock may be owned, directlyor indirectly, or voted bynon-U.S. citizensor their representatives, by a foreign government or itsrepresentatives or by a foreign corporation. If an FCC licenseeis controlled by another entity, as is the case with ourownership structure, up to 25% of that entity’s capitalstock may be owned or voted bynon-U.S. citizensor their representatives, by a foreign government or itsrepresentatives or by a foreign corporation.Foreign ownership above the 25% level may be allowed should theFCC find such higher levels not inconsistent with the publicinterest. The FCC has ruled that higher levels of foreignownership, even up to 100%, are presumptively consistent withthe public interest with respect to investors from certainnations, which are countries that are signatories to the WorldTrade Organization Agreement on Basic TelecommunicationsServices. However, the FCC, in adopting that strong presumption,did note that the possibility exists that entry by a foreigncarrier into the U.S. telecommunications market could be sodetrimental as to require the imposition of conditions on entryby such a carrier or even a denial of entry. In addition, theFCC stated it would accord deference to legitimate nationalsecurity, law enforcement, foreign policy and trade concernsraised by other federal agencies as part of the FCC’sanalysis of whether to grant a particular authorization. The FCChas done that in certain cases where the DOJ and theU.S. Federal Bureau of Investigation have raised concerns,requiring the carrier to configure its network(s) to be capableof complying with lawful U.S. process and to make availablein the U.S. certain call and subscriber data. Foreignownership by entities from countries other than World TradeOrganization member countries must meet a more stringentstandard, and there is no assurance that the FCC would find agrant of such an application to be in the public interest. Ifour foreign ownership were to exceed the permitted level(through foreign ownership of our owners, their transfers ofownership in us or issuances of Class A common stock by ourmanager), the FCC could revoke our FCC licenses, although wecould seek a declaratory ruling from the FCC allowing theforeign ownership or take other actions to reduce our foreignownership percentage in order to avoid the loss of our licenses.We have no knowledge of any present foreign ownership thatexceeds these limitations.*Spectrum Acquisitions and Leasing.* Two of the ways bywhich we can attempt to meet our needs for additional spectrumare by acquiring spectrum licenses held by others or byaccessing new spectrum being auctioned and licensed by the FCC.The Communications Act requires the FCC to award new licensesfor commercial wireless services to applicants through acompetitive bidding process. Therefore, if we need additionalspectrum, we plan to acquire the spectrum, indirectly throughjoint arrangements, or directly in an auction for any newlicenses that may become available or by purchasing existinglicensed facilities and incorporating them into our system,provided that we are permitted to do so under FCC rules.The FCC has announced that it will auction spectrum in the700 MHz band. There are numerous television operators thatcurrently occupy UHF television channels 52 through 69 in thisband. Although these stations have been awarded a second channelto establish digital service, they also have the right to
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**CINGULAR WIRELESS LLC** **PART I****Item 1.****Business**continue operation on the current channel through February 2009and potentially longer if various conditions are not met. Absentadoption of new federal legislation or rules that lead to“clearing” the 700 MHz band earlier than currentlaw requires, or the development of band-clearing mechanisms bythese operators for relocation, this spectrum would be oflimited use in the short-term for commercial wireless services.The FCC has also announced that on June 29, 2006, it willcommence an auction for 90 MHz of paired spectrum in the1710-1755 MHz and 2110-2155 MHz bands for AdvancedWireless Services (AWS). AWS is the collective term used by theFCC for new and innovative fixed and mobile terrestrial wirelessapplications using bandwidth that is sufficient for theprovision of a variety of applications, including those usingvoice and data (such as Internet browsing, message services andfull motion video) content. The FCC will auction 1,122 new AWSlicenses. Each license will be comprised of 10 or 20 MHzand each will be licensed on one of six geographical areas,including Cellular Market Areas (MSAs and RSAs), Economic Areas(EAs) and Regional Economic Area Groups (REAGs).The FCC’s spectrum leasing rules permit license holders tolease the use of their spectrum to others and provide that suchholders can meet their network system build requirements andother performance requirements through the facilitiesconstruction and operating activities of their lessees. The FCChas structured its rules such that it has minimal involvement inleasing activities. The FCC does limit the ability of adesignated entity to lease spectrum to a non-designated entitythat has an equity position in the designated entity, and it hasstated that it intends to scrutinize leasing activities bydesignated entities. Nevertheless, we view spectrum leasing asan attractive alternative to license acquisition in areas wherewe are spectrum constrained.*Rates and Services.* The FCC does not specify the rates wemay charge for our services nor does it require us to filetariffs for our U.S. wireless operations. However, theCommunications Act states that an entity, such as us, thatprovides CMRS is a common carrier and is thus subject to therequirements of the Communications Act that it not charge unjustor unreasonable rates nor engage in unreasonable discrimination.The FCC may invoke these provisions to regulate the rates andrelated terms and conditions under which we provide service. Inaddition, the Communications Act defines a CMRS provider as acommon carrier, which makes it subject to a number of otherregulatory requirements in its dealings with other carriers andcustomers. The following requirements impose restrictions on ourbusiness and increase our costs as well as the costs of otherwireless carriers.*Number Pooling.* The FCC has adopted rules regulating theuse of telephone numbers by wireless and other providers as partof an effort to achieve more efficient number utilization.*E911 Services.* The FCC has imposed rules requiringcarriers to provide emergency 911 services, including enhanced911 services that provide to local public safety dispatchagencies the caller’s communications number and approximatelocation. Providers are required to transmit the geographiccoordinates of the customer’s location within accuracyparameters set forth by the FCC, either by means ofnetwork-based or handset-based technologies. Providers may notdemand cost recovery as a condition of doing so, although theyare permitted to negotiate cost recovery if it is not mandatedby the state or local governments. Because of the delayedavailability of vendor equipment that could reasonably be reliedupon to comply with the FCC’s location accuracy rules, weand other wireless carriers negotiated settlement arrangementswith the FCC that established increasingly rigorous compliancestandards and deadlines.*Universal Service Fund.* The FCC has established federaluniversal service requirements that affect CMRS operators. Underthe FCC’s rules, CMRS providers are potentially eligible toreceive universal service subsidies; however, they are alsorequired to contribute to the federal universal service fund andmay be required to contribute to state universal service funds.Contributions into the federal fund are
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**CINGULAR WIRELESS LLC** **PART I****Item 1.****Business**based on the interstate and international revenues generated bythe properties owned by a CMRS provider. For 2005, we hadpayment obligations into the federal universal service fund ofapproximately $710 million. Because the amount that we arerequired to pay into the fund is based on revenues generated byour subscribers, we anticipate that this amount should continueto increase over time. We recover substantially all of thisexpense from our customers. Many states also are moving forwardto develop state universal service fund programs. A number ofthese state funds require contributions, varying greatly fromstate to state, from CMRS providers. If these programs expandthey will impose a correspondingly growing expense on ourbusiness. As mentioned, CMRS providers are now eligible toreceive universal service subsidies if federal and stateconditions are met. We pursue this funding in states where thecorresponding regulatory burdens do not exceed the benefits ofthe subsidies.*Wireless Local Number Portability.* In November 2003, theFCC’s rules on wireless local number portability becameoperative, enabling wireless customers to keep their wirelessnumber when switching to another carrier. These rules haveincreased competition, costs and subscriber churn across theindustry.*Communications Assistance for Law Enforcement Act of 1995(CALEA).* The FCC has adopted rules requiring wirelessproviders to facilitate electronic surveillance by lawenforcement officials pursuant to CALEA. These obligations arelikely to result in significant costs to us for the purchase,installation and maintenance of network software and otherequipment required.*Reciprocal Compensation.* The Communications Act and theFCC’s rules grant various rights and impose variousobligations on CMRS providers when they interconnect with thefacilities of local exchange carriers. Generally, CMRS providersare entitled to “reciprocal compensation” inconnection with the termination of wireline-originated localtraffic, in which they are entitled to collect the same chargesfor terminatingwireline-to-wirelesslocal traffic on their system similar to the charges that thelocal exchange carriers levy for terminatingwireless-to-wirelinelocal calls. Interconnection agreements are typically negotiatedby carriers, but in the event of a dispute, state public utilitycommissions, courts and the FCC all have a role in enforcing theinterconnection provisions of the Communications Act. Althoughwe have interconnection agreements in place with the major localexchange carriers in virtually all of our service areas, thoseagreements are subject to modification, expiration ortermination in accordance with their terms. Moreover, we arenegotiating and must continue to negotiate interconnectionagreements with a number of independent telephone companies inour service areas. Until these agreements are concluded, wegenerally accrue for contractual liabilities associated with theresulting unpaid invoices from those companies. Additionally, aswe expand our coverage footprint, we will be required tonegotiate interconnection arrangements with other wirelinecarriers.*Spectrum Reallocation.* The FCC has reallocated30 MHz of spectrum from the 2 GHz Mobile SatelliteService or MSS for fixed and mobile services. The FCC hascombined part of the 1990-2000 MHz portion of thatspectrum, which is adjacent to the upper limit of thebase-to-mobile portionof the PCS “C” Block, with part of the currentlyunlicensed PCS spectrum at 1910-1920 MHz, which is adjacentto the upper limit of themobile-to-base portionof the PCS “C” Block, to create a new PCS“G” Block. The FCC plans to grant the PCS“G” block (1910-1915 MHz paired with1990-1995 MHz) to Nextel in return for its relinquishingcertain of its spectrum in the 700 and 800 MHz bands toalleviate public safety interference concerns. The FCC has alsoallocated for AWS service spectrum blocks 1915-1920,1995-2000, 2020-2025and 2175-2180 but has not yet scheduled an auction for thisspectrum.*Terrestrial and Satellite Services.* The FCC has alsodecided to allow mobile satellite services (MSS) licenseesin three separate MSS bands to add an ancillary terrestrialcomponent to their existing or proposed mobile satelliteoffering. The FCC has conditioned the deployment of theterrestrial offering such that it has to be integrated with thesatellite offering of a licensee. In addition, satellites must be
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**CINGULAR WIRELESS LLC** **PART I****Item 1.****Business**launched and operational before the terrestrial service can beinitiated. It is likely that the satellite proponents will askthe FCC to minimize or eliminate these conditions which couldpermit them to forego their satellite service in favor ofdeploying a terrestrial network and offering service in directcompetition with our cellular and PCS services.*State Regulation and Local Approvals.* With the rapidgrowth and penetration of wireless services has come acommensurate surge of interest on the part of state legislaturesand state public utility commissions and local governmentalauthorities to regulate our industry. This interest has takenthe form of efforts to regulate customer billing, termination ofservice arrangements, advertising, filing of“informational” tariffs, certification of operation,use of handsets when driving, service quality, sales practices,management of customer call records and protected informationand many other areas. We anticipate that this trend willcontinue. It will require us to devote legal and other resourcesto working with the states to respond to their concerns whileminimizing, if not preventing, any new regulation that couldincrease our costs of doing business.While the Communications Act generally preempts state and localgovernments from regulating entry of, or the rates charged by,wireless carriers, it also permits a state to petition the FCCto allow it to impose CMRS rate regulation when marketconditions fail adequately to protect customers and such serviceis a replacement for a substantial portion of the telephonewireline exchange service within a state. No state currently hassuch a petition on file. In addition, the Communications Actdoes not expressly preempt the states from regulating the“terms and conditions” of wireless service.Several states have invoked this “terms andconditions” authority to impose or propose various consumerprotection regulations on the wireless industry.California’s recently enacted, but currently suspended,rules are potentially quite costly. State attorneys general havealso become more active in enforcing state consumer protectionlaws against sales practices and services of wireless carriers.Consent decrees negotiated with or imposed by the attorneysgeneral have the effect of indirectly regulating the targetedwireless carrier. States also may impose their own universalservice support requirements on wireless and othercommunications carriers, similar to the contributionrequirements that have been established by the FCC.States have become more active in imposing new taxes on wirelesscarriers, such as gross receipts taxes, and fees for items suchas the use of public rights of way. These taxes and fees aregenerally passed through to our customers and result in highercosts to our customers.At the local level, wireless facilities typically are subject tozoning and land use regulation. Neither local nor stategovernments may categorically prohibit the construction ofwireless facilities in any community or take actions, such asindefinite moratoria, which have the effect of prohibitingconstruction. Nonetheless, securing state and local governmentapprovals for new tower sites has been and is likely to continueto be difficult, lengthy and costly.**Item 1A.****Risk Factors*****Factors Relating to Our Business****Substantial competition in all aspects of our business couldcontinue to cause reduced pricing and have adverse effects onour profit margins.* There is substantial competition in allaspects of the wireless communications industry. Our competitorsare principally the three other national carriers doing businessas Verizon Wireless, Sprint Nextel andT-Mobile and a largenumber of regional providers of cellular, PCS and other wirelesscommunications services, resellers and wireline telephoneservice providers. Competition continues to intensify aswireless carriers include more equipment discounts and bundled
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**CINGULAR WIRELESS LLC** **PART I****Item 1A.****Risk Factors**services in their offerings, including more minutes and freelong distance and roaming services. Accordingly, we couldexperience additional pricing pressure which potentially wouldnegatively impact our revenue growth and profit margins. Thiscould also lead to incrementally lower ARPU amounts. We expectthese trends to continue.As 3G and other technologies are developed and become available,all the major wireless communications companies have begun toinstall new infrastructure in their networks to meet the growingdemand for these services and to remain competitive. Due in partto the highly competitive marketplace, the pressure on Cingularto expedite deployment of such technologies will requirecontinued capital deployment, which increases finance anddepreciation costs.FCC regulations and government policy in general promote robustcompetition, and new rules or changes to existing rules, such asrules for providing spectrum leasing and requiring wirelesslocal number portability for customers changing wireless localcarriers, increase this trend and contribute to pressure onchurn and margins.Many of our competitors have substantial financial, technical,marketing, distribution and other resources. As a response tothe intensifying competition, the need for cost reduction andthe requirements for additional radio spectrum, we believe thatthe industry will continue to consolidate. This may producelarger and more formidable competitors with greater financialability to rapidly deploy new technologies and continue toreduce prices to increase their subscriber base. As a result,our market share and profit margins may decrease.New communications technologies, such as Wi-Fi and voice overInternet, are being developed and deployed by competitors, whichmay affect our ability to grow our wireless data and voicebusinesses.*Our wireless data business could be severely disrupted if weare prohibited from providing one of our most popular wirelessdata devices.* We have an agreement with Research in MotionLimited and its affiliates (RIM) to purchase and resellBlackBerry®hand-held devices and to distribute the BlackBerry services aspart of our wireless data communications business. In litigationagainst RIM by various patent holders, a court has held thatBlackBerry services infringe several patents. This decision hasin part been upheld on appeal, and the U.S. Supreme Courthas declined to review the case. We are not a party to thepatent litigation. On February 24, 2006, the trial courtwill consider issuing an injunction on the patent claimsaffirmed on appeal, which could prohibit RIM and companies thatmarket its products and services, including us, from providingthe BlackBerry services. We have approximately one million RIMBlackBerry users. While RIM has publicly stated that theybelieve they have developed a non-infringing technologymodification, there can be no assurance that such modificationwill be upheld by the courts as non-infringing the patents atissue. If an injunction is issued and RIM’s modification isdetermined to infringe such patents, we could have to eithermigrate our BlackBerry users to another handheld device andservice platform and/or separately seek licenses from the patentholders. While there could be some expense and disruptionassociated with implementing the modification, the expenseand/or disruption to our customers from having to migrate oursubscribers to another device and service platform or tonegotiate licenses from the patent holders could be veryexpensive and disruptive to our wireless data business.*ARPU from voice services has declined for several years andmay continue under pressure.* Our ARPU has weakened over thepast several years, declining from $52.91 to $49.65 over thepast five years. This trend has resulted from:•     decreased roaming revenues due to lower negotiated roaming rates    and broader network footprints, which obviate the need for    roaming; •     increased competition, which has reduced pricing    generally; and
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**CINGULAR WIRELESS LLC** **PART I****Item 1A.****Risk Factors**•     expansion of subscriber bases to customers on lower price plans,    such as prepaid, reseller plans and our    FAMILYTALK®    and similar plans targeting different market segments.None of these trends show signs of abating in the near term. Inaddition, we added a higher aggregate percentage of lower-ARPUprepaid and reseller subscribers than postpaid subscribersduring the fourth quarter of 2005, and this trend may continue.Therefore, we believe that pressure on ARPU from voice servicesmay continue.*If we fail to make continued progress in integrating AT&TWireless, our churn could increase, our subscriber growth couldslow and our financial results could decline.* The ongoingchallenges to integrate AT&T Wireless into our companyinclude:•     delivering a single, consistent and effective customer    experience across all functions; •     integrating and rationalizing the separate analog, TDMA and GSM    network systems without reducing service coverage or quality; •     consolidating and rationalizing corporate information technology    and administrative infrastructures; •     creating a strong and positive Cingular brand identity with    subscribers who migrated from AT&T Wireless service; •     reducing redundant facilities and resources.If we do not successfully address these integration challengesin a timely and cost-effective manner, we may disrupt service,lose subscribers, experience reduced growth and fail to realizethe anticipated benefits or synergies of the acquisition to theextent, or in the timeframe, anticipated. The size and scale ofthe acquisition of AT&T Wireless increase both the scope andconsequences of ongoing integration risks.*If our wireless service offerings or customer care service donot meet customer expectations, it could limit our ability toretain or attract subscribers.* Customer acceptance of theservices we offer is and will continue to be affected bytechnology-based differences and by the operational performance,quality, reliability and coverage of our wireless networks.Consumer demand could be impacted by differences in technology,footprint and service areas, network quality, consumerperceptions, customer care levels and rate plans. We will havedifficulty retaining subscribers if we are unable to meet ourcustomers’ expectations for network quality and coverage,billing systems or customer care. An inability to address thoseissues could limit our ability to expand our network capacity orsubscriber base and place us at a competitive disadvantage toother wireless service providers in our markets. These issuescould affect our ability to attract new subscribers as well.*A high rate of subscriber churn could negatively impact ourbusiness.* Wireless communications services providersexperience varying rates of subscriber churn. We believe thatsubscribers change wireless providers for many reasons,including perceptions of poor call quality, inadequate serviceofferings, excessive price, limited coverage area andunsatisfactory customer service. We incur significant expensesto improve customer retention and reduce churn by subsidizingproduct upgrades and/or reducing pricing to matchcompetitors’ initiatives, upgrading our network andproviding improved customer service. There can be no assurancethat these efforts will be successful. A high rate of churncould adversely affect our results of operations because wewould lose revenue and because the cost of adding a newsubscriber, which generally includes a commission expense and/ora handset subsidy, is a significant factor in income andprofitability.*We are committing a substantial amount of capital to upgradeour wireless voice networks to offer advanced data services overa 3G network, but there can be no assurance that widespreaddemand for these services will develop.* While demand for ouradvanced data services is growing, revenues from such
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**CINGULAR WIRELESS LLC** **PART I****Item 1A.****Risk Factors**sources are currently a small portion of our total revenues.Continued growth in wireless data services is dependent onincreased development and availability of popular applicationsand improved availability of handsets and other wireless deviceswith features, functionality and pricing desired by customers.EDGE and UMTS/ HSDPA are new technologies, and a limited numberof applications and devices designed to operate on thesetechnologies are currently available. If applications anddevices are not developed and do not become commerciallyaccepted, our revenues and competitive position could bematerially and adversely affected. We cannot give assurance thatin the near future there will be widespread demand for advancedwireless data services or that data revenues will constitute asignificant and growing portion of our total revenues, nor canwe provide assurance that this demand will develop at a levelthat will allow us to earn a reasonable return on our investment.Customer demand for high-speed wireless service is unknown inthe U.S., and demand for 3G services in Europe has generallybeen disappointing and in Asia has varied significantly. Asthese services are in their infancy in the U.S. and are beingoffered in a highly competitive market, we cannot provideassurance that these services can be priced at profitablelevels. Significant challenges also exist to develop and produceat reasonable cost handsets that successfully address batterylife, size and functionality issues. Furthermore, our ownexperience encouraging subscribers to migrate from TDMA to GSMservice was that substantial handset subsidies were required. Ifwe are unable to promote effectively and obtain reasonablepenetration of this service in our subscriber base at adequatepricing levels, our ability to earn an acceptable rate of returnon our investment and protect our operating margins could bejeopardized.*Our choice for the next generation of technology, UMTS/HSDPA, is a new technology, which could become obsolete and/ornot commercially accepted, which could result in our having toinvest in new network infrastructure and a delay in offering newservices.* New high-speed 3G wireless services are now beingoffered by wireless carriers in the U.S. that combine theattributes of faster speed, greater data capability, betterportability and greater functionality than services providedover existing networks. We have chosen UMTS/ HSDPA as ouradvanced 3G technology, but there will be one or more competingtechnological standards, several options within each standard,vendor-proprietary variations and rapid technologicalinnovation. Other technologies could emerge as preferred datanetworks for some services and, if those technologies are widelyaccepted, we may miss the opportunity to offer those servicesbecause of our technology choice. There is a risk that UMTS/HSDPA could be inadequate or become obsolete as 4G technologiesare developed.*Our business expansion and network upgrade will requiresubstantial additional capital, and we are now dependent onAT&T and BellSouth to provide working capital and long-termfinancing.* We will require substantial capital for acquiringsystems, constructing network infrastructure, concluding ourtechnology migration and upgrade plan, expanding our networkcapacity, investing in joint venture affiliates and making othercapital investments.The actual amount of capital required may vary materially fromour current estimates. Unforeseen delays, cost overruns,regulatory changes, engineering and technological changes, legalcosts and judgments and other factors may also requireadditional funds.As a result of the cash needs described above, we may need toincur significant amounts of additional financing. AT&T andBellSouth have committed to provide us with working capitalfinancing. If AT&T or BellSouth are unable or unwilling tofinance our operating and capital needs on a timely basis, wecould be unable to pursue our business plan or meet ourfinancial obligations unless AT&T and BellSouth permit us toseek external financing.*Delay in completing our network expansion in California andNevada could result in substantially greater operatingexpenses.* Our agreement to dissolve our GSMF venture withT-Mobile required us tosell to
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**CINGULAR WIRELESS LLC** **PART I****Item 1A.****Risk Factors**them our California and Nevada network assets and construct ourown network in these states. As of December 31, 2005, westill had significant construction to complete. We have anagreement to purchase minutes fromT-Mobile for afour-year transition period while we build out our own network.In the event that our expansion is not completed in a timelymanner and we must extend our agreement to purchase minutes fromT-Mobile, our operatingcosts could substantially increase.*Termination or impairment of our relationship with a smallnumber of key suppliers or vendors could adversely affect ourrevenues and results of operations.* We have developedrelationships with a small number of key vendors, includingNokia Mobile Phones, Inc., Sony Ericsson Mobile Communications,LG InfoComm U.S.A., Inc., Motorola, Inc., and SamsungElectronics Co., Ltd. for our supply of wireless handsets anddevices; Nortel Networks, Inc., Ericsson, Nokia Networks, Inc.,Siemens and Lucent for our supply of telecommunicationsinfrastructure equipment; Convergys Information Management Groupand StarTek, Inc. for billing or customer care services; BechtelCorporation for build-out of our networks; and Siebel Systems,Inc., Sun Microsystems, Inc. and Cisco Systems, Inc. forinformation systems. We do not have operational or financialcontrol over our key suppliers and have limited influence withrespect to the manner in which these key suppliers conduct theirbusinesses. If these companies were unable to honor, orotherwise failed to honor their obligations to us, or terminatedtheir relationship with us, we could experience disruptions ofour business and adverse effects on our revenues and results ofoperations.*If we fail to obtain access to additional spectrum, we maynot be able to expand the geographic reach of Cingular-brandedservices, increase our subscriber base in areas we currentlyserve or meet the anticipated demand for new services.*Although our acquisition of AT&T Wireless, our purchase ofspectrum licenses from NextWave and participation in variousjoint ventures have generally provided us with access tosufficient additional spectrum to meet anticipated levels ofusage and provide 3G services in the near term, we may needadditional spectrum in certain markets to optimize service,especially over the long term. If we cannot obtain access to newmarkets through auctions, spectrum exchanges or leasing,acquisitions, joint ventures or other means, it could impede ourgrowth. In addition, an inability to add spectrum in some of ourexisting markets could adversely affect the quality of serviceif the demand for wireless communications continues to increaseat a rapid rate.*To provide service in domestic and international marketswhere we do not have network infrastructure, we rely on roamingarrangements with other carriers, which we may be unable toobtain or maintain in the future.* We may not be able toobtain or maintain roaming agreements with other wirelessproviders on terms that are acceptable to us. Our customersautomatically can access another provider’s system only ifthe other provider allows our customers to roam on its network.We rely on agreements to provide roaming capability to ourcustomers in many areas outside our service area and to improvecoverage within our network footprint. Some competitors may beable to obtain lower roaming rates than we do because they havelarger call volumes or because of their affiliations with, orownership of, wireless providers, or may be able to reduceroaming charges by providing service principally over their ownnetwork. In addition, the quality of service that a wirelessprovider delivers during a roaming call may be inferior to thequality of service we or our affiliates provide, the price of aroaming call may not be competitive with prices of otherwireless providers for such a call, or our customers may not beable to use some of the advanced features, such as voicemailnotification, that the customers enjoy when making calls on ournetwork. Finally, we may not be able to continue to obtainroaming agreements for our next-generation products and serviceswith pricing or coverage we desire.In all markets where our roaming providers operate, we are atrisk because we do not control those entities. As a result, wemay not be able to compel them to participate in our technologymigration and enhancement strategies or to expand their coverageareas. Our ability to provide service on a nationwide level andto implement our next-generation strategy could be adverselyaffected if these providers are
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**CINGULAR WIRELESS LLC** **PART I****Item 1A.****Risk Factors**unable or unwilling to participate in the further development ofour digital network or if they cease to provide servicescomparable to those we offer on our networks. Some of thesecarriers are still building their GSM/ GPRS/ EDGE networks,primarily in rural areas. If those carriers are delayed orprevented from completing their GSM/ GPRS/ EDGE networks, or ifthey cease doing business, our customers might be unable to roamon those networks when out of their home service areas, or theymay have to roam on carriers’ networks with which we haveless favorable roaming agreements. To the extent our roamingproviders that have developed GSM/ GPRS do not deploy EDGE orUMTS technology, our ability to expand our EDGE and UMTS servicearea beyond our own network will be limited, which couldadversely affect demand for the service. If we lose the abilityto rely on roaming providers to provide service in an area, wemay be required to commit capital resources to the constructionof our own network in those areas rather than to the pursuit ofother business opportunities.*Our lack of control over a large part of our distributionnetwork could hurt our ability to grow our subscriber base.*As of December 31, 2005, we had nearly 260,000 distributionchannels, of which approximately 2,100 were our own stores orkiosks. We rely heavily upon independent agents, nationalretailers and the distribution channels of AT&T andBellSouth to sell our products and services. Many of thesedistributors also sell communications products and services ofother companies, and we cannot completely control the marketingmessages they use in their selling efforts or their preferencesto sell our products and services as opposed to those of ourcompetitors. As a result, our distribution channels may beineffective to a degree that we cannot directly address, whichcould hurt our ability to generate subscriber additions andmaximize revenues.*The potential impact of unionization and organizingactivities, which we expect will increase, could adverselyaffect our costs and results of operations.* All of ourbusinesses, excluding joint ventures, are subject to variousagreements with the CWA. These agreements contain provisionsrequiring us to maintain neutrality if the union conducts anorganizing campaign and requiring us to allow employees to voteto unionize by presenting authorization cards rather thanparticipating in a more difficult secret ballot processconducted by the National Labor Relations Board. In an effort togain recognition in the areas not already covered by a contract,union activity may increase. We believe that no other nationalwireless provider currently employs a unionized workforce to anysignificant extent. At the expiration of the CWA agreements, awork stoppage could prevent us from providing service to ourcustomers in the areas covered by the expired contracts andpossibly result in subscriber loss and a reduction in revenue.***Factors Relating to Our Industry****We may be adversely affected by the significant changes inthe wireless communications industry.* The wirelesscommunications industry is experiencing significant changes.These include evolving industry standards, ongoing improvementsin the capacity and quality of digital technology, shorterdevelopment cycles for new services, evolution to new 3Gstandards and changes in end-user needs and preferences. Also,alternative technologies are developing for the provision ofservices to subscribers that may provide wireless communicationsservices or alternative services superior to those availablefrom us. Accordingly, there can be no assurance thattechnological changes will not materially adversely affect us.*Industry growth could be affected by increased marketpenetration.* The penetration rate in the wirelesscommunications market is approximately 70%. Although this marketcontinues to grow, increased penetration could have the effectof slowing subscriber growth, and gross subscriber additions ofany carrier could increasingly have to be obtained from othercarriers’ churn. Currently, we believe that approximately70% of industry gross additions during 2005 were formerlysubscribers of another wireless carrier. If this conditioncontinues, we expect competition could intensify and oursubscriber growth could be increasingly dependent on reducingour churn rate.
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**CINGULAR WIRELESS LLC** **PART I****Item 1A.****Risk Factors***Our operating results, including our profit or loss, margins,and cash flow generation, may fluctuate on a quarterly basis,and may not be representative of our results for the fullyear.* The wireless industry, including our company, hasexperienced a trend of generating a significantly higher numberof subscriber additions in the fourth quarter of each year ascompared to the other three fiscal quarters. A number of factorscontribute to this trend, including the increasing use of retaildistribution, which is dependent upon the year-end holidayshopping season, the timing of new product and serviceannouncements and introductions, competitive pricing pressuresand aggressive marketing and promotions. Strong fourth quarterresults for subscriber additions may not continue for thewireless industry or for us. The number of our subscriberadditions in the fourth quarter could decline for a variety ofreasons, including our inability to match or beat pricing plansoffered by competitors, failure to adequately promote ourproducts, services and pricing plans, failure to have anadequate supply or selection of handsets or lower demand forwireless services. If in any year fourth quarter results fail tosignificantly improve upon subscriber additions from theyear’s previous quarters, this could adversely impact thegrowth of our subscriber base, which could limit revenue growthin subsequent periods.The revenues we generate from subscribers roaming on ournetwork, as well as the expenses we incur related to oursubscribers roaming on other carriers’ networks, fluctuateon a quarterly basis, with increases typically occurring duringthe summer months due to an increase in travel during theseperiods. These fluctuations may result in higher or lowerroaming revenues and expenses in any given quarter, therebyincreasing or decreasing our profit or loss for that quarter.Our capital expenditures vary due to the timing of networkexpansion, network upgrades and market launches. The timing ofour capital expenditures could impact the cash flow we generatein any given quarter and may not be representative of our cashflow for the full year. Our churn levels may fluctuate fromquarter to quarter depending on the number of expiring contractsor other factors. Our operating margins could fluctuate fromquarter to quarter, depending on marketing expenses, significantfluctuations in the number of new subscribers and our subscriberretention efforts.*Our operations are subject to substantial governmentregulation, which could significantly increase our costs andincrease subscriber churn.* Many aspects of our business areregulated to varying degrees by the FCC and some state and localregulatory agencies. The adoption or change of regulations couldsignificantly increase our costs and increase subscriber churn.For example, the FCC, together with the Federal AviationAdministration, regulates tower marking and lighting. Inaddition, the FCC and the states are increasingly looking to thewireless industry to fund various initiatives, includinguniversal service programs, local telephone number portability,services for the hearing-impaired and emergency911 networks. Furthermore, many states have imposedsignificant taxes on the wireless industry and are attempting toregulate consumer protection matters. We are also subject toenvironmental protection and health and safety regulation,including limits on radio frequency energy from wirelesshandsets and towers. The failure to comply with any of theseregulations, even if hardware and software solutions are notreadily available from manufacturers and suppliers, can resultin significant penalties.*A number of our FCC licenses to provide wireless services aresubject to renewal and potential revocation in the event that weviolate applicable laws.* A number of our licenses aresubject to renewal, generally some each year, upon theexpiration of the10-year period forwhich they are granted, and we cannot provide assurance that theFCC will renew them. If any of our licenses are forfeited orrevoked, we would not be able to provide service in that areaunless we contract to resell wireless services of anotherprovider, utilize roaming agreements or lease spectrum fromother carriers.*Concern about alleged health risks relating to radiofrequency energy may harm our prospects.* A number of studieshave been conducted to examine the health effects of wirelessphone use, and some persons have construed some of the studiesas indicating that wireless phone use causes adverse healtheffects or
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**CINGULAR WIRELESS LLC** **PART I****Item 1A.****Risk Factors**that wireless phones’ safety has not been established. Somemedia reports have also suggested that radio frequency energyfrom wireless handsets, accessories and cell sites may beassociated with various health problems, including cancer. Inaddition, lawsuits have been filed against us and otherparticipants in the wireless industry alleging actual andpotential adverse health consequences as a result of wirelessphone usage. Some of these lawsuits allege other related claims,including negligence, strict liability, conspiracy and themisrepresentation of or failure to disclose these alleged healthrisks. If consumers’ health concerns over radio frequencyenergy increase, they may be discouraged from using wirelesshandsets, and regulators may impose restrictions on the locationand operation of cell sites. These concerns could have anadverse effect on the wireless communications industry andexpose wireless providers to further litigation, which, even ifnot successful, can be costly to defend. Additional studies ofradio frequency energy are ongoing and new studies areanticipated. Any negative findings in these studies couldincrease the risks described above. In addition, an adverseoutcome or settlement in the existing and/or any furtherlitigation against us or any other provider of wireless servicescould have a material adverse effect on our results ofoperations, financial condition and/or prospects.*Equipment failure and disasters may adversely affect ouroperations.* A major equipment failure or a natural disaster,terrorist act or other breach of network or IT security thataffects our wireless telephone switching offices, microwavelinks, third-party owned local and long distance networks onwhich we rely, our cell sites or other equipment or the networksof other providers on which our customers roam could have amaterial adverse effect on our operations. While we haveinsurance coverage for some of these events, our inability tooperate our wireless system, even for a limited time period, mayresult in a loss of subscribers or impair our ability to attractnew subscribers, which would have a material adverse effect onour business, results of operations and financial condition.*The restricted supply of new telephone numbers could limit ordelay our growth in California and some other states.* Thesupply of new telephone numbers in some areas of theU.S. is near exhaustion due to rapidly growing customerdemand for additional numbers for wireless handsets and pagers,as well as for Internet access and private branch exchangesystems or private telephone networks used within enterprises.Many states have imposed restrictions on carriers’ accessto additional numbers, creating shortages and delay in obtainingneeded number resources. If we are unable to obtain a sufficientsupply of new telephone numbers, our ability to increase oursubscriber base would be adversely affected.***Factors Relating to Our Arrangements with AT&T and    BellSouth****AT&T and BellSouth may transfer their controllinginterests in us and cease to be subject to certain obligationsthat benefit us, including exclusivity provisions.* Under ourlimited liability company agreement and the stockholders’agreement among our Manager, AT&T and BellSouth, each ofAT&T and BellSouth will cease to be subject to many of therestrictions imposed on it that benefit and protect us, such asrestrictions on competition and acquisitions of other wirelessbusinesses, once its ownership interest falls below 10%.Although both AT&T and BellSouth are subject to a number oftransfer restrictions, each of them may, under the circumstancesdescribed in Item 13, “Certain Relationships andRelated Transactions — Our Limited Liability CompanyAgreement”, sell its interests in us and its common stockin our Manager to third parties, subject to a right of firstrefusal of the respective other party, or spin-off or split-offits interests in us or its stock in our Manager to itsshareholders. In addition, we may lose any competitive advantagewe currently gain from our agency relationships and servicebundling offerings with AT&T and BellSouth.*AT&T and BellSouth may compete with us in the areas offixed wireless voice and data services and may resell ourservices under their own brand names inside their serviceterritories after specified future dates.* AT&T andBellSouth have agreed in our limited liability company agreementto engage in the provision of
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**CINGULAR WIRELESS LLC** **PART I****Item 1A.****Risk Factors**U.S. mobile wireless voice and data services only throughus and our subsidiaries, but the agreement is subject tosignificant exceptions, including an exception that permits themto market and sell fixed wireless voice and fixed wireless dataservices and to market and sell wireless services in areas inwhich we, our subsidiaries or joint venture affiliates are notproviding Cingular-branded services pursuant to FCC licenses.AT&T and BellSouth engage in other competitive activities,such as Wi-Fi wireless data service. AT&T and BellSouth arepermitted to resell our services under their own brand namesoutside their service territories. In addition, if BellSouth orAT&T terminates its wireless agency agreement, it may resellour wireless services in its respective service territories.*The arrangements that we have with AT&T and BellSouthwere established at our formation, and may not be asadvantageous as similar agreements we negotiate withunaffiliated third parties.* We are subject to variousagreements with AT&T and BellSouth and their respectiveaffiliates that are material to the conduct of our business, andthey may cause us to enter into additional agreements with themin the future. For example, we have entered into agencyagreements with AT&T and BellSouth that include pricing andother terms. Although we believe that these agreements, as awhole, are as advantageous to us as those that could otherwisebe obtained, we have no independent verification that theseagreements are as advantageous as similar agreements wenegotiate with unaffiliated third parties.*Under the terms of agreements with AT&T and BellSouth,the scope of our potential business is limited, which could hurtthe growth of our business.* AT&T and BellSouth havedetermined that we may not enter into any business other thanU.S. and limited foreign mobile wireless voice and databusinesses. These restrictions could limit our ability to growour business through initiatives such as expansion intoadditional markets and acquisitions of wireless providers thatare also engaged in other businesses outside of our permittedactivities. These restrictions may also preclude us frompursuing other attractive related or unrelated businessopportunities.*AT&T and BellSouth control all important decisionsaffecting our governance and our operations and may fail toagree on important matters.* Under the terms of our limitedliability company agreement, our management is exclusivelyvested in our Manager. Both the board of directors and thestrategic review committee of our Manager are comprised of sixdirectors: three elected by AT&T and three elected byBellSouth. Substantially all important decisions of our Managermust be approved by its strategic review committee. It ispossible that the committee may be deadlocked regarding mattersthat are very important to us. Although deadlocks are to beresolved by the chief executive officers of AT&T andBellSouth, if they cannot agree, inaction or disputes mayresult, which could, among other things, result in us losingimportant opportunities.*AT&T and BellSouth may have conflicts of interest with usand with each other.* Conflicts of interest may arise betweenus and AT&T and BellSouth and with each other when facedwith decisions that could have different implications for us andAT&T or BellSouth, including technology decisions, financialbudgets, repayment of member loans from AT&T and BellSouth,the payment of distributions by us, business activities andother matters. They may also take action that favors theirbusinesses and the interests of their shareholders over ourwireless business and the interests of our debt holders. BecauseAT&T and BellSouth control us, conflicts of interest couldbe resolved in a manner adverse to us or our debt holders.Therefore, we may not always be able to use our resources in thebest interest of advancing our business. Any of these types ofconflicts could impede our relationship with our members, theirability to manage us efficiently or our ability to operate ourbusiness in the best interests of our security holders.**Item 1B.****Unresolved Staff Comments**Not applicable.
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**CINGULAR WIRELESS LLC** **PART I****Item 2.****Properties**We lease our corporate headquarters building in Atlanta,Georgia. We also maintain administrative and sales offices,customer care call centers, retail sales locations, switchingcenters, cell tower sites and data centers throughout the U.S.and Puerto Rico. Most locations are leased to provide maximumflexibility. Some switching center and data center propertiesare owned due to their critical role in our operations and highset-up and relocationcosts. We continue to maintain a portion of the leased officespace that had previously been the corporate headquarters ofAT&T Wireless in Redmond, Washington.Plant and equipment used to provide wireless services consist of:•     switching, transmission and receiving equipment, •     connecting lines (cables, wires, poles and other support    structures, conduits, etc.), •     land and buildings, •     easements and •     other miscellaneous properties (work equipment, furniture and    plants under construction).As of December 31, 2005, we operated a direct distributionchannel comprised of approximately 2,100 company-operatedstores and kiosks. We have two centrally operated handset andaccessory distribution centers, which are located in Memphis,Tennessee and Fort Worth, Texas.Network properties include over 47,000 cell sites. Cingular isin the process of integrating its network and that of theprevious AT&T Wireless. In the network integration plan, itis anticipated that approximately 7,600 redundant cell siteswill be decommissioned by the end of 2006.We believe that our facilities are in good operating conditionand are currently suitable and adequate for our businessoperations.**Item 3.****Legal Proceedings***NOTE:* The claims identified as AT&T Wireless claimswere filed against AT&T Wireless prior to the acquisition byus in 2004.We and our subsidiaries, including AT&T Wireless, areparties to various legal actions and regulatory proceedingsrelating to matters that are incidental to the conduct of ourbusiness. These involve disputes with and inquiries by privateparties and governmental entities over, among other things,alleged patent infringement, agency and reseller relationships,alleged unfair competition, marketing (including unsolicitedmarketing calls to persons on the FTC’s National Do NotCall Registry), advertising, promotions, sales, labor practices,billing and collection practices and alleged health effects ofwireless phones. We are also subject to claims incidental to thenormal conduct of our business, including actions by customers,vendors and employees and former employees.We and various affiliated entities are subject to stategovernment inquiries over marketing practices in the wirelessindustry and are defendants in a number of purported classactions or representative actions brought on behalf ofsubscribers throughout the country regarding common law andstatutory claims of misrepresentation, inadequate disclosure,unfair trade practices or breach of contract related to ouradvertising, promotions, sales, billing and collectionpractices. These include claims relating to the allegedpractice, and alleged nondisclosure, of rounding up of partialminutes of airtime usage to full minute increments,send-to-end billing,charging early termination fees, post-cancellation billingpractices, billing for recovery costs associated with regulatoryprograms, billing for roaming calls, locking of handsets andother practices and charges, as well as the adequacy of ourwireless coverage and the quality of service.
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**CINGULAR WIRELESS LLC** **PART I****Item 3.****Legal Proceedings**The actions are in various stages of the investigation andlitigation processes. Plaintiffs in most of these putative classactions and representative actions have not specified thealleged damages they seek.We and various affiliated entities are defendants in a number ofcases in various courts involving claims by former agents andresellers who allege that we breached our contracts with thoseagents and resellers, have tortiously interfered with theircontractual relationships with others by terminating ourrelationships with them and have engaged in unfair competition.Some of the complaints have further alleged that we are afranchisor under applicable state franchise law and haveviolated franchise laws in our relationship with them. Statefranchise laws often provide for treble damages for violations.We believe that we are not a franchisor under state law in thesecases.Following a jury trial, a federal district court awarded FreedomWireless, Inc. (Freedom) damages jointly against us and BostonCommunications Group, Inc. (BCGI) in the approximate amountof $165 million, including prejudgement interest, foralleged past infringement of two patents allegedly owned byFreedom and used by BCGI to provide us and other carriers aprepaid wireless telephone service technology platform. Thecourt enjoined our continued use of the BCGI platform, althoughthe U.S. Court of Appeals for the Federal Circuit hasissued a stay of the injunction, and we and BCGI are appealingthe entire case. BCGI has agreed to indemnify us with respect tothe claims asserted in this litigation and has escrowed$41 million for that purpose. If BCGI were to commence abankruptcy proceeding, which is possible, the $41 millionmay not be available to cover any of our liability. As a resultof this arrangement and based upon our anticipated prospects onappeal, we do not believe the ultimate disposition of this casewill have a material impact on our operations, cash flows orfinancial position beyond the $20 million accrued in ourfinancial statements.Several class-action lawsuits were filed against Old AT&Tasserting claims under the federal securities laws. Thecomplaints assert claims that Old AT&T made materialmisstatements concerning earnings and financial condition, whileomitting other material information, allegedly to maximizeproceeds from the offering of AT&T Wireless Group trackingstock in April 2000 and/or to avoid paying a cash guarantee inconnection with their MediaOne acquisition. The plaintiffs havedemanded damages in excess of $2.1 billion related to theoffering of AT&T Wireless Group tracking stock. Inconnection with the split-off of AT&T Wireless from OldAT&T, the Separation Agreement between AT&T Wireless andOld AT&T provides for the allocation to AT&T Wireless of70% of any liabilities arising out of these actions. During thethird quarter, management concluded its evaluation of thepotential loss from this preacquisition liability and recordedan adjustment for this lawsuit to the purchase price allocationof AT&T Wireless.In September 2004, the California Public Utilities Commissionvoted to fine us $12 million and to require us to payrestitution to customers for alleged violations ofCalifornia’s consumer protection laws. We are appealingthat decision.We and various affiliated entities are defendants in lawsuitsalleging personal injuries, including brain cancer, fromwireless phone use. We and various affiliated entities are alsodefendants in purported class actions that allege adverse healtheffects caused by wireless phone use and also allege fraudulentconduct, participation in conspiracies and other wrongfulconduct by wireless phone manufacturers, service providers andothers. Plaintiffs seek various forms of relief, includingcompensatory and punitive damages, and/or injunctive andequitable relief.A series of class-action cases have been filed against us andAT&T Wireless, as well as our major competitors, allegingthat we and the other defendants have violated federal and stateantitrust laws and/or committed unfair or deceptive tradepractices by allegedly restricting the portability of wirelesshandsets between carriers.
