Attachment: 8-K 2.02 AT&T 4TH QUARTER 2021 EARNINGS RELEASE

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AT&T Reports Fourth-Quarter and Full-Year Results

Fourth-Quarter Consolidated Results

•Consolidated revenues of $41.0 billion

•Reported EPS of $0.69 compared to ($1.95) in the year-ago quarter, which included non-cash charges

•Adjusted EPS of $0.78 compared to $0.75 in the year-ago quarter

•Cash from operations of $11.3 billion

•Capital expenditures of $3.8 billion; gross capital investment1 of $4.9 billion and cash content spend of $4.6 billion

•Free cash flow2 of $8.7 billion

Full-Year Consolidated Results

•Consolidated revenues of $168.9 billion

•Reported EPS of $2.76 compared to ($0.75) in the prior year, which included non-cash charges

•Adjusted EPS of $3.40 compared to $3.18 in the prior year

•Cash from operations of $42.0 billion

•Capital expenditures of $16.5 billion; gross capital investment1 of $21.6 billion

•Free cash flow2 of $26.8 billion; total dividend payout ratio3 of 56%

Note: AT&T’s fourth-quarter earnings conference call will be webcast at 8:30 a.m. ET on Wednesday, January 26, 2022. The webcast and related materials will be available on AT&T’s Investor Relations website at https://investors.att.com.

DALLAS, January 26, 2022 — AT&T Inc. (NYSE:T) reported fourth-quarter results that showed continuing customer growth in wireless, fiber and HBO Max. For the full year, AT&T continued to lead the industry in postpaid phone net adds, gaining more subscribers than in the prior 10 years combined; added more than 1 million fiber subscribers — the fourth consecutive year in which it has added 1 million or more subscribers; and surpassed the high end of its guidance for global HBO Max and HBO subscribers with nearly 74 million subscribers at the end of 2021.

“A year and a half ago, we began simplifying our business to reposition AT&T for growth and we’re extremely pleased with how we’ve executed on that commitment,” said John Stankey, AT&T CEO. “We ended 2021 the way we started it – by growing our customer relationships, running our operations more effectively and efficiently, and sharpening our focus. Our momentum is strong and we’re confident there is more opportunity to continue to grow our customer base and drive costs from the business.

“We’re at the dawn of a new age of connectivity. Our focus now is to be America’s best connectivity provider and also ensure our media assets are positioned to grow and truly become a global media distribution leader. Once we do this, we’ll unlock the true value of these businesses and provide a great opportunity for shareholders.”

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Fourth-Quarter Highlights

Communications

•Mobility:

◦884,000 postpaid phone net adds; 3.2 million for full year

◦1.3 million postpaid net adds; 4.5 million for full year

◦Postpaid phone churn of 0.85%, 0.76% for full year

◦Revenues up 5.1%; service revenues up 4.6%; equipment revenues up 6.2%

◦Operating income of $5.4 billion, up 5.2% year over year; EBITDA4 up 4.3%

◦Operating income margin of 25.3%; EBITDA service margin5 50.5%

•Business Wireline:

◦Operating income margin of 15.2%; EBITDA margin4 37.5%, up 50 basis points due to cost efficiencies

•Consumer Wireline:

◦271,000 AT&T Fiber net adds; 1.0 million for full year

◦Revenues up 1.4%; broadband revenues up 5.4% with ARPU growth of 4.2%

WarnerMedia

•Total global HBO Max and HBO subscribers6 of 73.8 million, up 13.1 million year over year; domestic subscribers7 of 46.8 million, up 5.3 million for full year

•Domestic HBO Max and HBO subscriber ARPU8 of $11.15

•Total revenues up 15.4% in fourth quarter to $9.9 billion

•Direct-to-Consumer subscription revenues up 11.5% in fourth quarter

Consolidated Financial Results

Consolidated revenues for the fourth quarter totaled $41.0 billion versus $45.7 billion in the year-ago quarter, down 10.4% reflecting the impact of divested businesses, mainly U.S. Video in the third quarter and Vrio in the fourth quarter, and lower Business Wireline revenues. Decreases were partially offset by higher WarnerMedia revenues, including a partial recovery from prior-year pandemic impacts, and higher Mobility and Consumer Wireline revenues. Excluding impacts of the U.S. Video business and Vrio from both quarters, consolidated revenues totaled $40.6 billion9 compared to $39.0 billion in the year-ago quarter.

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Operating expenses were $35.7 billion versus $56.4 billion in the year-ago quarter. Expenses declined due to $16.4 billion of non-cash asset impairments in the prior year, the separation of the U.S. Video operations, and impacts of Vrio and other divested businesses. These declines were partially offset by higher WarnerMedia programming, marketing and selling costs, and higher domestic wireless equipment costs, including 3G network shutdown costs. Additionally, depreciation and amortization expense was $1.3 billion lower year over year, largely due to the impairments of long-lived assets taken in 2020 and ceasing depreciation and amortization of held-for-sale businesses.

Operating income (loss) was $5.3 billion versus ($10.7) billion in the year-ago quarter primarily due to non-cash asset impairments in the prior year. When adjusting for merger-amortization costs and other items, adjusted operating income was $6.6 billion10 versus $7.8 billion in the year-ago quarter. Adjusted operating income was comparable when excluding the U.S. Video business and Vrio from both quarters.

Fourth-quarter net income (loss) attributable to common stock was $5.0 billion, or $0.69 per diluted common share, versus ($13.9) billion, or ($1.95) per common share in the year-ago quarter. Adjusting for $0.09, which includes merger-amortization costs, a proportionate share of intangible amortization at the DIRECTV equity method investment, an actuarial gain on benefit plans, and other items, earnings per diluted common share was $0.78 compared to $0.75 in the year-ago quarter.

Cash from operating activities was $11.3 billion, up $1.2 billion year over year, including content spend of $4.6 billion. Capital expenditures were $3.8 billion in the quarter. Gross capital investment totaled $4.9 billion, which includes $0.6 billion of cash payments for vendor financing and excludes $0.5 billion of FirstNet reimbursements. Free cash flow, including $1.3 billion of distributions from DIRECTV classified as investing activities, was $8.7 billion for the quarter. Net debt decreased by $1.7 billion sequentially, and net debt-to-adjusted EBITDA at the end of the fourth quarter was 3.22x.11

Full-Year Results

For full-year 2021 when compared with 2020 results, AT&T's consolidated revenues totaled $168.9 billion versus $171.8 billion, reflecting the separation of the U.S. Video business in the third quarter of 2021, and the impacts from other divested businesses. These decreases were partially offset by higher revenues in WarnerMedia and Communications. Excluding impacts of U.S. Video and Vrio from both years, consolidated revenues totaled $153.2 billion9 compared to $144.6 billion in 2020.

Operating expenses were $145.5 billion in 2021 compared with $165.4 billion in 2020. Expenses declined due to $14.0 billion lower non-cash asset impairments year over year, a partial year of U.S. Video in 2021, and impacts of other divested businesses. These declines were partially offset by higher WarnerMedia programming, marketing and selling costs, and higher domestic wireless equipment costs. Additionally, depreciation and amortization expense was $5.7 billion lower year over year, largely due to the impairments of long-lived assets taken in 2020 and ceasing depreciation and amortization of held-for-sale businesses.

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Operating income was $23.3 billion compared to $6.4 billion in the prior year, and operating income margin was 13.8% versus 3.7%. With adjustments for both years, operating income was $32.8 billion10 versus $34.1 billion in 2020, and operating income margin was 19.4% versus 19.8%. Excluding impacts of U.S. Video and Vrio from both years, adjusted operating income totaled $30.5 billion12 compared to $32.4 billion in 2020.

Equity in net income (loss) of affiliates of $0.6 billion includes $0.6 billion from the DIRECTV investment for the five months after separation. With adjustment for a proportionate share of intangible amortization, adjusted equity in net income from the DIRECTV investment was $1.4 billion.13

2021 net income (loss) attributable to common stock was $19.9 billion, or $2.76 per diluted common share, versus ($5.4) billion, or ($0.75) per common share, in 2020. With adjustments for both years, earnings per diluted common share was $3.40 compared to $3.18 in 2020.

Cash from operating activities was $42.0 billion, down $1.2 billion year over year, including content spend of $19.2 billion, which was up $4.3 billion year over year. Capital expenditures were $16.5 billion for the year. Gross capital investment totaled $21.6 billion, which includes $4.6 billion of cash payments for vendor financing and excludes $0.5 billion of FirstNet reimbursements. Full-year free cash flow2, which includes $1.3 billion of distributions from DIRECTV classified as investing activities, was $26.8 billion for the year compared to $27.5 billion in 2020. The company’s free cash flow to total dividend payout ratio3 for the full year was 56%. Net debt increased by $8.7 billion in the year.

Communications Operational Highlights

Fourth-quarter revenues were $30.2 billion, up 2.4% year over year due to increases in Mobility and Consumer Wireline more than offsetting a decline in Business Wireline. Operating contribution was $6.5 billion, up 1.4% year over year, with operating income margin of 21.4%, compared to 21.6% in the year-ago quarter.

Mobility

•Revenues were up 5.1% year over year to $21.1 billion due to higher service and equipment revenues. Service revenues were $14.7 billion, up 4.6% year over year due to subscriber gains and the lapping of pandemic impacts on international roaming revenues. Equipment revenues were $6.5 billion, up 6.2% year over year, driven by increased sales of higher-priced smartphones.

•Operating expenses were $15.8 billion, up 5.1% year over year due to higher equipment costs, including 3G network shutdown costs of approximately $130 million, and higher HBO Max bundling costs, partially offset by lower marketing and support.

•Operating income was $5.4 billion, up 5.2% year over year. Operating income margin was 25.3%, flat with the year-ago quarter.

•EBITDA was $7.4 billion, up 4.3% year over year with EBITDA margin of 35.0%, down from 35.3% in the year-ago quarter. EBITDA service margin was 50.5%, compared to 50.6% in the year-ago quarter.

•Total net adds were 5.3 million including:

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▪1,285,000 postpaid net adds, with

•884,000 postpaid phone net adds

•31,000 postpaid tablet and other branded computing device net adds

•370,000 other net adds

▪24,000 prepaid phone net adds

•Postpaid churn was 1.02% versus 0.94% in the year-ago quarter. Postpaid phone churn was 0.85% versus 0.76% in the year-ago quarter. Prepaid phone churn was less than 3% with Cricket substantially lower.

•Postpaid phone-only ARPU was $54.06, down 0.7% versus the year-ago quarter, due to the impacts of promotional discount amortization.

Business Wireline

•Revenues were $5.9 billion, down 5.6% year over year, partially due to the prior-year increase for pandemic-related connectivity, lower demand for legacy voice and data services, and a strategic decision to deemphasize non-core services.

•Operating expenses were $5.0 billion, down 4.8% year over year due to the impact of ongoing operational cost efficiencies.

•Operating income was $0.9 billion, down 10.0% with operating income margin of 15.2%, compared to 15.9% in the year-ago quarter.

•EBITDA was $2.2 billion, down 4.3% year over year with EBITDA margin of 37.5%, compared to 37.0% in the year-ago quarter.

