8-K - T - Equibles

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

______________________________________________________

FORM 8-K

______________________________________________________

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported) January 25, 2023

______________________________________________________

AT&T INC.

(Exact Name of Registrant as Specified in Charter)

______________________________________________________

Delaware	001-08610	43-1301883
(State or Other Jurisdiction<br>of Incorporation)	(Commission<br>File Number)	(IRS Employer<br>Identification No.)
208 S. Akard St., Dallas, Texas<br><br>(Address of Principal Executive Offices)		75202<br><br>(Zip Code)

Registrant’s telephone number, including area code (210) 821-4105

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐	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))

Securities Registered Pursuant to Section 12(b) of the Act

Title of each class	Trading<br>Symbol(s)	Name of each exchange<br>on which registered
Common Shares (Par Value $1.00 Per Share)	T	New York Stock Exchange
Depositary Shares, each representing a 1/1000th interest in a share of 5.000% Perpetual Preferred Stock, Series A	T PRA	New York Stock Exchange
Depositary Shares, each representing a 1/1000th interest in a share of 4.750% Perpetual Preferred Stock, Series C	T PRC	New York Stock Exchange
AT&T Inc. 2.500% Global Notes due March 15, 2023	T 23	New York Stock Exchange
AT&T Inc. 2.750% Global Notes due May 19, 2023	T 23C	New York Stock Exchange
AT&T Inc. Floating Rate Global Notes due September 5, 2023	T 23D	New York Stock Exchange
AT&T Inc. 1.050% Global Notes due September 5, 2023	T 23E	New York Stock Exchange
AT&T Inc. 1.300% Global Notes due September 5, 2023	T 23A	New York Stock Exchange
Title of each class	Trading<br><br>Symbol(s)	Name of each exchange<br><br>on which registered
---	---	---
AT&T Inc. 1.950% Global Notes due September 15, 2023	T 23F	New York Stock Exchange
AT&T Inc. 2.400% Global Notes due March 15, 2024	T 24A	New York Stock Exchange
AT&T Inc. 3.500% Global Notes due December 17, 2025	T 25	New York Stock Exchange
AT&T Inc. 0.250% Global Notes due March 4, 2026	T 26E	New York Stock Exchange
AT&T Inc. 1.800% Global Notes due September 5, 2026	T 26D	New York Stock Exchange
AT&T Inc. 2.900% Global Notes due December 4, 2026	T 26A	New York Stock Exchange
AT&T Inc. 1.600% Global Notes due May 19, 2028	T 28C	New York Stock Exchange
AT&T Inc. 2.350% Global Notes due September 5, 2029	T 29D	New York Stock Exchange
AT&T Inc. 4.375% Global Notes due September 14, 2029	T 29B	New York Stock Exchange
AT&T Inc. 2.600% Global Notes due December 17, 2029	T 29A	New York Stock Exchange
AT&T Inc. 0.800% Global Notes due March 4, 2030	T 30B	New York Stock Exchange
AT&T Inc. 2.050% Global Notes due May 19, 2032	T 32A	New York Stock Exchange
AT&T Inc. 3.550% Global Notes due December 17, 2032	T 32	New York Stock Exchange
AT&T Inc. 5.200% Global Notes due November 18, 2033	T 33	New York Stock Exchange
AT&T Inc. 3.375% Global Notes due March 15, 2034	T 34	New York Stock Exchange
AT&T Inc. 2.450% Global Notes due March 15, 2035	T 35	New York Stock Exchange
AT&T Inc. 3.150% Global Notes due September 4, 2036	T 36A	New York Stock Exchange
AT&T Inc. 2.600% Global Notes due May 19, 2038	T 38C	New York Stock Exchange
AT&T Inc. 1.800% Global Notes due September 14, 2039	T 39B	New York Stock Exchange
AT&T Inc. 7.000% Global Notes due April 30, 2040	T 40	New York Stock Exchange
AT&T Inc. 4.250% Global Notes due June 1, 2043	T 43	New York Stock Exchange
AT&T Inc. 4.875% Global Notes due June 1, 2044	T 44	New York Stock Exchange
AT&T Inc. 4.000% Global Notes due June 1, 2049	T 49A	New York Stock Exchange
AT&T Inc. 4.250% Global Notes due March 1, 2050	T 50	New York Stock Exchange
AT&T Inc. 3.750% Global Notes due September 1, 2050	T 50A	New York Stock Exchange
AT&T Inc. 5.350% Global Notes due November 1, 2066	TBB	New York Stock Exchange
AT&T Inc. 5.625% Global Notes due August 1, 2067	TBC	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02 Results of Operations and Financial Condition.