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**CINGULAR WIRELESS LLC** **PART I****Item 3.****Legal Proceedings**AT&T Wireless has been named as a defendant, along withanother wireless carrier and several wireless phonemanufacturers, in three class-action lawsuits alleging thatexisting phone equipment does not meet FCC requirements for 911emergency call processing. Damages have not been specified,although plaintiffs are seeking injunctive and equitable relief.To the extent that management believes that a loss arising fromlitigation or regulatory proceedings is probable and canreasonably be estimated, an amount is accrued on the financialstatements for the estimated loss. As additional informationbecomes available, the potential liability related to the matteris reassessed and the accruals are revised, if necessary.While complete assurance cannot be given as to the outcome ofany legal claims, we believe that any financial impact fromlitigation or regulatory proceedings would not be material toour business, financial position or cash flows.**Item 4.****Submission of Matters to a Vote of Security Holders**None
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 5.****Market for Registrant’s Common Equity, Related    Stockholder Matters and Issuer Purchases of Equity    Securities**There is no established trading market for our ownershipinterests. AT&T indirectly owns approximately 60% of ourownership interests and BellSouth indirectly owns approximately40% of our ownership interests. Cingular Wireless Corporation,our Manager, owns a *de minimis*ownership interest in us.We are required to make periodic distributions to our members ona pro rata basis in accordance with each member’s ownershipinterest in amounts sufficient to permit members to pay the taxliabilities resulting from allocations of taxable income fromus. Since we did not generate taxable income to the members in2003, 2004 and 2005, we made no distributions in any of theseyears.Additionally, we are required to distribute to our members 50%of our “excess cash”, as defined in our operatingagreement, at the end of each fiscal year. Excess cash consistsof all funds generated from our business, less forecasted cashneeds for the upcoming fiscal year and distributions made to themembers for their tax payments. In 2003, 2004 and 2005, we werenot required to make any distributions of excess cash to themembers.Under a revolving loan agreement with AT&T and BellSouth,free cash flow after repayment of the revolving loans thereunderand subordinated shareholder loans will be distributed toAT&T and BellSouth. In application, these distributionprovisions have the effect of superseding the distributionprovisions described above to the extent they require a greaterdistribution.**Item 6.****Selected Financial Data***The following selected financial data should be read inconjunction with our consolidated financial statements and thenotes thereto contained herein in Item 8, “FinancialStatements and Supplementary Data”, the informationcontained herein in Item 7, “Management’sDiscussion and Analysis of Financial Condition and Results ofOperations” and the information contained herein in“Item 1, Business — Risk Factors —Factors Relating to our Business, — Factors Relatingto our Industry and — Factors Relating to OurArrangements with AT&T and BellSouth”. Historicalresults are not necessarily indicative of future results.***Selected Historical Financial Information —Cingular Wireless LLC**The following table presents our selected historicalconsolidated financial and operating data from 2001 to 2005. Thestatements of income, balance sheets and cash flow presented inthis table are derived from our audited historical consolidatedfinancial statements and related notes. Operating data wasderived from unaudited financial data.The 2004 and 2005 data presented below is not necessarilycomparable to that for the prior periods as a result of theacquisition of AT&T Wireless, which closed in October 2004.AT&T Wireless’ results subsequent to that date havebeen included in our consolidated financial statements.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 6.****Selected Financial Data**                       **Year Ended December 31,**     **2001** **2002** **2003** **2004** **2005**             **(Dollars in millions, except for operating data)****Statements of Income Data**                        Total operating revenues $14,268  $14,903  $15,483  $19,436  $34,433     Total operating expenses(1)  11,746   12,407   13,229   17,908   32,609                     Operating income  2,522   2,496   2,254   1,528   1,824     Income before provision for income taxes and cumulative effect    of accounting change  1,674   1,217   1,005   143   531     Net income(2)  1,666   1,173   977   201   333 **Balance Sheet Data***(as of December 31)*                        Total assets $22,552  $24,136  $25,530  $82,238  $79,319     Total long-term debt  12,466   12,546   12,592   23,857   19,340 **Cash Flow Data**                        Net cash provided by operating activities $3,665  $3,592  $3,686  $3,320  $8,401     Net cash used in investing activities  (3,945)  (3,585)  (3,368)  (41,077)  (3,686)    Net cash provided by (used in) financing activities  721   334   (87)  36,970   (4,595)    Capital expenditures(3)  3,156   3,085   2,734   3,449   7,475 **Operating Data**                        Licensed cellular/ PCS POPs (in millions) (end of period)(4)  219   219   236   291   294     Total cellular/ PCS subscribers (in millions) (end of period)(5)  21.6   21.9   24.0   49.1   54.1     Net additions, cellular/ PCS subscribers (in millions)  1.9   0.4   2.1   3.4   5.0     Cellular/ PCS subscriber churn(6)  2.9%  2.8%  2.7%  2.7%  2.2%    Average cellular/ PCS revenue per user (ARPU)(7) $52.91  $52.14  $51.67  $49.68  $49.65     Ratio of earnings to fixed charges(8)  2.69   2.08   1.95   1.11   1.26     OIBDA(9) $4,438  $4,345  $4,343  $4,605  $8,399     OIBDA margin(10)  33.5%  31.2%  30.5%  26.2%  27.4%  (1)     Subsequent to November 2001 and prior to disposition in January    2005, depreciation expense related to the assets transferred to    GSMF is classified as a component of equity in net loss of    affiliates and is no longer included in operating expenses.  (2)     For the year ended December 31, 2002, net income includes a    cumulative effect of accounting change, net of tax, of $32 upon    the adoption of Statement of Financial Accounting Standards    No. 142, *Goodwill and Other Intangible Assets.*  (3)     Capital expenditures do not include capital expenditures and    cash contributions related to our former infrastructure venture,    GSMF. See Note 5 to our audited financial statements    included in Item 8.  (4)     Licensed POPs refers to the number of people residing in areas    where we have licenses to provide cellular or PCS service.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 6.****Selected Financial Data** (5)     Cellular/ PCS subscribers include subscribers of other carriers    served through reseller agreements.  (6)     Cellular/ PCS subscriber churn is calculated by dividing the    aggregate number of cellular/ PCS subscribers who cancel service    during each month in a period by the total number of cellular/    PCS subscribers at the beginning of each month in that period.    Beginning in 2005, reseller churn calculation methodology for    resellers is based on net disconnects, See “Consolidated    Results of Operations, Year Ended December 31, 2005    Compared with the Year Ended December 31, 2004”.  (7)     ARPU is defined as cellular/ PCS service revenues during the    period divided by average number of cellular/ PCS subscribers    during the period. For discussion of ARPU and a reconciliation    to its most comparable measure under U.S. generally    accepted accounting principles (GAAP), see “ARPU    Discussion” below.  (8)     Earnings consist of income before income taxes, extraordinary    gain (loss), cumulative effect of accounting changes and fixed    charges. Fixed charges include interest expense, capitalized    interest and the portion of rent expense representing interest.  (9)     OIBDA is defined as operating income before depreciation and    amortization. For discussion of OIBDA, including reasons we    believe its presentation is useful and a reconciliation to its    most comparable measure under GAAP, see “OIBDA    Discussion” below.(10)     OIBDA margin is defined as OIBDA divided by service revenues.**OIBDA Discussion**OIBDA is defined as operating income before depreciation andamortization. Although we have used substantively similarmeasures in the past, which we called “EBITDA”, we nowuse the term OIBDA to describe the measure we use as it moreclearly defines the elements of the measure. OIBDA margin iscalculated as OIBDA divided by services revenue. These arenon-GAAP financial measures. They differ from operating incomeand operating margin, as calculated in accordance with GAAP, inthat they exclude depreciation and amortization. They differfrom net income, as calculated in accordance with GAAP, in thatthey exclude, as presented in our Consolidated Statements ofIncome: (i) depreciation and amortization,(ii) interest expense, (iii) minority interest inearnings of consolidated entities, (iv) equity in net(loss) earnings of affiliates, (v) other, net, and(vi) provision (benefit) for income taxes. We believe thesemeasures are relevant and useful information to our investors asthey are an integral part of our internal management reportingand planning processes and are important metrics that ourmanagement uses to evaluate the operating performance of ourconsolidated operations. They are used by management as ameasurement of our success in acquiring, retaining and servicingsubscribers because we believe these measures reflect ourability to generate and grow subscriber revenues while providinga high level of customer service in a cost-effective manner.Management also uses these measures as a method of comparing ourperformance with that of many of our competitors. The componentsof OIBDA include the key revenue and expense items for which ouroperating managers are responsible and upon which we evaluatetheir performance. Lastly, we use this measure for planningpurposes and in presentations to our board of directors, and weuse multiples of this current or projected measure in ourdiscounted cash flow models to determine the value of ourlicensing costs and our overall enterprise valuation.OIBDA does not give effect to cash used for debt servicerequirements and thus does not reflect available funds fordistributions, reinvestment or other discretionary uses. OIBDAexcludes other, net, minority interest in earnings ofconsolidated entities and equity in net (loss) earnings ofaffiliates, as these do not reflect the operating results of oursubscriber base and our national footprint that we utilize toobtain and service our customers. Equity in net (loss) earningsof affiliates represents our proportionate share of the net(loss) earnings of affiliates in which we exercise significantinfluence, but do not control. As we do not
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 6.****Selected Financial Data**control these entities, our management excludes these resultswhen evaluating the performance of our primary operations.Although excluded, equity in net (loss) earnings of affiliatesmay include results that are material to our overall net income.OIBDA also excludes interest expense and the provision (benefit)for income taxes. Excluding these items eliminates the expensesassociated with our capitalization and tax structures. Finally,OIBDA excludes depreciation and amortization, in order toeliminate the impact of capital investments.We believe OIBDA as a percentage of service revenues to be amore relevant measure of our operating margin than OIBDA as apercentage of total revenue. We generally subsidize a portion ofour handset sales, all of which are recognized in the period inwhich we sell the handset. This results in a disproportionateimpact on our margin in that period. Management views thisequipment subsidy as a cost to acquire or retain a subscriber,which is recovered through the ongoing service revenue that isgenerated by the customer. We also use service revenues tocalculate margin to facilitate comparison, both internally andexternally with our competitors, as they calculate their marginsusing services revenue as well.There are material limitations to using these non-GAAP financialmeasures, including the difficulty associated with comparingthese performance measures as we calculate them to similarperformance measures presented by other companies, and the factthat these performance measures do not take into account certainsignificant items, including depreciation and amortization,interest, tax expense and equity in net (loss) earnings ofaffiliates, that directly affect our net income. Managementcompensates for these limitations by carefully analyzing how ourcompetitors present performance measures that are similar innature to OIBDA as we present it, and considering the economiceffect of the excluded expense items independently as well as inconnection with its analysis of net income as calculated inaccordance with GAAP. OIBDA and OIBDA margin should beconsidered in addition to, but not as a substitute for, othermeasures of financial performance reported in accordance withGAAP. OIBDA and OIBDA margin, as we have defined them, may notbe comparable to similarly titled measures reported by othercompanies.**ARPU Discussion**ARPU is defined as cellular/ PCS service revenues during theperiod divided by average cellular/ PCS subscribers during theperiod. This metric is used to compare the recurring revenueamounts generated on our cellular/ PCS network to prior periodsand internal targets. Our ARPU calculation excludes revenuesfrom a business we sold in late 2004 and thereby makes ourmetric more comparable with other wireless carriers, which webelieve makes it more useful to investors.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 6.****Selected Financial Data*****Reconciliation of GAAP Financial Measures to Non-GAAP    Financial Measures.***                        **Year Ended December 31,**     **2001** **2002** **2003** **2004** **2005**               Income before cumulative effect of accounting change $1,666  $1,205  $977  $201  $333      Plus: Interest expense  822   911   856   900   1,260      Plus: Minority interest in earnings of consolidated entities  122   123   101   86   102      Plus: Equity in net (loss) earnings of affiliates  68   274   333   415   (5)     Plus: Other, net  (164)  (29)  (41)  (16)  (64)     Plus: Provision (benefit) for income taxes  8   12   28   (58)  198                     Operating income  2,522   2,496   2,254   1,528   1,824      Plus: Depreciation and amortization  1,916   1,849   2,089   3,077   6,575                     OIBDA $4,438  $4,345  $4,343  $4,605  $8,399                     ARPU                        Service revenues $13,229  $13,922  $14,317  $17,602  $30,638     Less: Mobitex data revenues  185   189   220   207   73                     Service revenue used to calculate ARPU $13,044  $13,733  $14,097  $17,395  $30,565 **Item 7.****Management’s Discussion and Analysis of Financial    Condition and Results of Operations****Introduction**This management’s discussion and analysis of financialcondition and results of operations is intended to provideinvestors with an understanding of our past performance,financial condition, and prospects. The following will bediscussed and analyzed:•     Overview of Business •     Industry and Operating Trends •     Components of Our Operating Results •     Consolidated Results of Operations •     Liquidity and Capital Resources •     Critical Accounting Policies and Estimates •     Related Party Transactions •     Recent Accounting Pronouncements**Overview of Business**We earn revenues and generate cash primarily by offering acomprehensive variety of high-quality wireless voice and datacommunications services and products. Our services are availablein a variety of postpaid pricing plans and prepaid servicearrangements. Our voice and data offerings are tailored to meetthe
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 7.****Management’s Discussion and Analysis of Financial    Condition and Results of Operations**communications needs of targeted customer segments, includingyouth, family, active professionals, local and regionalbusinesses and major national corporate accounts.At December 31, 2005, we served 54.1 million voice anddata subscribers over our cellular and PCS networks and were thelargest provider of wireless voice and data communicationsservices in the U.S., based on both the number of wirelesssubscribers and revenues. We had access to FCC licenses toprovide cellular or PCS wireless communications servicescovering 294 million POPs, or approximately 99% of theU.S. population, including all of the 100 largestU.S. metropolitan markets.**Industry and Operating Trends**We compete for customers based principally on our reputation,network quality, customer service, price and service offerings.We face substantial and increasing competition in all aspects ofour business. Our competitors are principally three national(Verizon Wireless, Sprint Nextel andT-Mobile) and a largenumber of regional providers of cellular, PCS and other wirelesscommunications services, as well as resellers. In addition, wemay experience significant competition from companies thatprovide similar services using other current or futurecommunications technologies and services. Our management focuseson key wireless industry drivers — subscriberpenetration, average revenue per user (ARPU), operating income,OIBDA (defined as operating income before depreciation andamortization) and reputation within the wirelessindustry — to evaluate our performance.The wireless telecommunications industry is continuing to growand consolidate. A high degree of competition exists among thecurrent four national carriers, their affiliates and the smallerregional carriers. This competition and other factors willcontinue to put pressure on pricing, margins and subscriberchurn as the carriers compete for customers. Future carrierrevenue growth is highly dependent upon the number of netsubscriber additions a carrier can achieve and the ARPU derivedfrom its subscribers.Our operating results for 2005 were significantly affected byour acquisition of AT&T Wireless in October 2004, and theactivities we undertook to integrate its operations into ours.To a lesser extent, in the third and fourth quarters of 2005,hurricanes Katrina and Rita impacted financial results byincreasing expenses to repair our facilities.Net subscriber additions increased on a year-over-year basis,especially postpaid contract subscribers who generate thehighest revenue per subscriber.Our OIBDA margin continued to strengthen as our mergerintegration initiatives progressed and was higher in 2005 thanin the prior year.The quarterly average revenue per user, or ARPU, continued todecline slightly on a year-over-year basis as we were successfulin attracting new customers by offering plans that;•     add incremental revenue but at a lower rate than our primary    plans, such as    FAMILYTALK®,    prepaid plans and/or plans offered through reseller arrangements; •     allow customers to carry over unused minutes to succeeding    months    (ROLLOVER®    plans), which reduces overage revenues; include no roaming or    long distance revenue; and •     allow our customers to call each other for free.These plans effectively position Cingular to compete forcustomers and add incremental revenue, though they negativelyaffect ARPU. Our ARPU is also adversely affected by the generalcompetitive environment and increasing wireless penetration,which puts pressure on the prices we can charge. In addition, weadded a higher aggregate percentage of lower-ARPU prepaid andreseller subscribers than
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 7.****Management’s Discussion and Analysis of Financial    Condition and Results of Operations**postpaid subscribers during the fourth quarter of 2005.Therefore, ARPU will continue to be under pressure. Thesepressures are offset in part by incremental revenue driversrelated to data products such as ring tones and messaging,Competition and the high rate of wireless service penetrationmay continue to adversely impact gross additions, revenuegrowth, expenses and margins. We expect cost of servicesincreases to continue due to higher network system usage, highercosts as we integrate AT&T Wireless’ network andoperations and, to a lesser extent, redundant expenses relatedto operating multiple networks as our subscriber basetransitions from our TDMA and analog networks to our GSMnetwork. If we are successful in increasing the growth rate ofgross subscriber additions, our subscriber acquisition costswill also increase. We also expect increased costs to maintainand support our growing subscriber base, including costs tomigrate AT&T Wireless subscribers to the Cingular commonservice offerings and for customer care initiatives to improveour level of service to our combined subscriber base and toretain existing subscribers. Our network integration and upgradewill result in increased costs, as compared to prior periods, aswe have accelerated the depreciation of our TDMA network andredundant network facilities. In further comparison to priorperiods, we expect to incur higher depreciation costs as aresult of the enhancement of the network coverage in ourfootprint and installation of high-speed 3G UMTS/ HSDPAtechnology in our network infrastructure. However, given ourstrategic business decisions and our continued execution of ourintegration plans, we do expect to realize, in the near and longterm, synergies and cost efficiencies in the operation of ournetwork, as well as other areas of our business, such asinformation technology, sales distribution and customer care.Further cost efficiencies and productivity improvement willresult from ongoing efforts to reduce general and administrativeexpenses and decreased roaming costs as a result of lowernegotiated roaming rates with other carriers and the acquisitionof AT&T Wireless. The effective management of subscriberchurn is also paramount in improving margins.***Integration of AT&T Wireless***In October 2004, our Manager acquired AT&T Wirelessapproximately $41,000 in cash, and then sold its interest inAT&T Wireless to us. At the acquisition date, AT&TWireless served nearly 22 million subscribers over itscellular and PCS networks in the U.S. and the Caribbean.AT&T Wireless also held equity interests in U.S. andinternational communications ventures, corporations andpartnerships.We have finalized and are implementing plans to exit certainactivities and dispose of certain assets of AT&T Wireless,including redundant facilities and interests in certain foreignoperations, and to integrate fully the acquired operations.These plans affect many areas of the combined company, includingsales and marketing, network, information technology, customercare, supply chain and general and administrative functions. Inconnection therewith, we expect to continue to incur significantcosts over the next several quarters associated with suchdispositions and integration activities. We have begun torealize cost savings and improvements in the operatingperformance of our combined operations from the elimination ofredundant facilities, advertising costs, staff functions,capital expenditures and other costs. We expect these synergysavings to partially offset integration costs and higheramortization expense and contribute to higher operating margins,beginning during 2006.For the year ended December 31, 2005, our operating incomewas negatively impacted by $876 of integration costs which wereprimarily reflected within “Selling, general andadministrative” expenses, “Cost of services”expenses and “Depreciation and amortization” expenses.Integration costs impacting “Selling, general andadministrative” and “Cost of services” expensesduring the year ended December 31, 2005, primarilyincluded: sales and distribution related expenses, as wecontinued efforts to integrate our sales processes andrationalize our distribution channels; continued support of ourcommon customer service initiative; and, network and systemsintegration costs. Employee termination benefits recorded in
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 7.****Management’s Discussion and Analysis of Financial    Condition and Results of Operations**accordance with SFAS No. 112, *Employers’Accounting for Postemployment Benefits*(SFAS 112),totaled $42 for the year ended December 31, 2005. We alsorecorded employee termination benefits to be provided to formerAT&T Wireless employees totaling $85 for the year endedDecember 31, 2005 which were recognized under EITF IssueNo. 95-3, *Recognition of Liabilities in Connection witha Purchase Business Combination*(EITF 95-3). Lastly,our operating income was negatively impacted by approximately$1,713 for the year ended December 31, 2005, of non-cashamortization expenses related to amortizable intangible assetsthat were recorded with the acquisition.*Network Integration Plan*In June 2005, we finalized a portion of our plan to integratecertain acquired network assets of AT&T Wireless. The planprimarily addressed certain TDMA network equipment in locationswhere we and AT&T Wireless had overlapping TDMA networkassets and AT&T Wireless had deployed UMTS assets, which weplanned to replace. This plan included decommissioning TDMAassets (approximately 85% former AT&T Wireless assets and15% legacy Cingular assets) and replacing former AT&TWireless’ UMTS assets by the end of 2005. The valuation ofthe AT&T Wireless assets was reduced by approximately $145and was reflected as an adjustment to the original purchaseprice allocated to these assets as of the acquisition date. Theadjustment to depreciation expense recorded in the secondquarter related to the revaluation of these former AT&TWireless assets was not material. The determination todecommission certain legacy Cingular assets as part of theinitial phase of the network integration plan resulted in a netincrease of $257 in depreciation expense for 2005.In October 2005, we approved the second and final phase of ournetwork integration plan. This plan complemented the activitiesthat were undertaken in June 2005 to eliminate redundant networkfacilities that arose upon the purchase of AT&T Wireless. Inconnection with the second phase of the network integrationplan, we are integrating our GSM networks, decommissioningredundant cell sites and core network elements and swappingvendor equipment in various markets in order to have likeequipment in each operating market. The plan is anticipated toresult in the decommissioning of approximately 7,600 cell sites,of which approximately 5,700 were acquired from AT&TWireless. The valuation of the former AT&T Wireless assetsaffected by the second phase of the network integration plan wasreduced by approximately $1,319 and was reflected as anadjustment to the original purchase price allocated to theseassets as of the acquisition date. Certain legacy Cingularassets are depreciated on an accelerated basis. The incrementaldepreciation associated with those legacy assets was $165 forthe fourth quarter of 2005. We expect to complete activitiesassociated with our network integration plans byDecember 31, 2006.*Retail Stores and Administrative Space Integration Plans*During the second quarter of 2005, management finalized plans tointegrate the retail stores and administrative spacerequirements for the sales/distribution and corporate realestate functions. These plans resulted in the closure of over600 retail stores and kiosks as of December 31, 2005, andthe termination of leases in 86 buildings used foradministrative and support functions. The valuation of formerAT&T Wireless non-network assets affected by theseintegration plans was reduced by $74 and was reflected as anadjustment to the original purchase price allocated to theseassets as of the acquisition date. The adjustment todepreciation expense recorded in 2005 related to the revaluationof these assets was not material. Legacy Cingular assetsaffected by the integration plans will be depreciated on anaccelerated basis through their estimated remaining lives; theimpact to depreciation expense in 2005 and in future periodsfrom the revised useful lives for these assets is not material.In addition, approximately 130 new stores were built in 2005.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 7.****Management’s Discussion and Analysis of Financial    Condition and Results of Operations***Exit Costs Recorded under Integration Plans*In addition to the revaluation of assets, we incurred andrecorded certain costs and accruals associated with theintegration plans in accordance with the requirements ofEITF 95-3 and Statement of Financial Accounting StandardsNo. 146, *Accounting for Costs Associated with Exit orDisposal Activities*(SFAS 146). Costs recorded underEITF 95-3 during 2005 to exit certain AT&T Wirelessactivities totaled $576, and resulted in adjustments to thepurchase price allocation for assets acquired and liabilitiesassumed in the acquisition of AT&T Wireless. Costs of $54were recognized in 2005 in the income statement within“Selling, general, and administrative” expenses and“Cost of services” expenses under SFAS 146 whenthose costs were incurred. The majority of the costs recognizedrelate to termination fees associated with leases and othercontractual arrangements related to legacy Cingular assets.***Asset Dispositions***During April 2005, we completed a series of transactions todispose of domestic wireless assets, including those required tobe divested by the FCC and the DOJ in connection with ouracquisition of AT&T Wireless. These divested assets did nothave a material impact on our ability to provide services insuch markets or on our results of operations.***Termination of GSM Facilities, LLC (GSMF) Network    Infrastructure Joint Venture***In May 2004, we entered into an agreement withT-Mobile, subject tothe closing of the acquisition of AT&T Wireless, to dissolveGSMF, sell to T-Mobilecertain spectrum licenses and other assets and exchange certainother spectrum licenses. The first stage of these transactionsclosed in January 2005.Pursuant to the agreement, we sold our ownership of theCalifornia/ Nevada Major Trading Area (MTA) network assetsto T-Mobile forapproximately $2.5 billion in cash. We retained the rightto utilize the California/ Nevada and New YorkT-Mobile networksduring a four-year transition period and have committed topurchase a minimum number of minutes over this term for resalewith a purchase commitment value of $1.2 billion (seeNote 15 to the consolidated financial statements). Ourremaining purchase commitment was approximately$520 million at December 31, 2005. Cingular andT-Mobile retained allof their respective subscribers in each market. Additionally, inJanuary 2005, we sold 10 MHz of spectrum toT-Mobile in each of theSan Francisco, Sacramento and Las Vegas Basic Trading Areas(BTAs) for $180 million as part of the dissolution of GSMF.As part of the original joint venture agreement, Cingular andT-Mobile were each toreceive 50% of the spectrum used in the operation of the jointventure following its dissolution. Spectrum licenses were notcontributed to the joint venture upon its formation in 2001, butrather were subject to a separate agreement governing their use.In connection with the dissolution, Cingular andT-Mobile arecontractually required to exchange certain spectrum licenses. Weexpect the spectrum licenses to be exchanged on January 1, 2007.Further, we expect to recognize a net gain on the dissolution ofthe joint venture upon the completion of the spectrum exchangein 2007, principally due to the value of New York spectrum to bereceived in connection with the consummation of thesetransactions.**Components of Our Operating Results*****Operating Revenues****Service Revenues.* Service revenues consist of revenuesfrom the provision of wireless voice and data services. For allthe periods presented, revenues from voice services accountedfor more than 90% of our
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 7.****Management’s Discussion and Analysis of Financial    Condition and Results of Operations**consolidated voice and data service revenues. Service revenues,which we record when services are provided net of servicecredits and adjustments, include revenues from:•     recurring monthly access charges; •     airtime usage, including prepaid service; •     long distance charges; •     charges for optional features and services such as voice mail,    unlimited    mobile-to-mobile    calling, roadside assistance, caller ID and data services; •     billings for USF and other regulatory program fees; •     roaming charges we bill to our customers for their use of our    and other carriers’ networks, which we refer to as    “incollect roaming” revenues; and •     roaming charges we bill to other wireless service providers    whose customers use our network, which we refer to as    “outcollect roaming” revenues.Revenues from data services as a percentage of total servicerevenues have increased each year and comprised approximately 9%of total service revenues for 2005. We expect revenues from ourwireless data services to continue to increase but not tocomprise a substantial portion of service revenues for theforeseeable future. We expect growth in wireless data servicesto be driven by the increased availability and/or usage ofhigher-speed GPRS, EDGE and UMTS/ HSDPA technology across ournetwork and the introduction of new data applications forbusiness and consumer use, including access to email, Internetcontent, mobile commerce and location-based services.As a result of the AT&T Wireless acquisition, ourconsolidated outcollect roaming revenues are substantially lessdue to a reduction or elimination of intra-company revenuesbetween Cingular and AT&T Wireless. There is also acorresponding elimination of roaming expenses, a component ofcost of services, as described below.*Equipment Sales.* Equipment sales include revenues fromthe sale of handsets and accessories to new and existingcustomers and to agents and other third-party distributors. Thetrend in equipment sales is generally comparable to the trend ingross subscriber additions, as well as being impacted bycustomers who upgrade their handsets.***Operating Expenses***Our operating expenses include:•     cost of services; •     cost of equipment sales; •     selling, general and administrative expenses; and •     depreciation and amortization.*Cost of Services.* Cost of services includes network costsrelated to voice and data transmissions and includes the coststo monitor, maintain and service our network and wirelinefacilities expense, as well as costs related to payments intothe USF and other regulatory funds. We expect cost of servicesto continue to increase as a result of higher network systemcosts associated with increased subscriber usage. Cost ofservices also includes roaming charges and long distance expensefor services provided by other telecommunications carriers.Overall, we expect these third-party costs to continue todecrease. Roaming
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 7.****Management’s Discussion and Analysis of Financial    Condition and Results of Operations**costs continue to decline as increased usage stimulated bynational rate plans’ inclusion of free roaming is more thanoffset by lower negotiated roaming rates. Additionally, as aresult of the AT&T Wireless acquisition, our consolidatedroaming expenses are less as a result of a reduction orelimination of intra-company roaming costs between Cingular andAT&T Wireless. There is also a corresponding elimination ofoutcollect roaming revenue, a component of service revenues, asdescribed above. We expect reductions in roaming costs to bepartially offset by higher domestic and international longdistance costs as usage increases.*Cost of Equipment Sales.* Cost of equipment sales includesthe cost of handsets and accessories. Some of our third-partydistributors purchase handsets and accessories from us,nominally above cost. However, we generally sell handsets belowcost to customers who purchase through direct sales channels,such as our company stores, as an inducement to customers toagree to one-year and two-year subscription contracts, toupgrade service or in connection with other promotions. As aresult, revenues from equipment sales are more than offset bythe related cost of equipment sales, resulting in a net subsidyto customers. In addition, we have actively focused on sellingservices to new subscribers and upgrading existing subscribersto digital handsets and service, which improves networkefficiency and lowers our per minute operating costs. The trendin the cost of equipment sales generally follows the trend ingross subscriber additions and customer upgrades, but is alsoimpacted by changes in the cost of handsets. As we continue toupgrade our network and introduce new data offerings, we expectto see an increase in higher-cost, feature-rich handsets forboth new and existing subscribers. As one of the largestpurchasers of handsets in the U.S., we believe we will be ableto purchase handsets at attractive volume-discounted rates.*Selling, General and Administrative.* Selling, general andadministrative expenses include:•     sales and marketing costs, including the costs of advertising    and promotions; •     distribution expenses, including the costs to maintain retail    locations and the commissions paid to our own sales force as    well as agents and other third-party distributors; •     provisions for uncollectible receivables; and •     other administrative costs, such as finance, information    technology, human resources, billing operations, customer    service and other overhead costs.*Depreciation and Amortization.* Depreciation andamortization expense includes non-cash expenses relating to thedepreciation of property, plant and equipment, amortization ofinternal use software and amortization of identifiablefinite-lived intangibles, such as customer relationships.Depreciation and amortization expense excludes depreciationrelated to assets used in our joint ventures. See “Equityin Net (Loss) Earnings of Affiliates” below. Depreciationexpense pertaining to assets used in our business has beengenerally increasing as a result of our capital expenditures andrecognition of shorter TDMA asset lives. We expect this expenseto continue to increase in the foreseeable future as we makesubstantial capital expenditures to expand and upgrade ournetwork and make other investments. See “CashRequirements” below for a discussion of our capitalexpenditures and other investments. Additionally, amortizationexpense increased in 2005 over prior years as a result of thecustomer relationship and AT&T trade name intangible assetsrecorded with our acquisition of AT&T Wireless. Thisamortization expense will decrease in 2006 when compared to2005, as the AT&T trade name intangible asset was fullyamortized during 2005 and as the amortization related to thecustomer relationship intangible asset decreases.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 7.****Management’s Discussion and Analysis of Financial    Condition and Results of Operations*****Other Income (Expenses)****Interest Expense.* Interest expense includes interestcosts related primarily to our indebtedness and capital leases,net of amounts capitalized. Interest expense for 2005 increasedover 2004, primarily due to the additional $9,500 of AT&TWireless Senior Notes we assumed with our acquisition ofAT&T Wireless. This increase was, and will continue to be,partially offset by a reduction in interest expense due to theamortization of a $2,045 purchase accounting fair value premiumassociated with the assumed debt.*Minority Interest in Earnings of Consolidated Entities.*Minority interest reflects the share of net (loss) earningsallocated to members or partners in our consolidated entities.*Equity in Net (Loss) Income of Affiliates.* We havenon-controlling equity investments in various entities.Effective January 2005, we terminated GSMF. For furtherinformation regarding our equity investments, see alsoNote 5, “Investments in and Advances to EquityAffiliates”, to our consolidated financial statementsincluded in Item 8, “Financial Statements andSupplementary Data”.***Income Taxes***We are not a taxable entity for federal income tax purposes.Rather, federal taxable income or loss is included in ourrespective members’ federal income tax returns. Ourprovision (benefit) for income taxes includes federal and stateincome taxes for certain of our corporate subsidiaries, as wellas for certain states which impose income taxes uponnon-corporate legal entities. The acquisition of AT&TWireless resulted in a significant increase in our pre-taxincome (loss) from our corporate subsidiaries. AT&T Wirelessretained its corporation status, however, after the acquisition,AT&T Wireless contributed the majority of its assets andliabilities to Cingular Wireless II, LLC (CW II), which itowns jointly with Cingular. In exchange for the assets andliabilities contributed to CW II, AT&T Wirelessreceived a 43% ownership interest in CW II, from which anyincome (loss) is allocated and is subject to federal and stateincome taxes. The remaining income (loss) from CW II isallocated to us and flows through to our members who are taxedat their level pursuant to federal and state income tax laws.For further information, see also Note 13, “IncomeTaxes”, to our consolidated financial statements includedin Item 8, “Financial Statements and SupplementaryData”.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 7.****Management’s Discussion and Analysis of Financial    Condition and Results of Operations****Consolidated Results of Operations*****Year Ended December 31, 2005 Compared with the Year    Ended December 31, 2004****Subscriber Base*                     **Year Ended**    **December 31,** **Change**       **2004** **2005** **Fav(Unfav)** **%**           **(In thousands)****Subscribers**                    Beginning of Period  24,027   49,132   25,105   104.5%    Net Additions (Losses)                     Postpaid  2,415   3,316   901   37.3      Prepaid  26   (115)  (141)  NM      Reseller  897   1,805   908   101.2                    Total Net Additions  3,338   5,006   1,668   50.0     Acquisition and Other  21,767   6   (21,761)  NM                  End of Period  49,132   54,144   5,012   10.2                  Gross Additions                     Postpaid  9,325   13,453   4,128   44.3      Prepaid  1,687   3,114   1,427   84.6      Reseller  1,638   1,919   281   17.2                    Total Gross Additions  12,650   18,486   5,836   46.1%              NM — Not meaningfulWe had 54.1 million cellular/ PCS subscribers atDecember 31, 2005. We added approximately 5.0 millionsubscribers to our subscriber base during December 31,2005, up from 3.3 million a year ago, and our grosssubscriber additions in 2005 totaled nearly 18.5 million.The increase in subscriber gross additions was primarily drivenby the following:•     the larger distribution network of the combined company; •     attractive service offerings, including the popularity of our    FAMILYTALK®    plans and our    ROLLOVER®    plan feature; and •     and continued high levels of advertising of the combined company.For 2005, our monthly cellular/ PCS churn rate was 2.2%, downfrom 2.7% in the prior year. The decline in our churn resultedprimarily from a lower churn rate in our postpaid subscriberbase, the change in our methodology in calculating churn relatedto our reseller subscribers and changes resulting from theconformity changes implemented in the fourth quarter of 2004.Partially offsetting these declines was an increase in the churnrate among our legacy prepaid subscribers. Postpaid churn for2005 was 1.9%, down from 2.3% in the prior year. We believe thatthe decline in our postpaid churn resulted as the combinedcompany provides a more compelling value proposition thanCingular was able to provide before the acquisition, includingmore affordable rate plans, broader network coverage, highernetwork quality, exclusive devices andmobile-to-mobilecalling to over 54.1 million Cingular subscribers. Sincethe acquisition of AT&T Wireless, we have successfullymigrated approximately 7 million former AT&T
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 7.****Management’s Discussion and Analysis of Financial    Condition and Results of Operations**Wireless subscribers to Cingular service offerings, includingapproximately 5 million for the year endedDecember 31, 2005.Beginning in the first quarter of 2005, we adopted a newreseller churn calculation methodology that resulted in anaggregated churn calculation that is more comparable with ourmajor competitors. Prior to 2005, we included gross resellerdisconnects in our churn calculation. Effective with the firstquarter of 2005, we based our churn calculation on total netreseller disconnects. The change resulted in an improvement toour reported churn for the year ended December 31, 2005 of32 basis points.Other adjustments to our subscriber base during the year endedDecember 31, 2005, reflected the removal of subscribersassociated with markets sold during this respective period.Additionally, the adjustments reflect the inclusion of thesubscribers associated with the Arkansas properties contributedto us from AT&T, partially offset by the removal ofsubscribers associated with markets sold during this respectiveperiod, including those that were required to be divested by theFCC and DOJ in connection with their approval of our acquisitionof AT&T Wireless.**     ***Historical Consolidated Data — For the years ended    December 31, 2004 and 2005.*                     **Year Ended**    **December 31,** **Change**       **2004** **2005** **$** **%**         **Operating revenues**                     Local service revenue — voice $14,968  $25,187  $10,219   68.3%     Data revenue  892   2,677   1,785   200.1                    Total local service revenue  15,860   27,864   12,004   75.7      Incollect roamer revenue  764   1,302   538   70.4      Long distance  229   479   250   109.2                    Subscriber revenue  16,853   29,645   12,792   75.9      Outcollect revenue  585   702   117   20.0      Other revenue  164   291   127   77.4                    Other service revenue  749   993   244   32.6                   Wireless service revenue  17,602   30,638   13,036   74.1      Equipment sales  1,963   3,795   1,832   93.3                  Total operating revenues  19,565   34,433   14,868   76.0              **Operating expenses**                     Cost of services (excluding depreciation)  4,737   9,318   4,581   96.7      Cost of equipment sales  2,874   5,069   2,195   76.4      Selling, general and administrative  7,349   11,647   4,298   58.5      Depreciation and amortization  3,077   6,575   3,498   113.7                    Total operating expenses  18,037   32,609   14,572   80.8              **Operating income**  1,528   1,824   296   19.4              
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 7.****Management’s Discussion and Analysis of Financial    Condition and Results of Operations**                     **Year Ended**    **December 31,** **Change**       **2004** **2005** **$** **%**         **Other income (expenses):**                     Interest expense  (900)  (1,260)  (360)  40.0      Minority interest in earnings of consolidated entities  (86)  (102)  (16)  18.6      Equity in net (loss) earnings of affiliates  (415)  5   420   NM      Other, net  16   64   48   NM                    Total other income (expenses)  (1,385)  (1,293)  92   (6.6)             **Income before provision (benefit) for income taxes**  143   531   388   271.3     Provision (benefit) for income taxes  (58)  198   256   NM               **Net income** $201  $333  $132   65.7%             *Operating Revenues*Total operating revenues, increased $14,868, or 76.0%, to$34,433 for 2005 when compared with the corresponding prioryear. The growth in service revenues compared with thecorresponding prior year was primarily the result of increasedrevenues associated with our acquisition of AT&T Wireless inthe fourth quarter of 2004. To a lesser extent, service revenuesincreased as a result of postpaid subscriber growth and higherdata and regulatory fee revenues in the traditional Cingularmarkets. For 2005, when compared with the corresponding prioryear, equipment sales contributed $1,832 of the increase intotal operating revenues. The components of the change inservice revenues are described as follows:*Wireless service revenue.* Wireless service revenue,increased $13,036, or 74.1%, for 2005 over the correspondingprior year period.The local service component of total service revenues includesrecurring monthly access charges, airtime usage, includingprepaid service, and charges for optional features and services,such as voice mail,mobile-to-mobilecalling, roadside assistance, caller ID and handset insurance.Local service revenues also include billings to our customersfor the USF and other regulatory fees and pass-through taxes.The key driver of the increase in local service revenues for2005 was an increase of 75.8% in the average number of cellular/PCS subscribers, including the nearly 22 millionsubscribers acquired with the AT&T Wireless transaction. Theincrease in local service revenues was partially offset by adecline in our monthly access charges and airtime usage due toan increase in the number of our subscribers on ourROLLOVER®plans, which allow subscribers to carry over unused minutes forup to one year, and our freemobile-to-mobileminutes, which allow Cingular subscribers to call other Cingularsubscribers at no charge. Data revenues also increased by $1,785over the prior year as a result of increased data servicepenetration and usage of SMS short messaging and other dataservices by our cellular/ PCS subscribers, including those datasubscribers assumed in the AT&T Wireless acquisition.Partially offsetting these increases was the loss of revenuesfrom our Mobitex data business, which we sold during the fourthquarter of 2004, and $32 in revenue losses associated withsubscribers affected by hurricane Katrina.Roaming revenues, including both incollect and outcollectrevenues, increased $655 for 2005 when compared with the prioryear. These increases resulted as higher roaming revenues fromthe acquired AT&T Wireless subscriber base more than offsetthe elimination of the intracompany roaming between formerAT&T Wireless and Cingular markets and a reduction inroaming rates.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 7.****Management’s Discussion and Analysis of Financial    Condition and Results of Operations**Long distance revenues for year ended December 31, 2005increased $250 from the prior year due to the revenue associatedwith the acquired AT&T Wireless subscribers and an increasein international long distance revenues from the traditionalCingular subscriber base as more subscribers continue to migrateto our GSM network, which allows for more access tointernational calling than TDMA technology.*Equipment Sales.* Equipment sales increased $1,832, or93.3%, to $3,795 for 2005 compared to $1,963 for 2004. Themajority of the increase was from handset sales, which increased$1,218, or 84.5%, for 2005. The overall increases were drivenprimarily by sales from new subscribers in former AT&TWireless markets, higher volumes of equipment sales in thetraditional Cingular markets and increased equipment sales fromformer AT&T Wireless subscribers migrating to Cingularcommon service offerings.*Operating Expenses**Cost of services (exclusive of depreciation).* The $4,581,or 96.7%, increase in cost of services for 2005 when comparedwith the prior year resulted from the increase in costs of alarger business attributable to the AT&T Wirelessacquisition, increased network usage, associated network systemgrowth and increased costs for long distance, reseller servicesand USF fees.The local systems costs component of cost of services includelocal network system costs, interconnect, property taxes,reseller services and USF fees. These combined costs increased$3,870, primarily attributable to the AT&T Wirelessacquisition. The increases to local network system costs andreseller services of $1,545 and $870, respectively, accountedfor the majority of the increase to the local systems component.The local network systems costs increase resulted primarily fromthe incremental network activity due to the acquisition and alsofrom increases due to the cost of network rationalization andhurricane expenses. The reseller services increase resulted fromthe incremental amount from the acquisition and from increasedcosts associated with the California/ Nevada network sold toT-Mobile in the firstquarter of 2005. The remainder of the local systems costcomponent came from increases to interconnect of $805 and USFfees of $517. The interconnect and USF fees increases primarilyresulted from the incremental activity from the acquisition.Interconnect also had a slight volume increase.For year ended December 31, 2005, compared with the prioryear, incollect roaming costs increased $373 and long distancecosts increased $338. Both increases were driven by highervolumes of minutes, including those minutes associated with theacquired AT&T Wireless subscribers, which more than offsetrate decreases for both incollect minutes and long distanceminutes, and the elimination of intracompany roaming betweenformer AT&T Wireless subscribers and Cingular.Cost of services increases for 2005, as compared with the prioryear, also included $97 of equipment writeoffs and expensesincurred in connection with damages caused by, and servicerestoration efforts undertaken in the aftermath of, hurricanesKatrina and Rita. Cost of services expenses included $195 ofintegration expense for 2005, mostly related to the integrationand rationalization of the network.*Cost of equipment sales.* For 2005, the $2,195 increasefrom the prior year was driven primarily by higher unit salesassociated with the acquired AT&T Wireless markets, as wellas higher unit sales in the traditional Cingular markets. Higherunit sales resulted both from the 46.1% increase in grosssubscriber additions as well as increased upgrade activity.Upgrade costs increased $602 when compared with the prior yeardue to the migration of former AT&T Wireless subscribers toCingular common service offerings and a shift to more advancedhandsets following our GSM/ GPRS/ EDGE network overlay.*Selling, general and administrative expenses.* Selling,general and administrative expenses for 2005 increased $4,298,or 58.5%, when compared with the prior year, driven primarily bythe AT&T Wireless acquisition. Selling, general andadministrative expenses during the year ended December 31,2005
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 7.****Management’s Discussion and Analysis of Financial    Condition and Results of Operations**included $264 of integration expenses, primarily related toemployee termination benefits for former Cingular employees,continued spending associated with re-branding the combinedcompany and support of our common customer service initiativeand system integration costs.Selling expenses, which include sales, marketing, advertisingand commission expenses, for 2005 increased $1,385, or 39.8%,when compared with the prior year. The primary increases inselling expenses related to increased sales personnel costsassociated with the acquired AT&T Wireless sales force,higher advertising and promotions expenses and increasedcommissions expenses related to the 46.1% increase in grosssubscriber additions for year ended December 31, 2005, whencompared with the prior year. Selling expenses included $81 ofintegration expenses for 2005.Costs for maintaining and supporting our subscriber base for2005 increased $1,987, or 76.4%, when compared with the prioryear. Increased costs were principally due to higher customerservice expenses, an increase in upgrade commissions and anincrease in billing and bad debt expenses. Customer serviceexpenses for 2005 increased $960, or 87.0%, primarily driven byincreased headcount and employee-related expenses acquired fromAT&T Wireless to support our larger subscriber base, as wellas customer retention and customer service improvementinitiatives. Customer service expenses included $21 ofintegration related costs for 2005. Upgrade commissions for 2005increased $261, or 41.8%, and were primarily driven by anincrease in handset upgrade activity and higher commissionincentives related to the migration of our AT&T Wirelesssubscribers to Cingular common service offerings. Since theacquisition of AT&T Wireless, we have successfully migratedapproximately 7 million former AT&T Wirelesssubscribers to Cingular service offerings, includingapproximately 5 million during the year endedDecember 31, 2005. Other maintenance cost increases includehigher billing and bad debt related expenses related to thegrowth in our subscriber base. Other administrative costs for2005 increased $926, or 73.3%, when compared with the prior yearand included $162 of integration costs. In addition to theintegration costs, administrative costs increased as a result ofincremental expenses associated with the acquired AT&TWireless administrative personnel.*Depreciation and amortization.* For 2005, depreciation andamortization expenses totaled $6,575, representing an increaseof $3,498 when compared with the prior year. Depreciationexpense increased primarily due to incremental depreciationassociated with the property, plant and equipment acquired inthe AT&T Wireless acquisition and depreciation related toour ongoing capital spending associated with our GSM network.Additionally, depreciation expense increased over the prior yearas a result of a reduction of the estimated useful lives ofcertain legacy Cingular TDMA assets and other equipmentassociated with a portion of our network integration planrelated to our AT&T Wireless acquisition, which increaseddepreciation expense by approximately $417 during the year endedDecember 31, 2005. This increase was offset to a degree bya reduction to depreciation expense related to former AT&TWireless assets resulting from integration plans approved in2005 and other refinements to the purchase price. Intangiblesamortization expense for 2005 totaled $1,763 representing anincrease of $1,249 when compared with the prior year, primarilydue to amortization of the customer relationship and otherintangible assets recorded with the AT&T Wirelessacquisition. The increase was partially offset by a decrease inamortization associated with intangible assets that became fullyamortized during 2004.*Other Income (Expenses)**Interest Expense.* For 2005, interest expense totaled$1,260 and represented an increase of $360 over the prior year.The increase in interest expense resulted primarily frominterest associated with the $9,500 in Senior Notes assumed inthe AT&T Wireless acquisition, of which $9,250 wasoutstanding as of December 31, 2005. The increases ininterest expense associated with the Senior Notes were partiallyoffset by the amortization of the premium that was establishedunder purchase accounting to record the
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 7.****Management’s Discussion and Analysis of Financial    Condition and Results of Operations**AT&T Wireless debt at fair value as of the acquisition dateand reduced interest expense related to the repayment of $2,911of member loans during 2005.*Minority interest in earnings of consolidated entities.*For 2005, minority interest in earnings of consolidated entitiestotaled $102 and represented an increase of $16 over the prioryear. The increase primarily resulted from increased partnershipnet income for 2005 over the prior year.*Equity in net (loss) earnings of affiliates.* For 2005,equity in net (loss) earnings of affiliates was income of $5versus a loss of $415 in the prior year. The losses for the yearended December 31, 2004 related primarily to GSMF, whichwas terminated in January 2005. See “Termination of GSMFNetwork Infrastructure Joint Venture” for furtherdiscussion.*Other, net.* For 2005, other, net totaled $64 andprimarily resulted from interest income on the cash receivedfrom the sale of certain network assets toT-Mobile in January2005 as well as a $13 gain recognized on the sale of certainassets in April 2005.*Provision (Benefit) for Income Taxes**Provision (benefit) for income taxes.* For 2005, theprovision for income taxes was $198, representing an increase of$256, as compared with the prior year. The higher provision forincome taxes resulted from higher pre-tax income related to ourcorporate subsidiaries in the current year versus the prior yearand the impact of state income tax law changes. The annualincrease in the provision was partly offset by the impact ofadjustments to previously established valuation allowances.***Year Ended December 31, 2004 Compared with the Year    Ended December 31, 2003****Subscriber Base*                     **Year Ended**    **December 31,** **Change**       **2003** **2004** **Fav(Unfav)** **%**           **(In thousands)****Cellular/ PCS Subscribers**                    Beginning of Period  21,925   24,027   2,102   9.6%    Net Additions (Losses)                     Postpaid  1,526   2,415   889   58.3      Prepaid  114   26   (88)  (77.2)     Reseller  476   897   421   88.4                    Total Net Additions  2,116   3,338   1,222   57.8     Acquisitions and Other Adjustments  (14)  21,767   21,781   NM                  End of Period  24,027   49,132   25,105   104.5                  Gross Additions                     Postpaid  7,161   9,325   2,164   30.2      Prepaid  1,343   1,687   344   25.6      Reseller  881   1,638   757   85.9                    Total Gross Additions  9,385   12,650   3,265   34.8%              NM — Not meaningfulWe had 49.1 million cellular/ PCS subscribers atDecember 31, 2004, representing a growth of25.1 million in our cellular/ PCS subscriber base from theprior year, primarily due to a nearly 22 million cellular/PCS
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 7.****Management’s Discussion and Analysis of Financial    Condition and Results of Operations**subscriber base increase related to our acquisition of AT&TWireless in October 2004. Additionally, for the year endedDecember 31, 2004, our cellular/ PCS subscriber netadditions were 3.3 million, up from 2.1 million in theprior year, with 1.7 million of the 2004’s cellular/PCS subscriber net additions occurring in the fourth quarter of2004. This fourth quarter increase represents the highestcellular/ PCS subscriber net additions total ever when comparedwith the combined historical results of Cingular and AT&TWireless. The strong performance in cellular/ PCS subscriber netadditions during the fourth quarter was driven by the Cingularbrand re-launch, the offering of new common rate plans and thelarger distribution network of the newly combined Cingular/AT&T Wireless subsequent to the acquisition. Also favorablyimpacting subscriber net additions throughout 2004 were thepromotion and success of our new GSM service offerings and thecontinued promotion of ourFAMILYTALK®service offering, a shared minutes plan that allows the additionof family members to certain primary accounts for as little as$9.99 per month, and ourROLLOVER®rate plans, which allows our subscribers to carry over anyunused “anytime” minutes frommonth-to-month for upto one year. Excluding the impact to the prepaid subscriber basedue to the AT&T Wireless acquisition, our prepaid subscribercount was reduced from the prior year, in part due to thesuccessful promotion of ourFAMILYTALK®plan, which competes for subscribers at a similar price pointbut with enhanced services. The increase in reseller subscribernet additions compared with the prior year can be attributed tocontinued growth by our primary reseller.For the year ended December 31, 2004, our monthly cellular/PCS churn rate was 2.7%, including the results of AT&TWireless since its acquisition. This 2.7% churn rate was flatwith Cingular’s churn rate in the prior year as a lowerchurn rate in our postpaid subscriber base was offset by higherchurn rates in our prepaid and reseller subscribers base. Duringthe fourth quarter of 2004, we experienced a significantimprovement in our postpaid subscriber base churn rate comparedwith prior periods as our customers responded positively to thelaunch of the new Cingular, our broad network coverage andattractive GSM service offerings. Also, during the fourthquarter of 2004, conformity issues related to the calculation ofchurn for Cingular and AT&T Wireless reduced churnsubsequent to the acquisition by 13 basis points.*Historical Consolidated Data — For the years ended    December 31, 2003 and 2004.*                     **Year Ended**    **December 31,** **Change**       **2003** **2004** **$** **%**         **Operating revenues**                     Local service revenue — voice $12,227  $14,968   2,741   22.4%     Data revenue  454   892   438   96.5                    Total local service revenue  12,681   15,860   3,179   25.1      Incollect roamer revenue  757   764   7   0.9      Long distance  171   229   58   33.9                    Subscriber revenue  13,609   16,853   3,244   23.8      Outcollect revenue  586   585   (1)  (0.2)     Other revenue  122   164   42   34.4                    Other service revenue  708   749   41   5.8                   Wireless service revenue  14,317   17,602   3,285   22.9      Equipment sales  1,260   1,963   703   55.8                  Total operating revenues  15,577   19,565   3,988   25.6              