•More than 675,000 U.S. business buildings are lit with fiber from AT&T, enabling high-speed fiber connections to more than 2.75 million U.S. business customer locations. Nationwide, more than 9.5 million business customer locations are on or within 1,000 feet of AT&T fiber.14

Consumer Wireline

•Revenues were $3.2 billion, up 1.4% year over year due to gains in broadband more than offsetting declines in legacy voice and data services and other services. Broadband revenues increased 5.4%, which reflects fiber subscriber growth and higher ARPU resulting from increases in higher-revenue fiber customers.

•Operating expenses were $3.0 billion, up 4.1% year over year largely driven by higher advertising, network and technology, and higher depreciation costs, partially offset by lower amortization of deferred fulfillment costs.

•Operating income was $201 million, down 26.9% year over year, with operating income margin of 6.4%, compared to 8.8% in the year-ago quarter.

•EBITDA was $1.0 billion, down 2.3% year over year with EBITDA margin of 31.3%, compared to 32.5% in the year-ago quarter.

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•Total broadband and DSL subscriber net losses were 20,000, reflecting growth in fiber subscribers mostly offsetting losses in slower-speed services. Full-year 2021 fiber net adds totaled about 1.0 million, the fourth consecutive year in which the company added 1 million or more fiber subscribers. AT&T Fiber is marketed to about 16 million customer locations.

WarnerMedia Operational Highlights

Revenues were $9.9 billion, up 15.4% versus the year-ago quarter, driven by higher content and other revenues, including the partial recovery from prior-year impacts of the pandemic and higher subscription revenues, partially offset by lower advertising revenues. Subscription revenues were $3.8 billion, up 5.4%, primarily reflecting growth of HBO Max. Content and Other revenues were $4.4 billion, up 45.0%, driven by higher TV licensing and theatrical. Advertising revenues were $1.6 billion, down 12.9% when compared to the prior year due to lower audiences with tough comparisons to the prior year political environment.

•Operating expenses totaled $8.3 billion, up 38.0% when compared to the fourth quarter of 2020, driven by higher programming and marketing costs, and incremental selling costs associated with DIRECTV advertising revenue sharing arrangements.

•Operating contribution was $1.6 billion, down 37.8%. Operating income was $1.6 billion, down 37.9% year over year, as continued HBO Max investments and incremental advertising revenue sharing costs were partially offset by higher revenues and cost savings initiatives. Operating income margin was 16.0%, compared to 29.7% in the year-ago quarter.

•At the end of the quarter, there were 73.8 million global HBO Max and HBO subscribers, up 13.1 million year over year and up 4.3 million sequentially, driven by international as well as domestic retail subscriber gains. At the end of the quarter, there were 46.8 million domestic HBO Max and HBO subscribers versus 41.5 million in the year-ago quarter, up 5.3 million year over year. Domestic subscriber ARPU was $11.15.

Latin America Operational Highlights

Revenues were $1.1 billion, down 29.0% year over year due to the sale of Vrio on November 15, 2021. Operating contribution was ($80) million compared to ($167) million in the year-ago quarter reflecting ceasing depreciation on Vrio held-for-sale assets. Operating income margin was (7.4%), compared to (11.0%) in the prior-year quarter.

Mexico

•Revenues were $704 million, down 4.3% year over year primarily due to lower equipment revenues partially offset by increased growth in service revenues. Service revenues were $485 million, up 5.7% year over year, driven by a growing subscriber base and growth in other services. Equipment revenues were $219 million, down 20.9% year over year driven by lower volumes. Operating loss was ($117) million versus ($126) million in the year-ago quarter.

•Total wireless net adds were 889,000 including 858,000 prepaid net adds, 26,000 postpaid net adds, and 5,000 reseller net adds.

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2022 Outlook

The company is planning to host a virtual analyst event in the first half of March. At that event, the company expects to provide additional insight and expectations for financial and operational performance of the Communications Company following the close of the pending WarnerMedia transaction, which the company now expects to close in the second quarter.

For the full year, including WarnerMedia and Xandr, the company expects:

•Consolidated revenue growth in the low-single digits range compared to 2021 consolidated revenues of $153.2 billion9, which excludes U.S. Video and Vrio.

•Adjusted EPS15 from $3.10 to $3.15.

•Gross capital investment1 in the $24 billion range with capital expenditures in the $20 billion range.

•2022 free cash flow16 in the $23 billion range.

For the full year, the company expects the contribution for WarnerMedia and Xandr to be:

•Revenues in the $37 to $39 billion range.

•EBITDA in the $6 to $7 billion range.

•Free cash flow16 of approximately $3 billion.

1Gross capital investment includes capital expenditures and cash payments for vendor financing and excludes FirstNet reimbursements. In 4Q21, gross capital investment included $0.6 billion in vendor financing payments and excluded $0.5 billion in FirstNet reimbursements. In 2021, gross capital investment included $4.6 billion in vendor financing payments and excluded $0.5 billion in FirstNet reimbursements. In 2022, vendor financing payments are expected to be in the $4 billion range.

2 Free cash flow is a non-GAAP financial measure that is frequently used by investors and credit rating agencies to provide relevant and useful information. In 4Q21, free cash flow is cash from operating activities of $11.3 billion, plus cash distributions from DIRECTV classified as investing activities of $1.3 billion, minus capital expenditures of $3.8 billion. In 2021, free cash flow is cash from operating activities of $42.0 billion, plus cash distributions from DIRECTV classified as investing activities of $1.3 billion, minus capital expenditures of $16.5 billion.

3 Free cash flow total dividend payout ratio is total dividends paid divided by free cash flow. For full-year 2021, dividends paid totaled $15.1 billion.

4EBITDA is operating income before depreciation and amortization. EBITDA margin is operating income before depreciation and amortization, divided by total revenues.

5EBITDA service margin is operating income before depreciation and amortization, divided by total service revenues.

6Global HBO Max and HBO subscribers consist of domestic and international HBO Max and HBO subscribers, and exclude free trials, basic and Cinemax subscribers.

7Domestic HBO Max and HBO subscribers consist of U.S. accounts with access to HBO Max (including wholesale subscribers that may not have signed in) and HBO accounts, and exclude free trials and Cinemax subscribers.

8Domestic subscriber ARPU is defined as domestic HBO Max and HBO subscriber revenues during the period divided by average domestic HBO Max and HBO subscribers during the period, excluding HBO Commercial and other bulk-billed revenues and subscribers during the period.

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9 Operating Revenues, excluding impacts of the U.S. Video business and Vrio, of $40.6 billion for 4Q21 is calculated as Operating Revenues of $41.0 billion minus Vrio operating revenues of $0.4 billion. For full-year 2021, Operating Revenues, excluding impacts of the U.S. Video business and Vrio, of $153.2 billion is calculated as Operating Revenues of $168.9 billion minus Video operating revenues of $15.5 billion, minus Vrio operating revenues of $2.6 billion, plus WarnerMedia sales for content and advertising of $2.5 billion that are external after close of the transactions. Further information is included in our Form 8-K dated January 26, 2022.

10 Adjusted Operating Income is Operating Income adjusted for revenues and costs we consider non-operational in nature, including items arising from asset acquisitions or dispositions. Adjusted Operating Income for 4Q21 of $6.6 billion is calculated as Operating Income of $5.3 billion plus $1.3 billion of adjustments as detailed in the Discussion and Reconciliation of Non-GAAP Measures included in our Form 8-K dated January 26, 2022. Adjusted Operating Income for 2021 of $32.8 billion is calculated as Operating Income of $23.3 billion plus $9.5 billion of adjustments.

11Net Debt to adjusted EBITDA ratios are non-GAAP financial measures that are frequently used by investors and credit rating agencies to provide relevant and useful information. Our Net Debt to Adjusted EBITDA ratio is calculated by dividing the Net Debt of $156.2 billion (Total Debt of $177.4 billion at December 31, 2021 less Cash and Cash Equivalents of $21.2 billion) by the sum of the most recent four quarters of Pro Forma Adjusted EBITDA of $48.5 billion ($12.5 billion for March 31, 2021; $12.2 billion for June 30, 2021; $12.5 billion for September 30, 2021; and $11.3 billion for December 31, 2021).

12Adjusted Operating Income, excluding impacts of the U.S. Video business and Vrio, of $30.5 billion for 2021 is calculated as Adjusted Operating Income of $32.8 billion minus $2.4 billion of adjustments to reflect the impacts of the July 31, 2021 U.S. Video separation and the November 15, 2021 Vrio sale. Further detail of these adjustments and information is included in our Form 8-K dated January 26, 2022.

13Adjusted equity in net income from DIRECTV investment is calculated as equity income from DIRECTV reported in Equity in Net Income (Loss) of Affiliates and excludes AT&T’s proportionate share of the noncash depreciation and amortization of fair value accretion from DIRECTV’s revaluation of assets and purchase price allocation.

14The more than 2.75 million U.S. business customer locations are included within the 9.5+ million U.S. business customer locations on or within 1,000 feet of AT&T fiber.

15The company expects adjustments to 2022 reported diluted EPS (that excludes impact of adoption of new accounting standards) to include merger-related amortization in the range of $1 billion per quarter (prior to close of the WarnerMedia-Discovery transaction) and other adjustments, the proportionate share of intangible amortization at the DIRECTV equity method investment in the range of $1.5 billion, a non-cash mark-to-market benefit plan gain/loss, and other items. The company expects the mark-to-market adjustment, which is driven by interest rates and investment returns that are not reasonably estimable at this time, to be a significant item. Our 2022 EPS depends on future levels of revenues and expenses which are not reasonably estimable at this time. Accordingly, we cannot provide a reconciliation between these projected non-GAAP metrics and the reported GAAP metrics without unreasonable effort.

16Free cash flow is cash from operating activities plus cash distributions from DIRECTV classified as investing activities, minus capital expenditures. Due to high variability and difficulty in predicting items that impact cash from operating activities, cash distributions from DIRECTV, and capital expenditures, the company is not able to provide a reconciliation between projected free cash flow and the most comparable GAAP metric without unreasonable effort.

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*About AT&T

AT&T Inc. (NYSE:T) is a diversified, global leader in telecommunications, media and entertainment, and technology. AT&T Communications provides more than 100 million U.S. consumers with communications and entertainment experiences across mobile and broadband. Plus, it serves high-speed, highly secure connectivity and smart solutions to nearly 3 million business customers. WarnerMedia is a leading media and entertainment company that creates and distributes premium and popular content to global audiences through its consumer brands, including: HBO, HBO Max, Warner Bros., TNT, TBS, truTV, CNN, DC Entertainment, New Line, Cartoon Network, Adult Swim and Turner Classic Movies. AT&T Latin America provides wireless services to consumers and businesses in Mexico.

AT&T products and services are provided or offered by subsidiaries and affiliates of AT&T Inc. under the AT&T brand and not by AT&T Inc. Additional information is available at about.att.com. © 2022 AT&T Intellectual Property. All rights reserved. AT&T, the Globe logo and other marks are trademarks and service marks of AT&T Intellectual Property and/or AT&T affiliated companies. All other marks contained herein are the property of their respective owners.

Cautionary Language Concerning Forward-Looking Statements

Information set forth in this news release contains financial estimates and other forward-looking statements that are subject to risks and uncertainties, and actual results might differ materially. A discussion of factors that may affect future results is contained in AT&T’s filings with the Securities and Exchange Commission. AT&T disclaims any obligation to update and revise statements contained in this news release based on new information or otherwise.