The registrant announced on January 25, 2023, its results of operations for the fourth quarter of 2022. The text of the press release and accompanying financial information are attached as exhibits and incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

The following exhibits are furnished as part of this report:

(d)	Exhibits
	99.1	Press release dated January 25, 2023 reporting financial results for the fourth quarter ended December 31, 2022.
	99.2	AT&T Inc. selected financial statements and operating data.
	99.3	Discussion and reconciliation of non-GAAP measures.
	99.4	Supplemental Quarterly Standalone AT&T Financial Information.
	104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	AT&T INC.
Date: January 25, 2023	By: /s/ Debra L. Dial .<br><br>Debra L. Dial<br><br>Senior Vice President - Chief Accounting Officer<br><br>and Controller

Document

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

Continued strong subscriber growth

◦656,000 postpaid phone net adds; nearly 2.9 million for the full year

◦280,000 AT&T Fiber net adds, 12 straight quarters with more than 200,000 net adds; more than 1.2 million net adds for full-year 2022, fifth straight year with 1 million or more AT&T Fiber net adds

Subscriber additions driving revenue growth

◦Domestic wireless service revenues up 5.2%; 5.1% for the full year

◦Consumer broadband revenues up 7.2% driven by AT&T Fiber revenue growth of more than 31%; full-year broadband revenues grew 6.4% with AT&T Fiber revenues up nearly 29%

Network deployment on or ahead of schedule

◦Mid-band 5G spectrum covering 150 million people, more than two times higher than original end-of-year target

◦Ability to serve more than 19 million consumer locations and more than 3 million business customer locations in more than 100 U.S. metro areas with fiber

Transformation supporting margin growth

◦Achieved more than $5 billion of $6 billion-plus run-rate cost savings target at year end

Fourth-Quarter Consolidated Results

•Revenues from continuing operations1 of $31.3 billion

•Reported EPS from continuing operations of $(3.20)2 due to non-cash charges compared to $.66 in the prior year

•Adjusted EPS* from continuing operations of $0.61 compared to $.56 in the prior year

•Cash from operating activities from continuing operations of $10.3 billion

•Capital expenditures from continuing operations of $4.2 billion; capital investment* from continuing operations of $4.7 billion

•Free cash flow* from continuing operations of $6.1 billion

Full-Year Consolidated Results

•Revenues from continuing operations of $120.7 billion

•Reported EPS from continuing operations of ($1.10) 2 due to non-cash charges

•Adjusted EPS* from continuing operations of $2.57

•Cash from operations of $35.8 billion

•Capital expenditures of $19.6 billion; capital investment* of $24.3 billion

•Free cash flow* of $14.1 billion

* Further clarification and explanation of non-GAAP measures and reconciliations to their most comparable GAAP measures can be found in the “Non-GAAP Measures and Reconciliations to GAAP Measures” section of the release and at https://investors.att.com.

2023 Outlook – Continuing Operations

For the full year AT&T expects:

•Wireless service revenue growth of 4% or higher

•Broadband revenue growth of 5% or higher

•Adjusted EBITDA* growth of 3% or higher

•Capital investment* of about $24 billion, consistent with 2022 levels

•Free cash flow* of $16 billion or better, up $2 billion from 2022

•Adjusted EPS* of $2.35 to $2.45, which includes an expected ($0.25) of impacts from higher non-cash pension costs related to higher interest rates, lower capitalized interest and impacts from an expected higher effective tax rate of 23% to 24%

Note: AT&T’s fourth-quarter earnings conference call will be webcast at 8:30 a.m. ET on Wednesday, January 25, 2023. The webcast and related materials, including financial highlights, will be available on AT&T’s Investor Relations website at https://investors.att.com.

DALLAS, January 25, 2023 — AT&T Inc. (NYSE: T) reported fourth-quarter results that showed sustained momentum in customer additions across 5G and fiber and solid growth in wireless service and broadband revenues.