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 7.****Management’s Discussion and Analysis of Financial    Condition and Results of Operations**                     **Year Ended**    **December 31,** **Change**       **2003** **2004** **$** **%**         **Operating expenses**                     Cost of services (excluding depreciation)  3,775   4,737   962   25.5      Cost of equipment sales  2,031   2,874   843   41.5      Selling, general and administrative  5,428   7,349   1,921   35.4      Depreciation and amortization  2,089   3,077   988   47.3                    Total operating expenses  13,323   18,037   4,714   35.4              **Operating income**  2,254   1,528   (726)  (32.2)             **Other income (expenses):**                     Interest expense  (856)  (900)  (44)  5.1      Minority interest in earnings of consolidated entities  (101)  (86)  15   (14.9)     Equity in net (loss) of affiliates  (333)  (415)  (82)  24.6      Other, net  41   16   (25)  (61.0)                   Total other income (expenses)  (1,249)  (1,385)  (136)  10.9              **Income before provision (benefit) for income taxes**  1,005   143   (862)  (85.8)    Provision (benefit) for income taxes  28   (58)  (86)  (307.1)              **Net income** $977  $201   (776)  (79.4)%             *Operating Revenues*Total operating revenues, consisting of service revenue andequipment sales, increased $3,988, or 25.6%, to $19,565 for theyear ended December 31, 2004, compared with $15,577 for theprior year. The primary driver behind the year over yearincreases in almost every component of total operating revenueswas our acquisition of AT&T Wireless in late October 2004and inclusion of their operating results since the acquisition.Excluding the impact of the AT&T Wireless acquisition, totaloperating revenues continued to be favorably impacted by growthin service revenues as a result of a higher average cellular/PCS subscriber base and the continued growth in data revenues.Equipment sales contributed $703 to the increase in totaloperating revenues, driven both by strong subscriber growth andhandset upgrade activity. The components of the changes inoperating revenues are described as follows:*Wireless service revenue.* Wireless service revenue,comprised of local voice and data services, roaming, longdistance and other revenue, increased $3,285, or 22.9%, comparedwith the prior year.The local service component of total service revenue includesrecurring monthly access charges, airtime usage, includingprepaid service, and charges for optional features and services,such as voice mail,mobile-to-mobilecalling, roadside assistance, caller ID, handset insurance anddata services. It also includes billings to our customers forUSF and other regulatory fees.The primary driver of the $3,179, or 25.1%, increase in localservice revenue for year ended December 31, 2004 was theinclusion of the former AT&T Wireless operating results as aresult of our acquisition in late October 2004. Excluding thisimpact, increases in local service revenue resulted from thehigher average subscriber base and increases in revenues fromUSF and other regulatory program fee billings.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 7.****Management’s Discussion and Analysis of Financial    Condition and Results of Operations**Strong growth in data revenue of $438, or 96.5%, including theimpact of the AT&T Wireless acquisition, continues tofavorably impact local service revenue, driven primarily byincreased data service penetration and use of text messaging andother data services by our cellular/ PCS subscribers. For theyear ended December 31, 2004, data revenue included $686from our cellular/ PCS business and $206 from our Mobitexbusiness, which we sold during the fourth quarter of 2004. Forthe year ended December 31, 2003, data revenue from ourMobitex business was $218.Incollect and outcollect roaming revenues were essentially flatwhen compared with the corresponding amounts from the prioryear. Roaming revenues continue to be unfavorably impacted bythe bundling of “free” roaming minutes withall-inclusive regional and national rate plans and lowernegotiated rates with our roaming partners. Prior to ouracquisition, AT&T Wireless was our largest national roamingpartner. Effective with the acquisition, our consolidatedoutcollect revenue reflects elimination of roaming revenuebetween the former Cingular and AT&T Wireless properties,along with a corresponding elimination of incollect roamingcosts. Although net income neutral, this elimination willsignificantly reduce our outcollect revenue when compared to thecombination of prior historical stand-alone results.Long distance revenue comprised only 1.3% of total servicerevenue. The $58, or 33.9%, increase in long distance revenuecompared with 2003 was primarily related to the incrementalimpact of the additional long distance revenue contributed as aresult of the AT&T Wireless acquisition. Higherinternational long distance revenue in 2004 also contributed, toa lesser extent, to the overall increase compared with the prioryear.*Equipment sales.* For the year ended December 31,2004, equipment sales increased $703, or 55.8%, primarily drivenby overall higher handset sales, including the impact of asignificant increase in subscriber gross additions due to theacquisition of AT&T Wireless. Subscriber migrations toCingular rate plans as a result of the acquisition alsoincreased handset upgrade revenue.*Operating Expenses**Cost of services (exclusive of depreciation).* Total costof services, excluding depreciation, increased $962, or 25.5%,to $4,737 for the year ended December 31, 2004, comparedwith $3,775 for the prior year. The cost of services increasefor the year ended December 31, 2004 compared with theprior year was due to increases in local network system costs of$897 and in third-party system costs (i.e., roaming and longdistance costs) of $30. Over half of the increase in localnetwork system costs can be attributed to the incremental costsrelated to the acquired AT&T Wireless network. Excludingthis impact, the overall drivers of increased local networkcosts are primarily related to increased network system usageand associated network system expansion costs. Increased localnetwork system costs in 2004 versus the prior year attributableto historical pre-acquisition Cingular activities included $74for increased costs billed to our customers related to paymentsinto the USF and certain other regulatory funds, a $31 chargerelated to a fair value adjustment of our Mobitex businessduring the third quarter of 2004 and higher costs related to ourhandset insurance program due to increased claims. For the yearended December 31, 2004, excluding the overall expenseincrease due to the AT&T Wireless acquisition, third-partynetwork system costs were lower as continued decreases inincollect roaming costs were only partially offset by higherlong distance costs. Lower incollect roaming costs were a resultof lower negotiated roaming rates with our roaming partners,which more than offset increased volumes of roaming minutes.Also, subsequent to the AT&T Wireless acquisition,Cingular’s consolidated incollect expenses reflectelimination of incollect roaming costs between the formerCingular and AT&T Wireless properties along with acorresponding elimination of outcollect revenue. Although netincome neutral, this elimination will significantly reduce ourincollect roaming expenses when compared to the combination ofprior historical stand-alone results.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 7.****Management’s Discussion and Analysis of Financial    Condition and Results of Operations**The increase in long distance costs of $113, or 33.4%, whencompared to the prior year, was primarily volume driven,impacted by the inclusion of “free long distance” inmany of our regional and national rate plan offerings, whichresulted in increases in subscriber long distance calls. Inaddition, approximately one-third of the increase in longdistance costs versus 2003 was related to the incremental longdistance expenses incurred as a result of the AT&T Wirelessacquisition.*Cost of equipment sales.* For the year endedDecember 31, 2004, the cost of equipment sales increased$843, or 41.5%, over the prior year, and consistent withequipment sales revenue, was primarily driven by overall higherhandset sales, including the impact of a significant increase insubscriber gross additions and subscriber migrations to Cingularrate plans due to the acquisition of AT&T Wireless.*Selling, general and administrative expenses.* Selling,general and administrative expenses for the year endedDecember 31, 2004 increased $1,921, or 35.4%, when comparedwith the prior year, primarily due to the incremental expenseimpact resulting from the addition of the AT&TWireless’ selling, general and administrative expensesduring the fourth quarter of 2004. In addition, selling, generaland administrative expenses in 2004 also included $277 inintegration and planning expenses associated with the AT&TWireless acquisition, as well as other cost increases associatedwith increased subscriber gross additions and other customerservice and support initiatives. The components of the changesin selling, general and administrative expenses are as describedbelow:Selling expenses, which include sales, marketing, advertisingand commission expenses, increased $873, or 33.5%, for the yearended December 31, 2004, compared with the prior year. Thisincrease was driven primarily by the addition of the incrementalAT&T Wireless selling expenses subsequent to acquisition. Inaddition, selling expenses included $149 in integration andplanning expenses, primarily related to sales and advertisingassociated with the new combined company re-branding and supportof our common customer service experience initiative subsequentto the acquisition. Higher sales, advertising and promotioncosts and commissions expenses were also a function of theincreased subscriber gross additions in 2004.Costs for maintaining and supporting our subscriber baseincreased $741, or nearly 40%, for the year endedDecember 31, 2004, compared with the prior year. Again,this increase was primarily driven by the addition of theAT&T Wireless expenses subsequent to the acquisition, andalso included $34 in integration and planning expenses,primarily due to increased customer service and other expensesto support subscriber migration, transition and communicationissues as a result of the acquisition. In addition to theseacquisition-related increases, costs for maintaining andsupporting our subscriber base were also impacted by higher baddebt expense, increased customer service expenses to supporton-going subscriber retention and other service improvementinitiatives and higher commission expenses associated withhandset upgrades. Bad debt expense increased primarily due tohigher subscriber net write-offs as a result of prior relaxedcredit policies in selected areas, which we have subsequentlychanged, as well as residual impacts related to theimplementation of wireless local number portability in late2003. Additionally, 2003 included a $26 net recovery ofprior WorldCom Inc. write-offs. Upgrade commission expenses wereimpacted by over one million AT&T Wireless subscribermigrations to new Cingular rate plans as a result of theacquisition.Other administrative costs increased $307, or 32.0%, for theyear ended December 31, 2004, compared with the prior year,and included, in addition to the incremental expenses ofAT&T Wireless, $94 in integration and planning costsprimarily related to acquisition project management costs andinformation technology and development costs to support customerservice, sales and billing systems integrations.*Depreciation and amortization.* For the year endedDecember 31, 2004, depreciation expense increased by $635,or 33.0%, compared with the prior year, and included anincremental $325 related to assets acquired from AT&TWireless. Other increases in depreciation expense were primarilydue to on-going
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 7.****Management’s Discussion and Analysis of Financial    Condition and Results of Operations**capital spending, including our GSM/ GPRS/ EDGE network overlay,in addition to increases to the rate of depreciation on TDMAassets in 2004 as a result of a further review of estimatedservice lives. See “Critical Accounting Policies andEstimates — Long-Lived Assets — Depreciationand Amortization” and also Note 4, “Property,Plant and Equipment” in Item 8, “FinancialStatements and Supplementary Data”. For the year endedDecember 31, 2004, amortization expense increased by $353,or 217.9%, and included an incremental $399 in amortizationexpense as a result of the AT&T Wireless acquisition,primarily related to amortization of the customer relationshipintangible asset acquired. This increase was partially offset bycertain historical Cingular finite-lived intangible assetsbecoming fully amortized during 2004.*Other Income (Expenses)**Interest expense.* For the year ended December 31,2004, interest expense increased $44, or 5.1%, compared to theprior year and included an incremental $97 in interest expenseas a result of the AT&T Wireless acquisition, primarilyrelated to $9,500 principal amount of AT&T Wireless SeniorNotes, partially offset by a reduction in interest expense dueto the amortization of the purchase price valuation premiumassociated with the acquired AT&T Wireless debt. We also hada $70 reduction in interest expense to our members, AT&T andBellSouth, as a result of an interest rate decrease from 7.5% to6%, effective July 2003. See also Item 7A,“Quantitative and Qualitative Disclosures about MarketRisk”.*Minority interest in earnings of consolidated entities.*For the year ended December 31, 2004, compared with theprior year, the minority interest in earnings of consolidatedentities decrease of $15, or 14.9%, was primarily a function oflower partnership net income versus the prior year.*Equity in net (loss) earnings of affiliates.* For the yearended December 31, 2004, the increase from the prior yearin equity in net (loss) earnings of affiliates of $82, or 24.6%,was primarily due to increased losses related to our GSMFventure, principally due to higher depreciation expense incurredby the joint venture.*Other, net.* For the year ended December 31, 2004,the $25, or 61.0%, reduction in other, net from the prior yearis primarily due to the impact of a one-time $23 gain recognizedin 2003.*Provision (benefit) for income taxes.* For the year endedDecember 31, 2004, the benefit for income taxes was $58versus a provision for income taxes of $28 for the year endedDecember 31, 2003. We are not a taxable entity for federalincome tax purposes. Rather, federal taxable income or loss isincluded in our respective members’ federal income taxreturns. Our provision (benefit) for income taxes includesfederal and state income taxes for certain of our corporatesubsidiaries, as well as for certain states which impose incometaxes upon non-corporate legal entities. The acquisition ofAT&T Wireless resulted in a significant increase in ourpre-tax income (loss) from our corporate subsidiaries. AT&TWireless retained its corporation status; however, after theacquisition, AT&T Wireless contributed the majority of itsassets and liabilities to CW II, which it owns jointly withthe Cingular Wireless LLC. In exchange for the assets andliabilities contributed to CW II, AT&T Wirelessreceived a 43% ownership interest in CW II, from which anyincome (loss) is allocated and is subject to federal and stateincome taxes. The remaining income (loss) from CW II isallocated to us and flows through to the members who are taxedat their level pursuant to federal and state income tax laws.The benefit for income taxes during 2004 resulted from a pre-taxloss related to our corporate subsidiaries during the year. SeeNote 13, “Income Taxes” in Item 8,“Financial Statements and Supplementary Data” forfurther information on our provision (benefit) for income taxes,as well as information related to the repatriation of foreignearnings resulting from the American Jobs Creation Act of 2004.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 7.****Management’s Discussion and Analysis of Financial    Condition and Results of Operations****Liquidity and Capital Resources*****Cash Flow Analysis*****     ***Cash Flows for the Year Ended December 31, 2005,    Compared with the Year Ended December 31, 2004*                   **Year Ended**    **December 31,** **Change**       **2004** **2005** **$** **%**             Net cash provided by operating activities $3,320  $8,401  $5,081   153.0%    Net cash used in investing activities  (41,077)  (3,686)  37,391   NM     Net cash provided by (used in) financing activities  36,970   (4,595)  (41,565)  NM                  Net increase (decrease) in cash and cash equivalents  (787)  120   907   NM     Cash and cash equivalents at beginning of year  1,139   352   (787)  (69.1)%                 Cash and cash equivalents at end of year $352  $472  $120   34.1% NM — Not meaningful*Net cash provided by operating activities.* The overallincrease in net cash provided by operating activities of $5,081was primarily due to a $3,794 increase in operating income,excluding depreciation and amortization, and increases in cashgenerated from working capital. The increase in cash generatedfrom working capital was primarily due to the $999 of cashgenerated from the increase in accounts payable and othercurrent liabilities for the year ended December 31, 2005versus a use of $512 in the prior year. The increase in accountspayable and accrued liabilities for the year endedDecember 31, 2005, resulted primarily from significantcapital-related accruals as of December 31, 2005.*Net cash used in investing activities.* The primarycontributors to the overall decrease in cash used of $37,391from 2004 in cash used in investing activities were theoccurrence of several significant one-time transactions in 2004.These significant one-time uses of cash in 2004 included thefollowing: the purchase of AT&T Wireless for $35,543, net ofcash on hand at AT&T Wireless; the purchase of spectrumlicenses from NextWave for $1,400; and the purchase ofheld-to-maturityinvestments totaling $219. In 2005, we increased our capitalexpenditures by $4,026 from the prior year, largely owing to theacquisition of AT&T Wireless and the commencement of networkintegration in 2005. This increase in capital expenditures wasoffset by $2,482 of proceeds from the sale of our California andNevada network assets toT-Mobile; $219 from theredemption of held-to-maturity investments; $180 from the saleof spectrum toT-Mobile; $432 ofproceeds from the sale of wireless properties, including thosethat we were required to divest; $300 of proceeds from the saleof IDEA Cellular Ltd. (IDEA); $349 of proceeds from the AtlanticWest B.V. (AWBV) distribution; and a $223 reduction indisbursements for equity investments due to the dissolution ofGSMF.*Net cash provided by (used in) financing activities.* Theprimary contributor to the overall decrease of $41,565 in 2005of net cash provided by (used in) financing activities was the2004 receipt of $36,024 in contributions from members related toour AT&T Wireless acquisition. In 2005, cash used infinancing activities totaled $4,595 and primarily included$1,156 of net repayments to our members under our revolvingcredit agreement, $2,911 of repayment to our members under ourSubordinated Notes, $250 in repayments of AT&T WirelessSenior Notes, $211 for the redemption of the TeleCorp Notes and$46 of net distributions to our minority partners. The remaininguses of cash consisted of various smallerlong-term debt andcapital lease repayments.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 7.****Management’s Discussion and Analysis of Financial    Condition and Results of Operations****              ***CashFlows for the Year Ended December 31, 2004, Compared withthe Year Ended December 31, 2003*                   **Year Ended**    **December 31,** **Change**       **2003** **2004** **$** **%**             Net cash provided by operating activities $3,686  $3,320  $(366)  (9.9)%    Net cash used in investing activities  (3,368)  (41,077)  (37,709)  NM     Net cash provided by (used in) financing activities  (87)  36,970   37,057   NM                  Net increase (decrease) in cash and cash equivalents  231   (787)  (1,018)  (440.7)%    Cash and cash equivalents at beginning of year  908   1,139   231   25.4%                 Cash and cash equivalents at end of year $1,139  $352  $(787)  (69.1)% NM — Not Meaningful*Net cash provided by operating activities.* The overalldecrease in net cash provided by operating activities wasprimarily due to working capital changes, driven mostly bygreater vendor payments by us in the year endedDecember 31, 2004 versus the year ended December 31,2003. Cash generated from operations was our primary source ofoperating funds in 2004 and 2003.*Net cash used in investing activities.* The primarycontributors to the overall increase of $37,709 in net cash usedin investing activities were the following acquisitions ofbusiness and licenses during 2004 which included the cash paidfor the AT&T Wireless acquisition of $35,543, net of cash onhand at AT&T Wireless; cash in the amount of $1,400 paid forSpectrum licenses from NextWave; cash payments in the amount of$176 related to Triton Virginia properties; and cash payments inthe amount of $49 related to wireless operations in Maryland andLouisiana and spectrum licenses in Maryland, Texas, Arkansas,Louisiana and Missouri.Capital expenditures increased $715 primarily due to the $611additional capital expenditures of AT&T Wireless from thedate of acquisition, and our purchase ofheld-to-maturityinvestments totaling $219, primarily related to the redemptionof the TeleCorp Wireless notes we assumed in conjunction withour acquisition of AT&T Wireless. Partially offsetting theincreases in cash used in investing activities were netdecreases in cash activity associated with investments in andadvances to equity affiliates. Capital expenditures and cashcontributions to equity affiliates decreased $196 from the prioryear primarily as a result of a $180 decrease in capital andcash contributions to our GSMF venture. Additionally,contributions to our venture with AT&T Wireless, prior toour acquisition, decreased $16. Also offsetting the increase incash used in investing activities was cash received from thedisposition of assets, which increased $181 from 2003. Thedispositions in 2004 primarily included cash receipts of $140from the sale of our indirect interest in Eurotel Bratislavaa.s. and $45 from the sale of our Mobitex business, CingularInteractive.*Net cash provided by (use in) financing activities.* Theprimary contributor to the overall increase in net cash providedby (used in) financing activities was the receipt of $36,024 incontributions from members related to our AT&T Wirelessacquisition. In addition, we received net funding from ourmembers of $1,667 under our revolving credit agreement. Theseincreases were partially offset, when compared with 2003, byhigher net repayments of external debt of $466, higher netdistributions to minority partners of $108 and the repayment of$50 in member loans in 2004. The net repayment of external debtin 2004 was $530 and included repayments of $429 related to debtassumed in our AT&T Wireless acquisition, $49 of CingularInteractive debt and $59 in capital lease payments.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 7.****Management’s Discussion and Analysis of Financial    Condition and Results of Operations**We expect to have significant cash needs over the next severalyears, as described below in “Cash Requirements”.***Sources of Liquidity***Effective August 1, 2004, we entered into a revolvingcredit agreement with AT&T and BellSouth pursuant to whichthey provide unsubordinated short-term financing on a pro ratabasis at an interest rate of LIBOR plus 0.05% for our ordinarycourse operations based upon our budget and forecasted cashneeds. The revolving credit agreement provides that in the eventthat we have available cash (as defined) on any business day,such amount shall first be applied to the repayment of therevolving loans, and any remaining excess then shall be appliedto the repayment of the Subordinated Notes (member loans) fromAT&T and BellSouth at month end if we do not then require acash advance under the agreement. For the year endedDecember 31, 2005, we repaid $2,911 of the member loans. Inaddition, at December 31, 2005, we had $511 outstandingunder the revolving credit agreement. The revolving creditagreement expires on July 31, 2007.As of December 31, 2005, we had cash and cash equivalentstotaling $472. We expect to fund our remaining capitalrequirements for at least the next 12 months by usingexisting cash balances, cash generated from operations and, ifnecessary, draws under our revolving credit agreement withAT&T and BellSouth.***Cash Requirements***Our operating cash requirements during 2006 will be drivenprimarily by capital expenditures associated with our network,integration activities associated with our acquisition ofAT&T Wireless, interest payments and costs associated withacquiring and retaining new and existing subscribers. We do notanticipate significant cash requirements for income tax paymentsduring 2006 related to our corporate subsidiaries due toutilization of existing tax net operating loss (NOLs)carryforwards. During 2006, we may be required to make taxdistributions to our members in amounts sufficient to permitmembers to pay the tax liabilities resulting from allocations ofincome tax items from us.*Network Upgrades, Integration and Expansion.* The upgrade,integration and expansion of the Cingular and AT&T Wirelessnetworks and the networks we acquired from Triton, theinstallation of UMTS/ HSDPA technology in a number of markets,the construction of network facilities in California and Nevadato replace the facilities we sold toT-Mobile upon thetermination of our GSMF network infrastructure joint venture andother accelerated coverage products, will require substantialamounts of capital over the next several quarters. For the yearended December 31, 2005, we spent $7,475 for our GSM/ GPRS/EDGE network upgrade plus other network and non-network capitalexpenditures. We expect our capital expenditures in 2006 to bein the $7,000 to $7,500 range.*Integration of AT&T Wireless.* We are executing plansto exit certain activities and dispose of certain assets ofAT&T Wireless, including redundant facilities, and to fullyintegrate the acquired operations. These plans affect many areasof the company, including sales and marketing, network,information technology, customer care, supply chain and generaland administrative functions. For the year endedDecember 31, 2005, we incurred $459 of cash-impactingintegration and planning costs, which are included primarily in“Selling, general and administrative” expenses and“Cost of services” expenses in our consolidated incomestatements. We expect to continue to incur significant costsassociated with dispositions and integration activities.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 7.****Management’s Discussion and Analysis of Financial    Condition and Results of Operations***Contractual Obligations.* The following table provides asummary of our contractual obligations as of December 31,2005:                         **Payments Due by Period**       **Total** **2006** **2007-2008** **2009-2010** **After 2010**               Long Term Debt(1) $28,610  $2,740  $9,539  $1,446  $14,885     Capital Lease Obligations(2)  3,099   89   192   211   2,607     Operating Leases(3)  10,089   1,263   2,121   1,750   4,955     Purchase Obligations(4)  2,365   1,118   577   24   646     Other Long-term Obligations(5)  1,099   416   439   99   145                     Total $45,262  $5,626  $12,868  $3,530  $23,238                  (1)     Total long-term debt payments include interest of $10,605 and    current portions of long-term debt totaling $1,520 at    December 31, 2005. The 2007-2008 amount includes $6,717 of    member loans due to AT&T and BellSouth with a stated    maturity date of June 30, 2008. See Note 8 to our    consolidated financial statements included in Item 8,    “Financial Statements and Supplementary Data”. (2)     Capital lease obligations include executory costs and imputed    interest. See Note 9 to our consolidated financial    statements included in Item 8, “Financial Statements    and Supplementary Data”. (3)     Amounts include payments over reasonably assured renewals. See    Note 15 to our consolidated financial statements included    in Item 8, “Financial Statements and Supplementary    Data”. (4)     Purchase obligations include commitments for advertising and    marketing, computer equipment and services, roaming,    telecommunications services, network equipment and related    maintenance and software development and related maintenance.    Purchase obligations also include our commitment of $520 to    purchase a minimum number of minutes from    T-Mobile as a result of    the termination of our GSMF joint venture. See Note 2 to    our consolidated financial statements included in Item 8,    “Financial Statements and Supplementary Data”.    Additionally, purchase obligations include $109 of purchase    commitments to AT&T and BellSouth for telecommunications and    other services as of December 31, 2005. See Note 15 to    our consolidated financial statements included in Item 8,    “Financial Statements and Supplementary Data”.    Purchase obligations do not include purchase orders, which we    enter into in the ordinary course of business for network    equipment, handsets, materials, supplies, and other items.    During 2006, we expect our capital spending to be between $7,000    and $7,500. (5)     Other Long-term obligations include the payout of a put option    of $186 in 2006 and $145 in 2007. See Note 6 to our    consolidated financial statements included in Item 8,    “Financial Statements and Supplementary Data” for    further discussion of these put options. Other Long-term    obligations also include $421 of commitments due to Crown Castle    International for monitoring and maintenance services related to    our communications towers. See Note 15 to our consolidated    financial statements included in Item 8, “Financial    Statements and Supplementary Data”.Through December 31, 2005, contributions were not requiredfor our defined benefit pension plans. We anticipate minimalcash funding needs to meet the minimum required fundingthreshold in 2006. We anticipate approximately $80 to $100 offunding associated with each plan year beginning in 2006,although we anticipate minimal cash funding needs to meet theminimum required funding threshold during fiscal 2006. Theseamounts are not included in the table above. We do not prefundour post-retirement benefit plans. See Note 14 to ourconsolidated financial statements included in Item 8,“Financial Statements and Supplementary Data”.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 7.****Management’s Discussion and Analysis of Financial    Condition and Results of Operations***Debt Service.* As of December 31, 2005, we had$19,658 of consolidated indebtedness and capitalized leaseobligations, excluding unamortized premiums/discounts andinterest rate swap fair value adjustments, but including theacquired AT&T Wireless debt obligations. This debt includes$2,000 in unsecured Senior Notes of Cingular Wireless LLC,$9,250 in unsecured Senior and Senior Subordinated Notes ofAT&T Wireless, $6,717 in unsecured, subordinated memberloans from AT&T and BellSouth, $1, 142 in capital leaseobligations (excluding executory costs and imputed interest) and$38 in other indebtedness. As of December 31, 2005, we had$511 in outstanding borrowings under the revolving creditagreement. During the year ended December 31, 2005, werepaid $2,911 of our member loans. In addition, in July 2005, weredeemed the TeleCorp Notes for $211. A significant portion ofthe funds used to make repayments on our member loans arose fromthe July 5, 2005 release of $1,488 of remaining netproceeds from the sale of our California/ Nevada network assetsin January 2005, which had been held in a qualified trust.Additional capital lease obligations for the year endedDecember 31, 2005 were $79.As a result of our acquisition in October 2004 of AT&TWireless, we assumed $9,906 in Senior Notes and SeniorSubordinated Notes, including Senior Notes of AT&T Wirelesstotaling $9,500 and Senior Subordinated Notes of TeleCorptotaling $200 and of Tritel PCS Inc. (Tritel) totaling $206 inaggregate principal amount. Included in the Senior Notes ofAT&T Wireless are $6,500 principal amount of unsecured andunsubordinated Senior Notes issued under a March 2001 privateplacement, with $1,000 maturing on March 1, 2006; $3,000maturing on March 1, 2011; and $2,500 maturing onMarch 1, 2031. Fixed interest rates range from 7.35% to8.75% per annum, payable semi-annually. Also included inthe Senior Notes are $2,750 of unsecured and unsubordinatedSenior Notes issued through an April 2002 registered publicoffering by AT&T Wireless with $750 maturing on May 1,2007; and $2,000 maturing on May 1, 2012. Fixed interestrates range from 7.5% to 8.125% per annum, payablesemi-annually. The Senior Notes of AT&T Wireless includecustomary covenants for issuers like us.Our member loans accrue interest at 6.0% and have a statedmaturity of June 30, 2008. We may prepay the member loansat any time, generally, and are obligated to prepay the memberloans to the extent of excess cash (as defined) pursuant to ourrevolving credit agreement.AT&T and BellSouth have agreed to subordinate theirrepayment rights applicable to the member loans to the repaymentrights of our senior debt. Senior debt includes our SeniorNotes, including Senior Notes of AT&T Wireless, and otherborrowings from external parties designated as senior debt towhich AT&T and BellSouth have specifically agreed to besubordinate. The payment of principal and interest on thesubordinated member loans by us is prohibited in the event ofbankruptcy or an event of default in the payment or prepaymentof any principal of or interest on any senior debt, or in theevent of an acceleration of the subordinated debt upon itsdefault, until the senior debt has been repaid in full.*Off-Balance Sheet Arrangements.* At December 31,2005, we had no material off-balance sheet arrangements.**Critical Accounting Policies and Estimates**The preparation of financial statements in conformity withU.S. generally accepted accounting principles requiresmanagement to make estimates and assumptions that affect theamounts reflected in the consolidated financial statements andaccompanying notes. We base our estimates on experience, whereapplicable, and other assumptions that we believe are reasonableunder the circumstances. Actual results may differ from thoseestimates under different assumptions or conditions. There arecertain critical estimates that we believe require significantjudgment when preparing our financial statements. We consider anaccounting estimate to be critical if: 1) it requires us tomake assumptions because information was not available at thetime or it included matters that were highly uncertain at thetime we
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 7.****Management’s Discussion and Analysis of Financial    Condition and Results of Operations**were making our estimate and 2) changes in the estimate ordifferent estimates that we could have selected may have had amaterial impact on our financial condition or results ofoperations. The various policies that are important to theportrayal of our financial condition and results of operationsinclude:***Business Combinations — Fair Value    Estimates****Nature of Critical Estimate Items*We apply the accounting requirements of SFAS No. 141,*Business Combinations* (SFAS 141), to theacquisitions of other businesses. SFAS 141 requires that werecord the net assets of acquired businesses at fair value, andwe must make estimates and assumptions to determine the fairvalue of these acquired assets and liabilities. We have hiredthird-party valuation specialists to assist us with these fairvalue estimates.*Assumptions/ Approach Used*We utilize a variety of assumptions to estimate fair value ofacquired assets and assumed liabilities, including market data,estimated future cash flows, growth rates, current replacementcost for similar capacity for certain fixed assets, market rateassumptions for contractual obligations and settlement plans forcontingencies and liabilities. The most significant assumptionswithin our cash flow models are the discount rate and the growthrate. We apply significant judgment in determining the fairvalues of acquired assets and liabilities, including thoseacquired in our acquisition of AT&T Wireless, notablyproperty, plant and equipment, licenses, customer relationshipintangibles, investments in and advances to equity affiliatesand long-term debt. The valuations of certain AT&T Wirelessassets and liabilities as of December 31, 2004 were basedon preliminary valuations and were adjusted as additionalinformation was obtained. As of December 31, 2005, allvaluation adjustments have been finalized and are reflected inthe 2005 reported results.*Effect if Different Assumptions Used*Changes to the assumptions we used to estimate fair value couldimpact the recorded amounts for acquired assets and liabilities,including but not limited to property, plant and equipment,licenses, customer relationship intangibles, investments in andadvances to equity affiliates, long-term debt, deferred incometaxes and goodwill. Significant changes to these balances couldhave a material impact to our future reported results. Lower orhigher fair values assigned to property, plant, and equipmentand customer relationship intangibles could result in lower orhigher amounts of depreciation and amortization recorded. Loweror higher fair values assigned to debt could result in higher orlower interest expense, net of premium amortization.***Restructuring Costs****Nature of Critical Estimate Items*We make estimates related to restructuring costs associated withbusiness acquisitions. Restructuring costs in a businessacquisition include primarily severance costs, costs related torationalizing our network and vacating targeted retail andadministrative facilities. For severance costs and other exitactivities related to employees and operations acquired in abusiness combination, we apply the accounting requirements ofEITF Issue No. 95-3, *Recognition of Liabilities inConnection with a Purchase Business Combination*(EITF 95-3). These costs are recorded as additionalconsideration of a business combination. For non-businesscombination severance costs related to Cingular employees andother costs related to exit or disposal activities forobligations existing at the company other than by means of abusiness combination,
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 7.****Management’s Discussion and Analysis of Financial    Condition and Results of Operations**we apply the accounting requirement of SFAS No. 112,*Employers’ Accounting for PostemploymentBenefits — an Amendment of FASB Statements Nos. 5 and43*(SFAS 112) and SFAS No. 146, *Accountingfor Costs Associated with Exit or Disposal Activities*(SFAS 146). The costs recorded under the provisions ofSFAS 112 and SFAS 146 are generally recorded ascharges to our operating results.*Assumptions/ Approach Used*We utilize a variety of assumptions for recording restructuringcosts, including numbers of employees to be terminated,pre-severance employee attrition rates and average employeecompensation for involuntary termination benefits. For exitcosts related to vacating targeted retail and administrativefacilities, we make assumptions for future lease expense andsub-lease income and timing for vacated space, discount ratesand contract termination charges to be incurred. Management hasbegun to dispose of certain operations and assets of AT&TWireless and to integrate the acquired businesses with ours.These integration plans, which include selling international andsome domestic businesses and spectrum licenses, will affect manyareas of our operations, including sales and marketing, network,information technology, customer care, supply chain and finance.In connection therewith, we expect to incur significant costsassociated with exiting activities of AT&T Wireless andintegrating the businesses.*Effect if Different Assumptions Used*Changes to estimates recorded under the provisions ofEITF 95-3 during the allocation period will be reflected asan adjustment to the business combination purchase price andimpact the amount of goodwill recorded. Increases to estimatesrecorded under the provisions of EITF 95-3 subsequent tothe allocation period, will be reflected as expense in thatperiod. Changes to estimates recorded under the provisions ofSFAS 112 and SFAS 146 will impact current operatingresults as changes to those estimates occur.***Long-Lived Assets — Depreciation and    Amortization****Nature of Critical Estimate Items*Depreciation — The wireless communications industry iscapital intensive. Depreciation of operating assets constitutesa significant operating cost for us. The cost of our property,plant and equipment, principally wireless communicationsequipment, is charged to depreciation expense over estimateduseful lives.Amortization — We have finite-lived intangible assets,principally consisting of customer relationship intangibleassets as a result of acquisitions of other businesses. Thecosts represent fair values placed on the customer relationshipsof acquired businesses. The majority of our customerrelationship intangible assets resulted from our acquisition ofAT&T Wireless in the fourth quarter of 2004. The costsrelated to finite-lived intangible assets are charged toamortization expense over estimated useful lives.*Assumptions/ Approach Used*Depreciation — We depreciate our wirelesscommunications equipment using the straight-line method overestimated useful lives. Leasehold improvements, including cellsite acquisition and other site construction improvements, aredepreciated over the shorter of their estimated useful lives orlease terms that are reasonably assured. We periodically reviewchanges in our technology and industry conditions, migrationpatterns of our subscribers, asset retirement activity andsalvage values to determine adjustments to estimated remaininguseful lives and depreciation rates. Such adjustments wouldaffect depreciation prospectively.While we continue to sell and market TDMA services for theforeseeable future, the amount of future projected cash flows tobe derived from the TDMA network assets is highly dependent uponthe rate of
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 7.****Management’s Discussion and Analysis of Financial    Condition and Results of Operations**transition of existing subscribers using TDMA equipment to GSM/GPRS/ EDGE-capable equipment, as well as other competitive andtechnological factors. Due to the accelerated migration oftraffic to GSM/ GPRS/ EDGE experienced in 2003 and 2004, usefullives were shortened in 2004 to fully depreciate all TDMAequipment by December 31, 2007. Additionally, weperiodically assess the useful lives of all network long-livedassets, including GSM assets, for appropriateness as theindustry evolves.Amortization — The majority of our customerrelationship intangible assets are amortized over a five-yearperiod using thesum-of-the-months digitmethod.*Effect if Different Assumptions Used*Actual economic lives may differ from estimated useful lives.Periodic reviews could result in a change in our depreciable andamortizable lives and therefore our depreciation andamortization expense in future periods.Depreciation — We continue to review the useful livesof the TDMA assets throughout the period of transition ofsubscribers to GSM/ GPRS/ EDGE and UMTS equipment to determinewhether further changes are warranted. We will continue toperiodically evaluate the appropriateness of the remaininguseful lives of our TDMA equipment. We believe useful lives ofour TDMA assets are appropriate as of December 31, 2005.Amortization — The majority of our customerrelationship intangible assets resulted from our acquisition ofAT&T Wireless and are being amortized over an estimateduseful life of five years. If we had assumed a useful life offour years, our amortization expense for 2005 would have been$330 greater than the amortization expense recorded within our2005 results. If we had assumed a useful life of six years, ouramortization expense for 2005 would have been $237 less than theamortization expense recorded within our 2005 results.***Impairment of Long-Lived Assets****Nature of Critical Estimate Item*We review finite-lived long-lived assets, principally consistingof property, plant and equipment and customer relationshipintangible assets, for impairment based on the requirements ofSFAS No. 144, *Accounting for the Impairment orDisposal of Long-Lived Assets*(SFAS 144). Thisimpairment review is performed whenever events or changes incircumstances indicate that the carrying amount of an assetgroup may not be recoverable. For assets we intend to hold anduse, if the total of the expected future undiscounted cash flowsfrom the asset group is less than the carrying amount of theasset group, a loss is recognized for the difference between thefair value and the carrying value of the asset group. The assetgroup to be held and used represents the lowest level for whichidentifiable cash flows are largely independent of the cashflows of other groups of assets and liabilities. We havedetermined that the lowest level for which cash flows arelargely independent of the cash flows of other groups is theconsolidated company level. For assets we plan to dispose of, aloss is recognized if the carrying amount of the assets in thedisposal group is more than fair value, net of the costs ofdisposal.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 7.****Management’s Discussion and Analysis of Financial    Condition and Results of Operations***Assumptions/ Approach Used*In analyzing finite-lived long-lived assets for potentialimpairment, significant assumptions used in determining theundiscounted cash flows of the asset group include:•     cash flows attributed to the asset group; •     future cash flows of the asset group, including estimates of    terminal values, which incorporate our views of growth rates for    the related business and anticipated future economic    conditions; and •     period of time over which the assets will be held and used.Similar assumptions are used to determine the fair value of theasset group when using a discounted cash flow model. Inaddition, an estimated discount rate is used to incorporate thetime value of money and risk inherent in the future cash flows,as well as estimates for any costs of disposal or salvagevalues. We believe that our estimates are consistent withassumptions that marketplace participants would use in theirestimates of fair value.*Effect if Different Assumptions Used*The use of different estimates or assumptions within ourundiscounted cash flow models (e.g., growth rates, futureeconomic conditions, estimates of terminal values) could resultin undiscounted cash flows that are lower than the currentcarrying value of an asset group, thereby requiring the need tocompare the carrying value of the asset group to its fair value.The use of different discount rates when determining the fairvalue of the asset group could result in different fair values,and impact any related impairment charges. A different method ofdetermining fair value, other than a discounted cash flow model,could result in a lower or higher fair value for the asset group.In the fiscal year ended December 31, 2005, no impairmentcharge was necessary or recognized. In the fiscal year endedDecember 31, 2004, we recognized an impairment chargeassociated with our Mobitex data business, which was sold inOctober 2004.***Goodwill — Impairment****Nature of Critical Estimate Item*We review goodwill for impairment based on the requirements ofSFAS No. 142, *Goodwill and Other Intangible Assets*(SFAS 142). In accordance with SFAS 142, goodwillis tested for impairment at the reporting unit level on anannual basis or on an interim basis if an event occurs orcircumstances change that would reduce the fair value of areporting unit below its carrying value. These events orcircumstances would include a significant change in the businessclimate, legal factors, operating performance indicators,competition, sale or disposition of a significant portion of thebusiness or other factors. We perform our annual goodwillimpairment test as of each October 1st.*Assumptions/ Approach Used*In accordance with SFAS 142, we are required to testgoodwill at the reporting unit level as defined by reference toour operating segment determined under SFAS No. 131,*Disclosures about Segments of an Enterprise and RelatedInformation*. We have one reporting unit, wirelesscommunications services, for which we test goodwill forimpairment. The goodwill impairment test requires us to estimatethe fair value of our overall business enterprise. As a resultof the acquisition of AT&T Wireless in October 2004, our
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 7.****Management’s Discussion and Analysis of Financial    Condition and Results of Operations**goodwill balance increased to $21,637 and $22,359 as ofDecember 31, 2004 and 2005, respectively. Goodwillresulting from our acquisition of AT&T Wireless was assignedto our one reporting unit.In analyzing goodwill for potential impairment, we useprojections of future cash flows from our reporting unit todetermine whether the reporting unit’s estimated fair valueexceeds its carrying value. These projections of cash flows arebased on our views of growth rates and anticipated futureeconomic conditions and the appropriate discount rates relativeto risk and estimates of residual values. We believe that ourestimates are consistent with assumptions that marketplaceparticipants would use in their estimates of fair value.We were not required during 2005 to test goodwill for impairmentat an interim date.*Effect if Different Assumptions Used*The use of different estimates or assumptions within ourdiscounted cash flow model (e.g., growth rates, future economicconditions, discount rates and estimates of terminal values)when determining the fair value of our one reporting unit couldresult in different values and may affect any related goodwillimpairment charge. Additionally, a change in our reporting unitstructure would result in the requirement to test goodwill forimpairment at multiple reporting units.For the annual goodwill impairment test performed as ofOctober 1, 2005, we had no impairment of our consolidatedgoodwill balance. A ten-percent change in the estimated fairvalue of our reporting unit as of October 1 would not haveimpacted the results of our goodwill impairment test.***FCC Licenses — Valuation of Indefinite-Lived    Intangible Assets****Nature of Critical Estimate Item*We review indefinite-lived intangible assets for impairmentbased on the requirements of SFAS 142. In accordance withSFAS 142, indefinite-lived intangible assets, consisting ofFCC licenses, are tested for impairment on an annual basis or onan interim basis if an event occurs or circumstances change thatwould indicate the asset might be impaired. We perform ourannual FCC license impairment test as of each October 1st.The impairment test requires us to estimate the fair value ofour licensing costs. We estimate the fair value of our FCClicenses in the aggregate, using a discounted cash flow model.As a result of the acquisition of AT&T Wireless, our FCClicense balance increased to $24,748 as of December 31,2004. As of December 31, 2005, our FCC license balance was$25,242.We were not required during 2005 to test FCC licenses forimpairment at an interim date.*Assumptions/ Approach Used*In accordance withEITF 02-7,*Unitof Accounting for Testing of Impairment of Indefinite-LivedIntangible Assets*, impairment tests for our FCC licenses areperformed on an aggregate basis. As of October 1, 2005, our2005 annual FCC license impairment testing date, we hadinterests in FCC licenses in markets where we do not currentlyprovide service. The majority of these licenses were granted toSalmon PCS LLC (Salmon) in October 2001. As we plan to eitherconstruct an operational network or utilize these licenses inother ways to provide service to our customers, these licensesare included in the aggregate test based on their strategicimportance to our future business plans.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 7.****Management’s Discussion and Analysis of Financial    Condition and Results of Operations**We estimate the fair value of our aggregated FCC licenses usinga discounted cash flow model. The approach used in determiningthe fair value of the FCC licenses includes the followingassumptions:• start-up model    assumption with FCC licenses as the only asset owned by us; •     cash flow assumptions incorporated in regard to investment in a    network, the development of distribution channels and subscriber    base and other critical inputs for making the business    operational. The assumptions underlying these inputs are based    upon a combination of our historical results and trends, our    business plans and market participant data. As these inputs are    included in determining free cash flows of the business, the    present value of the free cash flows of the business, after    investment in the network, customers, etc. is attributable to    the FCC licenses. •     weighted average cost of capital for a    start-up asset; and •     long-term rate of growth for our business.We believe that our estimates are consistent with assumptionsthat marketplace participants would use to estimate fair value.We corroborate our determination of fair value of the FCClicenses, using the discounted cash flow approach describedabove, with other market-based valuation metrics.*Effect if Different Assumptions Used*The use of different estimates or assumptions within ourdiscounted cash flow model when determining the fair value ofour FCC licenses or using a methodology other than a discountedcash flow model assuming astart-up asset couldresult in different values for our FCC licenses and may affectany related impairment charge. The most significant assumptionswithin our discounted cash flow model are the discount rate andthe growth rate. Additionally, a change in management’sfuture business plans or disposition of one or more FCC licensescould result in the requirement to test certain FCC licenses forimpairment on an individual basis rather than on an aggregatebasis. If any legal, regulatory, contractual, competitive,economic or other factors were to limit the useful lives of ourindefinite-lived FCC licenses, we would be required to testthese intangible assets for impairment in accordance withSFAS 142 and amortize the intangible asset over itsremaining useful life.For the 2005 license impairment test performed as ofOctober 1, the fair value of the group of aggregated FCClicenses was in excess of its carrying value. A ten-percentchange in the estimated fair value of the aggregated FCClicenses would not have impacted the results of our 2005 annuallicense impairment test.***Accounts Receivable — Allowance for Doubtful    Accounts****Nature of Critical Estimate Items*We maintain allowances for doubtful accounts for estimatedlosses resulting from the failure of our customers to makerequired payments.*Assumptions/ Approach Used*We base our estimates primarily on our write-off experience, netof recoveries, and the aging of accounts receivable balances.Our collection policies and procedures vary by credit class andprior payment history of customers.*Effect if Different Assumptions Used*Management believes that the allowance for doubtful accounts isadequate to cover estimated losses in customer accountsreceivable balances under current conditions. However, changesto the allowance for
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 7.****Management’s Discussion and Analysis of Financial    Condition and Results of Operations**doubtful accounts may be necessary in the event that thefinancial condition of our customers improves or deteriorates.Additionally, changes may be necessary if we adjust our creditstandards for new customers or change our collection practices.Either of these situations may result in write-off patterns thatdiffer from our experience. A ten-percent change in ourallowance for doubtful accounts at December 31, 2005 wouldhave resulted in a $29 pre-tax impact to our reported results.***Service Revenues —    ROLLOVER®    Rate Plans and Unbilled Revenues****Nature of Critical Estimate Item*ROLLOVER®Rate Plans — Certain subscriber rate plans include afeature whereby unused “anytime” minutes do not expireeach month but rather are available, under certain conditions,for future use for a period not to exceed one year from the dateof purchase. We defer revenue based on an estimate of theportion of minutes expected to be utilized prior to expiration.Unbilled Revenues — The majority of our postpaidsubscribers acquired through our acquisition of AT&TWireless are billed in arrears. For those subscribers, ourbilling cycle cut-off times require us to estimate servicerevenues earned but not yet billed at the end of each month.*Assumptions/ Approach Used*ROLLOVER®Rate Plans — Historical subscriber usage patterns,which have been consistent and which we view to be reliable forpurposes of gauging predictive behavior, allow us to estimatethe number of minutes expected to be utilized, as well as thosewhich are likely to expire or be forfeited. No deferral ofrevenue is recorded for the minutes that are expected to expireor be forfeited, as no future performance is expected to berequired by us, nor is there any obligation to refund or redeemfor value expired minutes. We record an obligation for thoseminutes we estimate will be utilized based on a weighted-averageof the per minute airtime rate implicit in the price of ourROLLOVER®rate plans.During the second quarter of 2004, we modified our estimate forcalculating the deferral to incorporate more refined subscriberdata and usage patterns, which in our view, more appropriatelyreflects the estimate of the future utilization of those minutesbased on historical trends. This change in estimate resulted ina $63 decrease in the deferral recorded as of December 31,2004, as compared to the deferral that would have been recordedprior to making the change. The balance of the deferral was $146and $234 as of December 31, 2004 and 2005, respectively.Unbilled Revenues — We estimate our unbilled servicesrevenue by reviewing historical minutes of use processed,adjusted for differences in the types and number of days,customer promotions, seasonality factors and number ofsubscribers.*Effect if Different Assumptions Used*ROLLOVER®Rate Plans — If our assumptions regarding expectedusage ofROLLOVER®minutes changes orROLLOVER®rate plan pricing changes, our estimate of the future obligationassociated with minutes to be deferred could differ, resultingin an increase or decrease to our deferred and service revenues.Unbilled Revenues — Actual services revenue could begreater or lower than amounts estimated due to subscriber levelsand their usage differing from our adjusted experience. Anyadjustments will be made in the following quarter for thedifferences between the actual services revenue billed and thepreviously accrued amounts.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 7.****Management’s Discussion and Analysis of Financial    Condition and Results of Operations** We have discussed the development and selection of thesecritical accounting policies with the Audit Committee of theBoard of Directors of our Manager, and the Audit Committee hasreviewed the disclosure of these critical accounting policies inthis Management’s Discussion and Analysis of FinancialCondition and Results of Operations.***Income Taxes****Nature of Critical Estimate Items*We account for income taxes in accordance with Statement ofFinancial Accounting Standard No. 109, *Accounting forIncome Taxes*. The computation of income taxes is subject toestimation due to the significant judgment required and the taxpositions we have taken that have been or could be challenged bytaxing authorities.*Assumptions/ Approach Used*Our income tax provision is based on our income, statutory taxrates and tax planning opportunities available to us in thevarious jurisdictions in which we operate. Significant judgmentis required in determining our annual tax rate and in evaluatingour tax positions. We establish reserves at the time wedetermine it is probable that we will be liable to payadditional taxes related to certain matters. We adjust thesereserves in light of changing facts and circumstances.A number of years may elapse before a particular matter, forwhich we have established a reserve, is audited and finallyresolved. While it is often difficult to predict the finaloutcome or the timing of resolution of any particular taxmatter, we record a reserve when we determine the likelihood ofloss is probable. Favorable resolutions of tax matters for whichwe have previously established reserves are recognized as areduction to our income tax expense when the amounts involvedbecome known.Tax law requires items to be included in the tax return atdifferent times than when these items are reflected in theconsolidated financial statements. As a result, our annual taxrate reflected in our consolidated financial statements isdifferent than that reported in our tax return (our cash taxrate). Some of these differences are permanent, such as expensesthat are not deductible in our tax return, and some differencesreverse over time, such as depreciation expense. These timingdifferences create deferred tax assets and liabilities. Deferredtax assets and liabilities are determined based on temporarydifferences between the financial reporting and tax bases ofassets and liabilities. The tax rates used to determine deferredtax assets or liabilities are the enacted tax rates in effectfor the year in which the differences are expected to reverse.Based on the evaluation of all available information, werecognize future tax benefits, such as net operating losscarryforwards, to the extent that realizing these benefits isconsidered more likely than not.We evaluate our ability to realize the tax benefits associatedwith deferred tax assets by analyzing our forecasted taxableincome using both historical and projected future operatingresults, the reversal of existing temporary differences, taxableincome in prior carry-back years (if permitted) and theavailability of tax planning strategies. A valuation allowanceis required to be established unless management determines thatit is more likely than not that we will ultimately realize thetax benefit associated with a deferred tax asset.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 7.****Management’s Discussion and Analysis of Financial    Condition and Results of Operations***Effect if Different Assumptions Used*We adjust our income tax provision in the period it isdetermined that actual results will differ from our estimates.The income tax provision reflects tax law and rate changes inthe period such changes are enacted.**Related Party Transactions**We incurred the following related party charges:               **Year Ended December 31,**   **Type of Service(1)** **2003** **2004** **2005**           Agent commissions and compensation $103  $67  $74     Interconnect and long distance  815   927   1,297     Other services  77   97   250  (1)     Represent charges from AT&T, BellSouth and their affiliates.    See Note 11 to our consolidated financial statements    included in Item 8, “Financial Statements and    Supplementary Data” for further discussion related to    interest expense on debt due to members.Additionally, we have purchase commitments to AT&T,BellSouth and their affiliates of approximately $161 fordedicated lease lines used to provide interconnection servicesand $109 for telecommunications and other services atDecember 31, 2005. See Note 11 to our consolidatedfinancial statements included in Item 8, “FinancialStatements and Supplementary Data”.We had receivables from affiliates of $247 and $156 and payablesto affiliates of $109 and $210 at December 31, 2004 and2005, respectively, primarily with AT&T, BellSouth and GSMF(2004 only). See Notes 5 and 11 to our consolidatedfinancial statements included in Item 8, “FinancialStatements and Supplementary Data” for further discussionof affiliate receivables and payables.In October 2004, SBC and BellSouth contributed $36,024 tofinance the acquisition of AT&T Wireless. See Note 2 toour consolidated financial statements included in Item 8,“Financial Statements and Supplementary Data” forfurther discussion of the AT&T Wireless acquisition.In August 2005, we sold to SBC and BellSouth for $34 in cashcertain ultra high frequency operating licenses that wereacquired as part of the AT&T Wireless transaction. Saleproceeds were received from each member in proportion to theirrespective economic ownership interests. No gain or loss wasrecognized on the transaction.**Recent Accounting Pronouncements**See the section, New Accounting Standards, in Note 1,“Summary of Significant Accounting Policies” inItem 8, “Financial Statements and SupplementaryData”.**Item 7A.****Quantitative and Qualitative Disclosure About Market Risk**The majority of our financial instruments are medium- andlong-term fixed rate notes and member loans. Fluctuations inmarket interest rates can lead to significant fluctuations inthe fair values of these fixed rate instruments. In addition, weare exposed to market risks, primarily from changes in interestrates. To manage exposure to these fluctuations, manage capitalcosts, control financial risks and maintain financialflexibility over the long term, we engage from time to time inhedging transactions that have been authorized by the board ofdirectors of our manager. We do not anticipate any significantchanges in our
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 7A.****Quantitative and Qualitative Disclosure About Market Risk**objectives and strategies with respect to managing suchexposures. We do not use derivatives for trading purposes, togenerate income or to engage in speculative activity.At December 31, 2005, we had outstanding an aggregate of$6,717 in unsecured, subordinated member loans from AT&T andBellSouth with a fixed interest rate of 6.0% and a statedmaturity of June 30, 2008. In addition, as ofDecember 31, 2005, we had outstanding $11,250 of unsecuredsenior notes with fixed interest rates ranging from 5.625% to8.75% with maturity dates between 2006 and 2031. As ofDecember 31, 2005, we had $250 offixed-to-floatinginterest rate swaps related to our five-year unsecured seniornotes. A change in interest rates of 100 basis points wouldchange our interest expense as a result of the swaps as ofDecember 31, 2005 by approximately $3 per annum. Wealso have capital leases outstanding of $1142 with fixedinterest rates ranging from 5.72% to 9.6%.As of December 31, 2005, we had $529 of floating rateborrowings. These borrowings primarily include amountsoutstanding under our revolving credit agreement with AT&Tand BellSouth, which carry an interest rate of LIBOR plus 0.05%.A change in interest rates of 100 basis points would changeour interest expense on floating rate debt balances as ofDecember 31, 2005 by $5.3 per annum.The risk management discussion above, related to our marketrisks, contains forward-looking statements and represents, amongother things, an estimate of possible changes in fair value thatwould occur assuming changes in interest rates. Future impactsof market risk would be based on actual developments in thefinancial markets. See Cautionary Language ConcerningForward-Looking Statements immediately following Part IV ofthis Annual Report.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 8.****Financial Statements and Supplemental Data**a. Documents filed as part of the report          (1)     Financial Statements        *Cingular Wireless LLC*             Report of Independent Registered Public    Accounting Firm — Ernst & Young LLP  76          Report of Independent Registered Public    Accounting Firm — PricewaterhouseCoopers LLP  77          Consolidated Balance Sheets as of    December 31, 2004 and 2005  78          Consolidated Statements of Income for the    years ended December 31, 2003, 2004, and 2005  79          Consolidated Statements of Changes in    Members’ Capital for the years ended December 31,    2003, 2004, and 2005  80          Consolidated Statements of Comprehensive    Income for the years ended December 31, 2003, 2004, and    2005  81          Consolidated Statements of Cash Flows for    the years ended December 31, 2003, 2004, and 2005  82          Notes to Consolidated Financial    Statements  83     *GSM Facilities LLC*             Report of Independent Auditors —    Ernst & Young LLP  127          Report of Independent Registered Public    Accounting Firm — PricewaterhouseCoopers LLP  128          Consolidated Balance Sheet as of    December 31, 2004  129          Consolidated Statements of Operations for    the years ended December 31, 2003 and 2004  130          Consolidated Statements of Changes in    Members’ Capital for the years ended December 31, 2003    and 2004  131          Consolidated Statements of Cash Flows for    the years ended December 31, 2003 and 2004  132          Notes to Consolidated Financial    Statements  133  (2)     Financial Statement Schedule as set forth under Item 8 of    this Report            Cingular Wireless LLC                  Schedule II —    Valuation and Qualifying Accounts  141 
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**CONSOLIDATED FINANCIAL STATEMENTS****CINGULAR WIRELESS LLC***Years Ended December 31, 2003, 2004 and 2005**with Report of Independent Registered Public AccountingFirm*
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**CONSOLIDATED FINANCIAL STATEMENTS****Years Ended December 31, 2003, 2004 and 2005**     **Contents**        Report of Independent Registered Public Accounting    Firm — Ernst & Young LLP  76     Report of Independent Registered Public Accounting    Firm — PricewaterhouseCoopers LLP  77     Audited Consolidated Financial Statements        Consolidated Balance Sheets  78     Consolidated Statements of Income  79     Consolidated Statements of Changes in Members’ Capital  80     Consolidated Statements of Comprehensive Income  81     Consolidated Statements of Cash Flows  82     Notes to Consolidated Financial Statements  83 
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**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**Board of Directors and ShareownersCingular Wireless Corporation, Manager of     Cingular Wireless LLCWe have audited the accompanying consolidated balance sheets ofCingular Wireless LLC as of December 31, 2004 and 2005 andthe related consolidated statements of income, changes inmembers’ capital, comprehensive income and cash flows foreach of the three years in the period ended December 31,2005. Our audits also included the financial statement schedulelisted in the Index at Item 15a (2). These financialstatements and schedule are the responsibility of theCompany’s management. Our responsibility is to express anopinion on these financial statements and schedule based on ouraudits. The financial statements of Omnipoint FacilitiesNetwork II, LLC (Omnipoint), a wholly-owned subsidiary ofGSM Facilities, LLC (an equity investee in which the Company hadan approximate 60% interest at December 31, 2004), havebeen audited by other auditors whose report has been furnishedto us; insofar as our opinion on the consolidated financialstatements relates to the 2003 and 2004 amounts included forOmnipoint, it is based solely on their report. In theconsolidated financial statements, the Company’s indirectinvestment in Omnipoint is stated at $880 million atDecember 31, 2004, and the Company’s equity in netlosses of Omnipoint is stated at $100 million for the yearended December 31, 2003 and $135 million for the yearended December 31, 2004.We conducted our audits in accordance with standards of thePublic Company Accounting Oversight Board (United States). Thosestandards require that we plan and perform the audit to obtainreasonable assurance about whether the financial statements arefree of material misstatement. An audit includes examining, on atest basis, evidence supporting the amounts and disclosures inthe financial statements. An audit also includes assessing theaccounting principles used and significant estimates made bymanagement, as well as evaluating the overall financialstatement presentation. We believe that our audits and thereport of other auditors for 2003 and 2004 provide a reasonablebasis for our opinion.In our opinion, based on our audits and the report of otherauditors for 2003 and 2004, the consolidated financialstatements referred to above present fairly, in all materialrespects, the consolidated financial position of CingularWireless LLC at December 31, 2004 and 2005, and theconsolidated results of its operations and its cash flows foreach of the three years in the period ended December 31,2005, in conformity with U.S. generally accepted accountingprinciples. Also, in our opinion, the related financial schedulewhen considered in relation to the basic financial statementstaken as a whole, presents fairly in all material respects theinformation set forth therein.     /s/ Ernst & Young    LLP    Atlanta, GeorgiaFebruary 24, 2006
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**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**To the Members and Board of Directors of GSM Facilities, LLC:In our opinion, the accompanying balance sheet and the relatedstatements of operations, of member’s equity and of cashflows (not presented separately herein) present fairly, in allmaterial respects, the financial position of OmnipointFacilities Network II, LLC (the “Company”) atDecember 31, 2004, and the results of its operations andits cash flows for the years ended December 31, 2004 and2003 in conformity with accounting principles generally acceptedin the United States of America. These financial statements arethe responsibility of the Company’s management. Ourresponsibility is to express an opinion on these financialstatements based on our audits. We conducted our audits of thesestatements in accordance with the standards of the PublicCompany Accounting Oversight Board (United States). Thosestandards require that we plan and perform the audit to obtainreasonable assurance about whether the financial statements arefree of material misstatement. An audit includes examining, on atest basis, evidence supporting the amounts and disclosures inthe financial statements, assessing the accounting principlesused and significant estimates made by management, andevaluating the overall financial statement presentation. Webelieve that our audits provide a reasonable basis for ouropinion.As described in Notes 1 and 5, the Company’stransactions are substantially with related parties, who are theCompany’s member owners. Additionally, as described inNote 1, the Company relies on its member owners for fundingrequirements.As described in Notes 1 and 6, the Company’sassets were contributed toT-Mobile USA, Inc.(“T-Mobile”)on January 5, 2005, as part of an agreement betweenT-Mobile and CingularWireless LLC to unwind the operations of their joint venture,GSM Facilities, LLC.     /s/ PricewaterhouseCoopers    LLP    Seattle, WashingtonMarch 3, 2005
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**CINGULAR WIRELESS LLC****CONSOLIDATED BALANCE SHEETS**            **December 31,**     **2004** **2005**       **(Dollars in millions)****ASSETS**    Current assets:             Cash and cash equivalents $352  $472      Accounts receivable, net of allowance for doubtful accounts of    $348 and $286  3,448   3,622      Due from affiliates, net  138   —      Inventories  690   536      Prepaid assets  346   320      Current deferred tax assets  2   767      Other current assets  594   332            Total current assets  5,570   6,049     Property, plant and equipment, net  21,958   21,745     Licenses, net  24,762   25,242     Goodwill  21,637   22,359     Customer relationship intangibles, net  4,698   2,998     Other intangible assets, net  241   174     Investments in and advances to equity affiliates  2,676   7     Other assets  696   745            Total assets $82,238  $79,319         **LIABILITIES AND MEMBERS’ CAPITAL**    Current liabilities:             Debt maturing within one year $2,158  $2,036      Accounts payable  1,383   1,920      Due to affiliates, net  —   54      Advanced billing and customer deposits  728   946      Accrued liabilities  3,714   5,052            Total current liabilities  7,983   10,008     Long-term debt:             Debt due to members  9,628   6,717      Other long-term debt, net of premium  14,229   12,623            Total long-term debt  23,857   19,340     Deferred tax liabilities, net  3,997   3,086     Other noncurrent liabilities  1,256   1,364            Total liabilities  37,093   33,798     Commitments and contingencies            Minority interests in consolidated entities  609   543     Members’ capital:             Members’ capital  44,714   44,988      Receivable for properties to be contributed  (178)  —      Accumulated other comprehensive loss, net of taxes  —   (10)           Total members’ capital  44,536   44,978            Total liabilities and members’ capital $82,238  $79,319        See accompanying notes.
