T 8-K

At&T Inc. (T)

8-K 2021-10-21 For: 2021-10-21

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☐			Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐			Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐			Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240-14d-2(b))
☐			Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


(d)	Exhibits

	99.1	Press release dated O ctober 21 , 2021 reporting financial results for the thir d quarter ended September 30, 2021.

	99.2	AT&T Inc. selected financial statements and operating data.

	99.3	Discussion and reconciliation of non-GAAP measures.

	99.4	Supplemental Quarterly Pro Forma Financial Information

	104	Cover Page Interactive Data File (embedded within the Inline XBRL document)


AT&T Inc.
Financial Data

Consolidated Statements of Income
Dollars in millions except per share amounts
Unaudited	Third Quarter				Percent		Nine-Month Period				Percent
	2021		2020		Change		2021		2020		Change
Operating Revenues
Service	$	34,843	$	37,782	(7.8)	%	$	112,303	$	113,716	(1.2)	%
Equipment	5,079		4,558		11.4	%	15,603		12,353		26.3	%
Total Operating Revenues	39,922		42,340		(5.7)	%	127,906		126,069		1.5	%

Operating Expenses
Cost of revenues
Equipment	5,427		4,552		19.2	%	16,324		12,622		29.3	%
Broadcast, programming and operations	4,750		6,912		(31.3)	%	19,891		19,555		1.7	%
Other cost of revenues (exclusive of depreciation and amortization shown separately below)	7,649		8,375		(8.7)	%	23,797		24,833		(4.2)	%
Selling, general and administrative	9,207		9,266		(0.6)	%	27,950		27,857		0.3	%
Asset impairments and abandonments	161		73		—	%	4,716		2,515		87.5	%
Depreciation and amortization	5,619		7,030		(20.1)	%	17,189		21,537		(20.2)	%
Total Operating Expenses	32,813		36,208		(9.4)	%	109,867		108,919		0.9	%
Operating Income	7,109		6,132		15.9	%	18,039		17,150		5.2	%
Interest Expense	1,667		1,972		(15.5)	%	5,221		6,031		(13.4)	%
Equity in Net Income (Loss) of Affiliates	91		5		—	%	184		(11)		—	%
Other Income (Expense) — Net	2,279		(231)		—	%	7,499		1,589		—	%
Income Before Income Taxes	7,812		3,934		98.6	%	20,501		12,697		61.5	%
Income Tax Expense	1,539		766		—	%	4,412		3,003		46.9	%
Net Income	6,273		3,168		98.0	%	16,089		9,694		66.0	%
Less: Net Income Attributable to Noncontrolling Interest	(355)		(352)		(0.9)	%	(1,051)		(987)		(6.5)	%
Net Income Attributable to AT&T	$	5,918	$	2,816	—	%	$	15,038	$	8,707	72.7	%
Less: Preferred Stock Dividends	(50)		(54)		7.4	%	(156)		(138)		(13.0)	%
Net Income Attributable to Common Stock	$	5,868	$	2,762	—	%	$	14,882	$	8,569	73.7	%

Basic Earnings Per Share Attributable to Common Stock	$	0.82	$	0.39	—	%	$	2.07	$	1.19	73.9	%
Weighted Average Common Shares Outstanding (000,000)	7,171		7,147		0.3	%	7,167		7,160		0.1	%
Diluted Earnings Per Share Attributable to Common Stock	$	0.82	$	0.39	—	%	$	2.07	$	1.19	73.9	%
Weighted Average Common Shares Outstanding with Dilution (000,000)	7,202		7,173		0.4	%	7,197		7,186		0.2	%


AT&T Inc.
Financial Data

Consolidated Balance Sheets
Dollars in millions
Unaudited	Sep. 30,		Dec. 31,
	2021		2020
Assets
Current Assets
Cash and cash equivalents	$	21,270	$	9,740
Accounts receivable – net of related allowances for credit loss of $806 and $1,221	16,304		20,215
Inventories	3,088		3,695
Prepaid and other current assets	16,568		18,358
Total current assets	57,230		52,008
Noncurrent Inventories and Theatrical Film and Television Production Costs	17,811		14,752
Property, Plant and Equipment – Net	124,419		127,315
Goodwill	133,663		135,259
Licenses – Net	112,423		93,840
Trademarks and Trade Names – Net	22,097		23,297
Distribution Networks – Net	12,408		13,793
Other Intangible Assets – Net	12,338		15,386
Investments in and Advances to Equity Affiliates	8,629		1,780
Operating Lease Right-Of-Use Assets	24,341		24,714
Other Assets	21,748		23,617
Total Assets	$	547,107	$	525,761
Liabilities and Stockholders’ Equity
Current Liabilities
Debt maturing within one year	$	23,755	$	3,470
Note payable to DIRECTV	1,180		—
Accounts payable and accrued liabilities	47,926		50,051
Advanced billings and customer deposits	4,991		6,176
Dividends payable	3,749		3,741
Total current liabilities	81,601		63,438
Long-Term Debt	155,406		153,775
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes	63,405		60,472
Postemployment benefit obligation	14,158		18,276
Operating lease liabilities	21,510		22,202
Other noncurrent liabilities	29,466		28,358
Noncurrent note payable to DIRECTV	258		—
Total deferred credits and other noncurrent liabilities	128,797		129,308
Stockholders’ Equity
Preferred stock	—		—
Common stock	7,621		7,621
Additional paid-in capital	130,035		130,175
Retained earnings	41,091		37,457
Treasury stock	(17,319)		(17,910)
Accumulated other comprehensive income	2,343		4,330
Noncontrolling interest	17,532		17,567
Total stockholders’ equity	181,303		179,240
Total Liabilities and Stockholders’ Equity	$	547,107	$	525,761