This news release may contain certain non-GAAP financial measures. Reconciliations between the non-GAAP financial measures and the GAAP financial measures are available on the company’s website at https://investors.att.com.

For more information, contact:

Fletcher Cook

AT&T Inc.

Phone: 214-912-8541

Email: fletcher.cook@att.com

Daphne Avila

AT&T Inc.

Phone: (972) 266-3866

Email: daphne.avila@att.com

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AT&T Inc.
Financial Data
Consolidated Statements of Income
Dollars in millions except per share amounts
Unaudited			Fourth Quarter						Percent			Year Ended						Percent
			2021			2020			Change			2021			2020			Change
Operating Revenues
Service			$	34,088		$	39,051		(12.7)		%	$	146,391		$	152,767		(4.2)		%
Equipment			6,870			6,640			3.5		%	22,473			18,993			18.3		%
Total Operating Revenues			40,958			45,691			(10.4)		%	168,864			171,760			(1.7)		%
Operating Expenses
Cost of revenues
Equipment			7,454			7,084			5.2		%	23,778			19,706			20.7		%
Broadcast, programming and operations			4,906			7,750			(36.7)		%	24,797			27,305			(9.2)		%
Other cost of revenues (exclusive of depreciation and amortization shown separately below)			7,435			8,076			(7.9)		%	31,232			32,909			(5.1)		%
Selling, general and administrative			9,994			10,182			(1.8)		%	37,944			38,039			(0.2)		%
Asset impairments and abandonments			188			16,365			(98.9)		%	4,904			18,880			(74.0)		%
Depreciation and amortization			5,673			6,979			(18.7)		%	22,862			28,516			(19.8)		%
Total Operating Expenses			35,650			56,436			(36.8)		%	145,517			165,355			(12.0)		%
Operating Income (Loss)			5,308			(10,745)			—		%	23,347			6,405			—		%
Interest Expense			1,663			1,894			(12.2)		%	6,884			7,925			(13.1)		%
Equity in Net Income of Affiliates			447			106			—		%	631			95			—		%
Other Income (Expense) — Net			2,354			(3,020)			—		%	9,853			(1,431)			—		%
Income (Loss) Before Income Taxes			6,446			(15,553)			—		%	26,947			(2,856)			—		%
Income Tax (Benefit) Expense			1,056			(2,038)			—		%	5,468			965			—		%
Net Income (Loss)			5,390			(13,515)			—		%	21,479			(3,821)			—		%
Less: Net Income Attributable to     Noncontrolling Interest			(347)			(368)			5.7		%	(1,398)			(1,355)			(3.2)		%
Net Income (Loss) Attributable to AT&T			$	5,043		$	(13,883)		—		%	$	20,081		$	(5,176)		—		%
Less: Preferred Stock Dividends			(51)			(55)			7.3		%	(207)			(193)			(7.3)		%
Net Income (Loss) Attributable    to Common Stock			$	4,992		$	(13,938)		—		%	$	19,874		$	(5,369)		—		%
Basic Earnings Per Share Attributable    to Common Stock			$	0.69		$	(1.95)		—		%	$	2.77		$	(0.75)		—		%
Weighted Average Common     Shares Outstanding (000,000)			7,172			7,150			0.3		%	7,168			7,157			0.2		%
Diluted Earnings Per Share Attributable     to Common Stock			$	0.69		$	(1.95)		—		%	$	2.76		$	(0.75)		—		%
Weighted Average Common      Shares Outstanding with Dilution (000,000)			7,204			7,176			0.4		%	7,199			7,183			0.2		%

1

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AT&T Inc.
Financial Data
Consolidated Balance Sheets
Dollars in millions
Unaudited			Dec. 31,						Dec. 31,
			2021						2020
Assets
Current Assets
Cash and cash equivalents			$	21,169					$	9,740
Accounts receivable – net of related allowance for credit loss of $771 and $1,221			17,571						20,215
Inventories			3,464						3,695
Prepaid and other current assets			17,793						18,358
Total current assets			59,997						52,008
Noncurrent Inventories and Theatrical Film and Television Production Costs			18,983						14,752
Property, Plant and Equipment – Net			125,904						127,315
Goodwill			133,223						135,259
Licenses – Net			113,830						93,840
Trademarks and Trade Names – Net			21,938						23,297
Distribution Networks – Net			11,942						13,793
Other Intangible Assets – Net			11,783						15,386
Investments in and Advances to Equity Affiliates			7,274						1,780
Operating Lease Right-Of-Use Assets			24,180						24,714
Other Assets			22,568						23,617
Total Assets			$	551,622					$	525,761
Liabilities and Stockholders’ Equity
Current Liabilities
Debt maturing within one year			$	24,630					$	3,470
Note payable to DIRECTV			1,245						—
Accounts payable and accrued liabilities			50,661						50,051
Advanced billings and customer deposits			5,303						6,176
Dividends payable			3,749						3,741
Total current liabilities			85,588						63,438
Long-Term Debt			152,724						153,775
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes			64,871						60,472
Postemployment benefit obligation			12,649						18,276
Operating lease liabilities			21,261						22,202
Other noncurrent liabilities			30,578						28,358
Noncurrent portion of note payable to DIRECTV			96						—
Total deferred credits and other noncurrent liabilities			129,455						129,308
Stockholders’ Equity
Preferred stock			—						—
Common stock			7,621						7,621
Additional paid-in capital			130,112						130,175
Retained earnings			42,350						37,457
Treasury stock			(17,280)						(17,910)
Accumulated other comprehensive income			3,529						4,330
Noncontrolling interest			17,523						17,567
Total stockholders’ equity			183,855						179,240
Total Liabilities and Stockholders’ Equity			$	551,622					$	525,761

2

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AT&T Inc.
Financial Data
Consolidated Statements of Cash Flows
Dollars in millions
Unaudited			Year Ended
			2021						2020
Operating Activities
Net income (loss)			$	21,479					$	(3,821)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization			22,862						28,516
Amortization of film and television costs			11,006						8,603
Distributed (undistributed) earnings from investments in equity affiliates			184						38
Provision for uncollectible accounts			1,240						1,972
Deferred income tax expense			5,246						1,675
Net (gain) loss on investments, net of impairments			(927)						(742)
Pension and postretirement benefit expense (credit)			(3,848)						(2,992)
Actuarial (gain) loss on pension and postretirement benefits			(4,140)						4,169
Asset impairments and abandonments			4,904						18,880
Changes in operating assets and liabilities:
Receivables			(634)						2,216
Other current assets, inventories and theatrical film and television production costs			(16,472)						(13,070)
Accounts payable and other accrued liabilities			1,636						(1,410)
Equipment installment receivables and related sales			(265)						(1,429)
Deferred customer contract acquisition and fulfillment costs			52						376
Postretirement claims and contributions			(822)						(985)
Other - net			456						1,134
Total adjustments			20,478						46,951
Net Cash Provided by Operating Activities			41,957						43,130
Investing Activities
Capital expenditures			(16,527)						(15,675)
Acquisitions, net of cash acquired			(25,453)						(1,851)
Dispositions			8,740						3,641
Distributions from DIRECTV in excess of cumulative equity in earnings			1,323						—
Other - net			(172)						337
Net Cash Used in Investing Activities			(32,089)						(13,548)
Financing Activities
Net change in short-term borrowings with original maturities of three months or less			1,316						(17)
Issuance of other short-term borrowings			21,856						9,440
Repayment of other short-term borrowings			(7,510)						(9,467)
Issuance of long-term debt			9,931						31,988
Repayment of long-term debt			(3,142)						(39,964)
Note payable to DIRECTV, net of payments of $459			1,341						—
Payment of vendor financing			(4,596)						(2,966)
Issuance of preferred stock			—						3,869
Purchase of treasury stock			(202)						(5,498)
Issuance of treasury stock			96						105
Issuance of preferred interests in subsidiaries			—						1,979
Redemption of preferred interest in subsidiaries			—						(1,950)
Dividends paid			(15,068)						(14,956)
Other - net			(2,444)						(4,570)
Net Cash Provided by (Used in) Financing Activities			1,578						(32,007)
Net increase (decrease) in cash and cash equivalents and restricted cash			11,446						(2,425)
Cash and cash equivalents and restricted cash beginning of year			9,870						12,295
Cash and Cash Equivalents and Restricted Cash End of Year			$	21,316					$	9,870

3

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AT&T Inc.
Consolidated Supplementary Data
Supplementary Financial Data
Dollars in millions except per share amounts
Unaudited			Fourth Quarter						Percent			Year Ended						Percent
			2021			2020			Change			2021			2020			Change
Capital expenditures
Purchase of property and equipment			$	3,790		$	2,361		60.5		%	$	16,354		$	15,552		5.2		%
Interest during construction			41			31			32.3		%	173			123			40.7		%
Total Capital Expenditures			$	3,831		$	2,392		60.2		%	$	16,527		$	15,675		5.4		%
Acquisition, net of cash acquired
Business acquisitions			$	—		$	85		—		%	$	—		$	238		—		%
Spectrum acquisitions			1,655			551			—		%	24,672			1,613			—		%
Interest during construction - spectrum			265			—			—		%	781			—			—		%
Total Acquisitions			$	1,920		$	636		—		%	$	25,453		$	1,851		—		%
Cash Paid for Programming and Produced Film/TV Content			$	4,602		$	4,617		(0.3)		%	$	19,164		$	14,898		28.6		%
Dividends Declared per Common Share			$	0.52		$	0.52		—		%	$	2.08		$	2.08		—		%
End of Period Common Shares Outstanding (000,000)												7,141			7,126			0.2		%
Debt Ratio												49.1		%	46.7		%	240		BP
Total Employees												202,600			230,760			(12.2)		%

4

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COMMUNICATIONS SEGMENT

The Communications segment provides wireless and wireline telecom and broadband services to consumers located in the U.S. and businesses globally. The Communications segment contains three reporting units: Mobility, Business Wireline, and Consumer Wireline.

Results have been recast to remove the Video business, instead reporting those results in Corporate and Other.

Segment Results
Dollars in millions
Unaudited			Fourth Quarter						Percent			Year Ended						Percent
			2021			2020			Change			2021			2020			Change
Segment Operating Revenues
Mobility			$	21,146		$	20,119		5.1		%	$	78,254		$	72,564		7.8		%
Business Wireline			5,901			6,251			(5.6)		%	23,937			25,083			(4.6)		%
Consumer Wireline			3,159			3,116			1.4		%	12,539			12,318			1.8		%
Total Segment Operating Revenues			30,206			29,486			2.4		%	114,730			109,965			4.3		%
Segment Operating Contribution
Mobility			5,353			5,088			5.2		%	23,312			22,372			4.2		%
Business Wireline			897			997			(10.0)		%	3,990			4,564			(12.6)		%
Consumer Wireline			201			275			(26.9)		%	977			1,377			(29.0)		%
Total Segment Operating Contribution			$	6,451		$	6,360		1.4		%	$	28,279		$	28,313		(0.1)		%

Supplementary Operating Data
Subscribers and connections in thousands
Unaudited												December 31,						Percent
												2021			2020			Change
Broadband Connections
Broadband												15,074			14,818			1.7		%
DSL												430			566			(24.0)		%
Total Broadband Connections												15,504			15,384			0.8		%
Voice Connections
Retail Consumer Switched Access Lines												6,177			7,263			(15.0)		%
U-verse Consumer VoIP Connections												3,333			3,816			(12.7)		%
Total Retail Consumer Voice Connections												9,510			11,079			(14.2)		%
			Fourth Quarter						Percent			Year Ended						Percent
			2021			2020			Change			2021			2020			Change
Broadband Net Additions
Broadband			24			57			(57.9)		%	256			159			61.0		%
DSL			(30)			(48)			37.5		%	(136)			(164)			17.1		%
Total Broadband Net Additions			(6)			9			—		%	120			(5)			—		%

5

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Mobility

Mobility provides nationwide wireless service and equipment.