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**CINGULAR WIRELESS LLC****CONSOLIDATED STATEMENTS OF INCOME**                **Year Ended December 31,**     **2003** **2004** **2005**         **(Dollars in millions)**    Operating revenues:                 Service revenues $14,317  $17,602  $30,638      Equipment sales  1,260   1,963   3,795               Total operating revenues  15,577   19,565   34,433     Operating expenses:                 Cost of services (excluding depreciation of $1,670, $2,259 and    $4,112, which is included below)  3,775   4,737   9,318      Cost of equipment sales  2,031   2,874   5,069      Selling, general and administrative  5,428   7,349   11,647      Depreciation and amortization  2,089   3,077   6,575               Total operating expenses  13,323   18,037   32,609               Operating income  2,254   1,528   1,824     Other income (expenses):                 Interest expense  (856)  (900)  (1,260)     Minority interest in earnings of consolidated entities  (101)  (86)  (102)     Equity in net (loss) earnings of affiliates  (333)  (415)  5      Other, net  41   16   64               Total other income (expenses)  (1,249)  (1,385)  (1,293)              Income before provision (benefit) for income taxes  1,005   143   531     Provision (benefit) for income taxes  28   (58)  198               Net income $977  $201  $333           See accompanying notes.
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**CINGULAR WIRELESS LLC****CONSOLIDATED STATEMENTS OF CHANGES IN MEMBERS’CAPITAL**        **(Dollars in millions)**    Balance at December 31, 2002, $7,435      Net income  977      Distributions to members, net  (79)        Balance at December 31, 2003  8,333      Net income  201      Contributions from members, net  36,000      Other, net  2         Balance at December 31, 2004,  44,536      Net income  333      Contributions from members, net  117      Other, net  (8)        Balance at December 31, 2005 $44,978     See accompanying notes.
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**CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME**                 **Year Ended December 31,**     **2003** **2004** **2005**         **(Dollars in millions)****Comprehensive Income**                Net income $977  $201  $333      Other comprehensive income (loss):                  Minimum pension liability adjustment, net of taxes of $1 in 2004    and 2005  —   (4)  (4)      Net foreign currency translation adjustment, net of taxes of    ($4) and $4 in 2004 and 2005  —   6   (6)              Total comprehensive income $977  $203  $323           See accompanying notes.
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**CINGULAR WIRELESS LLC****CONSOLIDATED STATEMENTS OF CASH FLOWS**                 **Year Ended December 31,**     **2003** **2004** **2005**         **(Dollars in millions)****Operating activities**                Net income $977  $201  $333     Adjustments to reconcile net income to net cash provided by    operating activities:                 Depreciation and amortization  2,089   3,077   6,575      Provision for doubtful accounts  259   423   570      Minority interest in earnings of consolidated entities  101   86   102      Equity in net loss (earnings) of affiliates  333   415   (5)     Amortization of debt discount (premium), net  1   (43)  (231)     Deferred income taxes  (1)  (74)  90      Changes in operating assets and liabilities:                  Accounts receivable  (331)  (336)  (732)      Inventories  (147)  (189)  163       Other current assets  (83)  (18)  181       Accounts payable and other current liabilities  278   (512)  999       Pensions and post-employment benefits  55   88   103      Other, net  155   202   253               Net cash provided by operating activities  3,686   3,320   8,401 **Investing activities**                Construction and capital expenditures  (2,734)  (3,449)  (7,475)    Investments in and advances to equity affiliates  (616)  (422)  (199)    Proceeds from dispositions of assets  7   188   3,874     Acquisition of AT&T Wireless, net of cash received  —   (35,543)  —     Acquisitions of other businesses and licenses, net of cash    received  (25)  (1,632)  (155)    (Purchase) Redemption of held-to-maturity investments  —   (219)  219     Other  —   —   50               Net cash used in investing activities  (3,368)  (41,077)  (3,686)**Financing activities**                Net borrowings (repayments) under revolving credit agreement  —   1,667   (1,156)    Repayment of long-term debt  (64)  (530)  (482)    Repayment of long-term debt due to members  —   (50)  (2,911)    Net distributions to minority interests  (33)  (141)  (46)    Contributions from members  10   36,024   —               Net cash (used in) provided by financing activities  (87)  36,970   (4,595)              Net increase (decrease) in cash and cash equivalents  231   (787)  120     Cash and cash equivalents at beginning of period  908   1,139   352               Cash and cash equivalents at end of period $1,139  $352  $472           See accompanying notes.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS****Years Ended December 31, 2003, 2004 and 2005****(Dollars in Millions)****1.****Summary of Significant Accounting Policies*****Background and Basis of Presentation***Cingular Wireless LLC (the Company) is a Delaware limitedliability company formed in 2000 by SBC Communications Inc.(SBC) and BellSouth Corporation (BellSouth) as the operatingcompany for their U.S. wireless joint venture. (OnNovember 18, 2005, SBC acquired through merger AT&TCorp. and changed the name of the surviving entity to AT&TInc. When used herein, “AT&T” will refer to thesurviving entity and, prior to November 18, 2005, to SBC.AT&T Corp. will be referred to as “Old AT&T”prior to November 18, 2005.) AT&T and BellSouth,through their wholly-owned subsidiaries, respectively, ownapproximate 60% and 40% economic interests in the Company.Cingular Wireless Corporation (the Manager), which is directedequally by AT&T and BellSouth, acts as the Company’smanager and controls the Company’s management andoperations. The Company provides wireless voice and datacommunications services, including local, long-distance androaming services using both cellular and personal communicationsservices (PCS) frequencies licensed by the FederalCommunications Commission (FCC), and equipment to customers in46 states, including service to all 100 of the largestU.S. metropolitan areas. All of the Company’soperations, which primarily serve customers in the U.S., areconducted through subsidiaries or joint ventures. Throughroaming arrangements with other carriers, the Company providesits customers service in regions where it does not have networkcoverage and is thus able to serve customers in virtually theentire U.S. and over 180 foreign countries.In October 2004, the Company acquired AT&T WirelessServices, Inc. (AT&T Wireless) for an aggregateconsideration of approximately $41,000 in cash. AT&TWireless, which has been renamed New Cingular Wireless Services,Inc. but will continue to be referred to herein as AT&TWireless, is now a direct wholly-owned subsidiary of theCompany. The operations of AT&T Wireless are integrated withthose of the Company, and the business is conducted under the“Cingular” brand name.As provided for in the original Contribution and FormationAgreement among the Company, AT&T and BellSouth, themajority of contributions of wireless operations and assets incertain markets were made during 2000 and 2001. The contributionby AT&T of wireless operations and assets in certainArkansas markets occurred on May 1, 2005, and was recordedas “Receivable for properties to be contributed” inthe consolidated balance sheets through the contribution date.Prior to the contribution, the Company managed the propertiesfor a fee. Fees received for managing the Arkansas markets forthe years ended December 31, 2003, 2004 and 2005 were $30,$40 and $30, respectively.These consolidated financial statements include charges fromAT&T and BellSouth for certain expenses pursuant to variousagreements (see Note 11). These expenses are considered tobe a reasonable reflection of the value of services provided orthe benefits received by the Company.***Use of Estimates***The preparation of financial statements in conformity withU.S. generally accepted accounting principles (GAAP)requires management to make estimates and assumptions thataffect the amounts reflected in the consolidated financialstatements and accompanying notes. The Company bases itsestimates on experience, where applicable and other assumptionsthat management believes are reasonable under the circumstances.Actual results could differ from those estimates under differentassumptions or conditions. Estimates are used when accountingfor certain items such as accrued and deferred revenues,allowance for
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**doubtful accounts, useful lives of property, plant andequipment, amortization periods for intangible assets, legal andtax contingencies, employee benefit programs, evaluation ofminimum lease terms for operating leases, fair values ofinvestments and intangible assets, asset impairment charges anddeferred income taxes, including income tax valuationallowances. Additionally, estimates are used when recording thefair values of assets acquired and liabilities assumed in apurchase business combination.***Principles of Consolidation***The consolidated financial statements include the accounts ofthe Company, variable interest entities in which the Company isthe primary beneficiary as defined by Financial AccountingStandards Board (FASB) Interpretation No. 46R,*Consolidation of Variable Interest Entities, aninterpretation of ARB No. 51* (FIN 46R), and votinginterest entities in which the Company exercises control. Otherparties’ interests in consolidated entities are reported asminority interests. All significant intercompany transactionsare eliminated in the consolidation process.The equity method is used to account for investments that arenot consolidated but in which the Company exercises significantinfluence. Investments in which the Company does not have theability to exercise significant influence are accounted forunder the cost method.***Segments***The Company manages the business as one reportable businesssegment, wireless communications services, which also is asingle operating segment. The Company operates primarily in theU.S.***Revenue Recognition***The Company earns service revenues by providing access to itswireless network (access revenue) and for usage of its wirelesssystem (airtime revenue). Access revenue from postpaidsubscribers is billed either in advance or arrears andrecognized ratably over the service period. Airtime revenue,including roaming revenue and long-distance revenue, is billedin arrears based on minutes of use and is recognized when theservice is rendered. Data airtime revenue, also billed inarrears, is based upon either number of messages or kilobytesused and is recognized when the service is rendered. Prepaidairtime sold to subscribers and revenue collected frompay-in-advancesubscribers is recorded as deferred revenue prior to thecommencement of services, and revenue is recognized when airtimeis used or expires. Access and airtime services provided arebilled throughout the month according to the bill cycle in whicha particular subscriber is placed. As a result of bill cyclecut-off times, the Company is required to make estimates forservice revenues earned but not yet billed at the end of eachmonth, and for advanced billings. Estimates for access revenuesare based upon the most current bill cycle revenues. Estimatesfor airtime revenues are based upon historicalminutes/messages/kilobytes of use.The Company’sROLLOVER®rate plans include a feature whereby unused anytime minutes donot expire each month but rather are available, under certainconditions, for future use for a period not to exceed one yearfrom the date of purchase. The Company defers revenue based onan estimate of the portion of unused minutes expected to beutilized prior to expiration. Historical subscriber usagepatterns, which have been consistent and which the Company viewsto be reliable for purposes of gauging predictive behavior,allow the Company to estimate the number of unused minutes to beutilized, as well as those which are likely to expire or beforfeited. No deferral of revenue is recorded for the minutesexpected to expire or be forfeited, as no future performance isexpected to be required by the Company, nor is there anyobligation
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**to refund or redeem for value the expired minutes. The balanceof the deferral as of December 31, 2004 and 2005 was $146and $234, respectively, and has been included in “Advancedbilling and customer deposits” in the consolidated balancesheets.Service revenues include revenues from Company subscribers whoroam outside their selected home coverage area, referred to as“incollect” roaming revenues, and revenues from otherwireless carriers for roaming by their subscribers on theCompany’s network, referred to as “outcollect”roaming revenues.The Company offers enhanced services including caller ID, callwaiting, call forwarding, three-way calling, no answer/busytransfer, text messaging and voice mail. Generally, theseenhanced features generate additional service revenues throughmonthly subscription fees or increased wireless usage throughutilization of the features. Other optional services, such asmobile-to-mobilecalling, roadside assistance and handset insurance, may also beprovided for a monthly fee. These enhanced features and optionalservices may be bundled with package rate plans or soldseparately. Revenues for enhanced services and optional featuresare recognized as earned. Service revenues also include billingsto our subscribers for Universal Service Fund (USF) andother regulatory fees.Equipment sales consist principally of revenues from the sale ofwireless handsets and accessories to new and existingsubscribers and to agents and other third-party distributors.The revenue and related expenses associated with the sale ofwireless handsets and accessories through our indirect saleschannels are recognized when the products are delivered andaccepted by the agent or third-party distributor, as this isconsidered to be a separate earnings process from the sale ofwireless services and probability of collection is likely.Shipping and handling costs for wireless handsets sold to agentsand other third-party distributors are classified as costs ofequipment sales.The Company has determined that the sale of wireless servicesthrough its direct sales channels with an accompanying handsetconstitutes a revenue arrangement with multiple deliverables inaccordance with Emerging Issues Task Force(EITF) No. 00-21, *Accounting for RevenueArrangements with Multiple Deliverables.* The Companyaccounts for these arrangements as separate units of accounting,including the wireless service and handset. Arrangementconsideration received for the handset is recognized asequipment sales when the handset is delivered and accepted bythe subscriber. Arrangement consideration received for thewireless service is recognized as service revenues when earned.As the non-refundable, up-front activation fee charged to thesubscriber does not meet the criteria as a separate unit ofaccounting, the Company allocates the additional arrangementconsideration received from the activation fee to the handset(the delivered item) to the extent that the aggregate handsetand activation fee proceeds do not exceed the fair value of thehandset. Any activation fees not allocated to the handset wouldbe deferred upon activation and recognized as service revenue ona straight-line basis over the expected customer relationshipperiod. The Company determined that the sale of wirelessservices through its indirect sales channels (agents) doesnot constitute a revenue arrangement with multiple deliverables.For indirect channel sales, the Company continues to defernon-refundable, up-front activation fees and associated costs tothe extent of the related revenues in accordance with StaffAccounting Bulletin No. 104 (SAB 104). Thesedeferred fees and costs are amortized on a straight-line basisover the estimated customer relationship period. The Company hasrecorded deferred revenues and deferred expenses of equalamounts in the consolidated balance sheets. As ofDecember 31, 2004 and 2005, deferred revenues and expenseswere $124 and $187, respectively.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)*****Income Taxes***The Company is not a taxable entity for federal income taxpurposes. Rather, federal taxable income or loss is included inthe Company’s respective members’ federal income taxreturns. However, the Company’s provision (benefit) forincome taxes includes federal and state income taxes for certainof its corporate subsidiaries, as well as for certain stateswhich impose income taxes upon non-corporate legal entities. Theacquisition of AT&T Wireless resulted in a significantincrease in its pre-tax income (loss) from its corporatesubsidiaries since AT&T Wireless retained its corporationstatus. However, after the acquisition, AT&T Wirelesscontributed the majority of its assets and liabilities toCingular Wireless II, LLC (CW II), which it ownsjointly with Cingular Wireless LLC. In exchange for the assetsand liabilities contributed to CW II, AT&T Wirelessreceived a 43% ownership interest in CW II, from which anyincome (loss) is allocated and is subject to federal and stateincome taxes. The remaining income (loss) from CW II isallocated to the Company and flows through to the members whoare taxed at their level pursuant to federal and state incometax laws.The Company recognizes deferred tax assets and liabilities basedon differences between the financial reporting and tax bases ofassets and liabilities, applying enacted statutory rates.Pursuant to the provisions of Statement of Financial AccountingStandards No. 109, *Accounting For Income Taxes*(SFAS 109), the Company provides valuation allowancesfor deferred tax assets for which it does not considerrealization of such assets to be more likely than not. SeeNote 13 for further information.***Required Distributions***The Company is required to make periodic distributions to itsmembers on a pro rata basis in accordance with eachmember’s ownership interest in amounts sufficient to permitmembers to pay the tax liabilities resulting from allocations ofincome tax items from the Company. Since the Company did notgenerate taxable income in 2003, 2004 or 2005, the Company madeno distributions for tax liabilities in 2003, 2004 or 2005.***Cash and Cash Equivalents***Cash and cash equivalents include all highly liquid investmentswith original maturities of three months or less. Outstandingchecks and drafts of $169 and $336 have been included in“Accounts payable” in the consolidated balance sheetsas of December 31, 2004 and 2005, respectively.***Accounts Receivable***Accounts receivable consist principally of trade accountsreceivable from subscribers and are generally unsecured and duewithin 30 days. Credit losses relating to these receivablesconsistently have been within management’s expectations.Expected credit losses are recorded as an allowance for doubtfulaccounts in the consolidated balance sheets. Estimates ofexpected credit losses are based primarily on write-offexperience, net of recoveries, and on the aging of the accountsreceivable balances. The collection policies and procedures ofthe Company vary by credit class and payment history ofcustomers. Provisions for uncollectible receivables are includedin selling, general and administrative expenses.***Inventories***Inventories consist principally of wireless handsets andaccessories and are valued at the lower of cost or market value.Market value is determined using current replacement cost.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)*****Property, Plant and Equipment***Property, plant and equipment are stated at cost, lessaccumulated depreciation and amortization. The cost of additionsand substantial improvements is capitalized. Interest expenseand network engineering costs incurred during the constructionphase of the Company’s wireless network are capitalized aspart of property, plant and equipment until the projects arecompleted and the assets are placed into service. The cost ofmaintenance and repairs is charged to operating expenses.Property, plant and equipment are depreciated using thestraight-line method over their estimated useful lives.Leasehold improvements, including cell site acquisition andother site construction improvements, are depreciated over theshorter of their estimated useful lives or lease terms that arereasonably assured. Depreciation lives may be accelerated due tochanges in technology, the rate of migration of theCompany’s subscriber base from its Time Division MultipleAccess (TDMA) network to its Global System for MobileCommunication (GSM) network or other industry conditions.Upon sale or retirement of an asset, the related costs andaccumulated depreciation are removed from the accounts and anygain or loss is recognized and principally included in“Cost of services” in the consolidated statements ofincome.***Software Capitalization***The Company capitalizes certain costs incurred in connectionwith developing or obtaining internal use software in accordancewith American Institute of Certified Public AccountantsStatement of Position98-1,*Accounting forthe Costs of Computer Software Developed or Obtained forInternal Use.* Capitalized costs include direct developmentcosts associated with internal use software, including internaldirect labor costs and external costs of materials and services.These capitalized software costs are included in “Property,plant and equipment, net” in the consolidated balancesheets and are being amortized on a straight-line basis over aperiod not to exceed five years. Costs incurred during thepreliminary project stage, as well as maintenance and trainingcosts, are expensed as incurred.***Intangible Assets***Intangible assets consist primarily of customer relationships,FCC spectrum licenses and the excess of consideration paid overthe fair value of net assets acquired in purchase businesscombinations (goodwill). In conjunction with the Company’sacquisition of AT&T Wireless, the Company also recordedintangible assets associated with trade names, trade marks andlease contracts.Customer relationships represent values placed on subscribers ofacquired businesses and have a finite life. The majority of theCompany’s customer relationship intangible assets areamortized over a five-year period using thesum-of-the-monthsdigits method.In accordance with Statement of Financial Accounting StandardsNo. 142, *Goodwill and Other Intangible Assets*(SFAS 142), goodwill and other indefinite-livedintangible assets are not amortized. The Company has determinedthat its FCC spectrum licenses should be treated asindefinite-lived intangible assets (see Note 4). The FCCissues spectrum licenses for up to ten years that authorizewireless carriers to provide service in specific geographicservice areas. In 1993, the FCC adopted specific standards toapply to wireless renewals, concluding it will award a licenserenewal to a licensee that meets certain standards of pastperformance. Historically, the FCC has granted license renewalsroutinely. The licenses held by the Company expire at variousdates and the Company believes it will be able to meet allrequirements necessary to secure renewal of its wirelesslicenses.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**The Company tests goodwill and other indefinite-lived intangibleassets for impairment on an annual basis. Additionally, goodwillwill be tested for impairment between annual tests if an eventoccurs or circumstances change that would more likely than notreduce the Company’s fair value below its carrying value.Indefinite-lived intangible assets will be tested between annualtests if events or changes in circumstances indicate that theasset might be impaired. These events or circumstances wouldinclude a significant change in the business climate, legalfactors, operating performance indicators, competition, sale ordisposition of a significant portion of the business or otherfactors. See Note 4 for description of the goodwill andindefinite-lived intangible asset impairment tests.***Valuation of Long-lived Assets***Long-lived assets, including property, plant and equipment andintangible assets with finite lives, are reviewed for impairmentin accordance with Statement of Financial Accounting StandardsNo. 144, *Accounting for the Impairment or Disposal ofLong-Lived Assets,* whenever events or changes incircumstances indicate that the carrying amount may not berecoverable. It is reasonably possible that these assets couldbecome impaired as a result of technological or other industrychanges. In analyzing potential impairment, the Company usesprojections of future cash flows from the asset group. Theseprojections are based on the Company’s views of forecastedgrowth rates, anticipated future economic conditions,appropriate discount rates relative to risk and estimates ofresidual values. If the total of the expected futureundiscounted cash flows from the asset group the Company intendsto hold and use is less than the carrying amount of the assetgroup, a loss is recognized for the difference between the fairvalue and carrying amount of the asset group. The asset group tobe held and used represents the lowest level for whichidentifiable cash flows are largely independent of the cashflows of other groups of assets and liabilities. The Company hasdetermined the lowest level for which cash flows are largelyindependent of the cash flows of other groups is theconsolidated company level. For assets the Company intends todispose of, a loss is recognized if the carrying amount of theassets in the disposal group is more than fair value, net of thecosts of disposal. The Company principally uses the discountedcash flow method to estimate the fair value of its long-livedassets. The discount rate applied to the undiscounted cash flowsis consistent with the Company’s weighted-average cost ofcapital.***Asset Retirement Obligations***In accordance with Statement of Financial Accounting StandardsNo. 143, *Accounting for Asset Retirement Obligations*(SFAS 143), the Company records the fair value of aliability for an asset retirement obligation in the period inwhich it is incurred and capitalizes that amount as part of thebook value of the long-lived asset. Over time, the liability isaccreted to its present value each period, and the capitalizedcost is depreciated over the estimated useful life of therelated asset. Upon settlement of the liability, the Companyeither settles the obligation for its recorded amount or incursa gain or loss.The Company has certain legal obligations related to networkinfrastructure, principally tower and related assets, certainadministrative facilities and battery disposal, which fallwithin the scope of SFAS 143. These legal obligationsinclude obligations to remediate leased land on which theCompany’s network infrastructure and administrative assetsare located. The significant assumptions used in estimating theCompany’s asset retirement obligations include thefollowing: a probability, depending upon the type of operatinglease, that the Company’s assets with asset retirementobligations will be remediated at the lessor’s directive;expected settlement dates that coincide with lease expirationdates plus estimates of lease extensions; remediation costs thatare indicative of what third party vendors would charge theCompany to
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**remediate the sites; expected inflation rates that areconsistent with historical inflation rates; and credit-adjustedrisk-free rates that approximate the Company’s incrementalborrowing rates.***Advertising Costs***Costs for advertising are expensed as incurred. Totaladvertising expenses were $643, $973 and $1,249 for the yearsended December 31, 2003, 2004 and 2005, respectively.***Operating Leases***Rent expense is recorded on a straight-line basis over theinitial lease term and those renewal periods that are reasonablyassured. The difference between rent expense and rent paid isrecorded as deferred rent and is included in “Accruedliabilities” and “Other noncurrent liabilities”in the consolidated balance sheets.***Derivative Financial Instruments***In accordance with Statement of Financial Accounting StandardsNo. 133, *Accounting for Derivative Instruments andHedging Activities*(SFAS 133), the Company recognizesall derivatives as either assets or liabilities in theconsolidated balance sheets and measures those instruments atfair value. Gains and losses resulting from changes in the fairvalues of those derivative instruments will be recorded toearnings or other comprehensive income (loss) depending on theuse of the derivative instrument and whether it qualifies forhedge accounting. The Company also assesses, both at theinception of the hedge and on an on-going basis, whether thederivatives used in hedging transactions are effective. Shouldit 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 hedginginstruments and hedged items, as well as its risk managementobjectives and strategies for undertaking various hedgetransactions.***New Accounting Standards***In March 2005, the FASB issued Interpretation No. 47,*Accounting for Conditional Asset Retirement Obligations (aninterpretation of FASB Statement No. 143)*(FIN 47). This Interpretation clarifies that the termconditional asset retirement obligation, as used in FASBStatement No. 143, *Accounting for Asset RetirementObligations,* refers to a legal obligation to perform anasset retirement activity in which the timing and(or) method of settlement are conditional on a future eventthat may or may not be within the control of the entity. Theobligation to perform the asset retirement activity isunconditional even though uncertainty may exist about the timingand (or) method of settlement. Accordingly, an entity isrequired to recognize the fair value of a liability for theconditional asset retirement obligation when incurred and theuncertainty about the timing and (or) method of settlementshould be factored into the measurement of the liability whensufficient information exists. This Interpretation is effectiveno later than December 31, 2005. Retrospective applicationof interim financial information is permitted but is notrequired. Additionally, companies shall recognize the cumulativeeffect of initially applying this Interpretation as a change inaccounting principle. The Company adopted this new pronouncementeffective December 31, 2005. The impact to theCompany’s consolidated financial statements as a result ofadopting this new statement is not material.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)*****Reclassifications***Certain amounts have been reclassified in the consolidatedfinancial statements to conform to the current yearpresentation. The consolidated statements of income for 2003 and2004 have been reclassified to reflect certain billings to theCompany’s subscribers related to gross receipts taxes as“Service revenues” and the related payments to theassociated taxing authorities and regulatory agencies as“Cost of services” expense. Operating income and netincome for both years were unaffected by the reclassification.The amounts reclassified for 2003 and 2004 were $94 and $129,respectively.**2.****Acquisitions and Dispositions**During 2003, 2004 and 2005, the Company completed certaintransactions as part of its overall strategy to expand itswireless footprint and divest itself of nonstrategic assets, aswell as divestitures required by regulatory agencies.**Acquisitions*****AT&T Wireless***In October 2004, the Company acquired AT&T Wireless in atransaction accounted for under the purchase method prescribedin SFAS No. 141, *Business Combinations*(SFAS 141). AT&T Wireless was a provider of wirelessvoice and data services and products primarily in the U.S. andserved nearly 22 million subscribers as of the acquisitiondate. AT&T Wireless also held equity interests in Triton PCSHoldings, Inc. (Triton), Cincinnati Bell, Inc. (CincinnatiBell), TeleCorp PCS, Inc. (TeleCorp) and other U.S. andinternational communications ventures, corporations andpartnerships. The acquisition formed the largest wirelesscommunications company in the U.S., based upon the number ofsubscribers.The aggregate consideration paid to AT&T Wirelessshareholders to complete the AT&T Wireless acquisition wasapproximately $41,000 in cash. The Company received $36,024 inequity funding from AT&T and BellSouth to finance theacquisition in proportion to their respective economicinterests. The remaining portion of the purchase price wasfunded with AT&T Wireless cash on hand. The results ofAT&T Wireless’ operations have been included in theCompany’s consolidated financial statements since theacquisition date.The acquisition was structured as a merger of a wholly-ownedsubsidiary of the Manager with and into AT&T Wireless,following which AT&T Wireless became a direct wholly-ownedsubsidiary of the Manager, and as the surviving entity, AT&TWireless retained all of its assets and liabilities. Followingthe merger, the Manager sold all its interests in AT&TWireless to the Company for $36,024, and AT&T Wireless thenbecame its direct wholly-owned subsidiary. Subsequently, asignificant portion of the operations, including assets,liabilities and subsidiary entities, were transferred from theCompany and AT&T Wireless to CW II. The Company andCW II executed supplemental indentures to AT&TWireless’s two indentures under which its Senior Notes areoutstanding to become co-obligated for all obligationsthereunder. Further, AT&T Wireless and CW II executedsupplemental indentures to the Company’s indenturegoverning the Company’s Senior Notes to become co-obligatedfor all obligations thereunder. As a result, CW II,AT&T Wireless and the Company are co-obligated on all of theCompany’s and AT&T Wireless’ Senior Notes.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**The Company paid a premium (*i.e.*, goodwill) over the fairvalue of the net tangible and identified intangible assetsacquired for a number of reasons, including but not limited tothe 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 high-speed data services and    reduce capital expenditures; •     AT&T Wireless’ subscriber base, which has a stronger    business subscriber component than that of the Company, adds a    complementary subscriber mix to the Company’s subscriber    base; •     AT&T Wireless’ average revenue per user, or    “ARPU”, had historically been higher than that of the    Company’s subscribers; •     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 141required that the total purchase price be allocated to the fairvalue of assets acquired and liabilities assumed based on theirfair values at the acquisition date. The allocation processrequired an analysis of all such assets and liabilitiesincluding acquired contracts, customer relationships, FCClicenses, contractual commitments and legal contingencies toidentify and record the fair value of all assets acquired andliabilities assumed. In valuing acquired assets and assumedliabilities, fair values were based on, but were not limited to:future expected cash flows; current replacement cost for similarcapacity for certain property, plant and equipment; market rateassumptions for contractual obligations; estimates of settlementcosts for litigation and contingencies; and appropriate discountrates and growth rates.The approach to the estimation of the fair values of theAT&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; •     Reconciliation of the individual assets’ returns with the    weighted average cost of capital; and •     Allocation of the excess purchase price over the fair value of    the identifiable assets and liabilities acquired to goodwill.The amounts reported as of December 31, 2004 in the tablebelow reflect the estimated fair values as of the acquisitiondate of October 26, 2004 plus adjustments made during thefourth quarter of 2004. The
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**adjustments summarized in the table below include purchase priceallocation adjustments made during 2005 prior to the end of theallocation period.                 **Purchase Price Allocation**     **As of**   **As of**  **December 31, 2004** **Adjustments(2)** **October 26, 2005**           Assets acquired:                 Current assets $8,457(1) $2  $8,459      Property, plant and equipment  10,314   (2,310)  8,004      Intangible assets not subject to amortization                 Licenses  15,540   649   16,189      Intangible assets subject to amortization                 Customer relationships  5,010   (23)  4,987      Other intangible assets  312   —   312      Investments in unconsolidated subsidiaries  898   103   1,001      Other assets  447   (12)  435      Goodwill  20,468   774   21,242                 Total assets acquired  61,446   (817)  60,629     Liabilities assumed:                 Current liabilities, excluding current portion of long-term debt  3,261   934   4,195      Long-term debt  12,172   4   12,176      Deferred income taxes  3,938   (1,763)  2,175      Other non-current liabilities  811   8   819                 Total liabilities assumed  20,182   (817)  19,365                Net assets acquired $41,264  $—  $41,264            (1)     Includes $5,240 of cash used to finance the acquisition. (2)     Adjustments include the impact of integration plans approved by    management in June and October 2005, wherein the utility and    expected lives of certain network and non-network property,    plant and equipment and internal-use software acquired were    reduced as a result of management decisions and refinements to    assumptions and/or data used to assign asset values in the    purchase price allocation. The impact of these plans and    refinements resulted in a reduction to the valuation of these    former AT&T Wireless assets as of the acquisition date.    Included in our 2005 operating results is a $35 reduction of    depreciation expense attributable to the fourth quarter of 2004    related to a $1,645 reduction in the valuation of property,    plant and equipment resulting from the integration plans    approved and management decisions made in 2005. Changes to the    valuation of property, plant and equipment resulted in    adjustments to the fair value of certain identifiable intangible    assets acquired and goodwill and associated deferred taxes. The    integration plans also resulted in the recognition of    liabilities under EITF Issue No. 95-3, *Recognition of    Liabilities in Connection with a Purchase Business Combination*(EITF 95-3), that adjusted the purchase price    allocation (see also Note 12 for further detail);    adjustments to these liabilities have been recorded as of    December 31, 2005, and may
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**    continue as the integration plans are executed and completed in    2006. The purchase price allocation has also been adjusted to    record preacquisition contingencies. In addition to the deferred    tax impacts associated with valuation adjustments, a net    reduction in deferred taxes was recorded to reflect revisions to    the tax bases of the assets acquired and liabilities assumed in    the purchase, and correspondingly reduced goodwill.In accordance with SFAS 141, goodwill includes a portion ofvalue for assembled workforce which is not separately classifiedfrom goodwill. Deferred tax liabilities have been recorded onall intangible assets except non-deductible goodwill. Taxbenefits will be reflected in the consolidated statements ofincome in future periods as the book basis of finite-livedintangible assets is amortized over their associated usefullives or if any intangible assets except non-deductible goodwillare impaired.Substantially all of the licenses acquired have an indefinitelife, and accordingly, are not subject to amortization. Themajority of customer relationship intangible assets are beingamortized over a weighted-average period of five years using thesum-of-the-monthsdigits method. This method best reflects the estimated patternin which the economic benefits will be consumed. Otherintangible assets and other noncurrent liabilities include leaseand sublease contracts, which are amortized over the remainingterms of the underlying leases and have a weighted-averageamortization period of seven years. Other intangibles alsoincludes the right to use the AT&T Wireless brand tradename, which was amortized over a six month period following theacquisition, and represented the use period under the BrandLicense Agreement with Old AT&T, as amended. Trademarks areamortized over their expected remaining economic lives, rangingfrom five to six years, and have a weighted-average amortizationperiod of 5.6 years.The Company completed an assessment of any preacquisitioncontingencies where the related liability was probable and theamount of the liability could be reasonably estimated. Inconnection with this assessment, the Company recordedpreacquisition liabilities of $172 related to pending legalproceedings in the final purchase price allocation.***Triton Wireless Properties***In September 2004, the Company and AT&T Wireless and Tritonsigned an agreement providing for the acquisition by the Companyof Triton’s wireless properties in Virginia (the“Virginia properties”) in exchange for certain ofAT&T Wireless’ properties in North Carolina, PuertoRico and the U.S. Virgin Islands (the “NC/ PRproperties”). In addition, the Company agreed to pay Triton$176 in cash. The exchange of network properties closed onDecember 1, 2004, and was accounted for as a purchase inaccordance with SFAS 141. The FCC licenses were retained bythe respective parties pending FCC approval for the transfer,which occurred in November 2005. The results of the Virginiaproperties have been included in, and the results of theexchanged properties have been excluded from, the Company’sconsolidated financial statements since the respective closingdates.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**Under the purchase method of accounting, the assets andliabilities of the Virginia properties were recorded at theirrespective fair values as of the date of acquisition. Thefollowing table summarizes the estimated fair values of theassets 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)     Customer relationships  48   (68)  (20)     FCC Licenses  301   (227)  74      Goodwill  364   (117)  247                 Total assets acquired (disposed)  892   (759)  133     Liabilities assumed (disposed):                 Current liabilities  13   4   17      Noncurrent liabilities  —   (60)  (60)                Total liabilities assumed (disposed)  13   (56)  (43)              Net assets acquired (disposed) $879  $(703) $176           In addition to the wireless property exchange, AT&T Wirelessand Triton, through wholly-owned subsidiaries, signed anagreement in July 2004 to terminate their stockholders’agreement which would terminate a market exclusivity arrangementbetween the parties. As of the close of the AT&T Wirelessacquisition, the Company had wireless operations in marketswhere AT&T Wireless was prohibited from operating under theexclusivity arrangement. In exchange for the termination of thestockholders’ agreement, AT&T Wireless agreed tosurrender 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. Withthe consummation of this agreement, the Company is able toprovide on its network continuing service in areas where Tritoncurrently has operations. The Company recognized no gain or losson the transaction.*Pro Forma Financial Information*The following unaudited pro forma consolidated results ofoperations of the Company for the years ended December 31,2003 and 2004 assume that the acquisitions of AT&T Wirelessand the Virginia properties were completed as of January 1 ineach 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 resultsof AT&T Wireless and the Virginia properties withappropriate adjustments that give effect to depreciation andamortization, interest expense, income taxes, and theelimination of intercompany roaming activity among the Company,AT&T Wireless
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**and the Virginia properties. The effects of othernon-acquisition related items are included in the pro formaamounts presented above. The pro forma amounts are notnecessarily indicative of the operating results that would haveoccurred if the acquisitions and related transactions had beencompleted at the beginning of the applicable periods presented.In addition, the pro forma amounts are not necessarilyindicative of operating results in future periods, in which theCompany might realize revenue enhancements and cost savings.***Acquisition of NextWave Licenses***In August 2003, the Company executed an agreement with NextWaveTelecom, Inc. and certain of its affiliates for the purchase ofFCC licenses for wireless spectrum in 34 markets for $1,400 incash. The transaction closed in April 2004, and the Companyrecorded this cost as additional licenses in the consolidatedbalance sheet.**Dispositions*****Termination of GSMF Network Infrastructure Joint    Venture***In May 2004, the Company andT-Mobile entered intoan agreement, subject to the closing of the acquisition ofAT&T Wireless, to dissolve GSM Facilities, LLC (GSMF), sellto T-Mobile certainspectrum licenses and other assets and exchange certain otherspectrum licenses. The first stage of these transactions closedin January 2005.Pursuant to the agreement, the joint venture was dissolved andthe Company sold its ownership of the California/ Nevada MajorTrading Area (MTA) network assets toT-Mobile forapproximately $2,500 in cash. Also, as part of the dissolution,the Company was required to contribute an additional $200 to theventure to restore a capital account deficit. The Companyretained the right to utilize the California/ Nevada and NewYork T-Mobile networksduring a four-year transition period and has committed topurchase a minimum number of minutes over this term with apurchase commitment value of $1,200 (see Note 15). TheCompany and T-Mobileretained all of their respective customers in each market.Additionally, in January 2005, the Company sold 10 megahertz(MHz) of spectrum toT-Mobile in each of theSan Francisco, Sacramento and Las Vegas Basic Trading Areas(BTAs) for $180 as part of the dissolution of GSMF.As part of the original joint venture agreement, the Company andT-Mobile were each toreceive 50% of the spectrum used in the operation of the jointventure following its dissolution. Spectrum licenses were notcontributed to the joint venture upon its formation in 2001, butrather were subject to a separate agreement governing their use.In connection with the dissolution, the Company andT-Mobile arecontractually required to exchange certain spectrum licenses.The Company expects the spectrum licenses to be exchanged onJanuary 1, 2007. The Company will receive 10 MHz ofspectrum in the New York BTA and 2.5 MHz of spectrum in theLas Vegas, Nevada BTA, andT-Mobile will receive5 MHz of spectrum in each of nine BTAs in California, thelargest of which is San Diego.T-Mobile also has theoption to purchase an additional 10 MHz of spectrum in theLos Angeles and San Diego BTAs from the Company commencingJanuary 2007. The Company expects to recognize a net gain on thedissolution of the joint venture upon the completion of thespectrum exchange in 2007, principally due to the value of theNew York spectrum to be received in connection with theconsummation of these transactions.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)*****Investment in Cincinnati Bell Wireless***In connection with the acquisition of AT&T Wireless, theCompany and Cincinnati Bell signed an agreement in August 2004that allowed the Company the right to put to Cincinnati Bell,AT&T Wireless’ 19.9% equity interest in CincinnatiBell’s wireless subsidiary, Cincinnati Bell Wireless LLC(CBW), for $83. In February 2006, the Company exercised this putright and closed on the transfer of its investment to CincinnatiBell. The Company accounted for its investment in CBW under thecost method. This investment, which had carrying amounts of $81and $83 as of December 31, 2004 and 2005, respectively, isincluded in “Other assets” in the consolidated balancesheets. The gain on the sale was not material.***Mobitex Data Business***In September 2004, the Company sold Cingular Interactive, L.P.(Cingular Interactive), a data messaging business utilizing theproprietary “Mobitex” packet switched network. Inconnection with its agreement to sell Cingular Interactive, theCompany evaluated the Cingular Interactive long-lived assetcarrying values, including property, plant and equipment and FCClicenses, for recoverability. Based on the results of therecoverability test, the Company adjusted the carrying values ofthe Cingular Interactive long-lived assets to their fair valuein September 2004, resulting in a loss of $31. Fair value wasdetermined using the agreed upon sale price for the CingularInteractive assets, less costs to sell. The write-down of thelong-lived assets is included in “Cost of services” inthe consolidated statements of income and “Other, net”in the consolidated statements of cash flows for 2004. The lossrecognized on sale of Cingular Interactive in October 2004 wasnot material.***Sale of Bermuda and Caribbean Operations and    Licenses***In June 2005, the Company signed a stock purchase agreement withDigicel Limited (Digicel) to sell former AT&T Wirelessoperations and licenses in Bermuda and certain Caribbean marketsto Digicel for $61 in cash (subject to certain potentialadjustments under the agreement). The majority of thetransaction closed in the third and fourth quarters of 2005 forwhich the Company received approximately $57 in cash. No gain orloss was recognized on the sales that closed. The two remainingmarkets are expected to close upon governmental and regulatoryapprovals in the respective markets. The Company does not expectto recognize a material gain or loss on these assets which areincluded in other current assets in the accompanyingconsolidated balance sheets as of December 31, 2005. Theoperating results of the Caribbean markets are not material forany period presented.***Other Divestitures***The Company has completed a series of transactions to dispose ofcertain domestic wireless assets, including those required to bedivested by the FCC and the U.S. Department of Justice(DOJ) in connection with its acquisition of AT&TWireless. These dispositions did not have a material impact onthe Company’s ability to provide services in any market oron its results of operations. The most significant of therequired dispositions was the transaction completed in April2005 with Alltel Corporation, in which the Company sold toAlltel, licenses, network assets and subscribers in severalmarkets that the Company acquired as part of the AT&TWireless acquisition. In exchange for the assets sold, theCompany received cash and additional minority interests inpartnerships that it already controlled. The Company also soldto Alltel 20 MHz of spectrum and network assets formerlyheld by AT&T Wireless in Wichita, Kansas, which it was notrequired to divest. The fair value of the assets exchanged inthe transactions was approximately $400. The gain recognized onthe exchange was not material.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)****3.****Property, Plant and Equipment**Property, plant and equipment is summarized as follows:                 **December 31,**  **Estimated**    **Useful Lives** **2004** **2005**         **(In years)**        Land  —  $95  $109     Buildings and building improvements  10-25   6,182   5,792     Operating and other equipment  2-15   25,388   29,217     Furniture and fixtures  3-10   450   427     Construction in progress  —   810   1,599                  32,925   37,144     Less accumulated depreciation and amortization      10,967   15,399               Property, plant and equipment, net     $21,958  $21,745           Depreciation expense and capitalized interest and networkengineering costs incurred during the construction phase of theCompany’s wireless network are summarized as follows:               **Year Ended December 31,**     **2003** **2004** **2005**           Depreciation expense $1,927  $2,562  $4,812     Capitalized interest costs  15   16   44     Capitalized network engineering costs  103   134   255 The net book value of assets recorded under capital leases was$916 and $897 at December 31, 2004 and 2005, respectively.These capital leases principally relate to communications towersand other operating equipment. Amortization of assets recordedunder capital leases is included in depreciation expense.Capital lease additions for the years ended December 31,2003, 2004 and 2005 were $143, $94 and $79, respectively.Previously, the Company’s cellular/ PCS networks wereequipped with GSM or TDMA digital transmission technologies. Inthe second quarter of 2004, the Company completed a two-yearoverlay of GSM equipment throughout its TDMA markets to providea common voice standard. As a part of this project, the Companyadded high-speed technologies for data services known as GeneralPacket Radio Service (GPRS) and Enhanced Data Rates for GSMEvolution (EDGE). Due to the accelerated migration of traffic toits GSM network experienced in 2004, the Company evaluated theestimated useful lives of its TDMA equipment. This review wascompleted in the fourth quarter of 2004 and, effectiveOctober 1, 2004, useful lives were further shortened tofully depreciate all TDMA equipment by December 31, 2007.This change in estimate increased depreciation expense in thefourth quarter of 2004 by $61 and 2005 depreciation expense byapproximately $235.**4.****Intangible Assets**A significant portion of the Company’s intangible assetsare FCC licenses that provide the Company with the exclusiveright to utilize certain radio frequency spectrum to providewireless communications services. While FCC licenses are issuedfor only a fixed time, renewals of FCC licenses have occurredroutinely and