AT&T Inc.
Financial Data

Consolidated Statements of Cash Flows
Dollars in millions
Unaudited	Nine-Month Period
	2021		2020
Operating Activities
Net income	$	16,089	$	9,694
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	17,189		21,537
Amortization of film and television costs	8,421		6,448
Distributed (undistributed) earnings from investments in equity affiliates	102		108
Provision for uncollectible accounts	858		1,611
Deferred income tax expense	3,187		2,248
Net (gain) loss on investments, net of impairments	(965)		(689)
Pension and postretirement benefit expense (credit)	(2,870)		(2,245)
Actuarial (gain) loss on pension and postretirement benefits	(3,021)		63
Asset impairments and abandonments	4,716		2,515
Changes in operating assets and liabilities:
Receivables	57		2,321
Other current assets, inventories and theatrical film and television production costs	(11,928)		(7,836)
Accounts payable and other accrued liabilities	(2,254)		(4,905)
Equipment installment receivables and related sales	715		(148)
Deferred customer contract acquisition and fulfillment costs	316		453
Postretirement claims and contributions	(425)		(409)
Other - net	516		2,282
Total adjustments	14,614		23,354
Net Cash Provided by Operating Activities	30,703		33,048

Investing Activities
Capital expenditures	(12,696)		(13,283)
Acquisitions, net of cash acquired	(23,533)		(1,215)
Dispositions	9,086		428
Other - net	(190)		344
Net Cash Used in Investing Activities	(27,333)		(13,726)

Financing Activities
Net change in short-term borrowings with original maturities of three months or less	630		(17)
Issuance of other short-term borrowings	17,476		9,440
Repayment of other short-term borrowings	(2,448)		(7,710)
Issuance of long-term debt	9,931		31,987
Repayment of long-term debt	(1,653)		(37,583)
Note payable to DIRECTV, net of payments of $361	1,439		—
Payment of vendor financing	(4,013)		(1,965)
Issuance of preferred stock	—		3,869
Purchase of treasury stock	(191)		(5,483)
Issuance of treasury stock	89		88
Issuance of preferred interests in subsidiaries	—		1,979
Dividends paid	(11,319)		(11,215)
Other - net	(1,776)		(5,158)
Net Cash Provided by (Used in) Financing Activities	8,165		(21,768)
Net increase (decrease) in cash and cash equivalents and restricted cash	11,535		(2,446)
Cash and cash equivalents and restricted cash beginning of year	9,870		12,295
Cash and Cash Equivalents and Restricted Cash End of Period	$	21,405	$	9,849


			AT&T INC.



Date: October 21, 2021			By: /s/ Debra L. Dial . Debra L. Dial Senior Vice President and Controller


AT&T Inc.
Consolidated Supplementary Data

Supplementary Financial Data
Dollars in millions except per share amounts
Unaudited	Third Quarter				Percent		Nine-Month Period						Percent
	2021		2020		Change		2021			2020			Change
Capital expenditures
Purchase of property and equipment	$	4,666	$	3,819	22.2	%	$	12,564		$	13,191		(4.8)	%
Interest during construction - capital expenditures	38		32		18.8	%	132			92			43.5	%
Total Capital Expenditures	$	4,704	$	3,851	22.2	%	$	12,696		$	13,283		(4.4)	%

Acquisition, net of cash acquired
Business acquisitions	$	(26)	$	25	—	%	$	—		$	153		—	%
Spectrum acquisitions	131		16		—	%	23,017			1,062			—	%
Interest during construction - spectrum	259		—		—	%	516			—			—	%
Total Acquisitions	$	364	$	41	—	%	$	23,533		$	1,215		—	%

Cash Paid for Programming and Produced Film/TV Content	$	4,766	$	3,062	55.6	%	$	14,562		$	10,281		41.6	%

Dividends Declared per Common Share	$	0.52	$	0.52	—	%	$	1.56		$	1.56		—	%

End of Period Common Shares Outstanding (000,000)							7,140			7,125			0.2	%
Debt Ratio							49.7		%	44.9		%	480	BP
Total Employees							214,840			234,630			(8.4)	%


Segment Results
Dollars in millions
Unaudited	Third Quarter				Percent		Nine-Month Period				Percent
	2021		2020		Change		2021		2020		Change
Segment Operating Revenues
Mobility	$	19,138	$	17,894	7.0	%	$	57,108	$	52,445	8.9	%
Business Wireline	5,938		6,261		(5.2)	%	18,036		18,832		(4.2)	%
Consumer Wireline	3,142		3,040		3.4	%	9,380		9,202		1.9	%
Total Segment Operating Revenues	28,218		27,195		3.8	%	84,524		80,479		5.0	%