Mobility Results
Dollars in millions
Unaudited			Fourth Quarter						Percent			Year Ended						Percent
			2021			2020			Change			2021			2020			Change
Operating Revenues
Service			$	14,669		$	14,022		4.6		%	$	57,590		$	55,542		3.7		%
Equipment			6,477			6,097			6.2		%	20,664			17,022			21.4		%
Total Operating Revenues			21,146			20,119			5.1		%	78,254			72,564			7.8		%
Operating Expenses
Operations and support			13,743			13,023			5.5		%	46,820			42,106			11.2		%
Depreciation and amortization			2,050			2,008			2.1		%	8,122			8,086			0.4		%
Total Operating Expenses			15,793			15,031			5.1		%	54,942			50,192			9.5		%
Operating Income			5,353			5,088			5.2		%	23,312			22,372			4.2		%
Equity in Net Income (Loss) of Affiliates			—			—			—		%	—			—			—		%
Operating Contribution			$	5,353		$	5,088		5.2		%	$	23,312		$	22,372		4.2		%
Operating Income Margin			25.3		%	25.3		%	—		BP	29.8		%	30.8		%	(100)		BP
Supplementary Operating Data
Subscribers and connections in thousands
Unaudited												December 31,						Percent
												2021			2020			Change
Mobility Subscribers
Postpaid												81,534			77,154			5.7		%
Postpaid phone												67,260			64,216			4.7		%
Prepaid												19,028			18,102			5.1		%
Reseller												6,113			6,535			(6.5)		%
Connected Devices												95,116			80,767			17.8		%
Total Mobility Subscribers												201,791			182,558			10.5		%
			Fourth Quarter						Percent			Year Ended						Percent
			2021			2020			Change			2021			2020			Change
Mobility Net Additions
Postpaid Phone Net Additions			884			800			10.5		%	3,196			1,457			—		%
Total Phone Net Additions			908			760			19.5		%	3,850			1,640			—		%
Postpaid			1,285			1,229			4.6		%	4,482			2,183			—		%
Prepaid			29			14			—		%	956			379			—		%
Reseller			(177)			(197)			10.2		%	(534)			(449)			(18.9)		%
Connected Devices			4,134			4,809			(14.0)		%	14,328			14,785			(3.1)		%
Total Mobility Net Additions			5,271			5,855			(10.0)		%	19,232			16,898			13.8		%
Postpaid Churn			1.02		%	0.94		%	8		BP	0.94		%	0.98		%	(4) BP
Postpaid Phone-Only Churn			0.85		%	0.76		%	9		BP	0.76		%	0.79		%	(3) BP

6

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Business Wireline

Business Wireline provides advanced IP-based services, as well as traditional data services to business customers.

Results have been recast to characterize revenues as either service or equipment, consistent with the way we are managing the business unit.

Business Wireline Results
Dollars in millions
Unaudited			Fourth Quarter						Percent			Year Ended						Percent
			2021			2020			Change			2021			2020			Change
Operating Revenues
Service			$	5,727		$	6,042		(5.2)		%	$	23,224		$	24,313		(4.5)		%
Equipment			174			209			(16.7)		%	713			770			(7.4)		%
Total Operating Revenues			5,901			6,251			(5.6)		%	23,937			25,083			(4.6)		%
Operating Expenses
Operations and support			3,687			3,938			(6.4)		%	14,755			15,303			(3.6)		%
Depreciation and amortization			1,317			1,316			0.1		%	5,192			5,216			(0.5)		%
Total Operating Expenses			5,004			5,254			(4.8)		%	19,947			20,519			(2.8)		%
Operating Income			897			997			(10.0)		%	3,990			4,564			(12.6)		%
Equity in Net Income (Loss) of Affiliates			—			—			—		%	—			—			—		%
Operating Contribution			$	897		$	997		(10.0)		%	$	3,990		$	4,564		(12.6)		%
Operating Income Margin			15.2		%	15.9		%	(70)		BP	16.7		%	18.2		%	(150)		BP

7

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Consumer Wireline

Consumer Wireline provides internet, including broadband fiber, and voice communication services primarily to residential customers.

Results have been recast to refine the allocation of shared infrastructure and deferred customer acquisition costs between Consumer Wireline and Video.

Consumer Wireline Results
Dollars in millions
Unaudited			Fourth Quarter						Percent			Year Ended						Percent
			2021			2020			Change			2021			2020			Change
Operating Revenues
Broadband			$	2,324		$	2,205		5.4		%	$	9,085		$	8,534		6.5		%
Legacy voice and data services			470			534			(12.0)		%	1,977			2,213			(10.7)		%
Other service and equipment			365			377			(3.2)		%	1,477			1,571			(6.0)		%
Total Operating Revenues			3,159			3,116			1.4		%	12,539			12,318			1.8		%
Operating Expenses
Operations and support			2,169			2,103			3.1		%	8,467			8,027			5.5		%
Depreciation and amortization			789			738			6.9		%	3,095			2,914			6.2		%
Total Operating Expenses			2,958			2,841			4.1		%	11,562			10,941			5.7		%
Operating Income			201			275			(26.9)		%	977			1,377			(29.0)		%
Equity in Net Income (Loss) of Affiliates			—			—			—		%	—			—			—		%
Operating Contribution			$	201		$	275		(26.9)		%	$	977		$	1,377		(29.0)		%
Operating Income Margin			6.4		%	8.8		%	(240)		BP	7.8		%	11.2		%	(340)		BP
Supplementary Operating Data
Subscribers and connections in thousands
Unaudited												December 31,						Percent
												2021			2020			Change
Broadband Connections
Total Broadband and DSL Connections												14,160			14,100			0.4		%
Fiber Broadband Connections												5,992			4,951			21.0		%
Voice Connections
Retail Consumer Switched Access Lines												2,423			2,862			(15.3)		%
U-verse Consumer VoIP Connections												2,736			3,231			(15.3)		%
Total Retail Consumer Voice Connections												5,159			6,093			(15.3)		%
			Fourth Quarter						Percent			Year Ended						Percent
			2021			2020			Change			2021			2020			Change
Broadband Net Additions
Total Broadband and DSL Net Additions			(20)			(2)			—		%	60			(19)			—		%
Fiber Broadband Net Additions			271			273			(0.7)		%	1,041			1,064			(2.2)		%

8

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Business Solutions

As a supplemental presentation to our Communications segment operating results, we are providing a view of our AT&T Business Solutions results which includes both wireless and fixed operations. This combined view presents a complete profile of the entire business customer relationship and underscores the importance of mobile solutions to serving our business customers.

Results have been recast to conform to the current period's classification of revenues.

Business Solutions Results
Dollars in millions
Unaudited			Fourth Quarter						Percent			Year Ended						Percent
			2021			2020			Change			2021			2020			Change
Operating Revenues
Wireless service			$	2,108		$	1,948		8.2		%	$	8,161		$	7,732		5.5		%
Wireline service			5,727			6,042			(5.2)		%	23,224			24,313			(4.5)		%
Wireless equipment			1,030			925			11.4		%	3,414			2,882			18.5		%
Wireline equipment			174			209			(16.7)		%	713			770			(7.4)		%
Total Operating Revenues			9,039			9,124			(0.9)		%	35,512			35,697			(0.5)		%
Operating Expenses
Operations and support			6,011			6,035			(0.4)		%	22,826			22,482			1.5		%
Depreciation and amortization			1,667			1,638			1.8		%	6,570			6,500			1.1		%
Total Operating Expenses			7,678			7,673			0.1		%	29,396			28,982			1.4		%
Operating Income			1,361			1,451			(6.2)		%	6,116			6,715			(8.9)		%
Equity in Net Income (Loss) of Affiliates			—			—			—		%	—			—			—		%
Operating Contribution			$	1,361		$	1,451		(6.2)		%	$	6,116		$	6,715		(8.9)		%
Operating Income Margin			15.1		%	15.9		%	(80)		BP	17.2		%	18.8		%	(160)		BP

9

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WARNERMEDIA SEGMENT

The WarnerMedia segment develops, produces and distributes feature films, television, gaming and other content in various physical and digital formats globally. WarnerMedia content is distributed through basic networks, Direct-to-Consumer (DTC) or theatrical, TV content and games licensing. Segment results also include Xandr advertising and Otter Media Holdings. We disposed of substantially all Otter Media assets in the third quarter of 2021. Additional information is provided as part of the earnings material on the company's Investor Relations website.

Segment Results
Dollars in millions
Unaudited			Fourth Quarter						Percent			Year Ended						Percent
			2021			2020			Change			2021			2020			Change
Segment Operating Revenues
Subscription			$	3,817		$	3,623		5.4		%	$	15,596		$	13,765		13.3		%
Content and other			4,411			3,042			45.0		%	13,514			10,552			28.1		%
Advertising			1,645			1,889			(12.9)		%	6,522			6,125			6.5		%
Total Segment Operating Revenues			9,873			8,554			15.4		%	35,632			30,442			17.0		%
Direct Costs
Programming			4,290			3,040			41.1		%	15,286			11,678			30.9		%
Marketing			1,208			779			55.1		%	4,137			2,529			63.6		%
Other			1,059			882			20.1		%	3,658			3,211			13.9		%
Selling, general and administrative			1,572			1,134			38.6		%	4,656			4,161			11.9		%
Depreciation and amortization			165			177			(6.8)		%	656			671			(2.2)		%
Total Operating Expenses			8,294			6,012			38.0		%	28,393			22,250			27.6		%
Operating Income			1,579			2,542			(37.9)		%	7,239			8,192			(11.6)		%
Equity in Net Income (Loss) of Affiliates			(6)			(13)			53.8		%	38			18			—		%
Total Segment Operating Contribution			$	1,573		$	2,529		(37.8)		%	$	7,277		$	8,210		(11.4)		%

LATIN AMERICA SEGMENT

The Latin America segment provides entertainment and wireless service outside of the U.S. Our international subsidiaries conduct business in their local currency and operating results are converted to U.S. dollars using official exchange rates. The Latin America segment contains two business units: Mexico and Vrio, which was sold in November 2021.