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**at nominal cost. Moreover, the Company has determined that thereare currently no legal, regulatory, contractual, competitive,economic or other factors that limit the useful lives of its FCClicenses and therefore treats the FCC licenses as anindefinite-lived intangible asset under the provisions ofSFAS 142.In accordance with EITF No. 02-7, *Unit of Accounting forTesting Impairment of Indefinite-Lived Intangible Assets,*the Company tests its licenses for impairment on anaggregate basis, consistent with the Company’s managementof the business on a national scope. The Company utilizes a fairvalue approach, incorporating discounted cash flows, to completethe test. This approach determines the fair value of the FCClicenses and, accordingly, incorporates cash flow assumptionsregarding the investment in a network, the development ofdistribution channels and other inputs for making the businessoperational. As these inputs are included in determining freecash flows of the business, the present value of the free cashflows is attributable to the licenses. The discount rate appliedto the cash flows is consistent with the Company’sweighted-average cost of capital.During the fourth quarters of 2003, 2004 and 2005, the Companycompleted its annual impairment tests for goodwill andindefinite-lived FCC licenses. These annual impairment tests,prepared as of October 1, resulted in no impairment of theCompany’s goodwill or indefinite-lived FCC licenses.Summarized below are the carrying values for the major classesof intangible assets that will continue to be amortized underSFAS 142, as well as the carrying values of thoseintangible assets deemed to have indefinite lives:                          **December 31, 2004** **December 31, 2005**         **Estimated** **Gross**   **Gross**    **Useful** **Carrying** **Accumulated** **Carrying** **Accumulated**  **Lives** **Amount** **Amortization** **Amount** **Amortization**             **(In years)**            Intangible assets subject to amortization:                         Customer relationships  5  $5,273  $(575) $5,316  $(2,318)     Other  1-18   326   (73)  306   (134)                    Total     $5,599  $(648) $5,622  $(2,452)                    Intangible assets not subject to amortization:                         FCC licenses     $24,748  $—  $25,242  $—                      Goodwill     $21,637  $—  $22,359  $—                 The weighted average estimated useful lives of intangible assetssubject to amortization was 5.0 years as ofDecember 31, 2005, with remaining useful lives ofapproximately 3.8 years.The changes in the carrying value of goodwill for the year endedDecember 31, 2005, which are largely attributable toadjustments to the purchase price allocation of AT&TWireless assets and liabilities, are as follows:.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**          Balance, December 31, 2004 $21,637      Goodwill acquired  65      Goodwill disposed of  (150)     Other adjustments  807         Balance, December 31, 2005 $22,359     The following table presents current and estimated amortizationexpense for each of the following periods:          Aggregate amortization expense for the year ended:         2003 $162      2004  515      2005  1,763     Estimated amortization expense for the year ending:         2006  1,315      2007  955      2008  603      2009  237      2010 and thereafter  60 In addition to the SFAS 142 intangible assets noted above,the Company had $2 of intangible assets in each of 2004 and 2005in connection with the recognition of an additional minimumliability for its bargained pension plan and/or otherunqualified benefit plans as required by SFAS No. 87,*Employers’ Accounting for Pensions,*(SFAS 87)(see Note 14).**5.****Investments in and Advances to Equity Affiliates**The Company had investments in affiliates and had made advancesto entities that provided the Company access to additional U.S.and international wireless markets. The Company did not have acontrolling interest in these investments, and all of theseinvestments were accounted for under the equity method ofaccounting. The most significant of these investments was GSMF,a jointly controlled network infrastructure venture withT-Mobile for networksin the New York City metropolitan area, California and Nevada.GSMF was dissolved in January 2005, and the others were soldduring 2005.Investments in and advances to equity affiliates consisted ofthe following at December 31, 2004:         Investment in GSMF $2,108     Investment in Atlantic West B.V. (Netherlands)  349     Investment in IDEA Cellular Ltd. (India)  210     Other  9       $2,676     **GSMF**In November 2001, the Company andT-Mobile formed GSMFand contributed to it portions of their existing networkinfrastructures in the California, Nevada and New York Citymetropolitan area markets.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**Management control of GSMF was vested in a four-membermanagement committee. Both companies bought network servicesfrom GSMF but retained ownership and control of their ownlicenses in those markets. The Company andT-Mobile independentlymarketed their services to subscribers and utilized their ownsales, marketing, billing and customer care operations. In July2002, the Company began marketing its commercial service in theNew York City market andT-Mobile began servicein California and Nevada.The Company andT-Mobile jointly fundedcapital expenditures of GSMF and procured services and networkequipment on behalf of GSMF in the respective markets. Networkequipment was contributed to GSMF at prices which approximatedfair value. The Company deferred any resulting profits andrecorded them as part of “Investments in and advances toequity affiliates” in the consolidated balance sheets. TheCompany recognized the intercompany profit over the estimateduseful lives of the related assets as a reduction of equity innet loss of affiliates.In January 2005, the Company andT-Mobile terminatedtheir network infrastructure joint venture through a series oftransactions. See Note 2 for additional information.The Company incurred and charged to GSMF certain networkoperating costs. The monthly operating expenses of GSMF,including monthly cash payments made on tower capital leaseobligations, were then charged back to the Company andT-Mobile based uponeach party’s proportionate share of licensed spectrum ineach market. Through a separate reciprocal home roamingagreement, the Company andT-Mobile charged eachother for usage that was not in the same proportion as thespectrum-based allocations. This usage charge was primarilybased upon the Company’s andT-Mobile’s shareof the total minutes of use on the respective networks. Thesecharges for network services are included in “Cost ofservices” in the consolidated statements of income. Thesetransactions are summarized as follows:           **Year Ended**  **December 31,**     **2003** **2004**         Network operating costs charged to GSMF $320  $385     Network services received based on usage  254   253 At December 31, 2004, the “Due from affiliates,net” caption in the consolidated balance sheets included$125 and $13 related to transactions between the Company andGSMF for the settlement of capital obligations and settlement ofoperating expenses, respectively.GSMF incurred net losses due to depreciation, deferred rent andinterest expense, which were not reimbursed by the Company orT-Mobile. For the yearsended December 31, 2003 and 2004, the Company recordedequity in the net loss of GSMF of $335 and $416, respectively.***Atlantic West B.V.***Atlantic West B.V. (AWBV), which was acquired through AT&TWireless, was a joint venture between the Company and VerizonCommunications, Inc. (Verizon). AWBV owned a 49% interest inEurotel Bratislava a.s. (Bratislava), a wireless operatingentity in Slovakia prior to its sale in December 2004. InDecember 2004, AWBV sold its interest in Bratislava to SlovakTelecom a.s. for cash proceeds of $315. The Company’sshare of proceeds from the sale totaled $158. AWBV distributed$280 of the proceeds upon completion of the sale, of which $140was distributed to the Company. The remaining cash proceeds,along with $662 in cash from a prior sale, were distributedequally to the Company and Verizon in June
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**2005 upon completion of a repatriation plan which qualifiedunder the American Jobs Creation Act of 2004 (see Note 13).The Company recognized no gain or loss on the sale transactionas the assumed fair value of the investment, in conjunction withits purchase of AT&T Wireless, equaled the transaction saleproceeds. AWBV is no longer operational as of December 31,2005.***IDEA Cellular Ltd.***In September 2005, the Company sold its 32.9% interest in IDEACellular Ltd. (IDEA), a cellular telecommunications company inIndia, to the other principal shareholders in IDEA for $300 incash. The Company recognized no gain or loss on the transaction.**6.****Variable Interest Entities**The Company has variable interests in several entities for whichit is deemed to be the primary beneficiary and accordinglyconsolidates the statements of financial position, results ofoperations and cash flows for these entities pursuant to FASBInterpretation No. 46 (Revised December 2003),*Consolidation of Variable Interest Entities — aninterpretation of ARB No. 51*(FIN 46R). Thesevariable interests typically consist of a combination of some orall of voting equity interests, nonvoting equity interests,loans and put options that provide the other owners the right torequire the Company, subject to prior governmental approvals topurchase their ownership interest if and when certain eventsoccur. These entities were formed to enable individuals andbusinesses with limited assets and revenues to partner with, andreceive financing from, large businesses, such as the Company orAT&T Wireless, to bid on licenses that were otherwiseunavailable to large entities. To date, the activities of theseentities have consisted primarily of acquiring licenses throughacquisitions and FCC auctions and network construction. TheCompany has no significant variable interests for which it isnot deemed to be the primary beneficiary.***Salmon PCS LLC***In November 2000, the Company and Crowley Digital Wireless, LLC(Crowley Digital) entered into an agreement, pursuant to whichSalmon PCS LLC (Salmon) was formed to bid as a “very smallbusiness” for certain 1900 MHz band PCS licensesauctioned by the FCC.Crowley Digital has the right to put its approximate 20%economic interest in Salmon to the Company at a cash price equalto Crowley Digital’s initial investment plus a specifiedrate of return. The put right can be exercised at certain timesending in April 2008. The Company’s maximum liability forthe purchase of Crowley Digital’s interest in Salmon underthis put right is $225. The fair values of this put obligation,estimated at $155 and $172 as of December 31, 2004 and2005, are included in “Other noncurrent liabilities”and “Accrued liabilities” in the consolidated balancesheets for the respective periods.***Edge Mobile Wireless, LLC***In November 2004, the Company and Edge Mobile Wireless, LLC(Edge Mobile Wireless) formed Edge Mobile, LLC (Edge) to bid asan “entrepreneur” for certain 1900 MHz band PCSlicenses auctioned by the FCC. In February 2005, Edge’stotal high bids for the 21 licenses it won at auction inNovember 2005 amounted to $181, of which the Company wasobligated to fund $174. In December 2004, the Companycontributed $31 in equity to Edge, which was used to pay for aportion of the licenses. The Company contributed equity and madeadvances to Edge in March 2005 of $7 and $136, respectively, tocover its remaining obligation.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**Edge Mobile Wireless will have the right to put its economicinterest in Edge to the Company at a cash price equal to EdgeMobile Wireless’ investment plus a specified rate ofreturn. The put right can be exercised at certain times, but, inno event, prior to the grant of the licenses. Upon grant of thelicenses to Edge in November 2005, the Company recorded theestimated fair value of the put obligation, which is immaterialto the Company’s financial condition.***AT&T Wireless Variable Interest Entities***As a result of the AT&T Wireless acquisition, theCompany’s consolidated financial statements include othervariable interest entities, similar to Salmon and Edge MobileWireless. The Company’s maximum liability related to theseentities as of December 31, 2005 was approximately $147,which represents the gross payment under the put options thatprovide the other owners the right to require the Company topurchase their ownership interests under certain circumstances.Also, through its acquisition of AT&T Wireless, the Companyacquired a variable interest and was deemed to be the primarybeneficiary in an entity engaged in leasing activities.**7.****Accrued Liabilities**Accrued liabilities are summarized as follows:           **December 31,**     **2004** **2005**         Accrued fixed asset purchases $822  $1,369     Taxes, other than income  387   499     Payroll and other related liabilities  697   622     Agent commissions  329   289     Advertising  231   125     Accrued interest  232   219     Lease termination costs  —   291     Equipment removal costs  —   190     Other  1,016   1,448            Total accrued liabilities $3,714  $5,052        **8.****Debt*****Debt Maturing Within One Year****Revolving Credit Agreement*Effective August 1, 2004, the Company entered into arevolving credit agreement with AT&T and BellSouth for themto provide unsubordinated short-term financing on a pro ratabasis at an interest rate of LIBOR plus 0.05% for theCompany’s ordinary course operations based upon theCompany’s budget and forecasted cash needs. The revolvingcredit agreement provides that in the event that the Company hasavailable cash (as defined) on any business day, such amountshall first be applied to the repayment of the revolving loans,and any remaining excess shall then be applied to the repaymentof the Subordinated Notes (member loans) from AT&T andBellSouth at month end if the Company does not
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**then require a cash advance under the agreement. As ofDecember 31, 2005, the Company had an outstanding balanceof $511 under the revolving credit agreement. The agreement wasamended in June 2005 to extend expiration until July 31,2007. The weighted average annual interest rate under thisagreement for the period August 1, 2004 throughDecember 31, 2004 and for the year ended December 31,2005 was 2.3% and 2.9% respectively. Interest expense on therevolving credit agreement for the years ended December 31,2004 and 2005 was $4 and $11, respectively.***Long-term Debt***Long-term debt is summarized as follows:            **December 31,**     **2004** **2005**         Due to members — Subordinated Notes due June 2008 $9,628  $6,717     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   1,000      7.5% Senior Notes, due May 2007  750   750      7.875% Senior Notes, due March 2011  3,000   3,000      8.125% Senior Notes, due May 2012  2,000   2,000      8.75% Senior Notes, due March 2031  2,500   2,500     Due to external parties — TeleCorp Wireless, Inc.,    maker:             10.625% Senior Subordinated Notes  200   —      Capital leases, 5.72% to 9.6%  1,011   1,142      Other  52   38            Total long-term debt, including current maturities  22,391   19,147     Unamortized premium (discount) on noncurrent Senior Notes    and Senior Subordinated Notes and other Notes, net  1,960   1,716     Current maturities of long-term debt  (491)  (1,523)    Interest rate swap fair value adjustment (see Note 9)  (3)  —            Total long-term debt $23,857  $19,340        *Debt Due to Members*The long-term debt due to members (member loans) representsborrowings from AT&T and BellSouth. Interest accrues at 6%and is payable monthly. Interest expense on the member loans forthe years ended December 31, 2003, 2004 and 2005 was $653,$582 and $510, respectively. The Company’s member loanshave a maturity date of June 30, 2008. The Company mayprepay the member loans at any time, subject to the provisionsdescribed below, and is obligated to prepay the member loans tothe extent of excess cash
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**from operations (as defined). See “Revolving CreditAgreement” above. For the years ended December 31,2004 and December 31, 2005, the Company repaid $50 and$2,911, respectively, of its member loans. Funds generated fromoperations and proceeds from asset sales were used to makerepayments on the member loans.AT&T and BellSouth have agreed to subordinate theirrepayment rights applicable to the member loans to the repaymentrights of the Company’s senior debt. Senior debt includesthe Company’s Senior Notes, including Senior Notes ofAT&T Wireless and other borrowings from external partiesdesignated as senior debt to which AT&T and BellSouth havespecifically agreed to be subordinate. The payment of principaland interest on the subordinated member loans by the Company isprohibited in the event of bankruptcy or an event of default inthe payment or prepayment of any principal of or interest on anysenior debt, or in the event of an acceleration of thesubordinated debt upon its default, until the senior debt hasbeen repaid in full.*Senior Notes — Cingular Wireless LLC*The Senior Notes are unsecured obligations and rank equally withall other unsecured and unsubordinated indebtedness. The SeniorNotes are governed by an indenture with J.P. Morgan TrustCompany, N.A., which acts as trustee. The indenture contains a“negative pledge” provision that the Company will notsubject its property or assets to any mortgage or otherencumbrance unless the Senior Notes are secured equally andratably with other indebtedness that is secured by that propertyor assets, unless “secured debt” would not exceed 15%of “consolidated net tangible assets” (as such termsare defined in the indenture). There is no sinking fund ormandatory redemption applicable to the Senior Notes. The SeniorNotes are redeemable, in whole or in part, at the Company’soption, at any time at a price equal to their principal amountplus any accrued interest and premium. CW II and AT&TWireless became co-obligated on the Company’s Senior Notesfollowing the Company’s acquisition of AT&T Wireless.*Senior Notes — AT&T Wireless*Following the Company’s acquisition of AT&T Wireless inOctober 2004, the Company, along with CW II, becameco-obligated on $9,500 of Senior Notes of AT&T Wireless.Included in the Senior Notes of AT&T Wireless are $6,500 ofunsecured and unsubordinated Senior Notes issued under a March2001 private placement, with $1,000 maturing on March 1,2006; $3,000 maturing on March 1, 2011; and $2,500 maturingon March 1, 2031. Fixed interest rates range from 7.35% to8.75% per annum, payable semi-annually. Also included inthe Senior Notes are $2,750 of unsecured and unsubordinatedSenior Notes issued through an April 2002 registered publicoffering by AT&T Wireless, with $750 maturing on May 1,2007, and $2,000 maturing on May 1, 2012. Fixed interestrates range from 7.5% to 8.125% per annum, payablesemi-annually.The $9,250 outstanding Senior Notes of AT&T Wireless aregoverned under two separate indentures, with U.S. BankN.A., successor to the Bank of New York, as trustee. The SeniorNotes are unsecured unsubordinated obligations, ranking equallyin right with all other unsecured and unsubordinated obligationsof the Company. The Senior Notes are redeemable, as a whole orin part, at the Company’s option, at any time or from timeto time, at a price equal to their principal amount plus anyaccrued interest and premium similar to that applicable to theCompany’s Senior Notes. The Senior Notes are not subject toany sinking fund requirements. With respect to both indentures,covenants limit activity related to “sale and leasebacktransactions” (as defined) under certain circumstances andcontain a “negative pledge” provision similar to thatapplicable to the Company’s Senior Notes.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)***Fair Values of Long-term Debt*At December 31, 2004 and 2005, the fair values of theSenior Notes and Senior Subordinated Notes were $13,879 and$13,153, respectively, based on their quoted market prices. Thecarrying value of the long-term debt due to members approximatesfair value since the Company may prepay the debt at any time, asdescribed above, without penalty. The above Senior Notes andSenior Subordinated Notes assumed in the Company’sacquisition of AT&T Wireless were recorded at fair value onthe acquisition date in accordance with the purchase accountingrequirements of SFAS 141. The premium recorded at theacquisition date totaled $2,045, of which $1,731 remainsoutstanding as of December 31, 2005. The premium is beingamortized under the effective interest method which reflectsmarket interest rates on the date of the acquisition.Amortization of the premium is recorded in the Company’sfinancial statements as a reduction to interest expense. For theyear ended December 31, 2005, this amortization totaled$231, which resulted in an effective annual interest rate of4.7% for the acquired Senior Notes and Senior Subordinated Notes.*Capital Leases*The Company has entered into capital leases primarily for theuse of communications towers.*Maturities of Long-Term Debt*Maturities of long-term debt outstanding, including capitallease obligations, at December 31, 2005 are summarizedbelow:                **Debt** **Capital Leases** **Total**           Maturities:                 2006 $1,520  $89  $1,609      2007  755   94   849      2008  6,722   98   6,820      2009  3   103   106      2010  2   108   110      Thereafter  9,003   2,607   11,610               Total minimum payments $18,005  $3,099  $21,104      Less capital lease imputed interest  —   1,518   1,518      Less capital lease executory costs  —   439   439               Total obligations $18,005  $1,142  $19,147           *Cash Paid for Interest*Cash paid for interest on debt for the years endedDecember 31, 2003, 2004 and 2005 was $862, $892 and $1,503,respectively. These amounts include cash paid for interest onmember loans and the revolving credit agreement with the membersof $665, $582 and $525 for the years ended December 31,2003, 2004 and 2005, respectively.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)****9.****Financial Instruments**The carrying amounts of cash and cash equivalents, accountsreceivable, accounts payable, advanced billing and customerdeposits and other current assets and liabilities are reasonableestimates of their fair value due to the short-term nature ofthese instruments.The Company uses interest rate swaps to manage its interest rateexposure on certain of its debt obligations. The Company doesnot invest in derivative instruments for trading purposes. InMarch 2003, the Company entered into two interest rate swapcontracts with banks to convert a portion of the fixed rateexposure on its five-year Senior Notes due December 15,2006 to variable rates without an exchange of the underlyingprincipal amount. Under the terms of the interest rate swapcontracts, the Company receives interest at a fixed rate of5.625% and pays interest at a variable rate equal to thesix-month LIBOR plus a specified margin, based on an aggregatenotional amount of $250. The six-month LIBOR rate on eachsemi-annual reset date determines the variable portion of theinterest rate swaps. For the years ended December 31, 2004and 2005, the effective interest rate associated with thisnotional amount was 4.58% and 6.05%, respectively.In accordance with SFAS 133, the Company recorded a fairvalue adjustment to the portion of its fixed rate long-term debtthat is hedged. This fair value adjustment is recorded as anincrease or decrease to long-term debt, with the related valuefor the interest rate swaps’ recorded in “Otherassets” or “Other noncurrent liabilities” ifnoncurrent, and/or “Other current assets” or“Accrued liabilities” if current, in the consolidatedbalance sheets. At December 31, 2005, the portion of debtrelated to the interest rate swap is classified as current andis recorded net of $5 related to the fair value of the interestrate swap. Interest rate differentials associated with theseinterest rate swaps are recorded as an adjustment to a currentasset or liability, with the offset to interest expense over thelife of the interest rate swaps.The Company has designated the swaps as fair value hedges of itsfixed rate debt. The terms of the interest rate swap contractsand hedged items are such that effectiveness can be measuredusing the short-cut method as defined in SFAS 133.**10.****Concentrations of Risk**The Company relies on local and long-distance telephonecompanies and other companies to provide certain communicationsservices. Additionally, the Company relies on one vendor toprovide billing services for the postpaid subscribers acquiredin conjunction with the Company’s acquisition of AT&TWireless (see Note 2). Although management believesalternative vendors could be found in a timely manner, anydisruption of these services could potentially have an adverseimpact on operating results.The Company relies on roaming agreements with other wirelesscarriers to permit the Company’s customers to use theirGSM/ GPRS/ EDGE and TDMA networks in areas not covered by theCompany’s networks. If these providers decide not tocontinue those agreements due to a change in ownership or othercircumstance, this could cause a loss of service in certainareas and possible loss of subscribers.Although the Company attempts to maintain multiple vendors tothe extent practicable, its handset inventory and networkinfrastructure equipment, which are important components of itsoperations, are currently acquired from only a few sources. Ifthe suppliers are unable to meet the Company’s needs as itcontinues to build out and upgrade its network infrastructureand sell service and handsets, delays and increased costs in theexpansion of the Company’s network infrastructure or lossesof potential customers could result, which would adverselyaffect operating results.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**Financial instruments that could potentially subject the Companyto credit risks consist principally of trade accountsreceivable. Concentrations of credit risk with respect to thesereceivables are limited due to the composition of the subscriberbase, which includes a large number of individuals andbusinesses. No subscriber accounted for more than 10% ofconsolidated revenues in any year presented.Approximately 35,000, or 55%, of the Company’s employeesare represented by the Communications Workers of America (CWA),with contracts expiring on various dates between March 2006 andFebruary 2009. Approximately 9,700 of the Company’semployees are covered by a contract that expires in March 2006.All of the contracts contain no-strike clauses. In most areas ofthe country and with most job titles, the Company iscontractually required to maintain a position of neutrality andto allow card-check balloting with respect to unionization andsupport the determination of its employees.The Company has approximately one million RIM BlackBerry users.In litigation against RIM by various patent holders, a court hasheld that BlackBerry services infringe several patents. If aninjunction is issued and RIM cannot modify the way the serviceis provided so that it does not infringe the patents at issue,the Company may have to either migrate its BlackBerry users toanother handheld device and service platform or separately seeklicenses from the patent holders. While there could be someexpense and disruption associated with implementing themodification, the expense and/or disruption to theCompany’s customers from having to migrate subscribers toanother device and service platform or to negotiate licensesfrom the patent holders could be very expensive and disruptiveto the Company’s wireless data business.**11.****Related Party Transactions**In addition to the affiliate transactions described elsewhere inthese financial statements, other significant transactions withrelated parties are summarized in the succeeding paragraphs.In connection with the formation of Cingular, the Companyentered into wireless agency agreements with subsidiaries ofAT&T and BellSouth. Such subsidiaries, and any of theiraffiliates that make an election to do so may act as authorizedagents exclusively on the Company’s behalf for the sale ofits wireless services to customers in AT&T’s andBellSouth’s respective incumbent service territories. TheCompany is free to contract with other agents, includingretailers and other distributors, for the sale of its wirelessservices in these territories and elsewhere throughout theU.S. In addition to the unilateral rights of AT&T andBellSouth and their affiliates to terminate the agreements andto the Company’s right to terminate in certain events, eachwireless agency agreement terminates upon breach, mutualagreement of the parties or on December 31, 2050. Agentcommissions and compensation charges are included in“Selling, general and administrative” in theconsolidated statements of income.The Company incurred local interconnect and long distancecharges from AT&T and BellSouth and their affiliates relatedto the provision of wireless services to its subscribers, whichare included in “Cost of services” in the consolidatedstatements of income, and telecommunication and other chargesfrom AT&T and BellSouth and their affiliates in connectionwith its internal business operations, which are primarilyincluded in “Selling, general and administrative” inthe consolidated statements of income.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**Related party charges incurred by the Company are summarized asfollows:               **Year Ended December 31,**   **Type of Service:** **2003** **2004** **2005**           Agent commissions and compensation $103  $67  $74     Interconnect and long distance  815   927   1,297     Telecommunications and other charges  77   97   250 Additionally, the Company has purchase commitments to AT&T,BellSouth and their affiliates of approximately $161 fordedicated leased lines used to provide interconnection servicesand $109 for telecommunications and other services (seeNote 15).The Company had receivables from affiliates of $247 and $156 andpayables to affiliates of $109 and $210 at December 31,2004 and 2005, respectively, primarily with AT&T, BellSouthand GSMF.In August 2005, the Company sold to AT&T and BellSouthcertain ultra high frequency operating licenses that wereacquired as part of the AT&T Wireless transaction for $34 incash. Sale proceeds were received from each member in proportionto their respective economic ownership interests. No gain orloss was recognized on the transaction.In August 2000, Southwestern Bell Mobile Systems, Inc., whichAT&T transferred to the Company on October 2, 2000,agreed to transfer approximately 3,900 of its communicationstowers (later reduced to 3,306), including those owned byconsolidated partnerships, to another AT&T affiliate, inconnection with an agreement whereby the AT&T affiliatewould lease its rights to use and lease space on the towers toSpectraSite Inc. (SpectraSite). Under the arrangement,SpectraSite subleases back to the AT&T affiliate the spaceon the towers the Company uses. The AT&T affiliate furthersubleases that space to the Company or its affiliates. Theannual rent escalates by 5% as of December 14 of everyyear. The term of the sublease is unique to each tower andranges from 13 to 32 years. The Company (as lessee) has theright to withdraw from any lease on the tenth anniversary of thelease date and on each five-year anniversary thereafter. TheCompany accounts for its subleases of the tower space from theAT&T affiliate as capital leases.In 2003 and 2004, the Company transferred to the AT&Taffiliate 94 and 187 towers, respectively. No towers weretransferred in 2005. Through December 31, 2005, a total of3,265 towers were transferred having an aggregate net book valueat transfer date of $190.**12.****Acquisition-Related, Integration and Other Costs**The Company is executing plans to exit certain activities anddispose of certain assets of AT&T Wireless, includingredundant facilities and interests in certain foreignoperations, and to fully integrate the acquired operations withthose of the Company. These plans affect many areas of thecombined company, including sales and marketing, network,information technology, customer care, supply chain and generaland administrative functions. In connection therewith, theCompany expects to continue to incur significant costs over thenext several quarters associated with such integrationactivities. Plans affecting the Company’s integration ofretail stores, administrative space and the network have beencompleted and approved by management, resulting in adjustmentsto the purchase price allocation for the acquired assets andassumed liabilities of AT&T Wireless and the need to shortenthe useful lives of certain network and other property, plantand equipment.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**For the years ended December 31, 2004 and 2005, the Companyexpensed integration costs of $288 and $876, respectively,related to these exit plans. Total costs to date include $601for network integration, $129 of costs to support the commoncustomer service experience, $116 to market the combinedcompany, $81 for billing and other IT systems conversions, $59to convert the branding of AT&T Wireless stores, agentlocations and other signage to the Cingular brand, $58 relatedto employee retention and involuntary terminations and $120 ofother integration planning and execution costs. These costs areprimarily included in “Depreciation and amortization”,“Cost of services” and “Selling, general andadministrative expenses” in the consolidated statements ofincome.**     ***Network IntegrationPlan — Phase I*In June 2005, the Company finalized a portion of its plan tointegrate certain acquired network assets of AT&T Wireless.The plan primarily addressed certain TDMA network equipment inlocations where the Company and AT&T Wireless hadoverlapping TDMA network assets and AT&T Wireless’ UMTS(Universal Mobile Telephone Service) assets. The plan includeddecommissioning TDMA assets (approximately 85% former AT&TWireless assets and 15% legacy Cingular assets) and replacingformer AT&T Wireless UMTS assets by the end of 2005. Thevaluation of these former AT&T Wireless assets was reducedby approximately $145 and was reflected as an adjustment to theoriginal purchase price allocated to these assets as of theacquisition date.The Company also determined to decommission and replace certainvendor-specific Cingular network assets in three markets as partof its overall network integration efforts, resulting in a netincrease of $257 in depreciation expense for 2005.**     ***Network IntegrationPlan — Phase II*In October 2005, the Company approved the second and final phaseof its network integration plan. This plan complemented theactivities undertaken in June 2005 to eliminate redundantnetwork facilities that arose upon the purchase of AT&TWireless. In connection with the second phase of the networkintegration plan, the Company is integrating its GSM (GlobalSystem for Mobile Communication) networks, decommissioningredundant cell sites and core network elements and swappingvendor equipment in various markets to have like equipment ineach operating market. The plan is anticipated to result indecommissioning approximately 7,600 cell sites, of whichapproximately 5,700 were acquired from AT&T Wireless. Thevaluation of the former AT&T Wireless assets affected by thesecond phase of the network integration plan was reduced byapproximately $1,319 and is reflected as an adjustment to theoriginal purchase price allocated to these assets. Certainlegacy Cingular assets that will be decommissioned as a resultof the second phase of the network rationalization plan weredepreciated on an accelerated basis beginning in the fourthquarter of 2005. The incremental depreciation associated withthose legacy assets amounted to $165 for the year endedDecember 31, 2005. The Company expects to completeactivities associated with its network integration plans byDecember 31, 2006.**     ***Retail Stores andAdministrative Space Integration Plans*The Company also finalized plans to integrate the retail storesand administrative space requirements for the sales/distributionand corporate real estate functions in June 2005. The valuationof former AT&T Wireless non-network assets affected by theseintegration plans was reduced by $74 and was reflected as anadjustment to the original purchase price allocated to theseassets as of the acquisition date. Legacy
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**Cingular assets affected by the integration plans will bedepreciated on an accelerated basis through their estimatedremaining lives. The impact on depreciation expense is notmaterial.**     ***Exit Costs Recordedunder Integration Plans*In addition to the revaluation of assets, the Company incurredand recorded certain costs and accruals associated with theintegration plans in accordance with the requirements ofEITF 95-3 andStatement of Financial Accounting Standards No. 146,*Accounting for Costs Associated with Exit or DisposalActivities*(SFAS 146). The costs presented in the tableimmediately following were recorded underEITF 95-3 during2005, to exit certain AT&T Wireless activities and resultedin adjustments to the purchase price allocation for assetsacquired and liabilities assumed in the acquisition of AT&TWireless. The majority of the costs recognized related totermination fees associated with leases and other contractualarrangements. Costs recorded under SFAS 146 as presented inthe second table below are recognized in the income statementwhen those costs have been incurred.The following table displays the activity and balances recordedunder EITF 95-3and are reflected in “Accrued liabilities” in theconsolidated balance sheets:**EITF 95-3Summary**                   **December 31, 2004** **Accruals** **Payments** **December 31, 2005**             Lease terminations $—  $293  $(31) $262     Severance  27   85   (97)  15     Equipment removal costs  —   194   (9)  185     Other  —   4   (1)  3                  Total $27  $576  $(138) $465              A summary of total expected costs to be incurred underSFAS 146 for the integration plans, and the amountsincurred for the year ended December 31, 2005, is presentedin the table below:**Summary of SFAS 146 Costs**                **Estimate of Costs**   **Cumulative Costs**  **Expected to be** **Costs incurred** **Incurred through**  **Incurred** **during 2005** **December 31, 2005**           Contract termination costs:                 Lease terminations $138  $36  $36      Agent terminations  10   —   —      Other contract terminations  6   —   —     Equipment removal costs  126   15   15     Other  4   3   3               Total $284  $54  $54           Costs recorded under SFAS 146 were classified in “Costof services” and “Selling, general andadministrative” in the consolidated statements of income.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)***Employee Termination Costs*In connection with the integration of AT&T Wireless, theCompany recognized $42 of termination costs in the year endedDecember 31, 2005, for approximately 2,400 Cingularemployees who were identified to be terminated during 2005 and2006. Approximately 1,900 of these employees left theirpositions by December 31, 2005. Employee terminationbenefits to be paid to former Cingular employees are recorded inaccordance with SFAS No. 112, *Employers’Accounting for Postemployment Benefits*(SFAS 112).Additional liabilities for termination benefits to be providedto former Cingular employees will be recognized when such costsare probable and estimable.Additionally, employee termination benefits of $35 and $85,including involuntary severance and related benefits, wererecorded in the years ended December 31, 2004 and 2005,respectively, for approximately 2,200 former AT&T Wirelessemployees. These costs were recognized underEITF 95-3 asliabilities assumed in the purchase business combination, whichincreased goodwill and did not affect net income, and arereflected in theEITF 95-3 Summarytable above. As of December 31, 2005, approximately 1,800of the identified employees had left their positions.The following table displays the SFAS 112 and SFAS 146activity and balances of the restructuring liabilitiesassociated with the integration plans which are reflected inaccrued liabilities on the consolidated balance sheet:           **SFAS 112** **SFAS 146**         Balance at December 31, 2004 $4  $—     Additions  42   54     Payments  (35)(1)  (17)           Balance at December 31, 2005 $11  $37         (1)     Includes cash payments and adjustments for changes in employment    status.*Hurricane Costs*In August and September 2005, hurricanes Katrina and Rita causedsignificant damage to coastal areas served by the Company inLouisiana, Mississippi, Alabama and Texas. The Companyconsequently experienced disruptions to its service andoperations, and incurred losses to its network equipment, retaillocations and other property. The extent of these asset lossescaused by the storms, and costs incurred for service restorationefforts, totaled $116. In addition, the Company recorded$32 in revenue losses related to subscribers residing ingeographic areas affected by hurricane Katrina.**13.****Income Taxes**The Company is not a taxable entity for federal income taxpurposes. Federal taxable income or loss is included in therespective member’s federal income tax return. The majorityof states follow this treatment. Certain states, however, imposetaxes at the Company level and such taxes are the responsibilityof the Company and are included in the Company’s income taxprovision (benefit). The consolidated financial statements alsoinclude income tax provisions (benefits) for federal andstate income taxes for all corporate subsidiaries of the Company.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**Following the Company’s acquisition of AT&T Wirelessand related restructuring, AT&T Wireless became a directwholly-owned subsidiary of the Company. The Company and AT&TWireless transferred significant portions of their respectiveassets and liabilities to CW II. Earnings or losses fromCW II flow to its owners in accordance with theirrespective ownership interests. The structure retains AT&TWireless as a tax-paying corporation that is a 43% owner ofCW II. The Company owns the remaining 57% of CW II.The Company and CW II are generally both consideredpartnerships for federal and state income tax purposes. Forpartnerships, income tax items generally flow through to theirpartners and are taxed at the partner level pursuant to federaland state income tax laws.Deferred income taxes are recorded using enacted tax law andrates for the years in which the taxes are expected to be paidor refunds received. Deferred income taxes are provided foritems when there is a temporary difference in recording suchitems for financial reporting and income tax reporting. Amajority of these deferred taxes were recorded through therequired application of the purchase method of accounting forthe Company’s acquisition of AT&T Wireless. As part ofpurchase accounting, the assets and liabilities acquired wererecorded by the Company at fair value. The difference betweenthe fair values recorded for these acquired assets (other thangoodwill) and liabilities and the tax basis of those assets andliabilities generated the related deferred income taxes thathave been recorded in the Company’s financial statements.Additionally, the Company assumed significant tax net operatinglosses (NOLs) with its acquisition of AT&T Wireless.The provision (benefit) for income taxes consists of thefollowing:                 **Year Ended**  **December 31,**     **2003** **2004** **2005**           Current:                 Federal $26  $14  $73      State and local  3   2   35                Total current  29   16   108     Deferred:                 Federal  (3)  (67)  72      State and local  2   (7)  18                 Total deferred  (1)  (74)  90               Provision (benefit) for income taxes $28  $(58) $198           
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**A reconciliation of the income tax provision (benefit) computedat the statutory tax rate to the Company’s effective taxrate is as follows:               **Year Ended December 31,**     **2003** **2004** **2005**           Income tax provision at federal statutory rate of 35% $352  $50  $186     State income taxes, net of federal U.S. tax benefit  40   6   19     LLC income not subject to federal or state income taxes  (364)  (114)  (17)    State law changes, net  —   —   29     Reversal of valuation allowance  —   —   (13)    Other  —   —   (6)              Provision (benefit) for income taxes $28  $(58) $198           The significant components of the Company’s deferred taxassets and liabilities are as follows:             **December 31,**     **2004** **2005**         Current deferred tax assets:             Net operating loss carryforwards $—  $753      Other  2   14            Total current deferred tax assets  2   767            Noncurrent deferred tax assets:              Net operating loss/credit carryforwards  3,078   2,246       Valuation allowances  (147)  (131)           Total net noncurrent deferred tax assets  2,931   2,115     Noncurrent deferred tax liabilities:             Investment in Cingular Wireless II  6,655   4,962      FCC licenses and goodwill  216   201      Investments in and advances to unconsolidated subsidiaries  41   —     Other  16   38            Total noncurrent deferred tax liabilities  6,928   5,201            Total noncurrent net deferred tax liabilities $3,997  $3,086        The Company, through AT&T Wireless, has federal and stateNOL carryforwards of approximately $6,979 and$9,858, respectively, which expire at various datesprincipally from December 31, 2007 throughDecember 31, 2024. The Company also has federal tax creditcarryforwards of $42 which expire between 2007 and 2024.Internal Revenue Code Section 382 places certainlimitations on the annual amount of NOL carryforwards that canbe utilized if certain changes to a company’s ownershipoccur. The Company believes its purchase of AT&T Wirelesswas a change in ownership pursuant to Section 382 of theCode, and the NOL carryforwards of AT&T Wireless are limitedbut more likely than not will be used in future periods. As ofDecember 31, 2005, the Company has valuation allowances of$119 for NOLs and $12 for tax credits which were more likelythan not to expire unused. The majority of the Company’sdeferred tax
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**asset valuation allowance would be applied to reduce goodwill inthe 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 EarningsRepatriation Provision within the American Jobs Creation Act of2004*(the Act), to provide accounting and disclosureguidance for the repatriation provision of the Act. The Actcreated a temporary incentive for U.S. corporations torepatriate accumulated income earned abroad by providing an85 percent dividends received deduction for certaindividends from controlled foreign corporations. Suchrepatriations must occur in either an enterprise’s last taxyear that began before the enactment date, or the first tax yearthat begins during the one-year period beginning on the date ofenactment. The Company and the Board of Directors approved aplan to repatriate approximately $310 in previously unremittedforeign earnings under the Act, which were remitted in the thirdquarter of 2005. Amounts to be repatriated under the Act do nothave an effect on the Company’s income tax expense. Changesin deferred taxes related to the Act directly resulted inadjustments to the purchase price allocations that were recordedin connection with the Company’s acquisition of AT&TWireless.At December 31, 2004 and 2005, the Company’s recordednet assets at entities that are not taxpayers exceed their taxbases by approximately $14,000 and$14,900, respectively. The Company does not record deferredtaxes for their differences due to its structure. For the yearended December 31, 2004 and 2005, this basis differenceprincipally relates to the Company’s investment inCW II. Cash paid for income taxes for the years endedDecember 31, 2003, 2004 and 2005 was $23, $22 and $138,respectively.The Company’s income tax returns are regularly audited andreviewed by the Internal Revenue Service (IRS) and state taxingauthorities. During the fourth quarter of 2005, the IRScompleted field examinations for tax years 1997 through 2003 forthe legacy AT&T Wireless operations. During 1997 throughJuly 9, 2001 (the effective date of its split off from OldAT&T), AT&T Wireless was included in the consolidatedfederal income tax return of Old AT&T. After the spin-off,AT&T Wireless filed as a separate taxpayer. The IRS hasissued assessments challenging the timing and amounts of variousdeductions for both the January 1, 1997 throughJuly 9, 2001 and the July 10, 2001 throughDecember 31, 2003 periods. The proposed assessment forthese years is currently under review by the Congressional JointCommittee on Taxation (JCT). The Company expects completion ofthe JCT review and final resolution of these audits during 2006.Since the audit periods predate the Company’s acquisitionof AT&T Wireless, any adjustments that result from theassessment will increase or decrease goodwill pursuant to therules of purchase accounting.**14.****Employee Benefits*****Pensions and Post-Retirement Benefits***As of December 31, 2005, approximately 41,000 of theCompany’s employees are covered by one of twononcontributory qualified pension plans. Participation in theCompany’s plans commenced November 1, 2001, followingthe initial contribution of employees and related obligationsand liabilities by AT&T and BellSouth to the Company. Inconnection with this contribution, AT&T and BellSouthtransferred pension assets from their qualified trusts to thetrusts established for the Company’s pension plans.Approximately 24,000 current employees of the Company whowere formerly employed by AT&T Wireless became eligible toparticipate in the pension plans on January 1, 2006.Nonbargained employees commencing service on or beforeDecember 31, 2005, and some bargained employees,participate in a cash balance plan, under which they can electto receive their pensions in a
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**lump sum. The pension benefit formula for many bargainedemployees is based on a flat dollar amount per year of serviceaccording to job classification, and these benefits aretypically paid as an annuity. Nonbargained employees commencingservice on or after January 1, 2006 do not participate inany defined benefit pension plan.The projected benefit obligation of the Company’s pensionplans is the actuarial present value of all benefits attributedby the pension benefit formula to previously rendered employeeservice. It is measured based on assumptions concerning futureinterest rates, employee compensation levels, retirement dateand mortality. Actual experience may differ from the actuarialassumptions, and the benefit obligation will be affected. TheCompany uses a December 31 measurement date for its plans.For a closed group of nonbargained and bargained transitionalemployees, the Company provides certain retiree medical, dentaland life insurance benefits under various plans and accruesactuarially determined post-retirement benefit costs as activeemployees earn these benefits. These post-retirement plans arenot funded. Other nonbargained employees and their covereddependents who meet certain eligibility requirements areprovided access to post-retirement medical and dental benefitsat no cost to the Company. Current employees formerly employedby AT&T Wireless who meet certain eligibility requirementsare eligible only for access to post-retirement medical anddental benefits at no cost to the Company.In accordance with FASB Staff Position No. FAS 106-2,*Accounting and Disclosure Requirements Related to theMedicare Prescription Drug, Improvement and Modernization Act of2003*, the obligation under the Medicare Prescription Drug,Improvement and Modernization Act of 2003 (MedicareModernization Act) has been reflected effective January 1,2004. Due to expected future receipt of subsidies availableunder the Act for plans that are determined to be actuariallyequivalent, the plans’ combined accumulated postretirementbenefit obligation was reduced by approximately $8 and $10 as ofthe beginning of 2004 and 2005, respectively, and the 2004 and2005 net periodic benefit cost were each reduced byapproximately $2.*Obligations and Funded Status*The funded status of the pension plan and post-retirementbenefit plan and amounts recognized in the consolidated balancesheets at December 31, 2004 and 2005 are as follows:                      **Post-**  **Pension** **Retirement**  **December 31,** **December 31,**       **2004** **2005** **2004** **2005**             Change in Benefit Obligation:                     Benefit obligation at beginning of year $456  $536  $114  $117      Service cost  65   71   10   11      Interest cost  26   30   6   7      Amendments  2   —   (12)  —      Impact of Medicare Modernization Act  —   —   (8)  —      Actuarial loss (gain)  18   (12)  7   22      Benefits paid  (31)  (47)  —   —                  Benefit obligation at end of year $536  $578  $117  $157              
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**                      **Post-**  **Pension** **Retirement**  **December 31,** **December 31,**       **2004** **2005** **2004** **2005**             Change in Plan Assets:                     Fair value of plan assets at beginning of year $510  $526  $—  $—      Actual return on plan assets  47   37   —   —      Employer contribution  —   —   —   —      Benefits paid  (31)  (47)  —   —                  Fair value of plan assets at end of year $526  $516  $—  $—                                 **Pension** **Post- Retirement**  **December 31,** **December 31,**       **2004** **2005** **2004** **2005**             Funded status $(10) $(62) $(117) $(157)    Unrecognized prior service cost  14   11   (7)  (6)    Unrecognized net actuarial loss  12   3   29   50                  Prepaid (accrued) pension cost and post-retirement benefit    obligation $16  $(48) $(95) $(113)             The accumulated benefit obligation for the pension plans was$511 and $554 at December 31, 2004 and 2005, respectively.As of December 31, 2005, the bargained pension plan had anaccumulated benefit obligation that exceeded the fair value ofplan assets, and an additional minimum liability of $10 wasrecorded in accordance with the provisions ofSFAS No. 87, *“Employers’ Accounting forPensions”.* Additional information for this plan is asfollows:           **December 31,**     **2004** **2005**         Projected benefit obligation $26  $38     Accumulated benefit obligation  22   32     Fair value of plan assets  17   15     Increase in minimum liability included in other comprehensive    income  4   5 