Segment Operating Contribution
Mobility	5,955		5,691		4.6	%	17,959		17,284		3.9	%
Business Wireline	985		1,184		(16.8)	%	3,093		3,567		(13.3)	%
Consumer Wireline	183		189		(3.2)	%	776		1,102		(29.6)	%
Total Segment Operating Contribution	$	7,123	$	7,064	0.8	%	$	21,828	$	21,953	(0.6)	%


Supplementary Operating Data
Subscribers and connections in thousands
Unaudited					September 30,		Percent
					2021	2020	Change
Broadband Connections
Broadband					15,050	14,761	2.0	%
DSL					460	614	(25.1)	%
Total Broadband Connections					15,510	15,375	0.9	%

Voice Connections
Retail Consumer Switched Access Lines					6,404	7,562	(15.3)	%
U-verse Consumer VoIP Connections					3,440	3,942	(12.7)	%
Total Retail Voice Connections					9,844	11,504	(14.4)	%

	Third Quarter		Percent		Nine-Month Period		Percent
	2021	2020	Change		2021	2020	Change
Broadband Net Additions
Broadband	62	213	(70.9)	%	232	102	—	%
DSL	(33)	(39)	15.4	%	(106)	(116)	8.6	%
Total Broadband Net Additions	29	174	(83.3)	%	126	(14)	—	%


Mobility Results
Dollars in millions
Unaudited	Third Quarter						Percent		Nine-Month Period						Percent
	2021			2020			Change		2021			2020			Change
Operating Revenues
Service	$	14,527		$	13,883		4.6	%	$	42,921		$	41,520		3.4	%
Equipment	4,611			4,011			15.0	%	14,187			10,925			29.9	%
Total Operating Revenues	19,138			17,894			7.0	%	57,108			52,445			8.9	%

Operating Expenses
Operations and support	11,148			10,182			9.5	%	33,077			29,083			13.7	%
Depreciation and amortization	2,035			2,021			0.7	%	6,072			6,078			(0.1)	%
Total Operating Expenses	13,183			12,203			8.0	%	39,149			35,161			11.3	%
Operating Income	5,955			5,691			4.6	%	17,959			17,284			3.9	%
Equity in Net Income (Loss) of Affiliates	—			—			—	%	—			—			—	%
Operating Contribution	$	5,955		$	5,691		4.6	%	$	17,959		$	17,284		3.9	%

Operating Income Margin	31.1		%	31.8		%	(70)	BP	31.4		%	33.0		%	(160)	BP

Supplementary Operating Data
Subscribers and connections in thousands
Unaudited									September 30,						Percent
									2021			2020			Change
Mobility Subscribers
Postpaid									80,249			75,969			5.6	%
Postpaid phone									66,396			63,485			4.6	%
Prepaid									19,028			18,100			5.1	%
Reseller									6,263			6,708			(6.6)	%
Connected Devices									90,979			75,967			19.8	%
Total Mobility Subscribers									196,519			176,744			11.2	%

	Third Quarter						Percent		Nine-Month Period						Percent
	2021			2020			Change		2021			2020			Change
Mobility Net Additions
Postpaid Phone Net Additions	928			645			43.9	%	2,312			657			—	%
Total Phone Net Additions	1,177			776			51.7	%	2,942			880			—	%

Postpaid	1,218			1,081			12.7	%	3,197			954			—	%
Prepaid	351			245			43.3	%	927			365			—	%
Reseller	(164)			(4)			—	%	(357)			(252)			(41.7)	%
Connected Devices	3,468			4,203			(17.5)	%	10,194			9,976			2.2	%
Total Mobility Net Additions	4,873			5,525			(11.8)	%	13,961			11,043			26.4	%

Postpaid Churn	0.92		%	0.85		%	7	BP	0.91		%	0.99		%	(8) BP
Postpaid Phone-Only Churn	0.72		%	0.69		%	3	BP	0.72		%	0.80		%	(8) BP


Business Wireline Results
Dollars in millions
Unaudited	Third Quarter						Percent		Nine-Month Period						Percent
	2021			2020			Change		2021			2020			Change
Operating Revenues
Service	$	5,765		$	6,079		(5.2)	%	$	17,497		$	18,271		(4.2)	%
Equipment	173			182			(4.9)	%	539			561			(3.9)	%
Total Operating Revenues	5,938			6,261			(5.2)	%	18,036			18,832			(4.2)	%

Operating Expenses
Operations and support	3,649			3,764			(3.1)	%	11,068			11,365			(2.6)	%
Depreciation and amortization	1,304			1,313			(0.7)	%	3,875			3,900			(0.6)	%
Total Operating Expenses	4,953			5,077			(2.4)	%	14,943			15,265			(2.1)	%
Operating Income	985			1,184			(16.8)	%	3,093			3,567			(13.3)	%
Equity in Net Income (Loss) of Affiliates	—			—			—	%	—			—			—	%
Operating Contribution	$	985		$	1,184		(16.8)	%	$	3,093		$	3,567		(13.3)	%

