AT&T announces major restructuring for 21st Century

September, 20, 1995 -- NEW YORK -- AT&T Chairman Robert E. Allen today
announced plans for a strategic restructuring that would separate AT&T
into three publicly traded, global companies.

Allen said the company was taking this bold step to capitalize on the
opportunities in each business' segment of the global information industry
-- communications services, communications equipment, and
transaction-intensive computing.

Under the plan, AT&T shareowners would hold shares in each company. A
fourth business -- AT&T Capital Corporation -- would be sold.

The AT&T Board of Directors approved pursuing the restructuring plan at a
special meeting this morning. AT&T hopes to complete all transactions by
the end of 1996.

"Changes in customer needs, technology and public policy are radically
transforming our industry," said Allen. "We now see this restructuring as
the next logical turn in AT&T's journey since divestiture. It will make
AT&T's businesses more valuable to our shareowners, even more responsive
to their customers, and better able to focus on the growth opportunities
in their individual markets.

"Under the plan announced today," Allen said, "one of the new companies
would focus on providing the world's best `anytime, anywhere'
communications and information services."

Operating under the familiar "AT&T" brand name, the services company would
consist of AT&T's current Communications Services Group, the AT&T
Universal Card Services Corporation, the newly established AT&T Solutions
consulting and systems-integration organization, and AT&T Wireless
Services, formerly McCaw Cellular Communications.

The company also plans to create an AT&T Laboratories unit around the core
of Bell Laboratories people dedicated to research and development in
communications services. In 1994, AT&T's services units had combined
revenues of more than $49 billion, making them the world leader in the
communications services market.

"AT&T's product and systems businesses, along with world-renowned Bell
Laboratories, would constitute a communications systems and technology
company that would immediately be the global leader in its industry," said
Allen.

It would include AT&T's Network Systems Group, Global Business
Communications Systems, Consumer Products, AT&T Paradyne and
Microelectronics. In 1994, these businesses had total sales of
approximately $20 billion. The new company, as yet unnamed, would be a
powerful competitor in the fast-growing communications systems market.

AT&T is considering an Initial Public Offering for approximately 15 percent
of the shares of the new equipment company in the first half of 1996.

"Our services and systems businesses are at the intersection of tremendous
change and opportunity," said Allen. "This restructuring ensures that each
can follow the path of greatest opportunity without worrying about bumping
into each other along the way."

The company's computer unit, AT&T Global Information Solutions, would be
launched as an independent company by spinning it off to AT&T shareowners,
following an aggressive turnaround effort also announced today.

GIS Chairman and CEO Lars Nyberg is taking decisive action to create a
smaller, more focused and swifter business. GIS will continue to develop,
manufacture and market computer platforms for any industry, but will focus
its unique capabilities on the three key industry segments where it has a
leading position -- financial, retail and communications.

"Lars Nyberg is the right leader to get our computer business back on
track," said Allen. "His goal is to be world-class in a few targeted
industry segments and in delivering high-quality computer platforms and
services. I believe that's not only worth doing, but doable. GIS's
customers and employees can count on AT&T's complete support during this
transition."

Nyberg assumed his post in June following a 20-year career at Philips
Electronics NV, where he turned around that company's computer business.

As part of its turnaround effort, GIS will halt manufacture of personal
computers, ceasing distribution through value-added resellers and retail
outlets. It will continue to offer customers personal computers as part of
total solutions through an agreement with an outside supplier that it
expects to announce soon.

GIS will continue to support and service all its current hardware and
software installations and will aggressively market its service
capabilities to all industries. And it will continue to have a strong
commercial relationship with Bell Laboratories.

GIS -- which currently employs about 43,000 people in more than 120
countries -- also announced a major cost-cutting initiative that will lead
to the elimination of approximately 8,500 jobs.

AT&T will incur a one-time, pre-tax charge estimated at approximately $1.5
billion against third-quarter earnings to cover the costs of the GIS
restructuring, reducing 1995 earnings by $1 billion, or 66 cents per
share. Excluding this charge, AT&T said it continues to target
earnings-per-share growth of at least 10 percent in 1995.

In addition, AT&T plans to sell its remaining interest in AT&T Capital
Corporation to the general public or to another company. AT&T holds in
excess of 80 percent of Capital Corp. shares, having sold a minority
interest to the general public in 1993. Capital Corp. is already one of
the largest equipment leasing and financing companies in the United
States. In 1994, it had revenues of approximately $1.4 billion and was
profitable.

Proceeds from the sale of Capital Corp. and from the initial public
offering of the new equipment business will be used to retire current AT&T
debt, giving each of the new businesses balance sheets appropriate to its
industry.

The company intends to adjust each business' capital structure to ensure
that it has the flexibility to raise resources as it needs them. AT&T
recognizes the importance of its relationship with its debt holders. The
company said its ability to satisfy its obligations to its debt holders
will not be impaired as a result of these transactions.

AT&T said that each of the businesses it is establishing will have
everything it needs to meet customers' needs. Each already has seasoned
management and a productive work force. Each has significant global
operations. The service, equipment and computer businesses each has the
sophisticated systems-integration capabilities necessary to provide
complete solutions to its set of customers. And, where it makes sense to
partner in serving a customer's needs, the new businesses could establish
commercial relationships with each other.

"Our first priority throughout this transition period is to ensure that
none of our businesses misses a beat on any customer commitment," Allen
said.

Financial details on the transactions will be released as they become
available in accordance with securities regulations.

AT&T, which currently has some 303,000 employees, said it is too early to
estimate the exact employment impact of the planned restructuring. On the
one hand, all three new companies will need additional resources to
establish themselves as free-standing, independent companies. However,
each company participates in a hotly competitive market and will continue
to size its operations as efficiently as possible. On balance, it is
likely that the combined new companies will have fewer employees than the
present AT&T.

The company said it will ensure that any employees dislocated by the
restructuring will have access to job opportunities across the total
corporation, as well as to a full range of assistance, ranging from job
counseling to retraining.

Allen, who will continue as chairman and CEO of the new AT&T, will chair a
committee of senior AT&T executives to oversee the restructuring. The
committee members are Hal Burlingame, senior vice president of Human
Resources; Marilyn Laurie, senior vice president of Public Relations and
Employee Communications; Rick Miller, executive vice president and chief
financial officer, and John Zeglis, senior vice president and general
counsel.

Allen also appointed senior officers to lead the transition of each new
company. They are: Alex J. Mandl, CEO of the Communications Services
Group, for the communications services company; Richard A. McGinn, CEO of
the Network Systems Group, for the systems and technology company; along
with the incumbent CEOs of GIS, Lars Nyberg, and AT&T Capital Corporation,
Thomas C. Wajnert. Allen said that the company's Board of Directors would
name the permanent executive leadership at the appropriate time.

All of these transactions are expected to be tax-free to shareowners. AT&T
intends to seek rulings from the Internal Revenue Service with respect to
the tax-free treatment of the transactions. While AT&T does not anticipate
the need for regulatory, Department of Justice or decree court approvals,
the company did call attention to the complexity of the issues to be
resolved in the months ahead.

For example, immediate disposition of AT&T's final 20 percent interest in
AT&T Capital Corp. would require modifications to certain existing
agreements. While AT&T is confident of its ability to resolve all these
issues, there can be no guarantee that the restructuring plan will be
implemented or that changes in the plan will not be made. The investment
banking firm of Morgan Stanley and the law firm of Wachtell Lipton Rosen &
Katz are serving as advisers to AT&T.
 
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