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)***Components of Net Periodic Pension Cost*Net pension expense and post-retirement benefit expenserecognized is comprised of the following:                           **Pension** **Post-Retirement**       **2003** **2004** **2005** **2003** **2004** **2005**                 Service cost $61  $65  $71  $9  $10  $11     Interest cost  24   26   30   6   6   7     Expected return on plan assets  (36)  (38)  (41)  —   —   —     Amortization of prior service cost  3   3   3   1   1   (1)    Recognized actuarial loss  —   —   1   1   1   1                        Net expense $52  $56  $64  $17  $18  $18                    *Assumptions*Significant weighted-average assumptions used in developingpension and post-retirement benefit obligations atDecember 31 include:                     **Post-**  **Pension** **Retirement**       **2004** **2005** **2004** **2005**             Discount rate  5.75%  5.50%  5.75%  5.50%    Composite rate of compensation increase  6.00%  5.00%  6.00%  5.00%Significant weighted-average assumptions used to determine netperiodic pension and post-retirement cost for the years endedDecember 31 include:                           **Pension 2003** **Post-Retirement**       **2003** **2004** **2005** **2003** **2004** **2005**                 Discount rate  6.75%  6.25%  5.75%  6.75%  6.25%  5.75%    Expected long-term return on plan assets  8.50%  8.50%  8.50%  —   —   —     Composite rate of compensation increase  6.00%  6.00%  6.00%  6.00%  6.00%  6.00%Discount rates are selected considering yields available onhigh-quality debt instruments at the measurement date. AtDecember 31, 2005, in addition to reviewing standard bondmarket indices, we specifically considered the timing andamounts of expected future benefit payments and compared thatwith a yield curve developed to reflect yields available onhigh-quality bonds. The discount rate selected as ofDecember 31, 2005 reflects the results of this yield curveanalysis, with appropriate consideration given to plandemographics and benefit design, as well as comparisons to otherpublished indices of long-maturity corporate bond rates.The expected long-term rate of return on assets was derivedusing data from investment managers and reflects the averagerate of earnings expected on the funds invested, or to beinvested, to provide for the benefits included in the projectedbenefit obligations. The Company considers many factors, whichinclude current market information on long-term returns(*e.g.*, long-term bond rates) and current and target assetallocations between asset categories. The target assetallocation is determined based on consultations with externalinvestment advisors.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**Assumed health care cost trend rates at December 31 are asfollows:                   **2004** **2005**       **Pre-** **Post-** **Pre-** **Post-**  **Age 65** **Age 65** **Age 65** **Age 65**             Health care cost trend rate assumed for next year  9.25%  10.00%  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   2012   2012 The assumed dental cost trend rate is 5.0% in 2005 and futureyears. A one percentage-point change in the assumed health carecost trend rate would have the following effects:           **One Percentage-** **One Percentage-**  **Point Increase** **Point Decrease**         Effect on total of service and interest cost components $5  $(4)    Effect on post-retirement benefit obligation  23   (18)*Plan Assets*The Company’s pension plans asset allocations atDecember 31, by asset category are as follows:             **Plan Assets at**  **December 31,**     **2004** **2005**     **Asset Category**             Equity securities  62%  63%     Debt securities  28   27      Cash  —   —      Other  10   10              Total  100%  100%       The investment goal of the plans is to ensure the availabilityof funds for the liabilities as they become due and to meet theobjectives with a prudent risk profile, diversification anddiligent management in accordance with applicable statutory andregulatory constraints. Target allocations for the pension plansare 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% domesticfixed income (range of 25 — 30%), 10% alternativeinvestments (range 5 — 15%) and 0% cash(0 — 2%) range. The alternative investment allocationis comprised of absolute return strategies. Absolute returnstrategies are designed to return cash plus a premium regardlessof market direction and are included in the portfolio fordiversification purposes. Prohibited investments are outlined ineach individual manager’s agreement, and derivatives areallowed if in compliance with the Company’s internalderivative policy. Derivatives may be used as a substitute forphysical investing or to manage duration and currency risk.Performance is reviewed on a monthly basis.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)***Contributions*The Company estimates it will have a minimum funding requirementof $10 for its bargained pension plan in 2006. No contributionsare expected for the nonbargained pension plan orpost-retirement benefit plans in 2006.*Estimated Future Benefit Payments*The following benefit payments, which reflect expected futureservice, as appropriate, are expected to be paid.Post-retirement benefit payments shown reflect estimated paymentamounts, without the Medicare subsidy. The Medicare subsidy forall years shown below totals less than $2 in aggregate.             **Post-**  **Pension** **retirement**  **Benefits** **Benefits**         2006 $47  $1     2007  43   2     2008  46   2     2009  47   3     2010  52   4     2011-2015  294   30 *Defined Contribution Plans*The Company maintains several contributory savings plans thatcover substantially all employees. Contributions made by theCompany and the related costs are determined as a percentage ofcovered employees’ eligible contributions to the plans andtotaled $46 in 2003, $46 in 2004 and $48 in 2005.Current employees who were formerly employed by AT&TWireless participated in a legacy savings plan untilDecember 31, 2005, at which time that plan was merged intothe Company’s existing savings plan. The plan matched apercentage of employee contributions up to certain limits andprovided for a fixed percentage contribution and a discretionaryprofit sharing contribution. A final fixed percentagecontribution and discretionary profit sharing contribution willbe made in 2006 for the 2005 plan year for certain eligibleemployees formerly employed by AT&T Wireless. Contributionsunder the plan totaled $13 from the acquisition date ofOctober 26, 2004 through December 31, 2004, and $79for the year ended December 31, 2005.*Supplemental Retirement Plans*The Company also assumed the liabilities related tononqualified, unfunded supplemental retirement plans for seniormanagers previously employed by AT&T affiliates that werecontributed to the Company. Expenses related to these plans wereless than $2 in each year presented. Liabilities of $8 and $10related to these plans, which include an additional minimumpension liability of $3 and $4, have been included in“Other noncurrent liabilities” in the consolidatedbalance sheets at December 31, 2004 and 2005, respectively.The consolidated balance sheets also include $1 in “Otherintangible assets, net” at December 31, 2004 and 2005related to these plans.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)*****     Deferred CompensationPlan***The Company provides certain management employees with anonqualified, unfunded deferred compensation plan. The planallows eligible participants to defer some of their compensationon a pre-tax basis and receive pre-determined market-basedinterest rates of return. In addition, the plan provides for astated matching contribution by the Company based on apercentage of the compensation deferred. Deferred compensationexpenses for all years presented was not significant. Certainmanagement employees who previously were employees of AT&TWireless are participants in a nonqualified, unfunded deferredcompensation plan, which allows participants to defer a portionof their compensation on a pre-tax basis, with earningscalculated based on valuation funds selected by theparticipants. In addition, the plan provides for contributionsby the Company to participants whose matching and profit sharingcontributions to the qualified 401(k) plan were capped byoperation of the limitations imposed by tax laws. The liabilityof the deferred compensation plans totaled $81 as ofDecember 31, 2005, of which $14 and $67 have been recordedas “Accrued liabilities” and “Other noncurrentliabilities”, respectively, in the consolidated balancesheets.The liabilities associated with the AT&T Wireless deferredcompensation plan, along with other benefit obligations, havebeen funded and are held in a grantor trust, subject to theclaims of the Company’s creditors in the event of theCompany’s insolvency. Upon the acquisition of AT&TWireless by the Company, the trust became irrevocable, and theCompany was required to contribute an amount to the grantortrust equal to the present value of the total amount owed toparticipants in the deferred compensation plan and other benefitobligations. As of December 31, 2005, the grantor trustheld $46 in assets, of which $31 was invested in cashequivalents and short term investments. The remaining $15represented the cash surrender value of Company owned lifeinsurance policies. The assets held by the grantor trust wereincluded in “Other assets” in the consolidated balancesheets. Effective January 1, 2006, former employees ofAT&T Wireless commenced participation in the Company’sdeferred compensation plan. After December 31, 2005, nofuture deferrals will be made into the AT&T Wirelessdeferred compensation plan.***     Long-Term CompensationPlan***The Cingular Wireless Long-Term Compensation Plan, as amended(the Plan), provides for incentive compensation to eligibleparticipants over periods that are two years or longer in theform of performance units, stock appreciation units, restrictedstock units and performance stock units. Awards granted in anyparticular year may be comprised of any combination of awardtype provided for under the Plan, as approved by the planadministrator. All awards are ultimately settled in cash. Grantsare made in April of the award year.Performance units granted prior to 2005 are tied to theachievement of specified financial objectives over a three-yearperformance period. The units have a stated value of $50 (wholedollars). Performance units granted at inception of a three-yearperformance period are payable in the first quarter followingthe performance period, with payouts ranging from 0% to 200% ofthe stated value of the performance units for years prior to2004 and 0% to 150% for 2004 grants. The number of performanceunits granted under the Plan total approximately540,000 units in 2003 and 732,000 units in 2004. As ofDecember 31, 2005, the Company has approximately1.1 million outstanding performance units issued prior to2005. Expense is accrued ratably throughout the performanceperiod based upon management’s estimate of the compensationthat will ultimately be earned under the Plan. As performance ismonitored against the financial objectives that have beenestablished throughout the respective three-year performanceperiods,
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**management may revise its estimate of the compensation that willultimately be earned under the Plan and adjust its accrualaccordingly. For the year ended December 31, 2005, 822,000performance units that were granted in connection with the2002-2004 performance period were paid in the amount of $16.Stock appreciation units granted under the Plan, whichapproximate 3.3 million in total, are indexed to anunderlying share of BellSouth or AT&T common stock. Eachstock appreciation unit has a grant price equal to the closingprice of BellSouth or AT&T common stock, as the case may be,based on the closing New York Stock Exchange price on the grantdate. Stock appreciation units were granted to eligibleemployees on April 1, 2003, 50% of which vest two yearsafter the grant date and the remaining 50% of which vest threeyears following the grant date. Exercised units are paid outbased on the appreciation of the stock price underlying theunits to the exercise date. As of December 31, 2005, theCompany had approximately 2.5 million outstanding stockappreciation units. The units expire 10 years from thegrant date. Compensation cost is recognized over the period suchunits remain outstanding based upon the change in the fair valueof the stock appreciation units at the end of each reportingperiod.Restricted stock units granted under the Plan are indexed to anunderlying share of BellSouth or AT&T common stock. Thevalue of the restricted stock units granted in 2004 and 2005will be paid in cash to holders in March 2007 and March 2008,respectively, based on the average of the closing stock pricesof BellSouth and AT&T common stock for the last ten tradingdays of February 2007 and February 2008. Dividend equivalentswill be paid annually at the same rate as the dividend receivedby all BellSouth and AT&T shareholders, respectively. Thenumber of BellSouth restricted stock units and AT&Trestricted stock units granted in 2004 totaled 339,000 and378,000, respectively, with an aggregate value on the grant dateof approximately $19. During the year ended December 31,2005, the Company granted approximately 730,000 BellSouthrestricted stock units and 797,000 AT&T restricted stockunits with an aggregate value on the grant date of approximately$37. As of December 31, 2005, the Company had approximately2.1 outstanding restricted stock units. The value of therestricted stock units, adjusted for changes in the value of theunderlying BellSouth and AT&T common stock as the case maybe, is recognized as compensation expense over the respectivethree-year vesting periods.Performance stock units granted in 2005 under the Plan, whichapproximate 4.4 million in total, are indexed to anunderlying share of BellSouth or AT&T common stock, based onthe closing New York Stock Exchange price of each stock for the10 trading days preceding the grant date. The value of the unitsis also based upon the Company’s performance relative topre-established performance objectives over the performanceperiod. For the 2005 grant, the performance objectives are basedupon return on capital objectives. Performance stock units weregranted to eligible employees on April 1, 2005, and vestand become payable on March 1, 2008, with the final paymentbased upon the average closing stock prices for the last 10trading days in February 2008 applied to a payout percentageranging from between 0% to 150% as determined by theCompany’s performance against the objectives. Dividendequivalents will be paid annually on each performance stock unitat the same rate as the dividend received by all BellSouth andAT&T shareholders, respectively. A portion of the 2005grants of BellSouth and AT&T performance stock units is tiedto the Company’s achievement of a ranking of first orsecond in several critical industry measures by the end of 2007.The number of performance units paid at the end of theperformance period will range from 0% to 150% based uponattainment of those predetermined objectives, with the value ofeach unit based upon the average closing stock prices for thelast 10 trading days of February 2008. Dividend equivalents onthese units will be paid at the end of the performance periodbased on the same payout percentage that applies to theperformance stock units. As of December 31, 2005, theCompany had approximately 3.8 million outstanding 2005performance stock units. Compensation cost is recognized
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**over the period such units remain outstanding based upon thechange in the fair value of the stock appreciation units at theend of each reporting period.For the years ended December 31, 2004 and 2005, the Companyrecognized compensation expense of $26 and $68, respectively,associated with the Plan. Former AT&T Wireless employees whoremain in the employment of the Company and meet certaineligibility requirements were eligible to participate in thePlan beginning in 2005.**15.****Commitments and Contingencies*****     Leases***The Company enters into capital leases primarily for the use ofcommunications towers. Capital lease obligations are included inNote 8.The Company also enters into operating leases for facilities andequipment used in operations. These leases typically includerenewal options and escalation clauses. In general, ground andcollocation leases have five or ten year initial terms withthree to five renewal terms of five years each. Rental expenseunder operating leases for the years ended December 31,2003, 2004 and 2005 was $512, $699 and $1,646, respectively.The following table summarizes the approximate future minimumrentals under noncancelable operating leases, including renewalsthat are reasonably assured, in effect at December 31, 2005:         2006 $1,263     2007  1,121     2008  1,000     2009  912     2010  838     Thereafter  4,955         Total $10,089     ***     Commitments***The Company has unconditional purchase commitments foradvertising and marketing, computer equipment and services,roaming, long distance services, network equipment and relatedmaintenance and software development and related maintenance.These commitments totaled approximately $1,845 atDecember 31, 2005. Included in this amount are commitmentsof $109 to AT&T, BellSouth and their affiliates fortelecommunications and other services.The Company has commitments with local exchange carriers fordedicated leased lines. The original terms of these commitmentsvary frommonth-to-month to up tofive years. The Company’s related commitment to its primarycarriers as of December 31, 2005, was approximately $347,with remaining payments due in succeeding fiscal years asfollows: $171 in 2006, $108 in 2007, $60 in 2008, and $8 in2009. Included in these amounts are commitments of approximately$161 to AT&T, BellSouth and their affiliates.The Company has commitments to Crown Castle International formonitoring and maintenance services related to its communicationtowers. The Company’s commitment at December 31, 2005was
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)**approximately $421, with payments due in succeeding fiscal yearsas follows: $59 in 2006, $61 in 2007, $65 in 2008, $68 in 2009and $23 in 2010.In connection with the termination of the Company’s GSMFnetwork infrastructure joint venture withT-Mobile (seeNote 2), the Company made a $1,200 commitment to purchase aminimum number of minutes fromT-Mobile. Thiscommitment became effective in January 2005, and approximately$520 of the purchase commitment remained outstanding as ofDecember 31, 2005.***     Contingencies***In a jury trial, Freedom Wireless, Inc. (Freedom) was awardeddamages jointly against the Company and Boston CommunicationsGroup, Inc. (BCGI) in the aggregate amount, includingprejudgment interest, of approximately $165 for alleged pastinfringement of two patents allegedly owned by Freedom and usedby BCGI to provide to the Company and other carriers a prepaidwireless telephone service technology platform. The court alsoenjoined the Company’s continued use of the BCGI platform,but the U.S. Court of Appeals for the Federal Circuitissued a stay of the injunction, and the Company and BCGI areappealing the entire case. BCGI has agreed to indemnify theCompany with respect to the claims asserted in this litigationand has escrowed $41 for that purpose. However, if BCGI were tocommence a bankruptcy proceeding, which is possible, the $41 maynot be available to cover any of the Company’s liability.As a result of this arrangement and based upon theCompany’s anticipated prospects on appeal, the Company doesnot believe the ultimate disposition of this case will have amaterial impact on its operations, cash flows or financialposition beyond the $20 accrued in its consolidated financialstatements.Several class-action lawsuits have been filed against OldAT&T asserting claims under the federal securities laws. Thecomplaints assert claims that Old AT&T made materialmisstatements concerning earnings and financial condition, whileomitting other material information, allegedly to maximizeproceeds from the offering of AT&T Wireless Group trackingstock in April 2000 and/or to avoid paying a cash guarantee inconnection with its MediaOne acquisition. The plaintiffs havedemanded damages in excess of $2,100 related to the offering ofAT&T Wireless Group tracking stock. In connection with thesplit-off of AT&T Wireless from Old AT&T, the SeparationAgreement between AT&T Wireless and Old AT&T providesfor the allocation to AT&T Wireless of 70% of anyliabilities arising out of these actions. Management’sestimation of the potential loss from this and otherpreacquisition liabilities from AT&T Wireless is reflectedin the purchase price allocation to AT&T Wireless’assets acquired and liabilities assumed.The Company is subject to claims arising in the ordinary courseof business involving allegations of personal injury, breach ofcontract, anti-competitive conduct, employment law issues,regulatory matters and other actions. To the extent thatmanagement believes that a loss arising from litigation orregulatory proceedings is probable and can reasonably beestimated, an amount is accrued on the financial statements forthe estimated loss. As additional information becomes available,the potential liability related to the matter is reassessed andthe accruals are revised, if necessary. While complete assurancecannot be given as to the outcome of any legal claims, theCompany believes that any financial impact would not be materialto its business, financial position or cash flows.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***CINGULAR WIRELESS LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(Continued)****16.****Selected Quarterly Financial Data (Unaudited)**The table below sets forth summarized quarterly financial datafor the years ended December 31, 2004 and 2005.                   **First** **Second** **Third** **Fourth****2004** **Quarter** **Quarter** **Quarter** **Quarter(a)**             Total operating revenues $3,967(b) $4,187(b) $4,292(b) $7,119(b)    Operating income (loss)  550   671   460(c)  (153)(d)    Income (loss) before provision for income taxes  221   337   142(c)  (557)(d)    Net income (loss)  215   339   142(c)  (495)(d)                   **First** **Second** **Third** **Fourth****2005** **Quarter** **Quarter** **Quarter** **Quarter**             Total operating revenues $8,229  $8,609  $8,746  $8,849     Operating income  114(e)  504(f)  657(g)  549(h)    Income (loss) before provision for income taxes  (218)(e)  171(f)  326(g)  252(h)    Net income (loss)  (240)(e)  147(f)  222(g)  204(h)     (a)    On October 26, 2004, the Company completed its acquisition    of AT&T Wireless. Operating results for AT&T Wireless    have been included in the consolidated financial statements    subsequent to that date.     (b)    In order to conform with the current year presentation, amounts    reflect reclassifications related to the presentation of gross    receipts taxes in the amount of $25, $32, $35 and $37 for first,    second, third and fourth quarter, respectively. The amounts    presented are greater than those previously reported. The    reclassifications did not have an impact on previously reported    Operating income, Income (loss) before provision for income    taxes or net income (loss).     (c)    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.     (d)    Includes an increase in customer list intangible amortization    associated with purchase accounting adjustments (see    Notes 2 and 4) and $245 of acquisition-related and    integration costs (see Note 12).     (e)    Includes a reduction of $105 for integration planning costs.     (f)    Includes a reduction of $204 for integration planning costs.     (g)    Includes a reduction of $241 for integration planning costs, $96    in hurricane related costs.     (h)    Includes a reduction of $326 for integration planning costs, $20    in hurricane related costs.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 8.     Financial Statementsand Supplemental Data****CONSOLIDATED FINANCIAL STATEMENTS****GSM FACILITIES, LLC***Years ended December 31, 2003 and 2004**with Report of Independent Auditors and Report of IndependentRegistered Public Accounting Firm**for the years ended December 31, 2003 and 2004*
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 8.     Financial Statementsand Supplemental Data****GSM Facilities, LLC****Consolidated Financial Statements****Years ended December 31, 2003 and 2004****Contents**         Report of Independent Auditors — Ernst & Young LLP  127     Report of Independent Registered Public Accounting    Firm — PricewaterhouseCoopers LLP  128     Consolidated Financial Statements        Consolidated Balance Sheets  129     Consolidated Statements of Operations  130     Consolidated Statements of Changes in Members’ Capital  131     Consolidated Statements of Cash Flows  132     Notes to Consolidated Financial Statements  133 
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 8.     Financial Statementsand Supplemental Data****REPORT OF INDEPENDENT AUDITORS**MembersGSM Facilities, LLCWe have audited the accompanying consolidated balance sheet ofGSM Facilities, LLC as of December 31, 2004, and therelated consolidated statements of operations, changes inmembers’ capital, and cash flows for the years endedDecember 31, 2003 and 2004. These financial statements are theresponsibility of the Company’s management. Ourresponsibility is to express an opinion on these financialstatements based on our audits. We did not audit the financialstatements of Omnipoint Facilities Network II, LLC, awholly-owned subsidiary, which statements reflect total assetsof $1.4 billion as of December 31, 2004, and totalrevenues of $125.5 million and $165.6 million for theyears ended December 31, 2003 and 2004, respectively. Thosestatements were audited by other auditors whose report has beenfurnished to us, and our opinion, insofar as it relates to theamounts included for Omnipoint Facilities Network II, LLC,is based solely on the report of the other auditors.We conducted our audits in accordance with auditing standardsgenerally accepted in the United States. Those standards requirethat we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free ofmaterial misstatement. An audit includes consideration ofinternal control over financial reporting as a basis fordesigning audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinionon the effectiveness of the Company’s internal control overfinancial reporting. Accordingly, we express no such opinion. Anaudit also includes examining, on a test basis, evidencesupporting the amounts and disclosures in the financialstatements, assessing the accounting principles used andsignificant estimates made by management and evaluating theoverall financial statement presentation. We believe that ouraudits and the report of other auditors provide a reasonablebasis for our opinion.In our opinion, based on our audits and the report of otherauditors, the financial statements referred to above presentfairly, in all material respects, the consolidated financialposition of GSM Facilities, LLC at December 31, 2004, andthe consolidated results of its operations and its cash flowsfor the years ended December 31, 2003 and 2004, inconformity with accounting principles generally accepted in theUnited States.     /s/ Ernst & Young LLP    Atlanta, GeorgiaMarch 4, 2005
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 8.     Financial Statementsand 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 sheet and the relatedstatements of operations, of member’s equity and of cashflows (not presented separately herein) present fairly, in allmaterial respects, the financial position of OmnipointFacilities Network II, LLC (the “Company”) atDecember 31, 2004, and the results of its operations andits cash flows for the years ended December 31, 2004 and2003 in conformity with accounting principles generally acceptedin the United States of America. These financial statements arethe responsibility of the Company’s management. Ourresponsibility is to express an opinion on these financialstatements based on our audits. We conducted our audits of thesestatements in accordance with the standards of the PublicCompany Accounting Oversight Board (United States). Thosestandards require that we plan and perform the audit to obtainreasonable assurance about whether the financial statements arefree of material misstatement. An audit includes examining, on atest basis, evidence supporting the amounts and disclosures inthe financial statements, assessing the accounting principlesused and significant estimates made by management, andevaluating the overall financial statement presentation. Webelieve that our audits provide a reasonable basis for ouropinion.As described in Notes 1 and 5, the Company’stransactions are substantially with related parties, who are theCompany’s member owners. Additionally, as described inNote 1, the Company relies on its member owners for fundingrequirements.As described in Notes 1 and 6, the Company’s assetswere contributed toT-Mobile USA, Inc.(“T-Mobile”)on January 5, 2005, as part of an agreement betweenT-Mobile and CingularWireless LLC to unwind the operations of their joint venture,GSM Facilities, LLC.     /s/ PricewaterhouseCoopers    LLP    Seattle, WashingtonMarch 3, 2005
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 8.     Financial Statementsand Supplemental Data****GSM FACILITIES, LLC****CONSOLIDATED BALANCE SHEET**        **December 31,**     **2004**     **(Dollars**  **in millions)****Assets**        Current assets:         Cash $—      Due from T-Mobile USA, Inc.   139         Total current assets  139     Property, plant and equipment, net  4,133         Total assets $4,272     **Liabilities and members’ capital**        Current liabilities:         Due to Cingular Wireless LLC $138      Property taxes payable  1         Total current liabilities  139     Capital lease obligations  253     Deferred rent  77         Total liabilities  469     Members’ capital  3,803         Total liabilities and members’ capital $4,272     See accompanying notes.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 8.     Financial Statementsand Supplemental Data****GSM FACILITIES, LLC****CONSOLIDATED STATEMENTS OF OPERATIONS**            **Year Ended**  **December 31,**     **2003** **2004**       **(Dollars in millions)**    Revenues:             Network service revenues $439  $541      Other revenues  12   13            Total revenues  451   554     Operating expenses:             Network services  285   381      Interconnection  167   197      Depreciation and amortization  454   589            Total operating expenses  906   1,167            Operating loss  (455)  (613)    Interest expense  (19)  (20)    Other expense  (5)  (18)           Total other expenses  (24)  (38)           Net loss $(479) $(651)       See accompanying notes.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 8.     Financial Statementsand Supplemental Data****GSM FACILITIES, LLC****CONSOLIDATED STATEMENTS OF CHANGES IN MEMBERS’CAPITAL**            **Year Ended**  **December 31,**     **2003** **2004**       **(Dollars in millions)**    Balance at beginning of year $2,721  $3,315      Adjustment to initial contributions  (41)  (2)     Contributions, net  1,114   1,141      Net loss  (479)  (651)           Balance at end of year $3,315  $3,803        See accompanying notes.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 8.     Financial Statementsand Supplemental Data****GSM FACILITIES, LLC****CONSOLIDATED STATEMENTS OF CASH FLOWS**           **Year Ended**  **December 31,**     **2003** **2004**       **(Dollars in millions)****Operating activities**            Net loss $(479) $(651)    Adjustments to reconcile net loss to net cash used in operating    activities:            Depreciation and amortization  454   589     Loss on disposal of property, plant and equipment  5   18     Interest accretion on capital lease obligations  6   6     Deferred rent  14   38     Changes in operating assets and liabilities:            Due from (to) affiliates, net  (4)  5     Property taxes payable  4   (5)           Net cash used in operating activities  —   — **Investing activities**            Net cash used in investing activities  —   — **Financing activities**            Capital contributions  —   —            Net cash provided by financing activities  —   —            Change in cash  —   —     Cash at beginning of year  —   —            Cash at end of year $—  $—        **Supplemental disclosure**            Interest paid for capital lease obligations $13  $14        **Non-cash investing and financing activities**            Capital contributions of property, plant and equipment $1,114  $1,141            Capital lease additions $19  $—        See accompanying notes.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 8.     Financial Statementsand Supplemental Data****GSM FACILITIES, LLC****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS****(Dollars in Millions)****Years ended December 31, 2003 and 2004****1.****Organization**GSM Facilities, LLC (“GSM Facilities” or the“Company”), a Delaware limited liability company, is ajointly controlled venture of Cingular Wireless LLC(“Cingular”) andT-Mobile USA, Inc.(“T-Mobile”)(collectively the “members”). GSM Facilities wasformed in November 2001 (inception date) and serves as a holdingcompany for Pacific Bell Wireless LLC (“PBW”) andOmnipoint Facilities Network II, LLC (“OFN”). TheCompany allows Cingular andT-Mobile to sharenetwork infrastructures in the Los Angeles andSan Francisco Major Trading Areas (“MTAs”), whichcover most of California and parts of Nevada (“California/Nevada Market”) and the New York Basic Trading Area(“BTA”) (“New York City Market”). BothCingular and T-Mobilehave access to the Company’s network infrastructure, andpursuant to the terms of the Company’s commercialarrangements, are able to provide their respective customersaccess to the network. In July 2002, Cingular began marketingits commercial service in the New York City Market andT-Mobile began servicein the California/ Nevada Market. The Company’s networkoperations are managed by Cingular andT-Mobile through PBWand OFN, respectively, and each member funds their daily cashoperating needs (see further discussion in Note 6).PBW and OFN are economically dependent on Cingular andT-Mobile, respectively,since neither PBW nor OFN have access to funding and do notseparately own spectrum licenses which are essential to theirbusinesses. Accordingly, the Company is economically dependentupon Cingular andT-Mobile to providefunding for the operating expenses and capital expenditures ofthe Company and access to spectrum licenses for theCompany’s network operations. See Note 7 regarding theunwind of GSM Facilities in January 2005.The Company sells only network services to Cingular andT-Mobile. Amountscharged to each member are based on monthly operating expensesand are allocated to each member based on spectrum ownership(see Note 6). Although the networks of the Company areconstructed and operational, Cingular andT-Mobile are requiredon a regular basis to contribute additional capital to GSMFacilities to modify and expand the networks.Management control of the Company is vested in a four-personmanagement committee (the “Management Committee”), towhich each member has the right to appoint two persons (the“managers”). The Management Committee has complete andexclusive discretion and authority in the management and controlof the business and affairs of the Company. A decision by theManagement Committee is made by the unanimous vote of themanagers. The operating agreement provides for certain actionsor decisions by the Management Committee. These include, but arenot limited to, approval of the annual operating and capitalbudget, amendments to the documents concerning formation ordissolution of the Company, and entering into any agreements oramendments that provide for payments by or to the Company inexcess of $5 that is not an arms length transaction or in theordinary course of business. Neither Cingular norT-Mobile has theunilateral ability to control the Company or its actions.Net assets contributed at formation by Cingular andT-Mobile were valued attheir historical costs and had carrying values of approximately$1,119 and $442, respectively. No spectrum licenses werecontributed
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 8.     Financial Statementsand Supplemental Data**to GSM Facilities at the time of, or subsequent to, formation.The capital interests of Cingular andT-Mobile at the time offormation were approximately 70% and 30%, respectively. SeeNote 5 for further discussion of members’ capital. TheCompany is expected to incur non-cash losses due todepreciation, deferred rent and interest expense, which are notreimbursed by the members.The members’ liability is limited as set forth in theLimited Liability Company Agreement (“LLC Agreement”)of GSM Facilities and other applicable law. The Company shallcontinue in existence in perpetuity or until the Company isdissolved in accordance with the LLC Agreement (see Notes 5and 7). Additionally, the LLC Agreement sets forth the basis forcapital contributions, allocations and distributions to themembers including the allocations of profits and losses, specialallocations for tax purposes and distributions of cash flows tothe members.**2.****Summary of Significant Accounting Policies*****     Consolidation and Basis ofPresentation***The consolidated financial statements include the accounts ofthe Company and its wholly-owned subsidiaries. Significantintercompany accounts and transactions have been eliminated inconsolidation.The consolidated financial statements have been prepared on agoing concern basis and do not give effect to the dissolutiontransaction described in Note 7.***     Cash***The members support the cash operating needs of the Company.***     Revenue Recognition***The Company earns network service revenues by providing themembers access to its network infrastructure. Network servicerevenues are based on monthly operating expenses and arerecognized monthly when earned and charged to the members. Theamount charged to each member of GSM Facilities is allocatedbased on each member’s respective ownership of the licensedspectrum in each market. Reimbursable monthly operating expensesare recorded as network service and interconnection expenses andinclude professional services consisting primarily of salariesand wages, site related, facility related and interconnectioncosts. Reimbursable costs also include payments made on thecapital lease obligations.Other revenues primarily consist of revenue earned from thelocal telephone company for land line calls terminated on theCompany’s wireless switches, and are recognized when callsare terminated. These revenues are treated as a reduction to thereimbursable monthly operating expenses described above.***     Property, Plant andEquipment***Property contributed at formation of the Company was recorded atthe net book value of the member who contributed the property.Subsequent to the formation date, the members contributeproperty to the Company at prices that are mutually agreed uponby the members and which approximate fair value. Furthermore,these prices are subject to adjustment from time to time, byunanimous agreement of the members, to reflect general changesin price levels.The Company periodically evaluates the useful lives of itswireless communication systems based on technological and otherindustry changes to determine whether events or changes incircumstances could warrant revisions to useful lives or resultin the impairment of long-lived assets.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 8.     Financial Statementsand Supplemental Data**Assets are depreciated using the straight-line method over theirestimated useful lives. Leasehold improvements, including siteacquisition and other cell site construction improvements, aredepreciated over the shorter of their estimated useful lives orthe term of the related ground or collocation lease. Networkengineering costs incurred on the Company’s behalf by themembers during the construction phase of the Company’swireless network are capitalized as part of property andequipment.***     Asset RetirementObligations***The Company adopted SFAS No. 143, *Accounting forAsset Retirement Obligations* (SFAS 143) effectiveJanuary 1, 2003. This statement requires the Company torecord the fair value of a liability for an asset retirementobligation in the period in which it is incurred and capitalizethat amount as part of the book value of the long-lived asset.Over time, the liability is accreted to its present value eachperiod, and the capitalized cost is depreciated over the usefullife of the related asset. Upon settlement of the liability, theCompany either settles the obligation for its recorded amount orincurs a gain or loss.The Company has certain legal obligations related to networkinfrastructure, principally tower assets, which fall within thescope of SFAS 143. These legal obligations includeobligations to remediate leased land on which the Company’snetwork infrastructure assets are located. The significantassumptions used in estimating the Company’s assetretirement obligations include the following: a probability thateach of the Company’s network infrastructure assets will beremediated at the lessor’s directive, expected settlementdates that coincide with lease expiration dates plus estimatesof lease extensions, remediation costs that are indicative ofwhat third party vendors would charge the Company to remediatethe sites, expected inflation rates that are consistent withhistorical inflation rates, and credit-adjusted risk-free ratesthat approximate the members’ incremental borrowing rates.The adoption of SFAS 143 did not have a material impact onthe Company’s individual financial statement line items orits consolidated financial statements taken as a whole.***     Operating Leases***The Company accounts for its operating leases in accordance withSFAS 13 and FTB 85-3. Rent expense is recorded on astraight-line basis over the initial lease term and thoserenewal periods that are reasonably assured. The differencebetween rent expense and rent paid is recorded as “Deferredrent” in the consolidated balance sheets.***     Taxes***The Company is a limited liability company. Accordingly, incometax items flow through to its members who would be subject totax at their level pursuant to federal and state income taxlaws. The members are responsible for their tax liabilitiesresulting from income earned at the member level. The Company isnot subject to income taxes at the limited liability companylevel. The Company’s obligations for property taxes areaccrued in the “Property tax payable” line item on theconsolidated balance sheets.***     Use of Estimates***The preparation of the accompanying financial statementsrequires management to make estimates and assumptions thataffect the reported amounts of assets and liabilities, revenuesand expenses and the disclosure of contingencies at the date ofthe financial statements. The Company bases its estimates onhistorical experience, where applicable, and other assumptionsthe Company believes are reasonable under the circumstances.Significant estimates include the determination of useful livesof network assets, evaluation of the minimum lease term asdefined in SFAS 13 for operating leases, and accruedreceivables
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 8.     Financial Statementsand Supplemental Data**and payables from members for operating expense and capitalsettlements. Actual results could differ from such estimatesunder different assumptions or conditions.***     Comprehensive Loss***Comprehensive loss for the Company is the same as net loss forall periods presented.**3.****Property, Plant and Equipment**Property, plant and equipment is summarized as follows:             **December 31,**  **Estimated**    **Useful Lives** **2004**       **(in years)**      Buildings and building improvements  10-25  $83     Wireless communication systems  3-15   4,795     Site acquisition costs  Lease term-20   451     Tower capital leases  13-32   229     Construction in progress  —   268               5,826     Less accumulated depreciation      (1,693)           Property, plant and equipment, net     $4,133        The net book value of assets recorded under capital leases was$200 at December 31, 2004. The capital leases relate tocommunication towers (see Note 4). Amortization of assetsrecorded under capital leases is included in depreciationexpense. Capitalized network engineering and overhead costsincurred during the construction phase of the Company’swireless networks for the years ended December 31, 2003 and2004 were $40 and $32, respectively.**4.****Commitments and Contingencies****     *Capital Leases***PBW, which was contributed to the Company in November 2001, hascertain leases related to approximately 640 communicationstowers that are accounted for as capital leases. Under the termsof these agreements, these towers are leased directly from anaffiliate of SBC Communications Inc. (“SBC”), 60%owner of Cingular, which in turn had leased the rights tocertain space on 545 of these towers from SpectraSite, Inc.(“SpectraSite”). In February 2003, a subsidiary ofCingular acquired leasehold interests from SpectraSite in all ofthe space on these 545 towers. For the years endedDecember 31, 2003 and 2004, the Company reimbursed Cingularfor lease payments made on its behalf amounting to $13 and $14,respectively. The Company charges its members for the amounts ofthe monthly lease payments in accordance with the methodologyfor monthly operating expenses as discussed in Note 6.The annual rent is escalated by 5% as of December 14 ofevery year. The term of the lease is unique to each tower andranges from 13 to 32 years. The Company (as lessee) has theright to withdraw from any lease on the tenth anniversary of thelease date and on each five-year anniversary thereafter.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 8.     Financial Statementsand Supplemental Data**Minimum lease payments under capital lease obligations atDecember 31, 2004 are summarized below:         2005 $17     2006  18     2007  19     2008  20     2009  20     Thereafter  765         Total minimum payments  859     Less imputed interest  (494)    Less executory costs  (112)        Total long-term obligations $253     **Operating Leases**The Company has also entered into operating leases for ground,facilities and equipment used in operations. These leasestypically include renewal options and escalation clauses. Ingeneral, lease terms include a five or ten year initial termwith three to five renewal periods with five year terms. Rentalexpense under operating leases for the years endedDecember 31, 2003 and 2004 were $129 and $184,respectively. Included in the 2003 and 2004 amounts are $5 and$8 respectively, related to certain network facilities leasedfrom SBC. The following table summarizes the approximate futureminimum rentals, including renewal terms that are reasonablyassured, under noncancelable operating leases in effect atDecember 31, 2004:         2005 $146     2006  149     2007  151     2008  153     2009  156     Thereafter  1,793         Total $2,548     ***Litigation***The Company is not currently a party to any pending litigation,which, if decided adversely to the Company, would have amaterial adverse effect on the business, financial condition,results of operations or cash flows of the Company.**5.****Members’ Capital**Cingular and T-Mobileagreed to jointly fund capital expenditures of GSM Facilities.Contributions to GSM Facilities are generally determined by theproportionate share of the annual capital expenditurerequirements based on each member’s incremental growth ofnetwork usage. Such contributions are accounted for as anincrease to the members’ capital of GSM Facilities. The LLCAgreement also provides for periodic capital settlements thatcan either increase or decrease each member’s capitalaccount. In addition to the periodic capital settlements,Cingular made additional contributions of $225 to
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 8.     Financial Statementsand Supplemental Data**GSM Facilities in both 2002 and 2003 on behalf ofT-Mobile as requiredunder the terms of the LLC Agreement. No member is entitled towithdraw any part of its capital contributions without unanimousapproval by the Management Committee. The total economicownership interest of GSM Facilities as of December 31,2004 is approximately 60% for Cingular and 40% forT-Mobile.GSM Facilities may be dissolved by its members under a number ofcircumstances. Dissolution may occur at any time as a result ofthe unanimous decision by its members; automatically upon thebankruptcy of one of its members; upon the occurrence of certainmaterial breaches of the venture agreements; upon a decree ofjudicial dissolution; or in the event of an acquisitiontransaction (as defined) involving one of the members, at theelection of the member that is a party to the acquisitiontransaction. See Note 7.**6.****Related Party Transactions**The monthly operating expenses of the Company, excludingdeferred rent, are charged to Cingular andT-Mobile based on eachmember’s proportionate share of the licensed spectrum ineach market. During all periods presented, Cingular andT-Mobile heldweighted-average spectrum of 53% and 47%, respectively, in theCalifornia/ Nevada Market, and 25% and 75%, respectively, in theNew York City Market. Through a separate reciprocal home roamingagreement, Cingular andT-Mobile charge eachother for usage that is not in the same proportion as thespectrum-based allocations.The consolidated statements of operations include networkservice revenues from the members as follows:           **Year Ended**  **December 31,**     **2003** **2004**         Network service revenues:            Cingular $199  $241     T-Mobile  240   300          $439  $541        Concurrent with its formation, GSM Facilities entered intooperating agreements with Cingular andT-Mobile for them tomanage and maintain the network assets of the California/ NevadaMarket and the New York City Market, respectively. The Companypurchases all services from the members and has no directemployees. Direct operating costs incurred by the members onbehalf of the Company include salaries and wages, site related,facility related and interconnection costs.Pursuant to the terms of the operating agreements, servicesprovided during the years ended December 31, 2003 and 2004by Cingular to the Company for network services and localinterconnection charges were $313 and $397, respectively, andare included in operating expenses in the consolidatedstatements of operations. Pursuant to the terms of the operatingagreements, services provided during the years endedDecember 31, 2003 and 2004 byT-Mobile to the Companyfor network services and local interconnection charges were $139and $181, respectively, and are included in operating expensesin the consolidated statements of operations.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 8.     Financial Statementsand Supplemental Data**At December 31, 2004, the consolidated balance sheetsinclude the following amounts due (to)/from the members:        **December 31,**  **2004**       Due (to)/from T-Mobile USA, Inc.:         Capital settlements $125      Operating expense settlements, net  14       $139         Due (to)/from Cingular Wireless LLC:         Capital settlements $(125)     Operating expense settlements, net  (13)      $(138)    The capital settlements presented in the table above representamounts due to/from the members for the estimated fourth quartersettlement in 2004. As the Company has been dissolved as ofJanuary 5, 2005 (see Note 7), the final settlementwill be paid directly between the members.**7.****Subsequent Event**On February 17, 2004, Cingular entered into an Agreementand Plan of Merger to acquire AT&T Wireless Services, Inc.(“AT&T Wireless”). In May 2004, the membersunanimously agreed, subject to regulatory and other customaryclosing conditions and the closing of the acquisition ofAT&T Wireless, to dissolve GSM Facilities, distribute therelated network assets and exchange certain spectrum. Theclosing of Cingular’s acquisition of AT&T Wirelessoccurred on October 26, 2004. The closing of thedissolution of GSM Facilities, and certain of the othertransactions described below, occurred on January 5, 2005.In dissolution, the New York City Market network assets weredistributed toT-Mobile, and theCalifornia/ Nevada Market network assets were distributed toCingular. The net book value of the New York City Market andCalifornia/ Nevada Market network assets at December 31,2004 were $1,375 and $2,758, respectively. All capital leaseobligations related to California/ Nevada Market network assetswere also distributed to Cingular. Following thesedistributions, a determination was made of each member’scapital account deficit or surplus, and a settlement madebetween the members. On January 5, 2005, Cingular paid $200in settlement of its capital account deficit.In dissolution, each member was to receive 50% of the spectrumused in the operation of GSM Facilities. As discussed inNote 1, spectrum licenses were not contributed to GSMFacilities upon its formation in 2001 but rather were subject toa separate agreement governing their use. In connection with thedissolution, the members are contractually required to exchangecertain spectrum. The Company expects the spectrum licenses tobe exchanged on January 1, 2007. Cingular will receive10 MHz of spectrum in the New York City Market and2.5 MHz of spectrum in the Las Vegas, Nevada BTA fromT-Mobile andT-Mobile will receive5 MHz of spectrum from Cingular in each of nine BTAs inCalifornia/ Nevada Market, the largest of which isSan Diego.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 8.     Financial Statementsand Supplemental Data**Immediately following the dissolution of GSM Facilities,Cingular sold its ownership of the California/Nevada Marketnetwork assets toT-Mobile forapproximately $2,500 in cash. Cingular retains the right toutilize the California/Nevada Market and New York City Marketnetworks during a four year transition period and has guaranteedto purchase a minimum number of minutes over this term amountingto $1,200. The members retain all their respective customers ineach market. Cingular also sold 10 MHz of spectrum toT-Mobile in each of theSan Francisco, Sacramento and Las Vegas BTAs for $180.T-Mobile has the optionto purchase an additional 10 MHz of spectrum in the LosAngeles and San Diego BTAs from Cingular at the end of twoyears, under certain circumstances.
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**CINGULAR WIRELESS LLC** **PART II***(Dollars in Millions)***Item 8.     Financial Statementsand Supplemental Data****Schedule II — Valuation and QualifyingAccounts****Allowance for Doubtful Accounts**                     **Col.A** **Col. B** **Col. C** **Col. C** **Col. D** **Col. E**             **Balance at** **Charged to** **Charged to**   **Balance**  **Beginning** **Costs and** **Other**   **at End****Description** **of Period** **Expenses** **Accounts** **Deductions** **of Period**               Year 2005 $348   570   (48)(a)  (584)(b) $286     Year 2004 $130   423   (66)(a)  (139)(b) $348     Year 2003 $163   259   (24)(a)  (268)(b) $130      (a)    Allowance for affiliate accounts receivable included in Due to    affiliates, net, on the balance sheets at December 31,    2003, 2004 and 2005.     (b)    Includes amounts written off as uncollectible, net of recoveries.**Item 9.****Changes in and Disagreements with Accountants on    Accounting and Financial Disclosure**None.**Item 9A.****Controls and Procedures**(a) We maintain disclosure controls and procedures that aredesigned to ensure that information required to be disclosed byus in the reports filed under the Securities Exchange Act of1934, as amended (Exchange Act) is recorded, processed,summarized and reported within the time periods specified in theSEC’s rules and forms.As of December 31, 2005, management, including ourPresident and Chief Executive Officer and Chief FinancialOfficer, completed its evaluation of the effectiveness of thedesign and operation of our disclosure controls and procedures.Based on the foregoing, our President and Chief ExecutiveOfficer and our Chief Financial Officer concluded that wemaintain disclosure controls and procedures that are effectivein providing reasonable assurance that information required tobe disclosed in our reports under the Exchange Act is recorded,processed, summarized and reported within the time periodsspecified in the SEC’s rules and forms, and that suchinformation is accumulated and communicated to management,including our President and Chief Executive Officer and ourChief Financial Officer, as appropriate, to allow timelydecisions regarding required disclosure. Management necessarilyapplied its judgment in assessing the costs and benefits of suchcontrols and procedures, which, by their nature, can provideonly reasonable assurance regarding management’s controlobjectives. We also have investments in certain unconsolidatedentities. As we do not control or manage these entities, ourdisclosure controls and procedures with respect to such entitiesare necessarily more limited than those we maintain with respectto our consolidated subsidiaries.b) During the evaluation referred to in Item 9A.(a)above, we have identified no change in our internal control overfinancial reporting that occurred during our last fiscal quarterthat has materially affected, or is reasonably likely tomaterially affect, our internal control over financial reporting.**Item 9B.****Other Information**None.