Operating Income Margin	16.6		%	18.9		%	(230)	BP	17.1		%	18.9		%	(180)	BP


Consumer Wireline Results
Dollars in millions
Unaudited	Third Quarter						Percent		Nine-Month Period						Percent
	2021			2020			Change		2021			2020			Change
Operating Revenues
Broadband	$	2,290		$	2,128		7.6	%	$	6,761		$	6,329		6.8	%
Legacy voice and data services	484			538			(10.0)	%	1,507			1,679			(10.2)	%
Other service and equipment	368			374			(1.6)	%	1,112			1,194			(6.9)	%
Total Operating Revenues	3,142			3,040			3.4	%	9,380			9,202			1.9	%

Operating Expenses
Operations and support	2,184			2,117			3.2	%	6,298			5,924			6.3	%
Depreciation and amortization	775			734			5.6	%	2,306			2,176			6.0	%
Total Operating Expenses	2,959			2,851			3.8	%	8,604			8,100			6.2	%
Operating Income	183			189			(3.2)	%	776			1,102			(29.6)	%
Equity in Net Income (Loss) of Affiliates	—			—			—	%	—			—			—	%
Operating Contribution	$	183		$	189		(3.2)	%	$	776		$	1,102		(29.6)	%

Operating Income Margin	5.8		%	6.2		%	(40)	BP	8.3		%	12.0		%	(370)	BP

Supplementary Operating Data
Subscribers and connections in thousands
Unaudited									September 30,						Percent
									2021			2020			Change
Broadband Connections
Total Broadband and DSL Connections									14,180			14,102			0.6	%
Fiber Broadband Connections									5,721			4,678			22.3	%

Voice Connections
Retail Consumer Switched Access Lines									2,527			2,977			(15.1)	%
U-verse Consumer VoIP Connections									2,843			3,361			(15.4)	%
Total Retail Consumer Voice Connections									5,370			6,338			(15.3)	%

	Third Quarter						Percent		Nine-Month Period						Percent
	2021			2020			Change		2021			2020			Change
Broadband Net Additions
Total Broadband and DSL Net Additions	6			158			(96.2)	%	80			(17)			—	%
Fiber Broadband Net Additions	289			357			(19.0)	%	770			791			(2.7)	%


Business Solutions Results
Dollars in millions
Unaudited	Third Quarter						Percent		Nine-Month Period						Percent
	2021			2020			Change		2021			2020			Change
Operating Revenues
Wireless service	$	2,059		$	1,950		5.6	%	$	6,053		$	5,784		4.7	%
Wireline service	5,765			6,079			(5.2)	%	17,497			18,271			(4.2)	%
Wireless equipment	813			662			22.8	%	2,384			1,957			21.8	%
Wireline equipment	173			182			(4.9)	%	539			561			(3.9)	%
Total Operating Revenues	8,810			8,873			(0.7)	%	26,473			26,573			(0.4)	%

Operating Expenses
Operations and support	5,603			5,441			3.0	%	16,815			16,447			2.2	%
Depreciation and amortization	1,651			1,632			1.2	%	4,903			4,862			0.8	%
Total Operating Expenses	7,254			7,073			2.6	%	21,718			21,309			1.9	%
Operating Income	1,556			1,800			(13.6)	%	4,755			5,264			(9.7)	%
Equity in Net Income (Loss) of Affiliates	—			—			—	%	—			—			—	%
Operating Contribution	$	1,556		$	1,800		(13.6)	%	$	4,755		$	5,264		(9.7)	%

Operating Income Margin	17.7		%	20.3		%	(260)	BP	18.0		%	19.8		%	(180)	BP


Vrio Results
Dollars in millions
Unaudited	Third Quarter						Percent		Nine-Month Period						Percent
	2021			2020			Change		2021			2020			Change
Operating Revenues	$	756		$	753		0.4	%	$	2,248		$	2,392		(6.0)	%

Operating Expenses
Operations and support	660			675			(2.2)	%	1,981			2,119			(6.5)	%
Depreciation and amortization	—			126			—	%	231			400			(42.3)	%
Total Operating Expenses	660			801			(17.6)	%	2,212			2,519			(12.2)	%
Operating Income (Loss)	96			(48)			—	%	36			(127)			—	%
Equity in Net Income (Loss) of Affiliates	9			14			(35.7)	%	7			26			(73.1)	%
Operating Contribution	$	105		$	(34)		—	%	$	43		$	(101)		—	%

Operating Income Margin	12.7		%	(6.4)		%	1,910	BP	1.6		%	(5.3)		%	690	BP

Supplementary Operating Data
Subscribers and connections in thousands
Unaudited									September 30,						Percent
									2021			2020			Change
Vrio Video Subscribers									10,142			10,893			(6.9)	%

	Third Quarter						Percent		Nine-Month Period						Percent
	2021			2020			Change		2021			2020			Change
Vrio Video Net Additions	(178)			229			—	%	(800)			(197)			—	%