Segment Results
Dollars in millions
Unaudited			Fourth Quarter						Percent			Year Ended						Percent
			2021			2020			Change			2021			2020			Change
Segment Operating Revenues
Mexico			$	704		$	736		(4.3)		%	$	2,747		$	2,562		7.2		%
Vrio			359			762			(52.9)		%	2,607			3,154			(17.3)		%
Total Segment Operating Revenues			1,063			1,498			(29.0)		%	5,354			5,716			(6.3)		%
Segment Operating Contribution
Mexico			(117)			(126)			7.1		%	(510)			(587)			13.1		%
Vrio			37			(41)			—		%	80			(142)			—		%
Total Segment Operating Contribution			$	(80)		$	(167)		52.1		%	$	(430)		$	(729)		41.0		%

10

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Mexico

Mexico provides wireless services and equipment to customers in Mexico.

Mexico Results
Dollars in millions
Unaudited			Fourth Quarter						Percent			Year Ended						Percent
			2021			2020			Change			2021			2020			Change
Operating Revenues
Wireless service			$	485		$	459		5.7		%	$	1,834		$	1,656		10.7		%
Wireless equipment			219			277			(20.9)		%	913			906			0.8		%
Total Operating Revenues			704			736			(4.3)		%	2,747			2,562			7.2		%
Operating Expenses
Operations and support			668			722			(7.5)		%	2,652			2,636			0.6		%
Depreciation and amortization			153			140			9.3		%	605			513			17.9		%
Total Operating Expenses			821			862			(4.8)		%	3,257			3,149			3.4		%
Operating Income (Loss)			(117)			(126)			7.1		%	(510)			(587)			13.1		%
Equity in Net Income (Loss) of Affiliates			—			—			—		%	—			—			—		%
Operating Contribution			$	(117)		$	(126)		7.1		%	$	(510)		$	(587)		13.1		%
Operating Income Margin			(16.6)		%	(17.1)		%	50		BP	(18.6)		%	(22.9)		%	430		BP
Supplementary Operating Data
Subscribers and connections in thousands
Unaudited												December 31,						Percent
												2021			2020			Change
Mexico Wireless Subscribers
Postpaid												4,807			4,696			2.4		%
Prepaid												15,057			13,758			9.4		%
Reseller												498			489			1.8		%
Total Mexico Wireless Subscribers												20,362			18,943			7.5		%
			Fourth Quarter						Percent			Year Ended						Percent
			2021			2020			Change			2021			2020			Change
Mexico Wireless Net Additions
Postpaid			26			(14)			—		%	111			(407)			—		%
Prepaid			858			509			68.6		%	1,299			174			—		%
Reseller			5			34			(85.3)		%	9			118			(92.4)		%
Total Mexico Wireless Net Additions			889			529			68.1		%	1,419			(115)			—		%

11

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Vrio

Vrio provides entertainment services to customers utilizing satellite technology in Latin America and the Caribbean. Vrio was sold to Grupo Werthein in November 2021.

Vrio Results
Dollars in millions
Unaudited			Fourth Quarter						Percent			Year Ended						Percent
			2021			2020			Change			2021			2020			Change
Operating Revenues			$	359		$	762		(52.9)		%	$	2,607		$	3,154		(17.3)		%
Operating Expenses
Operations and support			321			681			(52.9)		%	2,302			2,800			(17.8)		%
Depreciation and amortization			—			120			—		%	231			520			(55.6)		%
Total Operating Expenses			321			801			(59.9)		%	2,533			3,320			(23.7)		%
Operating Income (Loss)			38			(39)			—		%	74			(166)			—		%
Equity in Net Income (Loss) of Affiliates			(1)			(2)			50.0		%	6			24			(75.0)		%
Operating Contribution			$	37		$	(41)		—		%	$	80		$	(142)		—		%
Operating Income Margin			10.6		%	(5.1)		%	1,570		BP	2.8		%	(5.3)		%	810		BP

12

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SUPPLEMENTAL SEGMENT RECONCILIATION

Three Months Ended
Dollars in millions
Unaudited
December 31, 2021
			Revenues			Operations and Support Expenses			EBITDA			Depreciation and Amortization			Operating Income (Loss)			Equity in Net Income (Loss) of Affiliates			Segment Contribution
Communications
Mobility			$	21,146		$	13,743		$	7,403		$	2,050		$	5,353		$	—		$	5,353
Business Wireline			5,901			3,687			2,214			1,317			897			—			897
Consumer Wireline			3,159			2,169			990			789			201			—			201
Total Communications			30,206			19,599			10,607			4,156			6,451			—			6,451
WarnerMedia			9,873			8,129			1,744			165			1,579			(6)			1,573
Latin America
Mexico			704			668			36			153			(117)			—			(117)
Vrio			359			321			38			—			38			(1)			37
Total Latin America			1,063			989			74			153			(79)			(1)			(80)
Segment Total			41,142			28,717			12,425			4,474			7,951			$	(7)		$	7,944
Corporate and Other
Corporate			199			1,323			(1,124)			178			(1,302)
Video			—			—			—			—			—
Acquisition-related items			—			132			(132)			1,021			(1,153)
Certain significant items			—			188			(188)			—			(188)
Eliminations and consolidations			(383)			(383)			—			—			—
AT&T Inc.			$	40,958		$	29,977		$	10,981		$	5,673		$	5,308

13

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Three Months Ended
Dollars in millions
Unaudited
December 31, 2020
			Revenues			Operations and Support Expenses			EBITDA			Depreciation and Amortization			Operating Income (Loss)			Equity in Net Income (Loss) of Affiliates			Segment Contribution
Communications
Mobility			$	20,119		$	13,023		$	7,096		$	2,008		$	5,088		$	—		$	5,088
Business Wireline			6,251			3,938			2,313			1,316			997			—			997
Consumer Wireline			3,116			2,103			1,013			738			275			—			275
Total Communications			29,486			19,064			10,422			4,062			6,360			—			6,360
WarnerMedia			8,554			5,835			2,719			177			2,542			(13)			2,529
Latin America
Mexico			736			722			14			140			(126)			—			(126)
Vrio			762			681			81			120			(39)			(2)			(41)
Total Latin America			1,498			1,403			95			260			(165)			(2)			(167)
Segment Total			39,538			26,302			13,236			4,499			8,737			$	(15)		$	8,722
Corporate and Other
Corporate			456			949			(493)			56			(549)
Video			7,168			6,458			710			521			189
Acquisition-related items			—			37			(37)			1,890			(1,927)
Certain significant items			—			16,617			(16,617)			14			(16,631)
Eliminations and consolidations			(1,471)			(906)			(565)			(1)			(564)
AT&T Inc.			$	45,691		$	49,457		$	(3,766)		$	6,979		$	(10,745)

14

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SUPPLEMENTAL SEGMENT RECONCILIATION

Year Ended
Dollars in millions
Unaudited
December 31, 2021
			Revenues			Operations and Support Expenses			EBITDA			Depreciation and Amortization			Operating Income (Loss)			Equity in Net Income (Loss) of Affiliates			Segment Contribution
Communications
Mobility			$	78,254		$	46,820		$	31,434		$	8,122		$	23,312		$	—		$	23,312
Business Wireline			23,937			14,755			9,182			5,192			3,990			—			3,990
Consumer Wireline			12,539			8,467			4,072			3,095			977			—			977
Total Communications			114,730			70,042			44,688			16,409			28,279			—			28,279
WarnerMedia			35,632			27,737			7,895			656			7,239			38			7,277
Latin America
Mexico			2,747			2,652			95			605			(510)			—			(510)
Vrio			2,607			2,302			305			231			74			6			80
Total Latin America			5,354			4,954			400			836			(436)			6			(430)
Segment Total			155,716			102,733			52,983			17,901			35,082			$	44		$	35,126
Corporate and Other
Corporate			1,264			4,805			(3,541)			372			(3,913)
Video			15,513			12,666			2,847			356			2,491
Acquisition-related items			—			299			(299)			4,233			(4,532)
Certain significant items			—			4,961			(4,961)			—			(4,961)
Eliminations and consolidations			(3,629)			(2,809)			(820)			—			(820)
AT&T Inc.			$	168,864		$	122,655		$	46,209		$	22,862		$	23,347

15

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Year Ended
Dollars in millions
Unaudited
December 31, 2020
			Revenues			Operations and Support Expenses			EBITDA			Depreciation and Amortization			Operating Income (Loss)			Equity in Net Income (Loss) of Affiliates			Segment Contribution
Communications
Mobility			$	72,564		$	42,106		$	30,458		$	8,086		$	22,372		$	—		$	22,372
Business Wireline			25,083			15,303			9,780			5,216			4,564			—			4,564
Consumer Wireline			12,318			8,027			4,291			2,914			1,377			—			1,377
Total Communications			109,965			65,436			44,529			16,216			28,313			—			28,313
WarnerMedia			30,442			21,579			8,863			671			8,192			18			8,210
Latin America
Mexico			2,562			2,636			(74)			513			(587)			—			(587)
Vrio			3,154			2,800			354			520			(166)			24			(142)
Total Latin America			5,716			5,436			280			1,033			(753)			24			(729)
Segment Total			146,123			92,451			53,672			17,920			35,752			$	42		$	35,794
Corporate and Other
Corporate			2,207			4,205			(1,998)			310			(2,308)
Video			28,610			24,174			4,436			2,262			2,174
Acquisition-related items			—			468			(468)			8,012			(8,480)
Certain significant items			—			19,156			(19,156)			14			(19,170)
Eliminations and consolidations			(5,180)			(3,615)			(1,565)			(2)			(1,563)
AT&T Inc.			$	171,760		$	136,839		$	34,921		$	28,516		$	6,405

16

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Discussion and Reconciliation of Non-GAAP Measures

 

We believe the following measures are relevant and useful information to investors as they are part of AT&T's internal management reporting and planning processes and are important metrics that management uses to evaluate the operating performance of AT&T and its segments. Management also uses these measures as a method of comparing performance with that of many of our competitors. These measures should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with U.S. generally accepted accounting principles (GAAP).

Free Cash Flow

Free cash flow is defined as cash from operations and cash distributions from DIRECTV (classified as investing activities) minus capital expenditures. Free cash flow after dividends is defined as cash from operations minus capital expenditures and dividends on common and preferred shares. Free cash flow dividend payout ratio is defined as the percentage of dividends paid on common and preferred shares to free cash flow. We believe these metrics provide useful information to our investors because management views free cash flow as an important indicator of how much cash is generated by routine business operations, including capital expenditures, and from our continued economic interest in the U.S. video operations as part of our DIRECTV equity method investment, and makes decisions based on it. Management also views free cash flow as a measure of cash available to pay debt and return cash to shareowners.

Free Cash Flow and Free Cash Flow Dividend Payout Ratio
Dollars in millions
			Fourth Quarter									Year Ended
			2021			2020						2021			2020
Net cash provided by operating activities1			$	11,254		$	10,082					$	41,957		$	43,130
Add: Distributions from DIRECTV classified as investing          activities			1,323			—						1,323			—
Less: Capital expenditures			(3,831)			(2,392)						(16,527)			(15,675)
Free Cash Flow			8,746			7,690						26,753			27,455
Less: Dividends paid			(3,749)			(3,741)						(15,068)			(14,956)
Free Cash Flow after Dividends			$	4,997		$	3,949					$	11,685		$	12,499
Free Cash Flow Dividend Payout Ratio			42.9		%	48.6		%				56.3		%	54.5		%
1Includes distributions from DIRECTV of $489 in the fourth quarter and $619 for the year ended December 31, 2021. Total distributions from DIRECTV were $1,812 in the fourth quarter and $1,942 for the year ended December 31, 2021.