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**CINGULAR WIRELESS LLC** **PART III****Item 10.****Directors and Executive Officers of the Registrant**The following table presents information regarding persons whoserve as directors of our Manager and executive officers of usand our Manager as of February 24, 2006       **Name** **Age** **Position**         Richard A. Anderson  47      Class B Director    Richard G. Lindner  51      Class B Director (Chairman of Audit Committee)    Mark L. Feidler  49      Class B Director (Chairman of Nominating and Compensation    Committee)    W. Patrick Shannon  43      Class B Director (Member of Audit Committee)    Randall L. Stephenson  45      Class B Director (Member of Nominating and Compensation    Committee)    Rayford Wilkins, Jr.   54      Chairman of the Board and Class B Director    Stanley T. Sigman  58      President and Chief Executive Officer    Ralph de la Vega  54      Chief Operating Officer    Peter A. Ritcher  45      Chief Financial Officer    F. Thaddeus Arroyo  42      Chief Information Officer    Rickford D. Bradley  54      Executive Vice President — Human Resources    Joaquin R. Carbonell, III  53      Executive Vice President and General Counsel    Sean P. Foley  47      Vice President — Treasury and Corporate Development    William W. Hague  50      Executive Vice President — International    Gregory T. Hall  50      Vice President and Controller    Paul R. Roth  47      Executive Vice President — External Affairs and Public    Relations    Carol L. Tacker  57      Vice President and Assistant General Counsel, Corporate    Secretary and Chief Compliance Officer***Directors***Richard A. Anderson, *Class B Director, Cingular WirelessCorporation.* Richard Anderson is vice chairman andpresident, business markets of BellSouth and has served invarious positions with BellSouth since 1981. He was elected tothe board of directors of our Manager in February 2003.Richard G. Lindner, *Class B Director, Cingular WirelessCorporation.* Richard Lindner is the senior executive vicepresident and chief financial officer of AT&T, and hasserved as our chief financial officer, and as senior vicepresident and chief operating officer of SBC Wireless. Prior toOctober 1999, he served as president and chief executive officerof Southwestern Bell Wireless, where he was in charge of allwireless operations in five states. Mr. Lindner held avariety of senior management positions since joining SBC in1986, including vice president and chief financial officer forSouthwestern Bell Telephone Company in 1996. He was elected tothe board of directors of our Manager in June 2004.Mr. Lindner is also a director of Sabre HoldingsCorporation.Mark L. Feidler, *Class B Director, Cingular WirelessCorporation.* Mark Feidler is president and chief operatingofficer for BellSouth Corporation and has served in variouspositions with BellSouth and
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**CINGULAR WIRELESS LLC** **PART III****Item 10.****Directors and Executive Officers of the Registrant**Cingular since 1991. From 2001 through 2003, he served as thechief operating officer of Cingular. He was elected to the boardof directors of our Manager in June 2004. He is also a directorof BellSouthW. Patrick Shannon, *Class B Director, CingularWireless Corporation.* Patrick Shannon is chief financialofficer for BellSouth Corporation and had previously served assenior vice president — finance and controller sinceJanuary 2005. He has served in various high level managementpositions since joining BellSouth in 1997. He was elected to theboard of directors of our Manager in December 2005.Randall L. Stephenson, *Class B Director, CingularWireless Corporation.* Randall Stephenson is chief operatingofficer of AT&T and has served AT&T, and itspredecessors, in high level managerial positions for more thanthe past five years. He was elected to the board of directors ofour Manager in July 2001 and served as its chairman fromFebruary 2003 to June 2004.Rayford Wilkins, Jr., *Chairman of the Board andClass B Director, Cingular Wireless Corporation.*Rayford Wilkins is group president — International,Yellow Pages and Sterling Commerce and has served AT&T andits predecessors in various capacities since 1974. He waselected to the board of directors of our Manager in November2002. He also serves on the board of directors of H&R Block,Inc.*Audit Committee Financial Experts.* We have an auditcommittee comprised of Messrs. Lindner and Shannon. Theboard of directors of Cingular Wireless Corporation, ourManager, has determined that both audit committee membersqualify as audit committee financial experts under theSarbanes-Oxley Act of 2002 and the rules of the SEC. Because oftheir affiliations with BellSouth and AT&T, respectively,they are not independent of management.***Executive Officers***Executive officers are elected by the board of directors of ourManager and serve until their successors have been duly electedand qualified or until their resignation or removal. Ourexecutive officers also constitute the executive officers of ourManager, each holding the same office with both entities.Stanley T. Sigman, *President and Chief Executive Officer.*Stanley Sigman was elected to the board of directors of ourManager in October 2000 and resigned that position and becameour president and chief executive officer in November 2002.Previously, he had served as group president and chief operatingofficer of SBC from April 2001 until November 2002. Prior tothat, he was president and chief executive officer ofSouthwestern Bell Telephone Company and served as grouppresident of SBC National Operations since 1999.Ralph de la Vega, *Chief Operating Officer.* Ralph de laVega came to Cingular from BellSouth, where he most recentlyserved as president — BellSouth Latin America from2002 to 2003. Prior to that, he was BellSouth’s presidentof Broadband and Internet Services from 2000 to 2001.Mr. de la Vega came to BellSouth in 1974.Peter A. Ritcher, *Chief Financial Officer.* Peter Ritchercame to Cingular from SBC Communications, Inc., where he wasvice president-corporate finance, responsible for all financialplanning and wireline financial operations from November 2001 toMay 2004. Previously from September 2000 to November 2001, heserved as vice president and controller with responsibility forall financial reporting, accounting policy, financialoperations, regulatory finance and credit and collections forSBC. He joined SBC Communications Inc. in 1987 and has served innumerous financial positions with it and its subsidiaries.F. Thaddeus Arroyo, *Chief Information Officer.*Thaddeus Arroyo came to Cingular from Sabre Corporation, wherehe served as senior vice president of product marketing anddevelopment since June 2000. He also served as senior vicepresident of information technology services in 1999, vicepresident of
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**CINGULAR WIRELESS LLC** **PART III****Item 10.****Directors and Executive Officers of the Registrant****global outsourcing from 1997 to 1999, vice president ofstrategic infrastructure and in a number of other positions forSabre from 1992 to 1997.**Rickford D. Bradley, *Executive Vice President —Human Resources.* Rickford Bradley came to Cingular from SBCTelecommunications, Inc., where he served as president ofinterconnection services from 1999 to 2001. He has held avariety of senior and executive positions in sales, networkservices and corporate development. He also served as presidentof public communications in 1999 for SBC. Prior to SBC’smerger with Pacific Telesis in 1997, Mr. Bradley served asvice president and general manager of operator services atPacific Bell.Joaquin R. Carbonell III, *Executive Vice President andGeneral Counsel.* Joaquin Carbonell came to Cingular fromBellSouth Enterprises, Inc., where he served as vice presidentand group counsel and was responsible for the legal operationsof wireless services since 1997. Prior to that, he heldpositions as president of BellSouth International for LatinAmerica from 1992 to 1994 and then as president of BellSouthEurope from 1994 to 1997, overseeing operations in thoseregions. He joined BellSouth in 1980 as an attorney with theSouthern Bell Telephone & Telegraph Company.Sean P. Foley, *Vice President — Treasury/ CorporateDevelopment.* Sean Foley came to Cingular in 2000 fromU S WEST, where he was senior vicepresident — treasurer from 1998 to 2000. In that rolehe was responsible for all financing activities, as well asasset strategy.William W. Hague, *Executive Vice President —International.* William Hague came to Cingular in 2004 fromAT&T Wireless, where he served as executive vice presidentfor international roaming and strategy since 2002. He has alsoserved as executive vice president for corporate strategy andacquisitions from 1995 to 2002, where he was responsible for allthat company’s merger and acquisition work, joint venturesand roaming arrangements.Gregory T. Hall, *Vice President and Controller.* GregoryHall came to Cingular from SBC Wireless, Inc., where he servedas vice president and chief financial officer from October 1999until the formation of Cingular. He joined SBC in 1984 and hasserved in numerous financial and corporate development positionswith it and its subsidiaries.Paul R. Roth, *Executive Vice President — ExternalAffairs and Public Relations.* Paul Roth came to Cingular in2004 from SBC Communications, Inc., where he was president ofSBC’s Midwest consumer business since December 2001,responsible for all consumer markets sales and service.Previously, from March 2001 to November 2001, he served aspresident and chief executive officer of Prodigy CommunicationsCorporation. Mr. Roth has held a variety of sales andmarketing positions since joining Southwestern Bell Wireless in1986.Carol L. Tacker, *Vice President and Assistant GeneralCounsel, Corporate Secretary and Chief Compliance Officer.*Carol Tacker came to Cingular from SBC Wireless where she servedas vice president — general counsel since 1996. Priorto that, Ms. Tacker served in several positions ofincreasing responsibility, including general attorney ofSouthwestern Bell Yellow Pages and general attorney ofSouthwestern Bell Mobile Systems. Ms. Tacker joined SBC in1984 as an attorney with Southwestern Bell Telephone Company.There are no family relationships among any of the above-nameddirectors of our Manager or executive officers or anyarrangement or understanding between any of these directors andexecutive officers and any other person pursuant to which anysuch director or officer was selected. See Item 13,“Certain Relationships and Related Transactions —Stockholders’ Agreement” for more informationregarding the agreement between the stockholders of our Managerwith respect to the election of the directors of our Manager.
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**CINGULAR WIRELESS LLC** **PART III****Item 11.****Executive Compensation****General**Except for Mr. Arroyo, the executive officers whosecompensation is described in this section (the namedexecutive officers) came to us from AT&T or BellSouth. Allof our named executive officers, except for Mr. Ritcher,whose compensation arrangement is described below, participatein our compensation and benefit plans. In addition, and with theexception of Mr. Arroyo, the named executive officers haveand will continue to have interests in selected compensation andbenefit plans of AT&T or BellSouth in which theyparticipated prior to the time they became our employees or inconnection with joining us. As such, all executive compensationpaid by us, AT&T or BellSouth to our named executiveofficers is included beginning the year they become Cingularofficers. Messrs. Sigman, Arroyo and Carbonell became namedexecutive officers prior to 2003. Mr. de la Vega becameChief Operating Officer in December 2003.In May 2004, Mr. Ritcher was elected, and since then hasserved exclusively, as our chief financial officer; however, heremains an employee of AT&T. Mr. Ritcher’scompensation is determined and paid by AT&T, givingconsideration to advice and consultation from us, and he willcontinue to be eligible for participation in all employeebenefit plans, policies, programs and arrangements of whichAT&T is a participating employer. In lieu of the AT&Tshort-term and long-term compensation plan awards, AT&T paysshort-term and long-term compensation amounts consistent withwhat we provide to similarly situated employees. We reimburseAT&T for all internal and external costs and expensesincurred by AT&T that are associated with the provision ofservices by Mr. Ritcher to or on our behalf, including(i) all compensation costs, except for long-termcompensation grants prior to May 16, 2004; (ii) allassociated taxes; (iii) all benefit plan expenses;(iv) all business expenses incurred; (v) allrelocation costs and expenses; and (vi) all internal andexternal expenses incurred by AT&T for relatedadministration of this arrangement.**Nominating and Compensation Committee Interlocks and InsiderParticipation**Executive compensation is established by our Manager throughaction of its board of directors upon the recommendation of ourNominating and Compensation Committee. All of the directors ofour Manager are executive officers of AT&T or BellSouth. TheNominating and Compensation Committee consists of one memberfrom each of AT&T and BellSouth. None of the directors ofour Manager is compensated by us or our Manager, nor do any ofthem have any material financial or business transactions orrelationships with, or any indebtedness to, us or our Manager.During 2005, none of our executive officers served on thecompensation committee (or equivalent), or the board ofdirectors, of another entity whose executive officer(s) servedon our Board of Directors or our Nominating and CompensationCommittee.**Components of Compensation**There are three primary components of the compensation structurefor the senior management team: salary; a short-term incentiveaward paid in cash; and a long-term incentive award. The valuesof the short-term and long-term incentive awards depend largelyon the degree of success in attaining company performanceobjectives.*Salary.* Our executive salary structure is intended to becompetitive with the external market. We evaluate this structureby comparing it to a group of similar sized companies inwireless communications, telecommunications and other generalindustries. The salaries earned by the named executive officersfor 2005 are shown in the “Salary” column of theSummary Compensation Table.*Short-Term Incentive Award.* The executive group iseligible to receive annual cash payments under the CingularExecutive Short-Term Incentive Award Plan. The awards for 2005performance were based upon performance as measured againstpre-established performance objectives, as well as individualcontributions
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**CINGULAR WIRELESS LLC** **PART III****Item 11.****Executive Compensation**to the success of the business. Awards can range from zero to apre-established maximum performance percentage times a targetamount. These payments were made in 2006 and are shown under the“Bonus” column of the Summary Compensation Table.*Long-Term Incentive Award.* We provide long-termincentives under the Cingular Long-Term Compensation Plan. Theselong-term incentives may include performance units, performancestock units, stock appreciation units (SAUs) and restrictedstock units, in each case payable in cash. Named executives alsomay have performance shares, restricted stock and options topurchase common stock of AT&T or BellSouth which weregranted prior to becoming executives of Cingular. AT&T andBellSouth have stated that they do not intend to grant stockoptions or awards to our officers or employees in the future andthat our officers and employees will no longer participate intheir long-term incentive plans, except to the extent of futurepayments for past performance periods and grants and except inthe case of Mr. Ritcher, who continues to participate inAT&T’s benefit plans. Long-term compensation awards for2005, as described in the tables below consisted of the grantsof AT&T performance stock units, BellSouth performance stockunits, AT&T restricted stock units and BellSouth restrictedstock units. The awards of restricted stock units for each namedexecutive officer are reported in the Summary Compensation Tableand are valued using the respective closing stock prices on thegrant date. The performance stock units that were granted toeach named executive officer in 2005 are shown in the tabletitled “Long-Term Compensation Plans-Awards in Last FiscalYear”. Payout amounts reflected in the “LTIPPayouts” column of the Summary Compensation Table were paidin 2005 by Cingular or from the respective predecessorcompanies’ long-term incentive plans.***SUMMARY COMPENSATION TABLE***                                            **Long-Term Compensation**                 **Annual Compensation** **Awards** **Payouts**               **Other** **Restricted** **Securities**        **Annual** **Stock** **Underlying** **LTIP** **All Other**    **Salary** **Bonus(A)** **Compensation** **Award(s)** **Options/SAUs** **Payouts** **Compensation****Name and Principal Position** **Year** **($)** **($)** **(B) ($)** **(C) ($)** **(#)** **($)** **(D) ($)**                     Stanley T. Sigman  2005  $1,114,135  $2,492,500  $962,236  $6,774,783   0  $1,184,991  $169,796      President/ CEO  2004   967,692   1,323,750   760,001   1,704,581   —   863,528   195,997     2003   900,000   1,876,000   686,565   —   322,889   567,521   130,608     Ralph de la Vega  2005   619,808   744,000   96,135   827,972   0   275,850   81,301      Chief Operating Officer  2004   495,192   750,000   14,983   767,076   —   —   61,707     2003   410,319   716,000   11,212   2,855,646   122,624   —   36,211     Peter A. Ritcher(E)  2005   473,250   433,800   82,095   374,806   11,102   116,125   22,884      Chief Financial Officer  2004   347,507   363,105   45,980   129,559   6,414   69,412   91,194     F. Thaddeus Arroyo  2005   419,202   325,650   34,484   275,240   0   276,560   10,080      Chief Information Officer  2004   363,692   454,900   8,819   254,632   —   —   6,150     2003   346,500   332,250   7,590   —   47,542   —   10,368     Joaquin R. Carbonell III  2005   420,750   324,170   35,558   306,032   0   304,160   76,603      Executive Vice President  2004   341,977   343,500   7,064   270,012   —   —   52,521      and General Counsel  2003   314,277   286,000   74,927   —   50,413   —   129,845      (A)    The 2005 amounts were earned under the Cingular Executive    Short-Term Incentive Plan. The amounts reported for    Mr. Sigman include an incentive payment of $160,000 paid by    us in 2003, 2004 and 2005 and $675,000 paid by us in 2005, all    of which were paid under his employment agreements. Mr. de    la Vega’s 2003 amount was earned under the comparable    BellSouth executive short-term incentive plan. The amounts    reported for Mr. Arroyo include special bonuses of $100,000    for 2004 and $42,000 ($150,000 less gross up in 2002) for 2003    as part of his employment agreement.
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**CINGULAR WIRELESS LLC** **PART III****Item 11.****Executive Compensation**    (B)    The amount reported for Mr. Sigman for 2005 includes    $521,984 for tax reimbursements, $206,734 for payment of    dividend equivalents on performance stock units and $233,518 for    perquisites, including $204,152 for the personal use of    corporate aircraft. We require that Mr. Sigman use the    company aircraft for all travel. The 2005 amount disclosed for    personal use of corporate aircraft is based on the incremental    cost to us of such use. No other named executive officer had    perquisites and other personal benefits that, in the aggregate,    exceeded reporting thresholds with respect to the applicable    year. The amounts reported for Mr. de la Vega for 2005    include $14,743 for tax reimbursements and $81,392 for payment    of dividend equivalents on performance stock units. The amount    reported for Mr. Ritcher for 2005 includes $10,564 for tax    reimbursements and $71,531 for payment of dividend equivalents    on performance shares and performance stock units. The amount    reported for Mr. Arroyo includes $7,426 for tax    reimbursements and $27,058 for payment of dividend equivalents    on performance stock units. The amount reported for    Mr. Carbonell includes $5,476 for tax reimbursement and    $30,082 for payment of dividend equivalents on performance stock    units.     (C)    This item shows the grant date value of AT&T restricted    stock units and BellSouth restricted stock units awarded by us    to each named executive officer. These restricted stock units    will vest in full on March 1, 2008 and will be payable in    cash based on the average of the closing stock prices for the    last 10 trading days of February 2008 for the respective common    stock. Mr. Sigman also received a grant of 128,866 AT&T    restricted stock units and 74,432 BellSouth restricted stock    units under the provisions of his employment agreement described    below. These restricted stock units will vest in full    December 31, 2007 and will be payable in cash based on the    closing stock prices on December 31, 2007. At    December 31, 2005, the aggregate numbers and values of all    unvested restricted stock units, including, for Mr. de la    Vega, shares of restricted stock granted to him by BellSouth    prior becoming our Chief Operating Officer, held by each named    executive officer were as follows:               **Number of** **Number of** **Value at**  **AT&T** **BellSouth** **December 31,**  **Units** **Units** **2005**           Stanley T. Sigman  200,817   139,690  $8,703,607     Ralph de la Vega  90,536   75,268   4,256,989     Peter A. Ritcher  10,535   9,602   518,216     F. Thaddeus Arroyo  10,963   9,943   537,939     Joaquin R. Carbonell III  11,924   10,818   585,187      These values are based on the closing prices of $24.49 and    $27.10 of AT&T and BellSouth common stock, respectively, on    December 30, 2005. Dividend equivalents will be paid at the    same rates as the dividend rate received by all AT&T and    BellSouth shareholders, respectively.     (D)    Included in this category for 2005 are amounts for    Messrs. Sigman, de la Vega, Ritcher, Arroyo and Carbonell    for: (a) above-market interest on voluntary salary    deferrals under nonqualified deferred compensation plans of    $41,583, $7,641, $0, $0 and $19,967, respectively;    (b) employer matching contributions made to certain    employee benefit plans of $124,775, $73,659, $22,646, $10,080    and $54,058, respectively; and (c) life insurance premiums    paid by the Company of, $3,198, $0, $238, $0 and $2,578,    respectively.     (E)    All amounts for Mr. Ritcher are paid by AT&T, as    described in “General”.
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**CINGULAR WIRELESS LLC** **PART III****Item 11.****Executive Compensation*****Grants of Stock Options***The following table contains information concerning the grantsof stock options during 2005. No named executive officers otherthan Mr. Ritcher were granted options in 2005. AT&Tutilized the Black-Scholes option pricing model to develop thetheoretical values set forth under the “Grant Date PresentValue” column. The named executive officer realizes valuefrom the stock options only to the extent that the price of theunderlying stock on the date the officer exercises the optionsexceeds the price of the stock on the grant date. Consequently,there is no assurance the value realized by an officer will beat or near the value estimated below.**Option Grants in Last Fiscal Year**                             **Individual Grants**             **Number of** **% of Total**        **Securities** **Options**   **Grant Date**    **Underlying** **Granted to** **Exercise or**   **Present**    **Options/SARs** **Employees in** **Base Price** **Expiration** **Value****Name**   **Granted (#)** **Fiscal Year(A)** **($/Share)** **Date** **($)**                 Stanley T. Sigman      —   —   —   —   —     Ralph de la Vega      —   —   —   —   —     Peter A. Ritcher  A   6,281   0.22% $23.92   1/30/2015  $21,450    B   4,281   0.17% $24.01   6/15/2015  $16,218     F. Thaddeus Arroyo      —   —   —   —   —     Joaquin R. Carbonell III      —   —   —   —   —      (A)    Percentage is based on total options granted to AT&T    employees in 2005.Stock options were issued with an exercise price equal to thefair market value of stock on the date of issuance. The term ofeach option is 10 years (unless otherwise shortened orforfeited due to termination of employment). The expected lifeof the option grants A and B is 8 years.In calculating the value of the options, we assumed an interestrate of 4.17% from grant A and 4.13% for grant B. These interestrates represent the interest rate on U.S. treasurysecurities on the date of grant with maturity datescorresponding to that of the expected option lives. We alsoassumed an annual dividend yield of 5.39% for grant A and 5.37%for grant B.Expected volatility was calculated for each grant using dailystock prices for the period prior to the grant datecorresponding with the expected option life, resulting involatility of 22.63% for grant A and 22.29% for grant B.
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**CINGULAR WIRELESS LLC** **PART III****Item 11.****Executive Compensation*****Option/ SAU Exercises and Holdings***The following table provides information for the named executiveofficers regarding exercises of AT&T and BellSouth optionsand SAUs during 2005. All SAUs are settled in cash.Additionally, the table provides the values of unexercisedoptions and SAUs held on December 31, 2005 that are basedon the fair market value of the shares of common stock ofAT&T and BellSouth.**Aggregated Option/ SAU Exercises in Last Fiscal Year****and FY-End Option/ SAU Values****2005**                               **Number of Unexercised** **Value of Unexercised**      **Options/SAUs at** **In-the-Money Options/SAUs**  **Shares** **Value** **Fiscal Year-End (#)** **at Fiscal Year-End (#)(A)**  **Acquired on** **Realized**    **Name** **Exercise (#)** **($)** **Exercisable(B)** **Unexercisable(C)** **Exercisable(B)** **Unexercisable(C)**                 Stanley T. Sigman  —  $—   1,121,574   154,355  $596,376  $596,376     Ralph de la Vega  11,050   64,031   364,201   145,200   114,588   634,568     Peter A. Ritcher  5,378   1,312   114,778   18,721   2,287   6,275     F. Thaddeus Arroyo  23,770   64,089   65,000   23,772   —   91,847     Joaquin R. Carbonell III  44,606   170,884   155,956   25,207   —   97,392      (A)    “Value of Unexercised    In-the-Money    Options” figures are based on the year-end    December 30, 2005, AT&T common stock price of $24.49    and the year-end December 30, 2005, BellSouth common stock    price of $27.10.     (B)    Represents AT&T or BellSouth stock options and SAUs.     (C)    Represents AT&T or BellSouth SAUs, except for amounts    related to Messrs. de la Vega and Ritcher, which represent    unexercised BellSouth and AT&T stock options, respectively.
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**CINGULAR WIRELESS LLC** **PART III****Item 11.****Executive Compensation*****Long-Term Compensation Plans***The following table lists the performance units granted in 2005to the named executive officers under the Cingular Long-TermCompensation Plan (the LTCP). The LTCP provides for incentivecompensation based upon the achievement of certain performanceobjectives over performance periods that are two years or longer.**Long-Term Incentive Plans — Awards in Last FiscalYear**                                     **Performance** **Estimated Future Payouts**      **Number of** **or Other** **Under Non-Stock Price-Based Plans**      **Shares, Units** **Period Until**        **or Other** **Maturation or** **Threshhold** **Target** **Maximum****Name**     **Rights** **Payout** **(#)** **(#)** **(#)**                   Stanley T. Sigman  BellSouth PSU   (A)  68,462   2005-2007   0   68,462   102,693    AT&T PSU   (A)  74,726   2005-2007   0   74,726   112,089    BellSouth PSU   (B)  48,962   2005-2007   0   48,962   73,443    AT&T PSU   (B)  53,442   2005-2007   0   53,442   80,163     Ralph de la Vega  BellSouth PSU   (A)  31,943   2005-2007   0   31,943   47,915    AT&T PSU   (A)  34,866   2005-2007   0   34,866   52,299    BellSouth PSU   (B)  34,273   2005-2007   0   34,273   51,410    AT&T PSU   (B)  37,409   2005-2007   0   37,409   56,114     Peter A. Ritcher  BellSouth PSU   (A)  14,460   2005-2007   0   14,460   21,690    AT&T PSU   (A)  15,783   2005-2007   0   15,783   23,675    BellSouth PSU   (B)  21,712   2005-2007   0   21,712   32,568    AT&T PSU   (B)  23,698   2005-2007   0   23,698   35,547     F. Thaddeus Arroyo  BellSouth PSU   (A)  10,619   2005-2007   0   10,619   15,929    AT&T PSU   (A)  11,591   2005-2007   0   11,591   17,387    BellSouth PSU   (B)  15,944   2005-2007   0   15,944   23,916    AT&T PSU   (B)  17,403   2005-2007   0   17,403   26,105     Joaquin R. Carbonell III  BellSouth PSU   (A)  11,806   2005-2007   0   11,806   17,709    AT&T PSU   (A)  12,886   2005-2007   0   12,886   19,329    BellSouth PSU   (B)  17,727   2005-2007   0   17,727   26,591    AT&T PSU   (B)  19,349   2005-2007   0   19,349   29,024      (A)    Named executive officers were granted AT&T performance stock    units and BellSouth performance stock units. The value of each    unit was based on the average of the closing stock prices for    the last 10 trading days of March, 2005. The determination    of the actual award earned is based on the achievement of    pre-established return on capital objectives for Cingular during    the three-year performance period from 2005 to 2007. The actual    number of performance units that can be earned at the end of the    performance period ranges from 0 percent to    150 percent of a participant’s performance unit award.    The value of each unit at the time of payout will be based on    the average of the closing stock prices for the last 10 trading    days of February 2008.     (B)    Named executive officers were granted AT&T performance stock    units and BellSouth performance stock units. The value of each    unit was based on the average of the closing stock prices for    the last 10 trading days of March, 2005. The determination    of the actual award earned is based on Cingular being ranked    number one or number two in designated industry measures in    2007. The actual number of performance units that can be earned    at the end of the performance period ranges from 0 percent    to 150 percent of a participant’s performance unit    award. Dividend equivalents will be paid at the end of the    performance period based on the same award percentage as    applicable to the performance stock
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**CINGULAR WIRELESS LLC** **PART III****Item 11.****Executive Compensation**    units. The value of each unit at the time of payout will be    based on the average of the closing stock prices for the last 10    trading days of February 2008.***Pension and Other Retirement Benefits***We sponsor noncontributory pension plans that cover almost allof our employees. The largest of these plans is the CingularWireless Pension Plan, which covers the named executiveofficers, except for Mr. Ritcher, and certain otheremployees. Participants in the Cingular Wireless Pension Planare generally entitled to receive the greater of two pensionbenefits: the cash balance benefit or a grandfather benefitbased on prior plan formulae. The grandfather benefit for formerAT&T employees was frozen as of May 31, 2002. Thegrandfather benefit for former BellSouth employees was frozeneffective December 31, 2005. A participant’s cashbalance benefit is equal to the balance in theparticipant’s cash balance account, which is made up of(a) an opening account balance as of the date of ourformation; and (b) monthly transition credits resultingfrom their respective cash balance conversions ending onMay 31, 2002 for former AT&T employees andDecember 31, 2006 for former BellSouth employees;(c) subsequent monthly basic benefit credits equal to 5% ofthe participant’s compensation (generally, base pay,commissions and group incentive awards, but not individualawards); and (d) monthly interest credits on theparticipant’s cash balance account. The interest rate forcash balance credits is equal to the published average annualyield for the 30-yearTreasury Bond, reset quarterly as of the middle of the precedingquarter. All benefits under the Cingular Wireless Pension Planare subject to Internal Revenue Code limitations on pay used tocalculate pensions.Certain executives are also eligible for nonqualified pensionbenefits from us, AT&T or BellSouth. These nonqualifiedbenefits are generally offset by benefits earned under each ofthe qualified pension plans. The nonqualified pension plansapplicable for the named executives are described below:AT&T offers nonqualified pension plans for officers,including Messrs. Sigman and Ritcher, and certain seniormanagers, which are neither funded by nor a part of any otherqualified pension plan of AT&T. As a result of changes inthe tax laws, the original plan, known as the SupplementalRetirement Income Plan (AT&T SRIP) was frozen, effectiveDecember 31, 2004; future benefits are earned under the2005 Supplemental Employee Retirement Plan (AT&T SERP).Separate distribution elections (annuity or lump sum) are madeby the participants for benefits accrued before 2005 (under theAT&T SRIP) and for benefits accrued on and after 2005 (underthe AT&T SERP). Elections for the portion of the pensionthat accrues on and after 2005, however, must be made when theofficer first participates in the Plan. Under the nonqualifiedpension plans, a target annual retirement benefit is establishedfor officers and certain senior managers, stated as a percentageof their annual salaries and annual incentive bonuses averagedover a 36-month periodout of their final120-month period ofservice. The percentage is increased by .715% for each year ofactual service in excess of, or decreased by 1.43% for each yearof actual service below, 30 years of service. Benefits arenot offset by Social Security benefits.BellSouth offers a nonqualified pension plan, known as theBellSouth Supplemental Executive Retirement Plan (BLS SERP), forofficers, including Messrs. de la Vega and Carbonell andcertain senior managers, which is neither funded by nor a partof any other qualified pension plan of BellSouth. The planbenefit is based on years of service and is stated as apercentage of compensation averaged over a five-year periodpreceding retirement. Service accrual rates are based on yearsof service as follows: 2% per year up to 20 years;1.5% per year from 20 to 30 years; and, 1% for yearsin excess of 30. Benefits under the BLS SERP formula are payableannually for life. Benefits are offset by a Social SecurityPrimary Insurance Benefit payable at age 65.
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**CINGULAR WIRELESS LLC** **PART III****Item 11.****Executive Compensation**The table below shows the estimated annual pension annuitybenefits payable to participants in the plans indicated belowfrom the combined qualified and nonqualified pension plans basedon years of service and average annual compensation:**Pension Plan Table****($000)**                                     **Years of Service****Covered**    **Compensation** **Plan** **10** **15** **20** **25** **30** **35** **40**                 **$****500**      BLS SERP $78  $128  $178  $216  $253  $278  $303         AT&T SERP/ SRIP (55%)  132   168   204   239   275   293   311         AT&T SERP/ SRIP (65%)  182   218   254   289   325   343   361  **750**      BLS SERP  128   203   278   334   391   428   466         AT&T SERP/ SRIP (55%)  198   252   305   359   413   439   466         AT&T SERP/ SRIP (65%)  273   327   380   434   488   514   541  **1,000**      BLS SERP  178   278   378   453   528   578   628         AT&T SERP/ SRIP (55%)  264   336   407   479   550   586   622         AT&T SERP/ SRIP (65%)  364   436   507   579   650   686   722  **1,250**      BLS SERP  228   353   478   572   666   728   791         AT&T SERP/ SRIP (55%)  330   419   509   598   688   732   777         AT&T SERP/ SRIP (65%)  455   544   634   723   813   857   902  **1,500**      BLS SERP  278   428   578   691   803   878   953         AT&T SERP/ SRIP (55%)  396   503   611   718   825   879   932         AT&T SERP/ SRIP (65%)  546   653   761   868   975   1,029   1,082  **1,750**      BLS SERP  328   503   678   809   941   1,028   1,116         AT&T SERP/ SRIP (55%)  462   587   712   837   963   1,025   1,088         AT&T SERP/ SRIP (65%)  637   762   887   1,012   1,138   1,200   1,263  **2,000**      BLS SERP  378   578   778   928   1,078   1,178   1,278         AT&T SERP/ SRIP (55%)  528   671   814   957   1,100   1,172   1,243         AT&T SERP/ SRIP (65%)  728   871   1,014   1,157   1,300   1,372   1,443  **2,500**      BLS SERP  478   728   978   1,166   1,353   1,478   1,603         AT&T SERP/ SRIP (55%)  660   839   1,018   1,196   1,375   1,464   1,554         AT&T SERP/ SRIP (65%)  910   1,089   1,268   1,446   1,625   1,714   1,804  **3,000**      BLS SERP  578   878   1,178   1,403   1,628   1,778   1,928         AT&T SERP/ SRIP (55%)  792   1,007   1,221   1,436   1,650   1,757   1,865         AT&T SERP/ SRIP (65%)  1,092   1,307   1,521   1,736   1,950   2,057   2,165 
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**CINGULAR WIRELESS LLC** **PART III****Item 11.****Executive Compensation**The table below presents the following information for eachnamed executive officer: applicable SERP/ SRIP; average annualcompensation as of December 31, 2005 based on the terms ofthe applicable SERP/ SRIP; and completed years of service as ofDecember 31, 2005. Since the covered compensation is basedon the provisions of the applicable nonqualified plan, theamount below will differ from the salary and bonus amounts setforth in the Summary Compensation Table.                 **Covered**      **Compensation** **Years of****Name** **Plan** **($000)** **Service**           Stanley T. Sigman  AT&T SERP/SRIP (65% target)  $2,833.1   40     Ralph de la Vega  BLS SERP   811.3   31     Peter A. Ritcher  AT&T SERP/SRIP (55% target)   704.3   18     F. Thaddeus Arroyo  N/A   NA   4     Joaquin R. Carbonell III  BLS SERP   529.9   25 Mr. Arroyo is not a participant in a nonqualified pensionplan. Based on four years of service as of December 31,2005, Mr. Arroyo’s annual pension benefit, based on aretirement date of December 31, 2005, commencing atage 65 from the Cingular Wireless Pension Plan, is $18,665.***Agreements with Management****Stanley T. Sigman.* In connection with his election asPresident and Chief Executive Officer of the Company,Mr. Sigman and Cingular agreed to the compensationarrangement summarized below:•     base pay of not less than $900,000 per year; •     short-term award target of not less than $1,144,000 per    year, which shall be paid subject to achievement of performance    criteria; •     long-term award target of not less than $5,000,000 per    year, which shall be paid subject to achievement of performance    criteria of the LTCP Plan; •     a retention benefit valued on date of grant at $5,000,000 and    payable in cash, unless terminated for cause or by retirement or    resignation, at the end of three years (subject to accelerated    vesting in the case of death, permanent disability or    termination by us other than for cause), in an amount giving    effect to the weighted (at 60/40) stock price performance of,    and dividends on, AT&T and BellSouth common stock over the    vesting period; •     annual incentive cash payments on November 24, 2002, 2003    and 2004 of $160,000 if then employed by us; •     continued pension benefits to be accrued under the SBC    SRIP; and •     Georgia and federal income tax gross-ups on designated    compensation payments.Effective June 1, 2005, we entered into a new agreementwith Mr. Sigman providing for the following compensationarrangement:•     base pay of not less than $1,105,000 per year; •     annual short-term grants with award targets of 125% of base pay,    which shall be subject to achievement of performance objectives;
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**CINGULAR WIRELESS LLC** **PART III****Item 11.****Executive Compensation**•     annual long-term grants with award targets of 475% of base pay    on grant date, which may be subject to achievement of    performance objectives; •     a retention benefit valued on June 1, 2005 date of grant at    $5,000,000 and payable in cash, unless terminated for cause or    by retirement or resignation, on December 31, 2007 (subject    to accelerated vesting in the case of death, permanent    disability or termination by us other than for cause ), in an    amount giving effect to the weighted (at 60/40) stock price    performance of, and dividends on, AT&T and BellSouth common    stock over the vesting period; •     annual incentive cash payments of $675,000 on or about    June 1, 2005 and $160,000 on or about each of    November 24, 2005, 2006 and 2007 if then employed by the    Company; •     continued pension benefits to be accrued under the 2005 SBC    Supplemental Employee Retirement Plan; and •     Georgia and federal income tax gross-ups on designated    compensation payments.*Thaddeus Arroyo.* Pursuant to a retention and separationpayment agreement, we have agreed to pay Mr. Arroyo:•     a one-time retention payment of $400,000 if Mr. Arroyo    remains employed with us with a satisfactory performance rating    through September 2006 (with a pro-rated amount payable if his    employment terminates prior to September 2006 due to death,    permanent disability or involuntary termination, other than for    cause); •     a separation payment of one times salary plus standard bonus,    payable if involuntarily terminated, other than for    cause; and •     payment of a pro-rated bonus for the year of termination based    upon actual company results and payable at the normal bonus    payment date, unless involuntarily terminated for cause.In February 2005, Mr. Arroyo entered into a separateretention agreement with us, whereby we agreed to payMr. Arroyo $150,000 if he remains employed with us with asatisfactory performance rating through September 2007 (with apro-rated amount payable if his employment terminates prior toSeptember 2007 due to death, permanent disability or involuntarytermination, other than for cause).*Ralph de la Vega.* In connection with his joining ourcompany, Mr. de la Vega and we agreed to the compensationpackage summarized below:•     2004 base pay of $500,000; •     2004 short-term award target of $500,000; •     2004 long-term award target of $2,250,000; and •     a retention benefit valued on the date of grant at $2,500,000 in    the form of restricted stock units which shall vest 100% on    December 31, 2006, giving effect to the weighted (at 60/40)    average stock price performance of, and dividends on, AT&T    and BellSouth common stock over the vesting period.In addition, Mr. de la Vega and BellSouth entered into atransition agreement providing certain retention incentives andmaking modifications to certain benefits to which he wasentitled as a BellSouth executive officer. The agreementprovides for:•     the payment by BellSouth to him of two times base pay in effect    on the date of termination from us plus two times the standard    bonus award for the year in which the termination occurs, if we    initiate
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**CINGULAR WIRELESS LLC** **PART III****Item 11.****Executive Compensation**    termination other than for cause, or if Mr. de la Vega    initiates termination from us for good reason and BellSouth does    not offer him a comparable position at BellSouth to which to    return; and •     continued participation in the BellSouth SERP. BellSouth will    continue to accrue benefits under the SERP recognizing service    and compensation attributable to the period of service with us.**Item 12.****Security Ownership of Certain Beneficial Owners and    Management and Related Stockholder Matters**AT&T and BellSouth, through their respective wholly-ownedsubsidiaries, own approximately 60% and 40% ownership interestsrespectively in us, and Cingular Wireless Corporation, ourManager, owns a *de minimis*ownership interest in us. Ourdirectors and officers do not own any interest in us.**Item 13.****Certain Relationships and Related Transactions**We have provided below a summary of the significant agreementsthat we have executed with AT&T or BellSouth, or one oftheir respective subsidiaries, or that relate to our formation.These descriptions are not complete and only summarize thematerial terms of the agreements.**Our Limited Liability Company Agreement**Our limited liability company agreement governs our managementand operations. Its parties are certain AT&T and BellSouthentities and our Manager. Their economic interests in us arerepresented by units.Our Manager has two authorized classes of common stock:•     Class A common stock, par value $0.01 per share, which    entitles the holder to one vote per share and generally has    voting rights identical to those of holders of Class B    common stock, except for the low-vote structure and the    differences in the right to vote for directors described    below; and •     Class B common stock, par value $0.01 per share, which    entitles its holder to ten votes for each underlying unit in us.Of the two outstanding shares of Class B common stock, oneshare is held by AT&T and the other share is held byBellSouth. Our Manager also has six billion shares ofClass A common stock authorized, none of which arecurrently outstanding. In addition, our Manager has one billionauthorized shares of preferred stock, issuable in one or moreseries. However, no shares are currently outstanding.Our structure gives AT&T and BellSouth equal control of ourmanagement and ownership interests of approximately 60% and 40%,respectively. It also gives us the flexibility to raise equityin the capital markets. If we wish to raise new equity, ourManager would need to obtain the consent of its strategic reviewcommittee, then sell shares of its Class A common stock andcontribute the net proceeds to us in return for units. Ourparents may only sell their equity interests as described in“— Transfers of LLC Units and Common Stock”below.*Our Management.* Our management is vested in CingularWireless Corporation, whose powers are established by the termsof its amended and restated certificate of incorporation, whichwe refer to as the “Manager’s charter”. As ourManager, that corporation has control over all of our affairsand decision-making. The same persons are officers of both usand our Manager, but our Manager has no employees of its own.Operational and administrative decisions and theday-to-day managementof our affairs are accomplished at Cingular and at the variousoperating entities that we own. Substantially all importantdecisions must be approved by the Manager’s strategicreview committee, which is currently comprised of all of itsClass B directors. At all times, as long as any shares ofClass B common stock remain
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**CINGULAR WIRELESS LLC** **PART III****Item 13.****Certain Relationships and Related Transactions**outstanding, the Class B common stockholders will beentitled to control the Manager’s board of directors, evenif only one of AT&T or BellSouth holds Class B commonstock. Substantially all important decisions made by our Managerare subject to the affirmative vote of at least two-thirds ofthe strategic review committee of its board of directors. Thesedecisions include approval of a business plan, appointment ofexecutive officers, capital calls, declaration of dividends,purchases of new technology, public stock offerings, changes tothe Manager’s certificate of incorporation and by-laws andmany others. AT&T and BellSouth each may elect three membersto the board of directors so long as each remains a holder ofClass B common stock of the Manager and holds 10% or moreof the sum of:          (1) the total number of our units outstanding (excluding    units owned by our Manager); and           (2) shares of our Manager’s Class A and    Class B common stock outstanding (excluding any treasury    shares).Deadlocks between the Class B directors of AT&T andthose of BellSouth will be resolved by the chief executiveofficers of AT&T and BellSouth. In the event of anunderwritten public offering of shares of Class A commonstock, our Manager’s board will appoint one Class Adirector as an additional member of the strategic reviewcommittee. AT&T and BellSouth have agreed in astockholders’ agreement to vote their Class B commonstock in favor of any matter approved by the strategic reviewcommittee.*Scope of our Business.* The limited liability companyagreement and our Manager’s charter generally limit ourbusiness to the provision in the 50 U.S. states, theDistrict of Columbia, the U.S. Virgin Islands, theCommonwealth of Puerto Rico and 13 Caribbean countries of mobilewireless voice and data services that use licensed radiofrequencies for the provision of cellular service, PCS service,wireless data service, satellite services and related services.In Puerto Rico and the U.S. Virgin Islands, we may alsoconduct paging services.*Network Preferences.* When we or our subsidiaries requirenetwork services of wireline carriers to provide service in theincumbent service territories of AT&T and BellSouth, we andour subsidiaries must use their network services, except wherewe and our subsidiaries would be materially disadvantaged to doso and then must use such network services to the maximum extentpossible without being disadvantaged. For purposes of thelimited liability company agreement, the incumbent serviceterritory of AT&T consists of the states of California,Nevada, Connecticut, Texas, Missouri, Arkansas, Oklahoma,Kansas, Illinois, Indiana, Ohio, Michigan and Wisconsin, and theincumbent service territory of BellSouth consists of the statesof Georgia, Florida, South Carolina, North Carolina, Alabama,Mississippi, Kentucky, Louisiana and Tennessee.In addition, AT&T and BellSouth may not market or sellmobile wireless products and/or services other than ours.However, this prohibition does not prevent them from:•     continuing to market and sell wireless services other than ours    to customers who were joint billing subscribers as of    October 2, 2000; •     allowing our competitors to bundle and sell AT&T’s and    BellSouth’s products and services together with such    competitors’ wireless services; •     marketing and selling fixed wireless voice and data products    other than ours; and •     marketing and selling wireless services other than ours in    geographic areas designated by the FCC, which include the entire    U.S., except for PCS service offered in the Gulf of Mexico, in    which: •     neither we nor our subsidiaries provide wireless services    pursuant to FCC licenses; or •     Salmon does not provide wireless services pursuant to FCC    licenses.
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**CINGULAR WIRELESS LLC** **PART III****Item 13.****Certain Relationships and Related Transactions***Competition.* AT&T and BellSouth are generally notpermitted to compete with us regarding mobile wireless productsand/or services, as described under the “exclusivity”provisions above. However, AT&T and BellSouth may competewith each other and us to the extent described above and withrespect to resale and packaging of wireless services. AT&Tand BellSouth may also act as our agents, and may resell ourservices, as described below under “— WirelessAgency Agreements” and “— ResaleAgreements”.*Volume Discounts.* We must use reasonable best efforts tooffer to AT&T and BellSouth any vendor volume discountsavailable to us, and AT&T and BellSouth must use reasonablebest efforts to offer to us or to our subsidiaries or Salmon,any vendor or volume discounts available to them.*Change of Control.* If a company with a mobile wirelessbusiness acquires control of AT&T or BellSouth and aregulatory conflict results, that company must dispose of anyresulting overlapping properties, which may include its interestin us, and we would have no obligation to make a disposition ofany of our properties or to take any other action to eliminateany resulting overlaps or regulatory conflicts. A change ofcontrol, (as defined), of AT&T or BellSouth would occur ifany person becomes the beneficial owner of voting securities ofthat company resulting in the acquiring person having the powerto cast at least 50% of the votes for the election of directorsof that company.*Divestiture of Wireless Business.* In general, AT&T,BellSouth and their subsidiaries must divest any domestic mobilewireless businesses they own, other than wireless intereststhat, because of insubstantial economic or passive managementinterests, are considered *de minimis.*Divestitures would be carried out as follows:•     if AT&T or BellSouth owns and controls a mobile wireless    business and has the power to control its disposition, it would    be required to offer the wireless business to us before selling    to a third party. •     if AT&T or BellSouth owns a mobile wireless business but    cannot offer it to us because it cannot control its disposition,    it would be required to dispose of the wireless business or    reduce its ownership and/or management interest therein, such    that the wireless business becomes a *de minimis*interest. •     if the ownership of the mobile wireless business requires a    disposition of licenses under applicable law that would be    material to AT&T or BellSouth, then that company may, but is    not required to, sell the wireless business to us but may    instead transfer all of its units and our Manager’s    Class A common stock through a spin-off or split-off or    sale to third parties in accordance with the procedures    described under “Transfers of LLC Units and Common    Stock” below.*Distributions.* Except as described below, distributionsby us require the consent of all of our members and no member isentitled to withdraw any portion of its capital account withoutthe consent of the other members. We will make periodicdistributions to our members on a pro rata basis in an amountequal to the greatest of each member’s taxes (calculatedusing the highest corporate marginal tax rate as if we were acorporation for U.S. federal, state and local income taxpurposes) as a result of our operations due for the fiscalquarter for which estimated income tax payments are due, dividedby the member’s percentage interests in us. In addition, wewill distribute to our members at the end of a fiscal year, on apro rata basis in accordance with each member’s percentageinterest in us, an amount equal to the excess of the greater of:•     50% of our “excess cash”; or •     the greatest of each member’s taxes (calculated using the    highest corporate marginal tax rate as if we were a corporation    for U.S. federal, state and local income tax purposes)    resulting from allocations of tax items from us for the    preceding fiscal year, divided by the member’s percentage    interest in us over the amount of tax distributions made with    respect to that fiscal year.
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**CINGULAR WIRELESS LLC** **PART III****Item 13.****Certain Relationships and Related Transactions**“Excess cash” is defined as, with respect to anyfiscal year, the excess, if any, of:(A) the sum of (x) the amount of all cash received byus (including any amounts allocated to our subsidiaries) duringsuch fiscal year and (y) any cash and cash equivalents heldby us at the start of such fiscal year, in excess of(B) the sum of (x) all cash amounts paid or payable(without duplication) in such fiscal year incurred by us(including any amounts allocated to our subsidiaries) and(y) the net amount of cash needs for us set forth in ourbudget for the following fiscal year.The amount of the tax distributions to be made regarding thefederal estimated income tax payment on September 15 of a yearwill be adjusted for the amount by which the total of thequarterly tax distributions for the prior fiscal year was lessthan or exceeded the amount that would have been distributed hadour members’ taxes been calculated using our final resultsfor the prior fiscal year, as opposed to using estimates.In application, the distribution provisions of the revolvingcredit agreement with AT&T and BellSouth described under“Revolving Credit Agreement” have the effect ofsuperseding the foregoing distribution provisions.*Exchange of LLC Units and Transfer and Conversion of Sharesof Class B Common Stock.* Each of our members mayexchange any or all of its units for our Manager’sClass A common stock on a one-for-one basis. Our Manager isrequired to acquire a number of our units corresponding to anyshares of Class A common stock it issues.If either AT&T or BellSouth wishes to transfer its shares ofour Manager’s Class B common stock, except forpermitted transfers described under “— Transfersof LLC Units and Common Stock” below, it is required toconvert those shares of Class B common stock into shares ofour Manager’s Class A common stock. Shares ofClass B common stock may be converted into shares ofClass A common stock at any time. If either AT&T orBellSouth reduces its total ownership to less than 10% of the“total outstanding shares,” that party must convertits remaining shares of Class B common stock intoClass A common stock, and it loses its Class Bdirectors on our Manager’s board and strategic reviewcommittee. Because of the economic equivalence with units, thelimited liability company agreement bases several of itsprovisions on the concept of “total outstandingshares,” which means the sum of the total number of sharesof our Manager’s Class A and Class B common stockissued and outstanding and the total number of our unitsoutstanding, excluding units owned by our Manager.*Transfers of LLC Units and Common Stock.* The limitedliability company agreement generally prohibits transfers ofunits or common stock of our Manager (collectively referred toas “securities”), except transfers with the consent ofeach member owning more than 10% of the total outstandingshares. However, there are several exceptions to this generalrule for transfers by AT&T and BellSouth, including:•     transfers of our Manager’s Class A common stock in a    broad public offering of Class A common stock underwritten    on a firm commitment basis, including transfers in any offering; •     each member may transfer our Manager’s Class A common    stock or the stock of a company that owns units or the stock of    a company that owns Class A common stock in our Manager in    up to two spin-offs or split- offs. A “spin-off” would    be a wide, SEC-registered distribution of units or Class A    common stock of our Manager or of all of the equity securities    of a subsidiary of a member that owns units or Class A    common stock of our Manager to all of the common stockholders of    a series or class of the member or its ultimate parent. In a    “split-off”, each such common stockholder would be    offered the right to exchange common stock of our members or    their ultimate parent entities for our Manager’s
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**CINGULAR WIRELESS LLC** **PART III****Item 13.****Certain Relationships and Related Transactions**    Class A common stock or the stock of a subsidiary of the    member that owns units or our Manager’s Class A common    stock, which exchange offer would also be widely distributed and    registered with the SEC. Spin-offs and split- offs can involve    the sale of all or a portion of a member’s    interest; and •     a sale of all, but not less than all, of a member’s units    and any of our Manager’s common stock to third parties,    subject to, among other things, a right of first refusal and a    requirement that the third-party or its ultimate parent become a    party to the limited liability company agreement and the    stockholders’ agreement in the place of the selling party.    Upon any transfer of all of AT&T’s or BellSouth’s    units, the transferring member will have no continuing rights or    obligations under the limited liability company agreement, but    will remain bound by the terms of any ancillary operating    agreements it entered into in accordance with the terms of those    agreements.*Withdrawal of a Member.* A member automatically ceases tobe a member of us when it no longer owns any units.*Preemptive Rights.* If our Manager issues shares of itsClass A common stock solely for cash, except for issuancesin a public offering underwritten on a firm commitment basis orpursuant to the exercise of options granted under employeebenefit plans, each member has the right to purchase from us anumber of units such that its percentage ownership in us willnot be reduced.*Incentive Plans.* If our Manager issues any Class Acommon stock pursuant to any employee benefit plan of ourManager, we will issue one unit to our Manager for each shareissued by it and we will receive the net proceeds for the sharesthat were received by our Manager.*Tower Transactions.* We lease or pay a monthly fee for themaintenance of the tower or the use of the tower space on whichmany of our antennas are located, including the antennas,microwave dishes and other wireless equipment, together with theland surrounding the tower, instead of owning or controlling thetower. Before contributing their wireless properties to us,AT&T and BellSouth each entered into separate transactionswith different tower management companies to lease on along-term basis many of their communications towers and relatedassets to SpectraSite Inc. (formerly SpectraSite Holdings, Inc.)in the case of AT&T, and Crown Castle International, in thecase of BellSouth. In connection with these transactions,AT&T and BellSouth entered into master leases to subleaseportions of their towers in exchange for a monthly rental orsite maintenance payment and/or reserved antenna space on thetowers. Crown Castle is generally required to build, manage,maintain and remarket, including to competitors, the remainingspace on future towers on which our antennas will be located.With respect to the towers to be built in the markets whereSpectraSite is managing sites, we plan to hire different towercompanies to perform these functions.**Stockholders’ Agreement**There are six Class B directors of our Manager. Under astockholders’ agreement, each of AT&T and BellSouth hasagreed to vote shares beneficially owned by it for:•     the election of the Class B directors nominated by each of    AT&T and BellSouth, for so long as each such party is then    entitled to have its nominees elected as Class B directors; •     following any such issuance of Class A common stock of our    Manager, the election of one independent director to our    Manager’s board of directors selected by AT&T and the    election of one independent director selected by BellSouth, for    so long as each such party is then entitled to have its nominees    elected as Class B directors; •     the removal of any Class B director as determined by the    stockholder who nominated that director;
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**CINGULAR WIRELESS LLC** **PART III****Item 13.****Certain Relationships and Related Transactions**•     the appointment of a new Class B director upon any vacancy    of a Class B directorship on the board or any committee of    our Manager’s board, as determined by the stockholder who    nominated the Class B director whose departure caused the    vacancy; and •     approval of any matter submitted to the stockholders of our    Manager that has been previously approved by the strategic    review committee of our Manager.In the event of the issuance of Class A common stock of ourManager, each of AT&T and BellSouth shall be entitled tonominate one person to serve as an independent director. Ifthere is an initial public offering of Class A commonstock, Class A stockholders will be entitled to elect threeindependent directors. AT&T, BellSouth and our Manager haveagreed that one of the independent directors shall be nominatedby AT&T and one by BellSouth. Within 12 monthsfollowing the closing of such offering, a third independentdirector will be nominated by our Manager’s board ofdirectors. Our Manager, which is also a party to the agreement,has agreed that it will use its best efforts to cause theholders of Class A common stock to vote in favor of thenomination as independent directors on the board of the nomineesof AT&T and BellSouth. In addition, AT&T and BellSouthhave agreed that the chairman of our Manager’s board shall,for so long as AT&T and BellSouth together hold at least 50%of the total voting power, other than for the election ofdirectors, be elected from among the Class B directorsnominated by AT&T and BellSouth.The agreement contains transfer restrictions with respect to thetransfer of a stockholder’s Class A and Class Bcommon stock substantially similar to those set forth aboveunder “— Our Limited Liability CompanyAgreement — Transfers of LLC Units and CommonStock”. Conversions of Class B common stock intoClass A common stock are not considered transfers. In theevent of a transfer, the stockholders have agreed that the partyto whom the shares are transferred will become a party to thestockholders’ agreement. In addition, no stockholder maytransfer any of its Class B common stock unless ittransfers all of the shares it holds to the same person.**Marketing, New Products and Services, Marks and IntellectualProperty**As specified in more detail under separate agreements that aredescribed below, our limited liability company agreement setsout the following principles:•     we have primary responsibility for marketing our products and    services; •     AT&T and BellSouth may market our products and services as    agents and resellers, as further specified in the agency and    resale agreements that are described below; •     with respect to intellectual property other than the AT&T    and BellSouth marks, consisting of patents, trade secrets,    copyrights, technology and know-how, we have entered into    intellectual property agreements with AT&T and BellSouth and    certain of their subsidiaries; •     we may create new products and services and associated    intellectual property rights; and •     we have agreed that we may in our sole discretion grant each of    AT&T and BellSouth licenses in the intellectual property    that we are developing or that we acquire after October 2,    2000.**Intellectual Property**With respect to intellectual property consisting of patents,trademarks, trade secrets, copyrights, technology and know-how,we have entered into intellectual property agreements withAT&T and BellSouth and certain of their subsidiaries, asdescribed in more detail below. Moreover, we may create newproducts and services and we will own the associatedintellectual property rights.