Mexico Results
Dollars in millions
Unaudited	Third Quarter						Percent		Nine-Month Period						Percent
	2021			2020			Change		2021			2020			Change
Operating Revenues
Wireless service	$	463		$	385		20.3	%	$	1,349		$	1,197		12.7	%
Wireless equipment	261			258			1.2	%	694			629			10.3	%
Total Operating Revenues	724			643			12.6	%	2,043			1,826			11.9	%

Operating Expenses
Operations and support	697			662			5.3	%	1,984			1,914			3.7	%
Depreciation and amortization	157			124			26.6	%	452			373			21.2	%
Total Operating Expenses	854			786			8.7	%	2,436			2,287			6.5	%
Operating Income (Loss)	(130)			(143)			9.1	%	(393)			(461)			14.8	%
Equity in Net Income (Loss) of Affiliates	—			—			—	%	—			—			—	%
Operating Contribution	$	(130)		$	(143)		9.1	%	$	(393)		$	(461)		14.8	%

Operating Income Margin	(18.0)		%	(22.2)		%	420	BP	(19.2)		%	(25.2)		%	600	BP

Supplementary Operating Data
Subscribers and connections in thousands
Unaudited									September 30,						Percent
									2021			2020			Change
Mexico Wireless Subscribers
Postpaid									4,781			4,710			1.5	%
Prepaid									14,199			13,249			7.2	%
Reseller									493			455			8.4	%
Total Mexico Wireless Subscribers									19,473			18,414			5.8	%

	Third Quarter						Percent		Nine-Month Period						Percent
	2021			2020			Change		2021			2020			Change
Mexico Wireless Net Additions
Postpaid	36			(61)			—	%	85			(393)			—	%
Prepaid	389			472			(17.6)	%	441			(335)			—	%
Reseller	2			30			(93.3)	%	4			83			(95.2)	%
Total Mexico Wireless Net Additions	427			441			(3.2)	%	530			(645)			—	%


Segment Results
Dollars in millions
Unaudited	Third Quarter				Percent		Nine-Month Period				Percent
	2021		2020		Change		2021		2020		Change
Segment Operating Revenues
Subscription	$	3,988	$	3,477	14.7	%	$	11,779	$	10,142	16.1	%
Content and other	3,053		2,318		31.7	%	9,103		7,510		21.2	%
Advertising	1,401		1,600		(12.4)	%	4,877		4,236		15.1	%
Total Segment Operating Revenues	8,442		7,395		14.2	%	25,759		21,888		17.7	%

Direct Costs
Programming	3,068		3,181		(3.6)	%	10,996		8,638		27.3	%
Marketing	1,096		655		67.3	%	2,929		1,750		67.4	%
Other	932		734		27.0	%	2,599		2,329		11.6	%
General and administrative	1,175		913		28.7	%	3,084		3,027		1.9	%
Depreciation and amortization	163		169		(3.6)	%	491		494		(0.6)	%
Total Operating Expenses	6,434		5,652		13.8	%	20,099		16,238		23.8	%
Operating Income	2,008		1,743		15.2	%	5,660		5,650		0.2	%
Equity in Net Income (Loss) of Affiliates	(73)		12		—	%	44		31		41.9	%
Total Segment Operating Contribution	$	1,935	$	1,755	10.3	%	$	5,704	$	5,681	0.4	%


Segment and Business Unit EBITDA, EBITDA Margin and EBITDA Service Margin
Dollars in millions
	Third Quarter						Nine-Month Period
	2021			2020			2021			2020
WarnerMedia Segment
Operating Contribution	$	1,935		$	1,755		$	5,704		$	5,681
Additions:
Equity in Net (Income) of Affiliates	73			(12)			(44)			(31)
Depreciation and amortization	163			169			491			494
EBITDA	2,171			1,912			6,151			6,144

Total Operating Revenues	8,442			7,395			25,759			21,888

Operating Income Margin	23.8		%	23.6		%	22.0		%	25.8		%
EBITDA Margin	25.7		%	25.9		%	23.9		%	28.1		%


Adjusting Items
Dollars in millions
	Third Quarter				Nine-Month Period
	2021		2020		2021		2020



Operating Expenses
Merger costs	$	130	$	38	$	167	$	431
Employee separation costs and benefit-related (gain) loss1	—		40		57		924
Assets impairments and abandonment	161		73		4,716		2,515
Gain (loss) on spectrum transaction	—		—		—		(900)
Adjustments to Operations and Support Expenses	291		151		4,940		2,970
Amortization of intangible assets	1,012		1,921		3,212		6,122
Adjustments to Operating Expenses	1,303		2,072		8,152		9,092
Other
DIRECTV intangible amortization (proportionate share)	392		—		392		—
(Gain) loss on sale of assets	(768)		—		(832)		—
Debt redemption, impairments and other	68		1,263		213		1,670
Actuarial (gain) loss	(374)		63		(3,021)		63
Employee benefit-related (gain) loss1	—		(64)		—		(22)
Adjustments to Income Before Income Taxes	621		3,334		4,904		10,803
Tax impact of adjustments	72		648		620		1,791
Tax-related items	123		—		241		—
Impairment attributable to noncontrolling interest	—		—		81		105
Adjustments to Net Income	$	426	$	2,686	$	3,962	$	8,907
1 Mark-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 (losses) were $(3) and $256 in the third quarter and for the first nine months of 2021 and $123 and $125 in the third quarter and for the first nine months of 2020.


