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AT&T ESTIMATES $7 BILLION, NON-CASH CHARGE FOR RETIREE BENEFITS

 NEW YORK, Feb. 16 /PRNewswire/ -- AT&T (NYSE: T) today said it expects its liability for current and future retiree health care and other benefits will be approximately $7 billion, which will be charged against its first quarter 1993 earnings.
 The company had previously estimated the post-tax liability at $5.5 billion to $7.5 billion. Under new accounting rules, companies must begin to reflect on their balance sheets expected liabilities for post-employment benefits by the end of this quarter.
 The effect of the change on future earnings is expected to be negligible, AT&T said.
 As previously reported, AT&T also estimated that its 1993 net income would be increased by approximately $500 million under another new rule that changes accounting for income taxes. Companies must also adopt this new standard by this quarter.
 AT&T's 1992 net income was $3.807 billion or $2.86 per share.
 The retiree benefits accounting change, AT&T emphasized, would have no affect on its present and future retiree health benefits. Nor would the action affect AT&T's cash flow, its long-term earnings objectives, its ability to pay future dividends or invest in research and development or capital expansion programs, AT&T said.
 In 1991 AT&T began pre-funding health costs for its 141,000 retirees through separate trusts; company contributions now total $773 million. It has also placed limits, beginning in 1995, on the amount of the company's contribution toward retiree health costs -- in effect, a sharing of the insurance "premiums" paid by each party -- without limiting the amount of claims paid for a retiree. The cap for such premiums ranges from $850 to $5650 a year, depending on a retiree's age and marital status.
 For its 312,700 current employees, the company has also taken steps to control future benefit costs and improve health assessment and health promotion programs while ensuring that the employees have competitive medical coverage.
 AT&T introduced a flexible benefits program for its management employees. Managers choose the types and amount of benefits to suit their needs; they pay "premium" amounts, if any, above a pre-set limit.
 For occupational employees, AT&T and its unions -- the Communications Workers of America and the International Brotherhood of Electrical Workers -- developed a managed care network of professionals who agree to provide services at reduced rates. Employees who choose non-network providers generally have to pay more out-of-pocket expenses.
 The new income tax accounting rule requires companies to determine the amount of their deferred income taxes based on the tax rates that will be in effect when taxes will be paid or refunds received. Like most other companies, some of AT&T's deferred taxes were calculated based on higher tax rates in effect when the deferrals were established. AT&T's net deferred-tax liability at the end of 1992 was $2.5 billion.
 -0- 02/16/93
 /CONTACT: Dick Gray, 908-221-5057, (Home), 908-232-3706 or Burke Stinson, 908-221-2062, (Home), 201-377-0902, Both for AT&T/
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CO: AT&T ST: New York IN: TLS SU:

JP -- NY014 -- 6690 02/16/93 08:24 EST
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Publication:PR Newswire
Date:Feb 16, 1993
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