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**CINGULAR WIRELESS LLC** **PART III****Item 13.****Certain Relationships and Related Transactions***Intellectual Property License Agreements.* We have grantedAT&T and BellSouth perpetual, royalty-free, non-exclusivelicenses to use certain technology, the ownership of which wastransferred by BellSouth and AT&T to us at the contributionclosing, and to sell any products that are covered by thattechnology and certain other rights necessary for our parents toutilize the technology they transferred to us in order tocontinue their business without interruption. Similarly,AT&T and BellSouth have each granted us a perpetual,royalty-free, non-exclusive license to certain copyrights,technology and know-how, which were not transferred to us at thecontribution closing but are used in the operation of ourbusiness, as well as patents and patent applications.*Trademark License Agreements.* AT&T and BellSouth havegranted us royalty-free, non-exclusive licenses to use theirrespective trademarks as part of Cingular’s tag line inadvertising our products and services.*Intellectual Property Licensing Support Agreement.* Wehave entered into a Master Agreement with BellSouth in which wewill assist each other in licensing our respective intellectualproperty and technology to third parties. Each transaction willcomprise a separate agreement under this Master Agreement andwill include an allocation of monetary consideration receivedfrom such transactions.**Wireless Agency Agreements**Under our wireless agency agreements with subsidiaries ofAT&T and BellSouth, such subsidiaries and any of theiraffiliates that make an election to do so act as authorizedagents exclusively on our behalf for the sale of wirelessservices to subscribers in AT&T’s and BellSouth’srespective incumbent service territories. We are free tocontract with other agents for wireless services in both of ourparents’ incumbent service territories, including retailersand other distributors. All subscribers contracted throughAT&T and BellSouth agents are our own subscribers, exceptwhere the agents sell packages, in which case a subscriber is asubscriber of one of the agents for all portions of the packageother than our wireless services. All affiliates of AT&T andBellSouth may act as agents for us and, when electing to act asagents, will be bound by one of the wireless agency agreements.Each agent has agreed that it will not, directly or indirectly,offer or promote wireless services of our competitors in theagent’s service territory; however, services typicallyreferred to as “reflex paging”, which is a two-waymessaging service that adds a response channel to traditionalpager devices, is not considered a competing service for thesepurposes. See “Risk Factors — Factors Relating toOur Arrangements with AT&T and BellSouth” for furtherinformation on wireless data services.Each agent may elect to cease acting solely as our agent andbegin to act as a reseller under a resale agreement, asdescribed below. The election has to be made for all packagecustomers, but does not affect an agent’s right to act asour agent in selling wireless services that are not included ina package. Package customers are those subscribers that buycombinations of wireless services and other communicationsservices offered by our parents. In addition, the agent has acorresponding right to choose to cease acting as agent withrespect to national accounts.Each agent has a unilateral right of termination. We mayterminate the agreement with respect to any type of wirelessservice in the event of a change in the law relating to thattype of wireless service that materially and adversely impactsour ability to conduct our business in an agent’s serviceterritory. We may also terminate with respect to a specificwireless service if we do not get regulatory approval to sellthat service in an agent’s service territory. Each wirelessagency agreement also terminates upon breach, mutual agreementof the parties or on December 31, 2050. Once the agreementterminates, a former agent still has the rights under the resaleagreement described below and may sell within its serviceterritory wireless services that are not part of a package. Inaddition, in the event an agent terminates the
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**CINGULAR WIRELESS LLC** **PART III****Item 13.****Certain Relationships and Related Transactions**agreement because we are in breach, the former agent would havethe right to offer competing service purchased from thirdparties as an agent or reseller for those third parties. Upontermination, we may offer any communications services of thetypes that were previously exclusively offered through ourparents, network services or other services bought from one ofthe agents or from third parties.The wireless agency agreements provide that the agents receive acommission from us for each new subscriber enrolled by the agentin its service territory, which varies depending on the averagethree-month churn rate. Where we, instead of the agents, providehandsets and other equipment, we only pay a commission. Inaddition, the fees may be different where we participate in thesales process. Furthermore, we pay residual compensationsupplementing the commissions equal to a percentage ratemultiplied by monthly charges to the subscriber from accessingand using our network, but only where a subscriber has completeda minimum of 180 days of service. Pursuant to the agencyagreements, we paid $74 million for the year endedDecember 31, 2005.**Resale Agreements**We agreed to sell to AT&T and BellSouth and theiraffiliates, as resellers, both existing and future wirelessservices and features providing access to our wireless systemsor any wireless services to which we have access under roamingagreements. The resellers will resell those services to theirsubscribers, both separately and packaged with othercommunications services. The reseller may sell any new serviceofferings that we develop both in its own service territoriesand outside of that service territory. We are not required toprovide any customer service or billing services to theresellers’ users.Generally, the resellers may only sell our wireless servicesoutside their own service territory. However, if the resellerterminates its wireless agency agreement, as described aboveunder “Wireless Agency Agreements” above, it mayresell our wireless services in its respective serviceterritories. Each agreement terminates on October 2, 2050or upon mutual agreement of the parties.Under the resale agreements, we charge the resellers a fixedmonthly charge per wireless subscriber. In addition, theresellers also pay charges based on usage of our network andseparate charges for roaming and a number of other services.Neither AT&T nor BellSouth acted as a reseller nor had anyrevenues from these agreements in 2005.**Contribution and Formation Agreement**We entered into an Amended and Restated Contribution andFormation Agreement with AT&T and BellSouth dated as ofApril 4, 2000, governing the contributions that were madeto us on October 2, 2000 and some other contributions thatwere scheduled to be made later.We, our subsidiaries and other affiliates and our and theirdirectors, officers, employees, shareholders and agents may seekindemnification for breaches of representations and warrantiesmade by AT&T or BellSouth in the contribution agreement,subject to certain thresholds and deductibles. Theindemnification is subject to the following limitations:•     any indemnifiable losses are subject to a minimum threshold of    $2 million for individual losses, and only the amount in    excess of that amount will be deemed a loss; •     any breaches that relate to matters set forth on the respective    party’s disclosure schedule shall not be deemed a loss    until the amount of loss exceeds $4 million; •     a party will not be liable for an indemnifiable loss until the    total amount of the losses exceeds $250 million. For the    purpose of calculating this deductible, our losses and those of    AT&T and
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**CINGULAR WIRELESS LLC** **PART III****Item 13.****Certain Relationships and Related Transactions**    BellSouth may not be counted twice for the same breach. A party    is only liable for the amount of an indemnifiable loss in excess    of the $250 million deductible; and •     the maximum that AT&T or BellSouth must pay for    indemnifiable losses is $3 billion. Breaches of the    representations on capitalization, subsidiaries, financial    statements, taxes, brokers and finders and after-acquired    properties are not subject to this limitation.Each party’s representations have generally expired, exceptthose representations relating to:•     tax matters, which survive until the expiration of the    applicable statute of limitations; and •     organization, good standing and qualification; capitalization;    subsidiaries; corporate authority and approval; brokers and    finders; after acquired properties; and BellSouth’s    representations relating to the value of certain credits granted    to BellSouth by Ericsson, which have no expiration date.There were no significant payments under this agreement duringthe year ended December 31, 2005.As provided for in the Contribution and Formation Agreementbetween us, AT&T and BellSouth, additional contributions ofwireless operations and assets in certain markets were madeduring 2005. Until such time as the contributions were made, wecontinued to manage the properties for a fee. Fees receivedduring 2005 for managing the Arkansas markets until AT&Tcontributed them to us on May 1, 2005 were $30 million.**Registration Rights Agreements**Our Manager has granted registration rights to AT&T andBellSouth through which they may require our Manager to registerunder the Securities Act shares of its Class A common stockissued or issuable to them. These registration rights expire oneyear after a holder ceases to hold at least 10% of the totaloutstanding shares.Under the registration rights agreement, our Manager is requiredto use its best reasonable efforts to register any of the sharesof its common stock for sale in accordance with the intendedmethod of disposition, subject to customary deferral rights.Each of AT&T and BellSouth will have the right to demand tworegistrations in any calendar year, but no demand may be madeunless the shares to be registered (1) constitute at least1% of our Manager’s Class A common stock outstanding,or (2) have a market value on the demand date of at least$250 million. In addition, AT&T and BellSouth have theright to include their shares in other registrations of ourManager’s equity securities other than an initial publicoffering and offerings onForm S-4 or S-8and other than in connection with rights offerings or dividendreinvestment plans, subject to customary cutback provisions.However, AT&T and BellSouth are cut back only after allother holders, including holders exercising their own demandrights, are cut back. AT&T and BellSouth may also piggybackon the demand registration of another holder, but will besubject to the cutback provisions applicable to demandregistrations, pursuant to which the securities to be registeredby the demand holders will be considered first, then thesecurities to be registered by our Manager and last, thesecurities of the holder piggybacking on the demand registration.Once our Manager is eligible to file a shelf registrationstatement onForm S-3, it isrequired to file a shelf registration statement if so requestedby AT&T or BellSouth and to use its reasonable best effortsto have it declared effective and to keep it effective until theearlier of the date on which the registering holder no longerholds any of our common stock or the date on which its commonstock may be sold under Rule 144(k). As long as our Managerhas a shelf registration statement outstanding, it is notrequired to file additional demand registration statements,provided that the number of securities to be registered can besold under the shelf.
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**CINGULAR WIRELESS LLC** **PART III****Item 13.****Certain Relationships and Related Transactions**In addition, the agreement provides that our Manager is requiredto pay all registration expenses, including all filing fees andour fees and expenses, other than underwriting discounts andcommissions and any transfer taxes incurred by the holders.Customary indemnification and contribution provisions would beapplicable to any registered sale.No Class A common stock has been issued.**Interconnection and Long Distance Agreements**We are also a party to local interconnect and long distanceagreements with subsidiaries of AT&T and BellSouth. Pursuantto these agreements, we incurred expenses of $1,297 millionfor the year ended December 31, 2005. Additionally, wepurchase telecommunications and other related services fromAT&T and BellSouth. We incurred expenses of$250 million for these services for the year endedDecember 31, 2005. We had purchase commitments to AT&T,BellSouth and their affiliates of approximately$161 million for dedicated leased lines used to provideinterconnection services and $109 million fortelecommunications and other services as of December 31,2005.**SNET Diversified Group Name Delivery Service Agreement**We and SNET Diversified Group (SNET DG), an affiliate ofAT&T, entered into an agreement in October 2001 to provideCalling Name Delivery (CNAM) service and to receive a shareof the fees generated by the provision of this service. CNAMservice allows Local Exchange Carrier (LEC) subscriberswith caller ID to view the name of a Cingular subscriber callingan LEC subscriber. LECs pay a fee to SNET DG each time asubscriber uses this service, which SNET DG will share with uson a percentage basis, beginning at 50% of revenues, andincreasing to a maximum of 65%, with the addition of subscribersand/or additional markets adding CNAM service. For the yearended December 31, 2005, we recorded approximately$31 million in revenue from SNET DG under this agreement.**Member Loans**At December 31, 2005, a portion of our capital structureconsisted of subordinated member loans payable to AT&T andBellSouth in the principal amounts of approximately$4.1 billion and $2.6 billion, respectively. The loanshave an interest rate of 6% and a stated maturity ofJune 30, 2008. For the year ended December 31, 2005,we repaid $2.9 billion of our member loans and paid$525 million in interest.**Revolving Credit Agreement**We are a party to a revolving credit agreement with AT&T andBellSouth for them to provide unsubordinated short-termfinancing on a pro rata basis at an interest rate of LIBOR plus0.05% for our ordinary course operations based upon our budgetand forecasted cash needs. The revolving credit agreementprovides that in the event that we have available cash (asdefined) on any business day, such amount shall first be appliedto the repayment of the revolving loans, and any remainingexcess shall then be applied to the repayment of theSubordinated Notes (member loans) from AT&T and BellSouth atmonth end if we do not then require a cash advance under theagreement. As of December 31, 2005, we had an outstandingbalance of $511 million under the revolving creditagreement. During the year ended December 31, 2005, we paidless than $1 million in interest under this agreement.
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**CINGULAR WIRELESS LLC** **PART III****Item 14.****Principal Accounting Fees and Services**The following table sets forth the aggregate fees billed to usby Ernst & Young LLP for professional services renderedfor the fiscal years ended December 31, 2004 and 2005. Allservices were and continue to be specifically approved by ourAudit Committee.           **Year Ended**  **December 31,**     **2004** **2005**       **(Dollars in**  **millions)**    Audit Fees(1) $7.8  $7.5     Audit-Related Fees(2)  1.0   0.3     Tax Fees  —   —     All Other Fees  —   —            Total Fees $8.8  $7.8         (1)     Consists of fees billed for professional services for the audit    of our annual financial statements and review of financial    statements included in our SEC reports or services that are    normally provided by the independent registered public    accountant in connection with statutory and regulatory filings    or engagements for those fiscal years. (2)     Consists of fees billed for assurance and related services that    are reasonably related to the performance of the audit or review    of our financial statements and are not reported under    “Audit Fees”. These services primarily include pension    and benefit plan audits and balance sheet review procedures.
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**CINGULAR WIRELESS LLC** **PART IV****Item 15.****Exhibits and Financial Statement Schedules**             **Page(s)**    **in This**    **Form 10-K**      a.      Documents filed as part of the report     (1)     Financial Statements        *Cingular Wireless LLC*            Report of Independent Registered Public Accounting    Firm — Ernst & Young LLP  76         Report of Independent Registered Public Accounting    Firm — PricewaterhouseCoopers LLP  77         Consolidated Balance Sheets as of December 31, 2004 and 2005  78         Consolidated Statements of Income for the years ended    December 31, 2003, 2004, and 2005  79         Consolidated Statements of Changes in Members’ Capital for    the years ended December 31, 2003, 2004, and 2005  80         Consolidated Statements of Comprehensive Income for the years    ended December 31, 2003, 2004, and 2005  81         Consolidated Statements of Cash Flows for the years ended    December 31, 2003, 2004, and 2005  82         Notes to Consolidated Financial Statements  83     *GSM Facilities LLC*            Report of Independent Auditors — Ernst &    Young LLP  128         Report of Independent Registered Public Accounting    Firm — PricewaterhouseCoopers LLP  129         Consolidated Balance Sheet as of December 31, 2004  130         Consolidated Statements of Operations for the years ended    December 31, 2003, and 2004  131         Consolidated Statements of Changes in Members’ Capital for    the years ended December 31, 2003 and 2004  132         Consolidated Statements of Cash Flows for the years ended    December 31, 2003 and 2004  133         Notes to Consolidated Financial Statements  134  (2)     Financial Statement Schedule as set forth under Item 8 of    this Report            Cingular Wireless LLC                Schedule II — Valuation    and Qualifying Accounts  142     All other financial statements and schedules not listed are    omitted because they are not required, or the required    information is included in the consolidated financial statements    (3) Exhibits. The following exhibits are either providedwith thisForm 10-K or areincorporated by reference     **Exhibit**  **Number** **Description**        *      Incorporated by reference  2.1*     Amended and Restated Contribution and Formation Agreement among    SBC Communications, Inc., BellSouth Corporation and Alloy    LLC, dated as of April 4, 2000 (Exhibit 2.1 to    Registration Statement on Form S-4 filed January 24,    2002, Registration No. 333-81342)  2.1.1*     Second Amendment to Amended and Restated Contribution and    Formation Agreement among SBC Communications, Inc., BellSouth    Corporation and Cingular Wireless (Exhibit 2.1.1 to Annual    Report on Form 10-K for the year ended December 31,    2002)
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**CINGULAR WIRELESS LLC** **PART IV****Item 15.****Exhibits and Financial Statement Schedules**     **Exhibit**  **Number** **Description**     2.2*     Purchase Agreement, dated August 4, 2003, by and between    NextWave Telecom Inc., NextWave Personal Communications Inc.,    NextWave Partners Inc., NextWave Power Partners Inc. and    Cingular Wireless LLC (Exhibit 10.54 to Quarterly Report on    Form 10-Q for the quarter ended June 30, 2003)  2.3*     Interest Purchase Agreement by and among T-Mobile USA, Inc.,    Omnipoint Communications, Inc., Cingular Wireless LLC and    SBC Wireless LLC dated as of May 24, 2004. (Portions    omitted pursuant to a request for confidential treatment, which    has been granted) (Exhibit 10.66 to Quarterly Report on    Form 10-Q for the quarter ended September 30, 2004)  2.4*     Agreement and Plan of Merger, dated as of February 17,    2004, by and among AT&T Wireless Services, Inc., Cingular    Wireless Corporation, Cingular Wireless LLC and Links I    Corporation, and solely for the purposes of certain sections of    the Merger Agreement, SBC Communications Inc. and BellSouth    Corporation (Exhibit 99.1 to Form 8-K/ A dated    February 18, 2004)  3.1*     Certificate of Formation of the Company, dated April 19,    2000, as amended by Certificate of Merger, dated    November 1, 2000, Certificate of Merger, Dated    February 21, 2001, and Certificate of Amendment, dated    March 1, 2001 (Exhibit 3.1 to Registration Statement    on Form S-4 filed January 24, 2002, Registration    No. 333-81342)  3.2*     Limited Liability Company Agreement of Alloy LLC by and among    SBC Communications Inc., SBC Alloy Holdings, Inc., BellSouth    Corporation, BellSouth Mobile Data, Inc., BSCC of Houston, Inc.,    ACCC of Los Angeles, Inc., BellSouth Cellular Corp., RAM    Broadcasting Corporation and Alloy Management Corp., dated as of    October 2, 2000, as amended by Amendment No. 1, dated    January 1, 2001, Amendment No. 2, dated April 3,    2001 and Amendment No. 3, dated April 3, 2001    (Exhibit 3.2 to Registration Statement on Form S-4    filed January 24, 2002, Registration No. 333-81342)  3.2.1*     Amendment No. 4 to Limited Liability Company Agreement    dated December 31, 2001 (Exhibit 3.3 to Amendment    No. 1 to Registration Statement on Form S-4 filed    May 31, 2002, Registration No. 333-81342)  3.2.2*     Amendment No. 5 to Limited Liability Company Agreement of    Cingular Wireless LLC by and among SBC Communications Inc., SBC    Alloy Holdings, Inc., SBC Long Distance, Inc., BellSouth    Corporation, BLS Cingular Holdings, LLC, BellSouth Mobile Data,    Inc. and Cingular Wireless Corporation, dated as of    October 27, 2004. (Exhibit 99.11 to Form 8-K    dated October 28, 2004)  4.1*     Indenture between the Company and Bank One Trust Company, N.A.,    as Trustee, dated as of December 12, 2001 (Exhibit 4.1    to Registration Statement on Form S-4 filed    January 24, 2002, Registration No. 333-81342)  4.1.1*     First Supplemental Indenture between the Company and Bank One    Trust Company, N.A., as Trustee, dated December 31, 2002.    (Exhibit 4.1.1 to Annual Report on Form 10-K for the    year ended December 31, 2002)  4.1.2*     Second Supplemental Indenture by and among Cingular Wireless    LLC, Cingular Wireless II, LLC and J.P. Morgan Trust    Company, National Association (as successor Trustee), dated as    of October 27, 2004 (Exhibit 99.10 to Form 8-K    dated October 28, 2004)  4.1.3*     Third Supplemental Indenture by and among Cingular Wireless LLC,    Cingular Wireless II LLC, New Cingular Wireless, Inc. and    J.P. Morgan Trust Company dated as of March 4, 2005    (Exhibit 4.1.3 to Form 8-A/ A dated March 4, 2005)  4.2*     $500,000,000 5.625% Senior Notes Due December 15, 2006    (Exhibit 4.2 to Annual Report on Form 10-K for the    year ended December 31, 2002)
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**CINGULAR WIRELESS LLC** **PART IV****Item 15.****Exhibits and Financial Statement Schedules**     **Exhibit**  **Number** **Description**     4.3*     $750,000,000 6.5% Senior Notes Due December 15, 2011    (Exhibit 4.3 to Annual Report on Form 10-K for the    year ended December 31, 2002)  4.4*     $750,000,000 7.125% Senior Notes Due December 15, 2031    (Exhibit 4.4 to Annual Report on Form 10-K for the    year ended December 31, 2002)  4.5*     Indenture between AT&T Wireless Services, Inc. and    U.S. Bank National Association (as successor Trustee),    dated as of March 6, 2001 (Exhibit 4.5 to AT&T    Wireless Services, Inc.’s Registration Statement on    Form S-1/ A (Commission file No. 333-59174), filed    June 11, 2001)  4.5.1*     First Supplemental Indenture between AT&T Wireless Services,    Inc. and U.S. Bank National Association, dated as of    September 1, 2004, to the Indenture between AT&T    Wireless Services, Inc. and U.S. Bank National Association    (as successor Trustee), dated as of March 6, 2001.    (Exhibit 99.07 to Form 8-K dated October 28, 2004)  4.5.2*     Second Supplemental Indenture by and among Cingular Wireless    LLC, Cingular Wireless II, Inc., AT&T Wireless    Services, Inc. and U.S. Bank National Association, dated as    of October 26, 2004, to the Indenture between AT&T    Wireless Services, Inc. and U.S. Bank National Association    (as successor Trustee), dated as of March 6, 2001.    (Exhibit 99.04 to Form 8-K dated October 28, 2004)  4.6*     Indenture between AT&T Wireless Services, Inc. and    U.S. Bank National Association (as successor Trustee),    dated as of April 11, 2002 (Exhibit 4.3 to AT&T    Wireless Services, Inc.’s Form 10-Q for the quarterly    period ended March 31, 2002)  4.6.1*     First Supplemental Indenture between AT&T Wireless Services,    Inc. and U.S. Bank National Association, dated as of    September 1, 2004, to the Indenture between AT&T    Wireless Services, Inc. and U.S. Bank National    Association (as successor Trustee), dated as of April 11,    2002. (Exhibit 99.09 to Form 8-K dated    October 28, 2004)  4.6.2*     Second Supplemental Indenture by and among Cingular Wireless    LLC, Cingular Wireless II, Inc., AT&T Wireless    Services, Inc. and U.S. Bank National Association, dated as    of October 26, 2004, to the Indenture between AT&T    Wireless Services, Inc. and U.S. Bank National Association    (as successor Trustee), dated as of April 11, 2002.    (Exhibit 99.05 to Form 8-K dated October 28, 2004)  4.7*     Form of 7.350% Exchange Note due 2006 (Exhibit 4.4 to    Registration Statement on Form S-4 (Registration    No. 333-67068), filed August 8, 2001)  4.8*     Form of 7.875% Exchange Note due 2011 (Exhibit 4.5 to    Registration Statement on Form S-4 (Registration    No. 333-67068), filed August 8, 2001)  4.9*     Form of 8.750% Exchange Note due 2031 (Exhibit 4.6 to    Registration Statement on Form S-4 (Registration    No. 333-67068), filed August 8, 2001)  4.10*     Form of 6.875% Senior Notes due 2005 (Exhibit 4.4 to    AT&T Wireless Services, Inc.’s Form 10-Q for the    quarterly period ended March 31, 2002)  4.11*     Form of 7.5% Senior Notes due 2005 (Exhibit 4.5 to    AT&T Wireless Services, Inc.’s Form 10-Q for the    quarterly period ended March 31, 2002)  4.12*     Form of 8.125% Senior Notes due 2012 (Exhibit 4.6 to    AT&T Wireless Services, Inc.’s Form 10-Q for the    quarterly period ended March 31, 2002)  4.13*     Capital Markets Debt Subordination Agreement, dated as of    November 21, 2000, among SBC Communications Inc., BellSouth    Corporation and any Subsidiary Lender (Exhibit 10.13 to    Annual Report on Form 10-K for the year ended    December 31, 2002)  4.14*     Subordinated Notes of SBC and BellSouth (Exhibit 10.14 to    Amendment No. 1 to the Registration Statement on    Form S-4 filed May 31, 2002, Registration    No. 333-81342)
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**CINGULAR WIRELESS LLC** **PART IV****Item 15.****Exhibits and Financial Statement Schedules**     **Exhibit**  **Number** **Description**     4.14.1*     Amended, Restated and Consolidated Subordinated Promissory Notes    of the Company to SBC, BellSouth and Cellular Credit Corporation    dated July 1, 2003 (Exhibit 10.14.1 of Quarterly    Report on Form 10-Q for the quarter ended    September 30, 2003)  4.15*     Notice of Additional Senior Capital Markets Debt pertaining to    the Senior Notes of AT&T Wireless, Inc. (Exhibit 4.15    to Annual Report on Form 10-K for the year ended    December 31, 2005)  10.1*     Wireless Agency Agreement between Alloy LLC and BellSouth    Telecommunications Inc., dated October 2, 2000    (Exhibit 10.1 to Registration Statement on Form S-4    filed January 24, 2002, Registration No. 333-81342)  10.2*     Wireless Agency Agreement between Alloy LLC and SBC Operations,    Inc., dated October 2, 2000 (Exhibit 10.2 to    Registration Statement on Form S-4 filed January 24,    2002, Registration No. 333-81342)  10.3*     Resale Agreement between Alloy LLC and BellSouth    Telecommunications, Inc., dated October 2, 2000    (Exhibit 10.3 to Registration Statement on Form S-4    filed January 24, 2002, Registration No. 333-81342)  10.4*     Resale Agreement between Alloy LLC and SBC Communications Inc.,    dated October 2, 2000 (Exhibit 10.4 to Registration    Statement on Form S-4 filed January 24, 2002,    Registration No. 333-81342)  10.5*     Intellectual Property License Agreement between Alloy LLC and    BellSouth Corporation, dated October 2, 2000    (Exhibit 10.5 to Registration Statement on Form S-4    filed January 24, 2002, Registration No. 333-81342)  10.6*     Intellectual Property Agreement between Cingular Wireless LLC    and BellSouth Intellectual Property Marketing Corporation, dated    October 17, 2001 (Exhibit 10.6 to Registration    Statement on Form S-4 filed January 24, 2002,    Registration No. 333-81342)  10.7*     Intellectual Property License Agreement between Alloy LLC and    SBC Communications Inc., dated October 2, 2000    (Exhibit 10.7 to Registration Statement on Form S-4    filed January 24, 2002, Registration No. 333-81342)  10.8*     Intellectual Property License Agreement between BellSouth    Corporation and Alloy LLC, dated October 2, 2000    (Exhibit 10.8 to Registration Statement on Form S-4    filed January 24, 2002, Registration No. 333-81342)  10.9*     Intellectual Property License Agreement between SBC    Communications Inc. and Alloy LLC, dated October 2, 2000    (Exhibit 10.9 to Registration Statement on Form S-4    filed January 24, 2002, Registration No. 333-81342)  10.10*     Authorized Sales Representative Agreement by and among SBC    Communications Inc., South western Bell Telephone Company,    Pacific Bell Telephone Company, Ameritech Illinois,    Ameritech Indiana, Ameritech Michigan, Ameritech Ohio,    Ameritech Wisconsin, Nevada Bell Telephone, Southern New England    Telephone Company and Alloy LLC, dated October 2, 2000,    completed pursuant to the Wireline Agency Signature Agreement    between SBC Communications Inc. and Alloy LLC, dated    October 2, 2000 (Exhibit 10.10 to Registration    Statement on Form S-4 filed January 24, 2002,    Registration No. 333-81342)  10.11*     Marketing Representative Agreement between BellSouth    Telecommunications, Inc. and BellSouth Cellular Corp., dated    July 17, 1998 (Exhibit 10.11 to Registration Statement    on Form S-4 filed January 24, 2002, Registration    No. 333-81342)  10.12*     Assignment and Assumption Agreement between BellSouth Cellular    Corp. and Alloy LLC (Exhibit 10.12 to Registration    Statement on Form S-4 filed January 24, 2002,    Registration No. 333-81342)
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**CINGULAR WIRELESS LLC** **PART IV****Item 15.****Exhibits and Financial Statement Schedules**     **Exhibit**  **Number** **Description**     10.13*     Agreement to Sublease, dated August 25, 2000, by and among    SBC Wireless, Inc., for itself and on behalf of the Sublessor    Entities, SpectraSite Holdings Inc. and Southern SpectraSite    Towers, Inc. (Exhibit 10.1 of SpectraSite Holdings Inc.    Current Report on Form 8-K, dated August 25, 2000,    File No. 0-27217)  10.14*     Cingular Wireless Cash Deferral Plan (Exhibit 10.16 to    Registration Statement on Form S-4 filed January 24,    2002, Registration No. 333-81342)  10.15*     Cingular Wireless Pension Plan (Exhibit 10.17 to Amendment    No. 1 to the Registration Statement on Form S-4 filed    April 25, 2002, Registration No. 333-81342)  10.16*     Cingular Wireless Savings Plan (Exhibit 10.18 to Amendment    No. 1 to the Registration Statement on Form S-4 filed    April 25, 2002, Registration No. 333-81342)  10.17*     The Amended and Restated BellSouth Corporation Stock Plan    effective April 24, 1995, as amended (Exhibit 10v-1 of    BellSouth Corporation Annual Report on Form 10-K for the    year ended December 31, 2000, File No. 1-8607)  10.18*     BellSouth Corporation Trust Under Executive Benefit    Plan(s), as amended April 28, 1995 (Exhibit 10u-1 of    BellSouth Corporation Quarterly Report on Form 10-Q for the    quarter ended June 30, 1995)  10.18.1*     Amendment, dated May 23, 1996, to the BellSouth Corporation    Trust Under Executive Benefit Plan(s) (Exhibit 10s-1    of BellSouth Corporation Quarterly Report on Form 10-Q for    the quarter ended June 30, 1996, File No. 1-8607)  10.18.2*     Second Amendment dated July 8, 2002 to the BellSouth    Corporation Trust Under Executive Benefit Plan(s)    (Exhibit 10r-2 to BellSouth Corporation’s    Form 10-Q for the quarter ended September 30, 2002,    File No. 1-8607)  10.18.3*     First Amendment dated November 1, 2003 to the BellSouth    Corporation Trust Under Executive Benefit Plan(s)    (Exhibit 10r-3 to BellSouth Corporation’s    Form 10-K for the year ended December 31, 2003, File    No. 1-8607)  10.18.4*     Second Amendment dated December 17, 2003 to the BellSouth    Corporation Trust Under Executive Benefit Plan(s)    (Exhibit 10r-4 to BellSouth Corporation’s    Form 10-K for the year ended December 31, 2003, File    No. 1-8607)  10.18.5*     Third Amendment dated March 15, 2004 to the BellSouth    Corporation Trust Under Executive Benefit Plan(s)    (Exhibit 10r-5 to BellSouth Corporation’s    Form 10-Q for the quarter ended March 31, 2004, File    No. 1-8607)  10.19*     BellSouth Retirement Savings Plan, as amended and restated    effective July 1, 2001 (Exhibit 10-w of BellSouth    Corporation Annual Report on Form 10-K for the year ended    December 31, 2001, File No. 1-8607)  10.19.1*     First Amendment dated December 18, 2001 to the BellSouth    Retirement Savings Plan (Exhibit 10w-1 to BellSouth    Corporation’s Form 10-K for the year ended    December 31, 2001, File 1-8607)  10.20*     BellSouth Corporation Executive Incentive Award Deferral Plan,    as amended and restated effective September 23, 1996    (Exhibit 10g of BellSouth Corporation Annual Report on    Form 10-K for the year ended December 31, 1996, File    No. 1-8607)  10.21*     BellSouth Corporation Supplemental Executive Retirement Plan, as    amended on March 23, 1998 (Exhibit 10i of BellSouth    Corporation Quarterly Report on Form 10-Q for the quarter    ended March 31, 1998, File No. 1-8607)  10.22*     BellSouth Corporation Nonqualified Deferred Compensation Plan,    as amended and restated effective November 25, 1996    (Exhibit 10h of BellSouth Corporation Annual Report on    Form 10-K for the year ended December 31, 1996, File    No. 1-8607)
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**CINGULAR WIRELESS LLC** **PART IV****Item 15.****Exhibits and Financial Statement Schedules**     **Exhibit**  **Number** **Description**     10.23*     SBC Communications Inc. 1996 Stock and Incentive Plan    (Exhibit 10-o of SBC Communications Inc. Annual Report    on Form 10-K for the year ended December 31, 2002)  10.24*     SBC Communications Inc. 2001 Incentive Plan (Exhibit 10-u    of SBC Communications Inc. Annual Report on Form 10-K for    the year ended December 31, 2002)  10.25*     SBC Communications Inc. Stock Savings Plan, as amended through    September 28, 2001 (Exhibit 10-l of SBC Communications    Inc. Annual Report on Form 10-K for the year ended    December 31, 2002)  10.26*     SBC Communications Inc. Short-Term Incentive Plan    (Exhibit 10-a of SBC Communications Inc. Annual Report on    Form 10-K for the year ended December 31, 2002)  10.27*     SBC Communications Inc. Supplemental Retirement Income Plan    (Exhibit 10-c of SBC Communications Inc. Annual Report on    Form 10-K for the year ended December 31, 2004)  10.28*     SBC Communications Inc. 1992 Stock Option Plan, as amended    through June 19, 2001 (Exhibit 10-n of SBC    Communications Inc. Annual Report on Form 10-K for the year    ended December 31, 2001, File No. 1-8610)  10.29*     Pacific Telesis Group 1994 Stock Incentive Plan (Attachment A of    Pacific Telesis Group’s Definitive Proxy Statement, dated    March 11, 1994, and amended March 14 and March 25,    1994, File No. 1-8609)  10.29.1*     Resolutions amending the Pacific Telesis Group 1994 Stock    Incentive Plan, effective January 1, 1995. (Attachment A to    Pacific Telesis Group’s 1995 Proxy Statement, filed    March 13, 1995, File No. 1-8609)  10.30*     Cingular Wireless SBC Transition Executive Benefit Plan    (Exhibit 10.42 to Amendment No. 1 to the Registration    Statement on Form S-4 filed May 31, 2002, Registration    No. 333-81342)  10.31*     Cingular Wireless Long-Term Incentive Plan (Exhibit 10.43    to Amendment No. 1 to the Registration Statement on    Form S-4 filed May 31, 2002, Registration    No. 333-81342)  10.32*     Cingular Wireless Executive Short Term Incentive Award Plan    (Exhibit 10.45 to Amendment No. 1 to the Registration    Statement on Form S-4 filed May 31, 2002, Registration    No. 333-81342) 10.32.1*     2005 Short-Term Incentive Award Plan Matrix for the 2005    Performance Period under the Cingular Wireless Executive    Short-Term Incentive Award Plan (Exhibit 99.1 to    Form 8-K dated April 14, 2005)  10.32.2*     2006 Short-Term Incentive Award Plan Matrix for the 2006    Performance Period under the Cingular Wireless Executive    Short-Term Incentive Award Plan (Exhibit 99.2 to    Form 8-K dated February 21, 2006)  10.33*     Cingular Wireless BLS Transition Executive Benefit Plan    (Exhibit 10.46 to Amendment No. 1 to the Registration    Statement on Form S-4 filed May 31, 2002, Registration    No. 333-81342)  10.34*     Cingular Wireless Executive Financial Services Plan    (Exhibit 10.47 to Amendment No. 1 to the Registration    Statement on Form S-4 filed May 31, 2002, Registration    No. 333-81342)  10.35*     Officer Communication Plan (Exhibit 10.48 to Annual Report    on Form 10-K for the year ended December 31, 2002)  10.36*     Employment Agreement with Stanley T. Sigman (Exhibit 10.49    to Annual Report on Form 10-K for the year ended    December 31, 2002)  10.36.1*     Compensation Arrangement for Stanley T. Sigman, effective    June 1, 2005 (Exhibit 99.1 to Form 8-K dated    May 16, 2005)  10.37*     Supplemental Retention Agreement with Thaddeus Arroyo    (Exhibit 99.1 to Form 8-K dated February 18, 2005)
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**CINGULAR WIRELESS LLC** **PART IV****Item 15.****Exhibits and Financial Statement Schedules**     **Exhibit**  **Number** **Description**     10.38*     Cingular Wireless Long Term Compensation Plan amended and    restated effective January 1, 2003 (Exhibit 10.52 to    Quarterly Report on Form 10-Q for the quarter ended    March 31, 2003)  10.39*     Licensing Support Agreement between BellSouth Intellectual    Property Marketing Corporation and Cingular Wireless, LLC,    effective April 21, 2003 (Exhibit 10.53 to Quarterly    Report on Form 10-Q for the quarter ended June 30,    2003)  10.40*     Stockholders’ Agreement by and among SBC Communications    Inc., BellSouth Corporation and Alloy Management Corp. dated    October 2, 2000 (Exhibit 10.55 to Quarterly Report on    Form 10-Q for the quarter ended September 30, 2003)  10.41*     Subordination Agreement among SBC Communications Inc., BellSouth    Corporation, Cellular Credit Corporation and Cingular Wireless    LLC dated November 17, 2003 (Exhibit 10.56 to Annual    Report on Form 10-K for the year ended December 31,    2003)  10.42*     Compensation arrangement with Ralph de la Vega    (Exhibit 10.58 to Annual Report on Form 10-K for the    year ended December 31, 2003)  10.43*     Transition Agreement by and between BellSouth Corporation and    Ralph de la Vega dated December 29, 2003    (Exhibit 10.59 to Annual Report on Form 10-K for the    year ended December 31, 2003)  10.44*     Cingular Wireless Long Term Compensation Plan amended and    restated effective January 1, 2004 (Exhibit 10.61 to    Annual Report on Form 10-K for the year ended    December 31, 2003)  10.45*     Billing and Collections Services Operating Agreement by and    among BellSouth Telecommunications, Inc. and Cingular Wireless    LLC, effective September 1, 2003 (Exhibit 10.62 to    Annual Report on Form 10-K for the year ended    December 31, 2003)  10.46*     Retention Agreement with William Hague dated June 24, 2005    (Exhibit 99.1 to Form 8-K dated June 24, 2005)  10.47*     Investment Agreement, dated as of February 17, 2004,    between BellSouth Corporation and SBC Communications Inc.    (Exhibit 10.64 to Annual Report on Form 10-K for the    year ended December 31, 2003)  10.47.1*     Investment and Reorganization Agreement dated October 25,    2004, by and among BellSouth Corporation, SBC Communications    Inc., Cingular Wireless Corporation, Cingular Wireless LLC,    Links I Corporation, Cingular Wireless II, Inc., BLS    Cingular Holdings, LLC, SBC Alloy Holdings, Inc., BellSouth    Enterprises, Inc., BellSouth Mobile Systems, Inc., BellSouth    Mobile Data, Inc. and SBC Long Distance, Inc.    (Exhibit 99.01 to Form 8-K dated October 28, 2004)  10.48*     Revolving Credit Agreement by and among BellSouth Corporation,    SBC Communications, Inc. and Cingular Wireless LLC dated as of    August 1, 2004. (Exhibit 10.65 to Quarterly Report on    Form 10-Q for the quarter ended September 30, 2004)  10.48.1*     Amended and Restated Revolving Credit Agreement by and among    BellSouth Corporation, SBC Communications Inc. and Cingular    Wireless LLC dated as of June 28, 2005 (Exhibit 99.2    to Form 8-K dated June 24, 2005)  10.49*     Separation and Distribution Agreement by and between AT&T    Corp. and AT&T Wireless Services, Inc., dated as of    June 4, 2001 (Exhibit 10.1 to Registration Statement    on Form S-1/ A (Registration No. 333-59174), filed    June 21, 2001)  10.50*     Amended and Restated Tax Sharing Agreement by and between    AT&T Corp. and AT&T Wireless Services, Inc., dated as of    June 4, 2001 (Exhibit 10.2 to Registration Statement    on Form S-1/ A (Registration No. 333-59174), filed    June 21, 2001)  10.51*     Cingular Wireless Long-Term Compensation Plan as amended and    restated on February 11, 2005 (Exhibit 99.1 to    Form 8-K dated February 17, 2005)
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**CINGULAR WIRELESS LLC** **PART IV****Item 15.****Exhibits and Financial Statement Schedules**     **Exhibit**  **Number** **Description**     10.51.1*     Revised Performance Matrices for the 2003 — 2005 and    2004 — 2006 Performance Periods under the Cingular    Wireless Long-Term Compensation Plan (Exhibit 99.2 to    Form 8-K dated February 17, 2005)  10.51.2*     Methodology for determining grants under the Cingular Wireless    Long-Term Compensation Plan and certain performance targets and    matrices for the 2005 — 2007 performance period    (Exhibit 99.3 to Form 8-K dated February 17, 2005)  10.51.3*     Methodology for determining special grants of performance stock    units under the Cingular Wireless Long-Term Compensation Plan    and certain performance targets and matrices for the    2005 — 2007 performance period (Exhibit 99.4 to    Form 8-K dated February 17, 2005)  10.51.4*     Methodology for determining grants units under the Cingular    Wireless Long-Term Compensation Plan and certain performance    targets and matrices for the 2006 — 2008 performance    period (Exhibit 99.1 to Form 8-K dated February 21,    2006)  10.51.5*     Methodology for determining special grants of performance stock    units under the Cingular Wireless Long-Term Compensation Plan    and certain performance targets and matrices for the    2006 — 2008 performance period (Exhibit 99.1 to    Form 8-K dated February 21, 2006)  10.55*     SBC Communications Inc. Salary and Incentive Award Deferral    Plan. (Exhibit 10-g to SBC Communications Inc.    Form 10-K for 2002)  10.56*     SBC Communications Inc. Supplemental Life Insurance Plan.    (Exhibit 10-b to SBC Communications, Inc. Form 10-K    for 2002)  10.57*     SBC Communications Inc. Executive Health Plan, formerly the    Supplemental Health Plan (Exhibit 10-h to SBC    Communications Inc. Form 10-K for 2004)  10.58*     SBC Communications Inc. Senior Management Deferred Compensation    Plan (effective for Units of Participation Having a Unit Start    Date Prior to January 1, 1988). (Exhibit 10-d to SBC    Communications Inc. Form 10-K for 2002)  10.59*     SBC Communications Inc. Cash Deferral Plan (Exhibit 10-gg    to SBC Communications Inc. Form 10-K for 2004)  10.60*     SBC Communications Inc. Stock Purchase and Deferral Plan    (Exhibit 10-ff to SBC Communications Inc. Form 10-K    for 2004)  10.61*     SBC Communications Inc. 2005 Supplemental Employee Retirement    Plan (Exhibit 10-jj to SBC Communications Inc.    Form 10-K for 2004)  10.62*     AT&T 2006 Incentive Plan (Exhibit 10.2 to AT&T    Form 8-K dated January 26, 2006)  12      Statement of Computation of Ratios of Earnings to Fixed Charges  21      Subsidiaries of the Registrant  24      Powers of Attorney  31.1     Certification of President and Chief Executive Officer pursuant    to Section 302 of the Sarbanes-Oxley Act of 2002  31.2     Certification of Chief Financial Officer pursuant to    Section 302 of the Sarbanes-Oxley Act of 2002  32.1(1)     Certification of President and Chief Executive Officer pursuant    to Section 906 of the Sarbanes-Oxley Act of 2002,    18 U.S.C. Section 1350  32.2(1)     Certification of Chief Financial Officer pursuant to    Section 906 of the Sarbanes-Oxley Act of 2002,    18 U.S.C. Section 1350  99.1*     Restated Certificate of Incorporation of Cingular Wireless    Corporation, dated October 2, 2000, as amended on    October 23, 2000 and April 16, 2001 (Exhibit 99.4    to Registration Statement on Form S-4 filed    January 24, 2002, Registration No. 333-81342)
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**CINGULAR WIRELESS LLC** **PART IV****Item 15.****Exhibits and Financial Statement Schedules**     **Exhibit**  **Number** **Description**     99.1.1*     Certificate of Amendment of Restated Certificate of    Incorporation of Cingular Wireless Corporation dated    July 22, 2004 (Exhibit 99.1.1 to Annual Report on    Form 10-K for the year ended December 31, 2005) 99.1.2*     Certificate of Amendment of Restated Certificate of    Incorporation of Cingular Wireless Corporation dated    October 27, 2004 (Exhibit 99.1.1 to Quarterly Report    on Form 10-Q for the quarter ended September 30, 2004)  99.2*     Amended and Restated Bylaws of Cingular Wireless Corporation,    dated October 2, 2000, as amended on January 19, 2001    and November 28, 2001 (Exhibit 99.5 to Registration    Statement on Form S-4 filed January 24, 2002,    Registration No. 333-81342)  99.2.1*     Amendment to Bylaws dated April 30, 2002 (Exhibit 99.6    to Amendment No. 1 to Registration Statement on    Form S-4 filed May 31, 2002, Registration    No. 333-81342) (1)     This exhibit is hereby furnished to the SEC as an accompanying    document and is not to be deemed “filed” for purposes    of Section 18 of the Securities Exchange Act of 1934 or    otherwise subject to the liabilities of that Section, nor shall    it be deemed incorporated by reference into any filing under the    Securities Act of 1933.
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**CINGULAR WIRELESS LLC** **PART IV****Item 15.****Exhibits and Financial Statement Schedules****CAUTIONARY LANGUAGE CONCERNING FORWARD-LOOKING STATEMENTS**In addition to historical information, this document containsforward-looking statements regarding events, financial trends,critical accounting policies, off-balance sheet arrangements,contractual obligations and estimates that may affect our futureoperating results, financial position and cash flows. Thesestatements are based on assumptions and estimates and aresubject to risks and uncertainties.There are possible developments that could cause our actualresults to differ materially from those forecasted or implied byour forward-looking statements. You are cautioned not to placeundue reliance on these forward-looking statements, which arecurrent only as of the date of this filing. We disclaim anyintention or obligation to update or revise any forward-lookingstatements, whether as a result of new information, futureevents or otherwise.While the below list of cautionary statements is not exhaustive,some factors, in addition to those contained in Item 1A.Risk Factors and elsewhere throughout this document, that couldaffect future operating results, financial position and cashflows and could cause actual results to differ materially fromthose expressed or implied in the forward-looking statements are:•     the pervasive and intensifying competition in all markets where    we operate; •     failure to quickly realize capital and expense synergies from    the acquisition of AT&T Wireless as a result of technical,    logistical, regulatory and other factors; •     delays or inability of vendors to deliver hardware, software,    handsets, devices or network equipment, including failure to    deliver such equipment free of claims, including patent claims,    of other parties; •     problems associated with the transition of our network to higher    speed technologies; •     slow growth of our data services due to a lack of popular    applications, terminal equipment, advanced technology and other    factors; •     sluggish economic and employment conditions in the markets we    serve; •     the final outcome of FCC proceedings, including rulemakings and    judicial review, if any, of such proceedings; •     enactment of additional state and federal laws, regulations and    requirements pertaining to our operations; and •     the outcome of pending or threatened complaints and litigation.
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**CINGULAR WIRELESS LLC** **PART IV****SIGNATURES**Pursuant to the requirements of the Securities Exchange Act of1934, the registrant has duly caused this report to be signed onits behalf by the undersigned thereunto duly authorized. Cingular Wireless Llc     By: Cingular Wireless    Corporation,         as Manager By:     /s/ Peter A. Ritcher           Peter A. Ritcher     Chief Financial Officer     (Principal Financial Officer)Date: February 24, 2006            /s/ Stanley T. Sigman