Adjusted Diluted EPS
	Third Quarter					Nine-Month Period
	2021			2020		2021			2020
Diluted Earnings Per Share (EPS)	$	0.82		$	0.39	$	2.07		$	1.19
Amortization of intangible assets	0.11			0.22		0.35			0.68
DIRECTV intangible amortization (proportionate share)	0.04			—		0.04			—
Impairments	0.02			0.01		0.54			0.35
(Gain) loss on sale of assets	(0.08)			—		(0.09)			—
Actuarial (gain) loss 1	(0.04)			0.01		(0.32)			0.01
Debt redemption and other adjustments	0.02			0.13		0.06			0.20
Tax-related items	(0.02)			—		(0.03)			—
Adjusted EPS	$	0.87		$	0.76	$	2.62		$	2.43
Year-over-year growth - Adjusted	14.5		%			7.8		%
Weighted Average Common Shares Outstanding with Dilution (000,000)	7,202			7,173		7,197			7,186
1Includes adjustments for actuarial gains or losses associated with our pension benefit plan, 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 $0.4 billion in the third quarter of 2021. As a result, adjusted EPS reflects an expected return on plan assets of $0.9 billion (based on an average expected return on plan assets of 6.75% for our pension trust), rather than the actual return on plan assets of $1.0 billion (actual pension return of 6.3%), included in the GAAP measure of income.


Three Months Ended
Dollars in millions
Unaudited
September 30, 2021
	Revenues		Operations and Support Expenses		EBITDA		Depreciation and Amortization		Operating Income (Loss)		Equity in Net Income (Loss) of Affiliates		Segment Contribution
Communications
Mobility	$	19,138	$	11,148	$	7,990	$	2,035	$	5,955	$	—	$	5,955
Business Wireline	5,938		3,649		2,289		1,304		985		—		985
Consumer Wireline	3,142		2,184		958		775		183		—		183
Total Communications	28,218		16,981		11,237		4,114		7,123		—		7,123





WarnerMedia	8,442		6,271		2,171		163		2,008		(73)		1,935
Latin America
Vrio	756		660		96		—		96		9		105
Mexico	724		697		27		157		(130)		—		(130)
Total Latin America	1,480		1,357		123		157		(34)		9		(25)
Segment Total	38,140		24,609		13,531		4,434		9,097		$	(64)	$	9,033
Corporate and Other
Corporate	278		1,109		(831)		129		(960)
Video	2,149		1,731		418		44		374
Acquisition-related items	—		130		(130)		1,012		(1,142)
Certain significant items	—		161		(161)		—		(161)
Eliminations and consolidations	(645)		(546)		(99)		—		(99)
AT&T Inc.	$	39,922	$	27,194	$	12,728	$	5,619	$	7,109


Nine Months Ended
Dollars in millions
Unaudited
September 30, 2021
	Revenues		Operations and Support Expenses		EBITDA		Depreciation and Amortization		Operating Income (Loss)		Equity in Net Income (Loss) of Affiliates		Segment Contribution
Communications
Mobility	$	57,108	$	33,077	$	24,031	$	6,072	$	17,959	$	—	$	17,959
Business Wireline	18,036		11,068		6,968		3,875		3,093		—		3,093
Consumer Wireline	9,380		6,298		3,082		2,306		776		—		776
Total Communications	84,524		50,443		34,081		12,253		21,828		—		21,828





WarnerMedia	25,759		19,608		6,151		491		5,660		44		5,704
Latin America
Vrio	2,248		1,981		267		231		36		7		43
Mexico	2,043		1,984		59		452		(393)		—		(393)
Total Latin America	4,291		3,965		326		683		(357)		7		(350)
Segment Total	114,574		74,016		40,558		13,427		27,131		$	51	$	27,182
Corporate and Other
Corporate	1,065		3,482		(2,417)		194		(2,611)
Video	15,513		12,666		2,847		356		2,491
Acquisition-related items	—		167		(167)		3,212		(3,379)
Certain significant items	—		4,773		(4,773)		—		(4,773)
Eliminations and consolidations	(3,246)		(2,426)		(820)		—		(820)
AT&T Inc.	$	127,906	$	92,678	$	35,228	$	17,189	$	18,039


Free Cash Flow and Free Cash Flow Dividend Payout Ratio
Dollars in millions
	Third Quarter						Nine-Month Period
	2021			2020			2021			2020
Net cash provided by operating activities1	$	9,866		$	12,123		$	30,703		$	33,048
Add: Distributions from DIRECTV classified as investing activities	—			—			—			—
Less: Capital expenditures	(4,704)			(3,851)			(12,696)			(13,283)
Free Cash Flow	5,162			8,272			18,007			19,765

Less: Dividends paid	(3,748)			(3,741)			(11,319)			(11,215)
Free Cash Flow after Dividends	$	1,414		$	4,531		$	6,688		$	8,550
Free Cash Flow Dividend Payout Ratio	72.6		%	45.2		%	62.9		%	56.7		%
1 Includes distributions from DIRECTV of $130 in the third quarter and for the nine months ended September 30, 2021.