Cash Paid for Capital Investment

In connection with capital improvements, we negotiate with some of our vendors to obtain favorable payment terms of 120 days or more, referred to as vendor financing, which are excluded from capital expenditures and reported in accordance with GAAP as financing activities. We present an additional view of cash paid for capital investment to provide investors with a comprehensive view of cash used to invest in our networks, product developments and support systems. 

Cash Paid for Capital Investment
Dollars in millions
			Fourth Quarter									Year Ended
			2021			2020						2021			2020
Capital Expenditures			$	(3,831)		$	(2,392)					$	(16,527)		$	(15,675)
Cash paid for vendor financing			(583)			(1,001)						(4,596)			(2,966)
Cash paid for Capital Investment			$	(4,414)		$	(3,393)					$	(21,123)		$	(18,641)
FirstNet reimbursement			(515)			(920)						(515)			(1,063)
Gross Capital Investment			$	(4,929)		$	(4,313)					$	(21,638)		$	(19,704)

1

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EBITDA

Our calculation of EBITDA, as presented, may differ from similarly titled measures reported by other companies. For AT&T, EBITDA excludes other income (expense) – net, and equity in net income (loss) of affiliates, as these do not reflect the operating results of our subscriber base or operations that are not under our control. Equity in net income (loss) of affiliates represents the proportionate share of the net income (loss) of affiliates in which we exercise significant influence, but do not control. Because we do not control these entities, management excludes these results when evaluating the performance of our primary operations. EBITDA also excludes interest expense and the provision for income taxes. Excluding these items eliminates the expenses associated with our capital and tax structures. Finally, EBITDA excludes depreciation and amortization in order to eliminate the impact of capital investments. EBITDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. EBITDA is not presented as an alternative measure of operating results or cash flows from operations, as determined in accordance with GAAP.

EBITDA service margin is calculated as EBITDA divided by service revenues.

When discussing our segment, business unit and supplemental results, EBITDA excludes equity in net income (loss) of affiliates, and depreciation and amortization from operating contribution.

These measures are used by management as a gauge of our success in acquiring, retaining and servicing subscribers because we believe these measures reflect AT&T's ability to generate and grow subscriber revenues while providing a high level of customer service in a cost-effective manner. Management also uses these measures as a method of comparing operating performance with that of many of its competitors. The financial and operating metrics which affect EBITDA include the key revenue and expense drivers for which management is responsible and upon which we evaluate performance.

We believe EBITDA Service Margin (EBITDA as a percentage of service revenues) to be a more relevant measure than EBITDA Margin (EBITDA as a percentage of total revenue) for our Mobility business unit operating margin. We also use wireless service revenues to calculate margin to facilitate comparison, both internally and externally with our wireless competitors, as they calculate their margins using wireless service revenues as well.

There are material limitations to using these non-GAAP financial measures. EBITDA, EBITDA margin and EBITDA service margin, as we have defined them, may not be comparable to similarly titled measures reported by other companies. Furthermore, these performance measures do not take into account certain significant items, including depreciation and amortization, interest expense, tax expense and equity in net income (loss) of affiliates. For market comparability, management analyzes performance measures that are similar in nature to EBITDA as we present it, and considering the economic effect of the excluded expense items independently as well as in connection with its analysis of net income as calculated in accordance with GAAP. EBITDA, EBITDA margin and EBITDA service margin should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP.

EBITDA, EBITDA Margin and EBITDA Service Margin
Dollars in millions
			Fourth Quarter									Year Ended
			2021			2020						2021			2020
Net Income (Loss)			$	5,390		$	(13,515)					$	21,479		$	(3,821)
Additions:
Income Tax Expense			1,056			(2,038)						5,468			965
Interest Expense			1,663			1,894						6,884			7,925
Equity in Net (Income) Loss of Affiliates			(447)			(106)						(631)			(95)
Other (Income) Expense - Net			(2,354)			3,020						(9,853)			1,431
Depreciation and amortization			5,673			6,979						22,862			28,516
EBITDA			10,981			(3,766)						46,209			34,921
Merger costs and revenue adjustments			132			37						299			468
Employee separation costs and benefit-related (gain) loss			—			253						57			1,177
Impairments			188			16,365						4,904			18,880
Gain on spectrum transactions			—			—						—			(900)
Adjusted EBITDA1			$	11,301		$	12,889					$	51,469		$	54,546
1 See page 5 for additional discussion and reconciliation of adjusted items.

2

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Segment and Business Unit EBITDA, EBITDA Margin and EBITDA Service Margin
Dollars in millions
			Fourth Quarter									Year Ended
			2021			2020						2021			2020
Communications Segment
Operating Contribution			$	6,451		$	6,360					$	28,279		$	28,313
Additions:
Depreciation and amortization			4,156			4,062						16,409			16,216
EBITDA			10,607			10,422						44,688			44,529
Total Operating Revenues			30,206			29,486						114,730			109,965
Operating Income Margin			21.4		%	21.6		%				24.6		%	25.7		%
EBITDA Margin			35.1		%	35.3		%				39.0		%	40.5		%
Mobility
Operating Contribution			$	5,353		$	5,088					$	23,312		$	22,372
Additions:
Depreciation and amortization			2,050			2,008						8,122			8,086
EBITDA			7,403			7,096						31,434			30,458
Total Operating Revenues			21,146			20,119						78,254			72,564
Service Revenues			14,669			14,022						57,590			55,542
Operating Income Margin			25.3		%	25.3		%				29.8		%	30.8		%
EBITDA Margin			35.0		%	35.3		%				40.2		%	42.0		%
EBITDA Service Margin			50.5		%	50.6		%				54.6		%	54.8		%
Business Wireline
Operating Contribution			$	897		$	997					$	3,990		$	4,564
Additions:
Depreciation and amortization			1,317			1,316						5,192			5,216
EBITDA			2,214			2,313						9,182			9,780
Total Operating Revenues			5,901			6,251						23,937			25,083
Operating Income Margin			15.2		%	15.9		%				16.7		%	18.2		%
EBITDA Margin			37.5		%	37.0		%				38.4		%	39.0		%
Consumer Wireline
Operating Contribution			$	201		$	275					$	977		$	1,377
Additions:
Depreciation and amortization			789			738						3,095			2,914
EBITDA			990			1,013						4,072			4,291
Total Operating Revenues			3,159			3,116						12,539			12,318
Operating Income Margin			6.4		%	8.8		%				7.8		%	11.2		%
EBITDA Margin			31.3		%	32.5		%				32.5		%	34.8		%

3

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Segment and Business Unit EBITDA, EBITDA Margin and EBITDA Service Margin
Dollars in millions
			Fourth Quarter									Year Ended
			2021			2020						2021			2020
WarnerMedia Segment
Operating Contribution			$	1,573		$	2,529					$	7,277		$	8,210
Additions:
Equity in Net (Income) Loss of Affiliates			6			13						(38)			(18)
Depreciation and amortization			165			177						656			671
EBITDA			1,744			2,719						7,895			8,863
Total Operating Revenues			9,873			8,554						35,632			30,442
Operating Income Margin			16.0		%	29.7		%				20.3		%	26.9		%
EBITDA Margin			17.7		%	31.8		%				22.2		%	29.1		%

Segment and Business Unit EBITDA, EBITDA Margin and EBITDA Service Margin
Dollars in millions
			Fourth Quarter									Year Ended
			2021			2020						2021			2020
Latin America Segment
Operating Contribution			$	(80)		$	(167)					$	(430)		$	(729)
Additions:
Equity in Net (Income) Loss of Affiliates			1			2						(6)			(24)
Depreciation and amortization			153			260						836			1,033
EBITDA			74			95						400			280
Total Operating Revenues			1,063			1,498						5,354			5,716
Operating Income Margin			-7.4		%	-11.0		%				-8.1		%	-13.2		%
EBITDA Margin			7.0		%	6.3		%				7.5		%	4.9		%
Mexico
Operating Contribution			$	(117)		$	(126)					$	(510)		$	(587)
Additions:
Depreciation and amortization			153			140						605			513
EBITDA			36			14						95			(74)
Total Operating Revenues			704			736						2,747			2,562
Operating Income Margin			-16.6		%	-17.1		%				-18.6		%	-22.9		%
EBITDA Margin			5.1		%	1.9		%				3.5		%	-2.9		%

4

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Adjusting Items

Adjusting items include revenues and costs we consider non-operational in nature, including items arising from asset acquisitions or dispositions. We also adjust for net actuarial gains or losses associated with our pension and postemployment benefit plans due to the often-significant impact on our results (we immediately recognize this gain or loss in the income statement, pursuant to our accounting policy for the recognition of actuarial gains and losses). Consequently, our adjusted results reflect an expected return on plan assets rather than the actual return on plan assets, as included in the GAAP measure of income.

The tax impact of adjusting items is calculated using the effective tax rate during the quarter except for adjustments that, given their magnitude, can drive a change in the effective tax rate, in these cases we use the actual tax expense or combined marginal rate of approximately 25%.   

Adjusting Items
Dollars in millions
			Fourth Quarter									Year Ended
			2021			2020						2021			2020
Operating Expenses
Merger costs			132			37						299			468
Employee separation costs and benefit-related (gain) loss1			—			253						57			1,177
Asset impairments and abandonment			188			16,365						4,904			18,880
Gain (loss) on spectrum transaction			—			—						—			(900)
Adjustments to Operations and Support Expenses			320			16,655						5,260			19,625
Amortization of intangible assets			1,021			1,890						4,233			8,012
Impairments			—			14						—			14
Adjustments to Operating Expenses			1,341			18,559						9,493			27,651
Other
DIRECTV intangible amortization (proportionate share)			434			—						826			—
(Gain) loss on sale of assets			172			43						(660)			(50)
Debt redemption, impairments and other adjustments			22			(29)						235			1,735
Actuarial (gain) loss			(1,119)			4,106						(4,140)			4,169
Employee benefit-related (gain) loss1			—			(149)						—			(172)
Adjustments to Income Before Income Taxes			850			22,530						5,754			33,333
Tax impact of adjustments			(40)			3,186						580			4,977
Tax-related items			264			41						505			41
Impairment attributable to noncontrolling interest			—			—						81			105
Adjustments to Net Income			$	626		$	19,303					$	4,588		$	28,210
1Mark-to-market gains and losses on benefit-related investments were adjusted in 2020 reflecting more significant market volatility and uncertainty experienced as a result of the onset of the COVID-19 pandemic. Benefit-related investment gains were approximately $160 and $430 in the fourth quarter and for the year ended December 31, 2021, and $205 and $330 in the fourth quarter and for the year ended December 31, 2020.

Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBITDA service margin and Adjusted diluted EPS are non-GAAP financial measures calculated by excluding from operating revenues, operating expenses and income tax expense certain significant items that are non-operational or non-recurring in nature, including dispositions and merger integration and transaction costs, actuarial gains and losses, significant abandonments and impairment, severance and other material gains and losses. Management believes that these measures provide relevant and useful information to investors and other users of our financial data in evaluating the effectiveness of our operations and underlying business trends.