“We’re committed to connecting people to greater possibility, and our results demonstrate that our customers are responding to this,” said John Stankey, AT&T CEO. “Our consistent go-to-market strategy and the simplicity of our offerings drove continued robust, high-quality wireless and fiber customer additions in the fourth quarter. Over the last 10 quarters, we’ve demonstrated sustainable momentum in growing customer relationships, with 7.5 million postpaid phone net adds and 2.9 million AT&T Fiber net adds.

“We met or surpassed all of our profitability targets for the year all while investing at record levels to bring the benefits of our 5G and fiber technologies to even more people. As we enter 2023, I’m confident in the trajectory of our business and in our team’s ability to deliver profitable and durable growth for our shareholders.”

Consolidated Financial Results

Revenues from continuing operations for the fourth quarter totaled $31.3 billion versus $31.1 billion in the year-ago quarter, up 0.8%. This increase primarily reflects higher Mobility, Mexico and Consumer Wireline revenues, partly offset by lower Business Wireline revenues.

Operating expenses from continuing operations were $52.4 billion versus $26.2 billion in the year-ago quarter. Operating expenses increased primarily due to non-cash goodwill impairments and asset abandonments and restructuring charges in the current quarter totaling $26.8 billion. Goodwill impairments of $24.8 billion were associated with our Business Wireline, Consumer Wireline and Mexico reporting units and were driven by higher interest rates consistent with the macroeconomic environment, with secular declines also impacting Business Wireline growth rates. Asset abandonments of $1.4 billion were associated with certain wireline conduits no longer required to support our copper and fiber networks. To a lesser extent, the year-over-year increase also reflected higher bad debt expense and increased depreciation, partly offset by lower wireless equipment costs from lower volumes and the lack of 3G network shutdown costs in the fourth quarter of 2022.

Operating income (loss) from continuing operations was ($21.1) billion versus $4.9 billion in the year-ago quarter. When adjusting for the asset impairments and abandonments, and other items, adjusted operating income* from continuing operations was $5.7 billion versus $5.0 billion in the year-ago quarter.

Equity in net income of affiliates of $0.4 billion primarily from the DIRECTV investment. With adjustment for our proportionate share of intangible amortization, adjusted equity in net income from the DIRECTV investment* was $0.7 billion.

Income (loss) from continuing operations was ($23.1) billion versus $5.2 billion in the year-ago quarter. Earnings per common share from continuing operations was ($3.20) versus $0.66 in the year-ago quarter. Adjusting for ($3.81), which includes asset impairments and abandonments, an actuarial loss on benefit plans, our proportionate share of intangible amortization from the DIRECTV equity method investment and other items, earnings per diluted common share* from continuing operations was $0.61 compared to $0.56 in the year-ago quarter.

Cash from operating activities from continuing operations was $10.3 billion, up $2.3 billion year over year. Capital expenditures from continuing operations were $4.2 billion in the quarter versus $3.5 billion in the year-ago quarter. Capital investment* from continuing operations, which includes $0.5 billion of cash payments for vendor financing, totaled $4.7 billion.

Free cash flow* from continuing operations was $6.1 billion for the quarter.

Full-Year Results

Revenues from continuing operations for the full year totaled $120.7 billion versus $134.0 billion in 2021, down 9.9% reflecting the impact of the U.S. Video separation in July 2021. Excluding the impact of U.S. Video, operating revenues for standalone AT&T* were up 2.1%, from $118.2 billion, primarily driven by higher revenues from Mobility, and, to a lesser extent, Mexico and Consumer Wireline, partially offset by lower Business Wireline revenues.

Operating expenses from continuing operations were $125.3 billion compared with $108.1 billion in 2021 primarily due to higher non-cash asset impairments and abandonments, and restructuring charges, partly offset by the inclusion in the prior year of U.S. Video results for seven months as well as other divested businesses. To a lesser extent, the year-over-year increase reflects higher bad debt expense, the elimination of CAF II government credits and increased wholesale network access charges. Wireless equipment costs were up slightly year over year as the impacts of higher sales volumes and the sale of higher-priced smartphones were largely offset by lower 3G network shutdown costs.

Operating income (loss) from continuing operations was ($4.6) billion versus $25.9 billion in 2021. When adjusting for asset impairments, abandonments, restructuring, and other items, adjusted operating income* from continuing operations was $23.5 billion versus $26.2 billion a year ago. When excluding the impacts of prior-year dispositions, standalone AT&T* adjusted operating income totaled $22.3 billion for full year 2021.

