The AT&T Retirement Savings and Profit Sharing Plan (the “Plan” or “RSPSP”) is a defined contribution plan established by AT&T Corp. (“AT&T”) to provide a convenient way for employees of certain participating companies of AT&T to save on a regular and long-term basis. The RSPSP participates in the AT&T Savings Master Trust (“Master Trust”) for the investment of the pooled assets of various funds. Each participating plan has an undivided interest in the Master Trust. The trustee of the Master Trust is State Street Bank and Trust Company (“Trustee”).

An eligible employee enters the Plan by authorizing a payroll allotment to invest his/her contributions in one or more of twenty-six different funds as set forth in the current Plan documents. A participant who did not have, as of July 30, 2004, or who does not continue to maintain a balance in the Fidelity Low-Priced Stock Fund, cannot invest in the Fidelity Low-Priced Stock Fund through the Plan. On December 6, 2004, Fidelity Investments (“Fidelity”) implemented an enterprise-wide policy to monitor and address excessive short-term trading in Fidelity funds sold through retail or 401(k) plans for which they keep the records. This policy maintains standards for warning participants and suspending trading privileges, if necessary, in accordance with the prospectus rules. Fidelity has offered to implement this policy for other mutual fund providers and T. Rowe Price and Legg Mason agreed to have their funds monitored by Fidelity. Effective August 29, 2005, the short-term holding period for the Morgan Stanley Institutional Fund – International Equity Portfolio, Class A Shares was reduced from 60 days to 30 days.

In March 2005, in response to a change in the law, the automatic distribution threshold was reduced to $1,000 from $5,000.

On November 18, 2005, AT&T Corp. was acquired by AT&T Inc. (formerly known as SBC Communications Inc.). As a result of the acquisition, the AT&T Corp. common stock held in the AT&T Stock Fund was converted to AT&T Inc. common stock based on a conversion ratio. In addition, a special cash dividend of $1.30 was received for each share of AT&T Corp. common stock and was invested in the AT&T Stable Value Fund. As part of the conversion process, the AT&T Stock Fund was closed for participant transactions from 4:00 p.m. Eastern Time on November 18, 2005, through 9:30 a.m. Eastern Time on November 23, 2005.

Employee allotments of 2% to 16% of salary may be authorized. An employee may designate allotments as pre-tax allotments, after-tax allotments or as a combination of pre-tax and after-tax allotments. All participant contributions and earnings thereon are immediately vested and are not subject to forfeiture. Pre-tax contributions may be made up to the Internal Revenue Service limit of $14,000 in 2005. When an employee contributes to the Plan, the employing company (AT&T or any AT&T subsidiary participating in the Plan) will contribute an amount equal to 66-2/3% of the first 6% of the employee’s salary contributed. Employing company contributions are made in accordance with the participant’s elected investment direction. A participant becomes 100% vested in the employing company contributions after three years of vesting service.

Employees who are age 50 or older on or before December 31 may be eligible to make pre-tax contributions beyond the Internal Revenue Service pre-tax limit. The 2005 catch-up contribution limit set by the Internal Revenue Service is $4,000. No employing company contribution is made on catch-up contributions.

The employing company may make quarterly or an annual discretionary profit-sharing contribution of up to 6% of each participant’s eligible compensation for participants with at least six months of service with a participating company. A participant becomes vested in the profit-sharing contribution on a 5-year graduated schedule (20% per year of vesting service). In 2005, one of the participating companies made profit-sharing contributions.