Adjusted Operating Revenues, Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBITDA service margin and Adjusted diluted EPS should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP. AT&T's calculation of Adjusted items, as presented, may differ from similarly titled measures reported by other companies.

5

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Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA and Adjusted EBITDA Margin
Dollars in millions
			Fourth Quarter									Year Ended
			2021			2020						2021			2020
Operating Income			$	5,308		$	(10,745)					$	23,347		$	6,405
Adjustments to Operating Expenses			1,341			18,559						9,493			27,651
Adjusted Operating Income			6,649			7,814						32,840			34,056
EBITDA			10,981			(3,766)						46,209			34,921
Adjustments to Operations and Support Expenses			320			16,655						5,260			19,625
Adjusted EBITDA			11,301			12,889						51,469			54,546
Total Operating Revenues			40,958			45,691						168,864			171,760
Operating Income Margin			13.0		%	(23.5)		%				13.8		%	3.7		%
Adjusted Operating Income Margin			16.2		%	17.1		%				19.4		%	19.8		%
Adjusted EBITDA Margin			27.6		%	28.2		%				30.5		%	31.8		%

Adjusted Diluted EPS
			Fourth Quarter									Year Ended
			2021			2020						2021			2020
Diluted Earnings Per Share (EPS)			$	0.69		$	(1.95)					$	2.76		$	(0.75)
Amortization of intangible assets			0.12			0.22						0.47			0.90
DIRECTV intangible amortization (proportionate share)			0.05			—						0.09			—
Impairments			0.02			2.02						0.56			2.37
(Gain) loss on sale of assets			0.04			0.03						(0.05)			0.02
Actuarial (gain) loss 1			(0.12)			0.43						(0.43)			0.44
Debt redemption, merger and other adjustments			0.02			0.01						0.07			0.21
Tax-related items			(0.04)			(0.01)						(0.07)			(0.01)
Adjusted EPS			$	0.78		$	0.75					$	3.40		$	3.18
Year-over-year growth - Adjusted			4.0		%							6.9		%
Weighted Average Common Shares Outstanding    with Dilution (000,000)			7,204			7,176						7,199			7,183
1Includes adjustments for actuarial gains or losses associated with our postemployment benefit plans, which we immediately recognize in the income statement, pursuant to our accounting policy for the recognition of actuarial gains/losses. We recorded total net actuarial gain of $4.1 billion in 2021. As a result, adjusted EPS reflects an expected return on plan assets of $3.7 billion (based on an average expected return on plan assets of 6.75% for our pension trust and 4.50% for our VEBA trusts), rather than the actual return on plan assets of $5.9 billion gain (actual pension return of 11.4% and VEBA return of 6.3%), included in the GAAP measure of income.

6

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Net Debt to Pro Forma Adjusted EBITDA

Net Debt to EBITDA ratios are non-GAAP financial measures frequently used by investors and credit rating agencies and management believes these measures provide relevant and useful information to investors and other users of our financial data. Our Net Debt to Pro Forma Adjusted EBITDA ratio is calculated by dividing the Net Debt by the sum of the most recent four quarters Pro Forma Adjusted EBITDA. Net Debt is calculated by subtracting cash and cash equivalents and certificates of deposit and time deposits that are greater than 90 days, from the sum of debt maturing within one year and long-term debt.

Net Debt to Pro Forma Adjusted EBITDA - 2021
Dollars in millions
						Three Months Ended
						March. 31						June 30,						Sept. 30,						Dec. 31,						Four Quarters
						2021 1						2021 1						2021 1						2021
Adjusted EBITDA						$	13,564					$	13,585					$	13,019					$	11,301					$	51,469
Less: Historical Video						(1,065)						(1,364)						(418)						—						(2,847)
Add: WarnerMedia sale of DIRECTV advertising						349						372						99						—						820
Add: WarnerMedia/DIRECTV revenue share						(271)						(287)						(78)						—						(636)
Less: Historical Vrio						(82)						(89)						(96)						(38)						(305)
Pro Forma Adjusted EBITDA						12,495						12,217						12,526						11,263						48,501
End-of-period current debt																														24,630
End-of-period long-term debt																														152,724
Total End-of-Period Debt																														177,354
Less: Cash and Cash Equivalents																														21,169
Net Debt Balance																														156,185
Annualized Net Debt to Pro Forma    Adjusted EBITDA Ratio 2																														3.22
1Adjusted EBITDA as reported in AT&T's Form 8-K filed April 22, 2021, July 22, 2021 and October 21, 2021.
2Annualized Net Debt to Adjusted EBITDA Ratio of 3.03 (excluding pro forma).

Net Debt to Adjusted EBITDA - 2020
Dollars in millions
						Three Months Ended
						March 31,						June 30,						Sept. 30,						Dec. 31,						Four Quarters
						2020 1						2020 1						2020 1						2020
Adjusted EBITDA						$	14,232					$	14,112					$	13,313					$	12,889					$	54,546
End-of-period current debt																														3,470
End-of-period long-term debt																														153,775
Total End-of-Period Debt																														157,245
Less: Cash and Cash Equivalents																														9,740
Net Debt Balance																														147,505
Annualized Net Debt to Adjusted EBITDA Ratio																														2.70
1As reported in AT&T's Form 8-K filed April 22, 2020, July 23, 2020, and October 22, 2020.

7

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Supplemental Operational Measures

We provide a supplemental discussion of our business solutions operations that is calculated by combining our Mobility and Business Wireline operating units, and then adjusting to remove non-business operations. The following table presents a reconciliation of our supplemental Business Solutions results.

Supplemental Operational Measure
			Fourth Quarter
			December 31, 2021															December 31, 2020
			Mobility			Business Wireline			Adjustments1			Business Solutions						Mobility			Business Wireline			Adjustments1			Business Solutions
Operating Revenues
Wireless service			$	14,669		$	—		$	(12,561)		$	2,108					$	14,022		$	—		$	(12,074)		$	1,948
Wireline services			—			5,727			—			5,727						—			6,042			—			6,042
Wireless equipment			6,477			—			(5,447)			1,030						6,097			—			(5,172)			925
Wireline equipment			—			174			—			174						—			209			—			209
Total Operating Revenues			21,146			5,901			(18,008)			9,039						20,119			6,251			(17,246)			9,124
Operating Expenses
Operations and support			13,743			3,687			(11,419)			6,011						13,023			3,938			(10,926)			6,035
EBITDA			7,403			2,214			(6,589)			3,028						7,096			2,313			(6,320)			3,089
Depreciation and amortization			2,050			1,317			(1,700)			1,667						2,008			1,316			(1,686)			1,638
Total Operating Expenses			15,793			5,004			(13,119)			7,678						15,031			5,254			(12,612)			7,673
Operating Income			5,353			897			(4,889)			1,361						5,088			997			(4,634)			1,451
Equity in Net Income (Loss) of Affiliates			—			—			—			—						—			—			—			—
Operating Contribution			$	5,353		$	897		$	(4,889)		$	1,361					$	5,088		$	997		$	(4,634)		$	1,451
1Non-business wireless reported in the Communication segment under the Mobility business unit.

Supplemental Operational Measure
			Year Ended
			December 31, 2021															December 31, 2020
			Mobility			Business Wireline			Adjustments1			Business Solutions						Mobility			Business Wireline			Adjustments1			Business Solutions
Operating Revenues
Wireless service			$	57,590		$	—		$	(49,429)		$	8,161					$	55,542		$	—		$	(47,810)		$	7,732
Wireline service			—			23,224			—			23,224						—			24,313			—			24,313
Wireless equipment			20,664			—			(17,250)			3,414						17,022			—			(14,140)			2,882
Wireline equipment			—			713			—			713						—			770			—			770
Total Operating Revenues			78,254			23,937			(66,679)			35,512						72,564			25,083			(61,950)			35,697
Operating Expenses
Operations and support			46,820			14,755			(38,749)			22,826						42,106			15,303			(34,927)			22,482
EBITDA			31,434			9,182			(27,930)			12,686						30,458			9,780			(27,023)			13,215
Depreciation and amortization			8,122			5,192			(6,744)			6,570						8,086			5,216			(6,802)			6,500
Total Operating Expenses			54,942			19,947			(45,493)			29,396						50,192			20,519			(41,729)			28,982
Operating Income			23,312			3,990			(21,186)			6,116						22,372			4,564			(20,221)			6,715
Equity in Net Income (Loss) of Affiliates			—			—			—			—						—			—			—			—
Operating Contribution			$	23,312		$	3,990		$	(21,186)		$	6,116					$	22,372		$	4,564		$	(20,221)		$	6,715
1Non-business wireless reported in the Communication segment under the Mobility business unit.

8

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Quarterly Pro Forma Financial Information
Supplemental Unaudited Quarterly Pro Forma Financial Information1
Dollars in millions
Unaudited
Operating Revenues																		3/31/20			6/30/20			9/30/20			12/31/20			2020			3/31/21			6/30/21			9/30/21			12/31/21			2021
Reported AT&T Operating Revenues																		$	42,779		$	40,950		$	42,340		$	45,691		$	171,760		$	43,939		$	44,045		$	39,922		$	40,958		$	168,864
Less: Video (A1)																		(7,407)			(7,021)			(7,014)			(7,168)			(28,610)			(6,725)			(6,639)			(2,149)			—			(15,513)
Add: WarnerMedia sales to Video (A2)																		755			666			551			487			2,459			524			508			167			—			1,199
Add: WarnerMedia sales of DIRECTV advertising inventory (A3)																		413			294			408			603			1,718			388			410			111			—			909
Add: Other eliminations																		64			55			65			84			268			61			58			17			—			136
Less: Vrio (A4)																		(887)			(752)			(753)			(762)			(3,154)			(743)			(749)			(756)			(359)			(2,607)
Add: WarnerMedia sales to Vrio (A5)																		41			39			53			60			193			64			65			63			30			222
Pro Forma Operating Revenues																		$	35,758		$	34,231		$	35,650		$	38,995		$	144,634		$	37,508		$	37,698		$	37,375		$	40,629		$	153,210
Reported Revenue Growth Rate Y/Y																																	2.7		%	7.6		%	-5.7		%	-10.4		%	-1.7		%
Pro Forma Revenue Growth Rate Y/Y																																	4.9		%	10.1		%	4.8		%	4.2		%	5.9		%