Cash Paid for Capital Investment
Dollars in millions
	Third Quarter				Nine-Month Period
	2021		2020		2021		2020
Capital Expenditures	$	(4,704)	$	(3,851)	$	(12,696)	$	(13,283)
Cash paid for vendor financing	(1,019)		(611)		(4,013)		(1,965)
Cash paid for Capital Investment	$	(5,723)	$	(4,462)	$	(16,709)	$	(15,248)
FirstNet reimbursement	—		(64)		—		(143)
Gross Capital Investment	$	(5,723)	$	(4,526)	$	(16,709)	$	(15,391)


EBITDA, EBITDA Margin and EBITDA Service Margin
Dollars in millions
	Third Quarter				Nine-Month Period
	2021		2020		2021		2020
Net Income	$	6,273	$	3,168	$	16,089	$	9,694
Additions:
Income Tax Expense	1,539		766		4,412		3,003
Interest Expense	1,667		1,972		5,221		6,031
Equity in Net (Income) Loss of Affiliates	(91)		(5)		(184)		11
Other (Income) Expense - Net	(2,279)		231		(7,499)		(1,589)
Depreciation and amortization	5,619		7,030		17,189		21,537
EBITDA	12,728		13,162		35,228		38,687
Merger costs	130		38		167		431
Employee separation costs and benefit-related (gain) loss	—		40		57		924
Impairments	161		73		$	4,716	2,515
Gain on spectrum transaction	—		—		—		(900)
Adjusted EBITDA 1	$	13,019	$	13,313	$	40,168	$	41,657
1 See page 5 for additional discussion and reconciliation of adjusted items.


Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, and Adjusted EBITDA Margin
Dollars in millions
	Third Quarter						Nine-Month Period
	2021			2020			2021			2020
Operating Income	$	7,109		$	6,132		$	18,039		$	17,150

Adjustments to Operating Expenses	1,303			2,072			8,152			9,092
Adjusted Operating Income	8,412			8,204			26,191			26,242

EBITDA	12,728			13,162			35,228			38,687

Adjustments to Operations and Support Expenses	291			151			4,940			2,970
Adjusted EBITDA	13,019			13,313			40,168			41,657

Total Operating Revenues	39,922			42,340			127,906			126,069







Operating Income Margin	17.8		%	14.5		%	14.1		%	13.6		%
Adjusted Operating Income Margin	21.1		%	19.4		%	20.5		%	20.8		%
Adjusted EBITDA Margin	32.6		%	31.4		%	31.4		%	33.0		%


Net Debt to Pro Forma Adjusted EBITDA - 2021
Dollars in millions
	Three Months Ended
	Dec. 31,		March. 31		June 30,		Sept. 30,		Four Quarters
	2020 1		2021 1		2021 1		2021
Adjusted EBITDA	$	12,889	$	13,564	$	13,585	$	13,019	$	53,057
Less: Historical Video	(710)		(1,065)		(1,364)		(418)		(3,557)
Add: WarnerMedia sale of DIRECTV advertising	565		349		372		99		1,385
Add: WarnerMedia/DIRECTV revenue share	(422)		(271)		(287)		(78)		(1,058)
Pro Forma Adjusted EBITDA	12,322		12,577		12,306		12,622		49,827
End-of-period current debt									23,755
End-of-period long-term debt									155,406
Total End-of-Period Debt									179,161
Less: Cash and Cash Equivalents									21,270
Net Debt Balance									157,891
Annualized Net Debt to Pro Forma Adjusted EBITDA Ratio									3.17
1As reported in AT&T's Form 8-K filed January 27, 2021, April 22, 2021, July 22, 2021, and September 9, 2021.


Net Debt to Adjusted EBITDA - 2020
Dollars in millions
	Three Months Ended
	Dec. 31,		March. 31		June 30,		Sept. 30,		Four Quarters
	2019 1		2020 1		2020 1		2020 1
Adjusted EBITDA	$	14,365	$	14,232	$	14,112	$	13,313	$	56,022
End-of-period current debt									5,898
End-of-period long-term debt									152,980
Total End-of-Period Debt									158,878
Less: Cash and Cash Equivalents									9,758
Net Debt Balance									149,120
Annualized Net Debt to Adjusted EBITDA Ratio									2.66
1As reported in AT&T's Form 8-K filed January 29, 2020, April 22, 2020, and July 23, 2020.



Supplemental Operational Measure
	Third Quarter
	September 30, 2021								September 30, 2020
	Mobility		Business Wireline		Adjustments1		Business Solutions		Mobility		Business Wireline		Adjustments1		Business Solutions
Operating Revenues
Wireless service	$	14,527	$	—	$	(12,468)	$	2,059	$	13,883	$	—	$	(11,933)	$	1,950
Wireline service	—		5,765		—		5,765		—		6,079		—		6,079
Wireless equipment	4,611		—		(3,798)		813		4,011		—		(3,349)		662
Wireline equipment	—		173		—		173		—		182		—		182
Total Operating Revenues	19,138		5,938		(16,266)		8,810		17,894		6,261		(15,282)		8,873

Operating Expenses
Operations and support	11,148		3,649		(9,194)		5,603		10,182		3,764		(8,505)		5,441
EBITDA	7,990		2,289		(7,072)		3,207		7,712		2,497		(6,777)		3,432
Depreciation and amortization	2,035		1,304		(1,688)		1,651		2,021		1,313		(1,702)		1,632
Total Operating Expenses	13,183		4,953		(10,882)		7,254		12,203		5,077		(10,207)		7,073
Operating Income	5,955		985		(5,384)		1,556		5,691		1,184		(5,075)		1,800
Equity in Net Income (Loss) of Affiliates	—		—		—		—		—		—		—		—
Operating Contribution	$	5,955	$	985	$	(5,384)	$	1,556	$	5,691	$	1,184	$	(5,075)	$	1,800
1Non-business wireless reported in the Communication segment under the Mobility business unit.
Results have been recast to conform to the current period's classification.


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
Reported AT&T Operating Revenues	$	42,779	$	40,950	$	42,340	$	45,691	$	171,760	$	43,939		$	44,045		$	39,922

Less: Video (A1)	(7,407)		(7,021)		(7,014)		(7,168)		(28,610)		(6,725)			(6,639)			(2,149)
Add: WarnerMedia sales to Video (A2)	755		666		551		487		2,459		524			508			167
Add: WarnerMedia sales of DIRECTV advertising inventory (A3)	413		294		408		603		1,718		388			410			111
Add: Other eliminations	64		55		65		84		268		61			58			17
Pro Forma Operating Revenues	$	36,604	$	34,944	$	36,350	$	39,697	$	147,595	$	38,187		$	38,382		$	38,068

Reported Revenue Growth Rate Y/Y											2.7		%	7.6		%	-5.7		%
Pro Forma Revenue Growth Rate Y/Y											4.3		%	9.8		%	4.7		%


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
Reported AT&T Operations and Support Expenses	$	28,071	$	30,133	$	29,178	$	49,457	$	136,839	$	30,469		$	35,015		$	27,194
Adjustments (B1)	476		(3,295)		(151)		(16,655)		(19,625)		(94)			(4,555)			(291)
Adjusted Operations and Support Expenses	28,547		26,838		29,027		32,802		117,214		30,375			30,460			26,903
Less: Video (A1)	(6,020)		(5,809)		(5,887)		(6,458)		(24,174)		(5,660)			(5,275)			(1,731)
Add: WarnerMedia sales to Video (A2)	755		666		551		487		2,459		524			508			167
Add: WarnerMedia sales of DIRECTV advertising inventory (A3)	39		38		38		38		153		39			38			12
Add: WarnerMedia/DIRECTV 70% revenue share (A3)	289		206		286		422		1,203		271			287			78
Add: Other eliminations	64		55		65		84		268		61			58			17
Pro Forma Adjusted Operations and Support Expenses	$	23,674	$	21,994	$	24,080	$	27,375	$	97,123	$	25,610		$	26,076		$	25,446
Reported Operations and Support Expense Growth Rate Y/Y											8.5		%	16.2		%	-6.8		%
Adjusted Operations and Support Expense Growth Rate Y/Y											6.4		%	13.5		%	-7.3		%
Pro Forma Adjusted Operations and Support Expense Growth Rate Y/Y											8.2		%	18.6		%	5.7		%


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
Reported AT&T Depreciation and Amortization Expense	$	7,222	$	7,285	$	7,030	$	6,979	$	28,516	$	5,809		$	5,761		$	5,619
Adjustments (B1)	(2,056)		(2,145)		(1,921)		(1,904)		(8,026)		(1,131)			(1,069)			(1,012)
Adjusted Depreciation and Amortization Expense	5,166		5,140		5,109		5,075		20,490		4,678			4,692			4,607
Less: Video Depreciation (A1)	(591)		(593)		(557)		(521)		(2,262)		(164)			(148)			(44)
Add: Other consolidation	—		1		—		1		2		—			—			—
Pro Forma Adjusted Depreciation and Amortization Expense	$	4,575	$	4,548	$	4,552	$	4,555	$	18,230	$	4,514		$	4,544		$	4,563
Reported Depreciation and Amortization Expense Growth Rate Y/Y											-19.6		%	-20.9		%	-20.1		%
Adjusted Depreciation and Amortization Expense Growth Rate Y/Y											-9.4		%	-8.7		%	-9.8		%
Pro Forma Adjusted Depreciation and Amortization Expense Growth Rate Y/Y											-1.3		%	-0.1		%	0.2		%





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






(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

Merger Costs	$	182	$	211	$	38	$	37	$	468	$	37	$	—	$	130
Employee separation costs and benefit-related (gain) loss	119		765		40		253		1,177		57		—		—
Impairments	123		2,319		73		16,365		18,880		—		4,555		161
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
Amortization of intangibles	2,056		2,145		1,921		1,890		8,012		1,131		1,069		1,012
Impairments	—		—		—		14		14		—		—		—
Adjustments to Operating Income	$	1,580	$	5,440	$	2,072	$	18,559	$	27,651	$	1,225	$	5,624	$	1,303

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 and October 21, 2021.