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Operations and Support Expenses																		3/31/20			6/30/20			9/30/20			12/31/20			2020			3/31/21			6/30/21			9/30/21			12/31/21			2021
Reported AT&T Operations and Support Expenses																		$	28,071		$	30,133		$	29,178		$	49,457		$	136,839		$	30,469		$	35,015		$	27,194		$	29,977		$	122,655
Adjustments (B1)																		476			(3,295)			(151)			(16,655)			(19,625)			(94)			(4,555)			(291)			(320)			(5,260)
Adjusted Operations and Support Expenses																		28,547			26,838			29,027			32,802			117,214			30,375			30,460			26,903			29,657			117,395
Less: Video (A1)																		(6,020)			(5,809)			(5,887)			(6,458)			(24,174)			(5,660)			(5,275)			(1,731)			—			(12,666)
Add: WarnerMedia sales to Video (A2)																		755			666			551			487			2,459			524			508			167			—			1,199
Add: WarnerMedia sales of DIRECTV advertising inventory (A3)																		39			38			38			38			153			39			38			12			—			89
Add: WarnerMedia/DIRECTV 70% revenue share (A3)																		289			206			286			422			1,203			271			287			78			—			636
Add: Other eliminations																		64			55			65			84			268			61			58			17			—			136
Less: Vrio (A4)																		(783)			(661)			(675)			(681)			(2,800)			(661)			(660)			(660)			(321)			(2,302)
Add: WarnerMedia sales to Vrio (A5)																		41			39			53			60			193			64			65			63			30			222
Pro Forma Adjusted Operations and Support Expenses																		$	22,932		$	21,372		$	23,458		$	26,754		$	94,516		$	25,013		$	25,481		$	24,849		$	29,366		$	104,709
Reported Operations and Support Expense Growth Rate Y/Y																																	8.5		%	16.2		%	-6.8		%	-39.4		%	-10.4		%
Adjusted Operations and Support Expense Growth Rate Y/Y																																	6.4		%	13.5		%	-7.3		%	-9.6		%	0.2		%
Pro Forma Adjusted Operations and Support Expense Growth Rate Y/Y																																	9.1		%	19.2		%	5.9		%	9.8		%	10.8		%

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Depreciation and Amortization Expense																		3/31/20			6/30/20			9/30/20			12/31/20			2020			3/31/21			6/30/21			9/30/21			12/31/21			2021
Reported AT&T Depreciation and Amortization Expense																		$	7,222		$	7,285		$	7,030		$	6,979		$	28,516		$	5,809		$	5,761		$	5,619		$	5,673		$	22,862
Adjustments (B1)																		(2,056)			(2,145)			(1,921)			(1,904)			(8,026)			(1,131)			(1,069)			(1,012)			(1,021)			(4,233)
Adjusted Depreciation and Amortization Expense																		5,166			5,140			5,109			5,075			20,490			4,678			4,692			4,607			4,652			18,629
Less: Video Depreciation (A1)																		(591)			(593)			(557)			(521)			(2,262)			(164)			(148)			(44)			—			(356)
Less: Vrio Depreciation (A4)																		(147)			(127)			(126)			(120)			(520)			(117)			(114)			—			—			(231)
Add: Other consolidation																		—			1			—			1			2			—			—			—			—			—
Pro Forma Adjusted Depreciation and Amortization Expense																		$	4,428		$	4,421		$	4,426		$	4,435		$	17,710		$	4,397		$	4,430		$	4,563		$	4,652		$	18,042
Reported Depreciation and Amortization Expense Growth Rate Y/Y																																	-19.6		%	-20.9		%	-20.1		%	-18.7		%	-19.8		%
Adjusted Depreciation and Amortization Expense Growth Rate Y/Y																																	-9.4		%	-8.7		%	-9.8		%	-8.3		%	-9.1		%
Pro Forma Adjusted Depreciation and Amortization Expense Growth Rate Y/Y																																	-0.7		%	0.2		%	3.1		%	4.9		%	1.9		%

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Operating Income																		3/31/20			6/30/20			9/30/20			12/31/20			2020			3/31/21			6/30/21			9/30/21			12/31/21			2021
Reported AT&T Operating Income (Loss)																		$	7,486		$	3,532		$	6,132		$	(10,745)		$	6,405		$	7,661		$	3,269		$	7,109		$	5,308		$	23,347
Adjustments (B1)																		1,580			5,440			2,072			18,559			27,651			1,225			5,624			1,303			1,341			9,493
Adjusted Operating Income																		9,066			8,972			8,204			7,814			34,056			8,886			8,893			8,412			6,649			32,840
Less: Video (A1)																		(796)			(619)			(570)			(189)			(2,174)			(901)			(1,216)			(374)			—			(2,491)
Add: WarnerMedia sales to Video (A2)																		—			—			—			—			—			—			—			—			—			—
Add: WarnerMedia sales of DIRECTV advertising inventory (A3)																		374			255			370			564			1,563			349			372			99			—			820
Add: WarnerMedia/DIRECTV 70% revenue share (A3)																		(289)			(206)			(286)			(422)			(1,203)			(271)			(287)			(78)			—			(636)
Add: Other eliminations																		—			—			—			—			—			—			—			—			—			—
Less: Vrio (A4)																		43			36			48			39			166			35			25			(96)			(38)			(74)
Add: WarnerMedia sales to Vrio (A5)																		—			—			—			—			—			—			—			—			—			—
Pro Forma Adjusted Operating Income																		$	8,398		$	8,438		$	7,766		$	7,806		$	32,408		$	8,098		$	7,787		$	7,963		$	6,611		$	30,459
Reported Operating Income Growth Rate Y/Y																																	2.3		%	-7.4		%	15.9		%	149.4		%	264.5		%
Adjusted Operating Income Growth Rate Y/Y																																	-2.0		%	-0.9		%	2.5		%	-14.9		%	-3.6		%
Pro Forma Adjusted Operating Income Growth Rate Y/Y																																	-3.6		%	-7.7		%	2.5		%	-15.3		%	-6.0		%
Reported Operating Income Margin																		17.5		%	8.6		%	14.5		%	-23.5		%	3.7		%	17.4		%	7.4		%	17.8		%	13.0		%	13.8		%
Adjusted Operating Income Margin																		21.2		%	21.9		%	19.4		%	17.1		%	19.8		%	20.2		%	20.2		%	21.1		%	16.2		%	19.4		%
Pro Forma Adjusted Operating Income Margin																		23.5		%	24.7		%	21.8		%	20.0		%	22.4		%	21.6		%	20.7		%	21.3		%	16.3		%	19.9		%

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EBITDA																		3/31/20			6/30/20			9/30/20			12/31/20			2020			3/31/21			6/30/21			9/30/21			12/31/21			2021
Reported AT&T Net Income (Loss)																		$	4,963		$	1,563		$	3,168		$	(13,515)		$	(3,821)		$	7,942		$	1,874		$	6,273		$	5,390		$	21,479
Additions:
Income Tax Expense (Benefit)																		1,302			935			766			(2,038)			965			2,122			751			1,539			1,056			5,468
Interest Expense																		2,018			2,041			1,972			1,894			7,925			1,870			1,684			1,667			1,663			6,884
Equity in Net Income (Loss) of Affiliates																		6			10			(5)			(106)			(95)			(52)			(41)			(91)			(447)			(631)
Other (Income) Expense - net																		(803)			(1,017)			231			3,020			1,431			(4,221)			(999)			(2,279)			(2,354)			(9,853)
Depreciation and amortization																		7,222			7,285			7,030			6,979			28,516			5,809			5,761			5,619			5,673			22,862
EBITDA																		14,708			10,817			13,162			(3,766)			34,921			13,470			9,030			12,728			10,981			46,209
Adjustments (B1)																		(476)			3,295			151			16,655			19,625			94			4,555			291			320			5,260
Adjusted EBITDA																		14,232			14,112			13,313			12,889			54,546			13,564			13,585			13,019			11,301			51,469
Less: Video (A1)																		(1,387)			(1,212)			(1,127)			(710)			(4,436)			(1,065)			(1,364)			(418)			—			(2,847)
Add: WarnerMedia sales to Video (A2)																		—			—			—			—			—			—			—			—			—			—
Add: WarnerMedia sales of DIRECTV advertising inventory (A3)																		374			256			370			565			1,565			349			372			99			—			820
Add: WarnerMedia/DIRECTV 70% revenue share (A3)																		(289)			(206)			(286)			(422)			(1,203)			(271)			(287)			(78)			—			(636)
Add: Other eliminations																		—			—			—			—			—			—			—			—			—			—
Less: Vrio (A4)																		(104)			(91)			(78)			(81)			(354)			(82)			(89)			(96)			(38)			(305)
Add: WarnerMedia sales to Vrio (A5)																		—			—			—			—			—			—			—			—			—			—
Pro Forma Adjusted EBITDA																		$	12,826		$	12,859		$	12,192		$	12,241		$	50,118		$	12,495		$	12,217		$	12,526		$	11,263		$	48,501
Adjusted EBITDA Growth Rate Y/Y																																	-4.7		%	-3.7		%	-2.2		%	-12.3		%	-5.6		%
Pro Forma Adjusted EBITDA Growth Rate Y/Y																																	-2.6		%	-5.0		%	2.7		%	-8.0		%	-3.2		%
Adjusted EBITDA Margin																		33.3		%	34.5		%	31.4		%	28.2		%	31.8		%	30.9		%	30.8		%	32.6		%	27.6		%	30.5		%
Pro Forma Adjusted EBITDA Margin																		35.9		%	37.6		%	34.2		%	31.4		%	34.7		%	33.3		%	32.4		%	33.5		%	27.7		%	31.7		%
1 After the transaction, AT&T expects to retain incurred operations and support costs in the range of ~$500M per quarter and depreciation costs for network infrastructure that provides both U-verse video and broadband services of ~$150M per quarter, of which approximately 50% will be received from DIRECTV through transition service agreements and commercial arrangements. These pro formas do not include the impacts of accounting for the NFL SUNDAY TICKET, per the Contribution Agreement.

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NOTES
(A) Notes to Pro Forma Adjustments
(A1) Video business results as reported in AT&T's consolidated financial results; quarters ended 2021 exclude retained depreciation on assets supporting U-verse products
(A2) Intercompany transactions between WarnerMedia and Video that are external following the close of the transaction
(A3) DIRECTV's advertising inventory sold by WarnerMedia (Xandr business) pursuant to commercial agreement, with WarnerMedia recording all the advertising revenues and an expense for DIRECTV's 70% revenue share
(A4) Vrio business results as reported in AT&T's consolidated financial results
(A5) Intercompany transactions between WarnerMedia and Vrio that are external following the close of the transaction
(B1) Non-GAAP Adjustments2:																		3/31/20			6/30/20			9/30/20			12/31/20			2020			3/31/21			6/30/21			9/30/21			12/31/21			2021
Merger Costs																		$	182		$	211		$	38		$	37		$	468		$	37		$	—		$	130		$	132		$	299
Employee separation costs and benefit-related (gain) loss																		119			765			40			253			1,177			57			—			—			—			57
Impairments																		123			2,319			73			16,365			18,880			—			4,555			161			188			4,904
Gain (loss) on spectrum transaction																		(900)			—			—			—			(900)			—			—			—			—			—
Adjustments to Operations and Support Expenses/ EBITDA																		(476)			3,295			151			16,655			19,625			94			4,555			291			320			5,260
Amortization of intangibles																		2,056			2,145			1,921			1,890			8,012			1,131			1,069			1,012			1,021			4,233
Impairments																		—			—			—			14			14			—			—			—			—			—
Adjustments to Operating Income																		$	1,580		$	5,440		$	2,072		$	18,559		$	27,651		$	1,225		$	5,624		$	1,303		$	1,341		$	9,493
2 As reported in AT&T's Forms 8-K filed April 22, 2020, July 23, 2020, October 22, 2020, January 27, 2021, April 22, 2021, July 22, 2021, October 21, 2021 and January 26, 2022.

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Attachment: XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT

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Attachment: XBRL TAXONOMY EXTENSION DEFINITION LINKBASE DOCUMENT

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Attachment: XBRL TAXONOMY EXTENSION LABEL LINKBASE DOCUMENT

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Attachment: XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE DOCUMENT