Equity in net income of affiliates of $1.8 billion primarily from the DIRECTV investment. With adjustment for our proportionate share of intangible amortization, adjusted equity in net income from the DIRECTV investment* for full year 2022 was $3.4 billion.

Income (loss) from continuing operations was ($6.9) billion versus $23.8 billion a year ago. Earnings per common share from continuing operations was ($1.10) versus $3.02 for full-year 2021. With adjustments for both years, adjusted earnings per diluted common share from continuing operations* was $2.57 versus $2.63 for full-year 2021. On a standalone AT&T* comparative basis, adjusted earnings per diluted common share was $2.41 for 2021.

Cash from operating activities from continuing operations was $35.8 billion, down from $37.2 billion in the prior year due to inclusion of U.S. Video in 2021. Capital expenditures from continuing operations were $19.6 billion for the full year, versus $15.5 billion for full-year 2021. Capital investment* from continuing operations, which includes $4.7 billion of cash payments for vendor financing, totaled $24.3 billion.

Free cash flow* from continuing operations was $14.1 billion for the full year. Total debt was $135.9 billion at the end of the fourth quarter, and net debt* was $132.2 billion.

Communications Operational Highlights

Fourth-quarter revenues were $30.4 billion, up 0.5% year over year due to increases in Mobility and Consumer Wireline, which more than offset a decline in Business Wireline. Operating income was $7.2 billion, up 12.7% year over year, with operating income margin of 23.8%, compared to 21.2% in the year-ago quarter. Operating income in the quarter reflects the lower costs associated with a third-quarter 2022 retirement benefit plan change of about $115 million, with about $50 million for Business Wireline, $40 million for Consumer Wireline and $20 million for Mobility.

Mobility

•Revenues were up 1.7% year over year to $21.5 billion due to higher service revenues. Service revenues were $15.4 billion, up 5.2% year over year, primarily driven by subscriber and postpaid ARPU growth. Equipment revenues were $6.1 billion, down 6.3% year over year, driven by lower volumes.

•Operating expenses were $15.5 billion, down 2.3% year over year primarily due to lower equipment costs including the absence of 3G network shutdown costs, gains from tower transactions, decreased advertising costs and lower content costs. These decreases were partially offset by higher bad debt expense, increased amortization of customer acquisition costs and the elimination of CAF II government credits.

•Operating income was $6.0 billion, up 13.4% year over year. Operating income margin was 28.1%, compared to 25.2% in the year-ago quarter.

•EBITDA* was $8.1 billion, up 10.1% year over year with EBITDA margin* of 37.8%, up from 34.9% a year ago. EBITDA service margin* was 52.6%, up from 50.3% in the year-ago quarter.

•Total wireless net adds were 6.4 million including:

◦1.1 million postpaid net adds with:

◦656,000 postpaid phone net adds

◦39,000 postpaid tablet and other branded computing device net adds

◦409,000 other net adds

◦(13,000) prepaid phone net adds

•Postpaid churn was 1.01% versus 1.02% in the year-ago quarter.

•Postpaid phone churn was 0.84% versus 0.85% in the year-ago quarter.

•Prepaid churn was less than 3%, with Cricket substantially lower.

•Postpaid phone-only ARPU was $55.43, up 2.5% versus the year-ago quarter, due to pricing actions, higher international roaming and a mix shift to higher-priced unlimited plans.

•FirstNet® connections reached approximately 4.4 million across more than 24,000 agencies. FirstNet is the nationwide communications platform dedicated to public safety. The AT&T and FirstNet networks cover more than 99% of the U.S. population, and FirstNet covers more first responders than any other network in America.

Business Wireline

•Revenues were $5.6 billion, down 4.5% year over year due to lower demand for legacy voice and data services and product simplification, partly offset by growth in connectivity services. The quarter also included approximately $90 million in revenues from intellectual property sales, an increase of about $15 million year over year.

•Operating expenses were $4.8 billion, down 3.8% year over year due to ongoing operational cost efficiencies, credits associated with a retirement benefit plan change in the third quarter of 2022 and lower amortization of deferred fulfillment costs, partly offset by higher wholesale network access costs and higher depreciation expense.

•Operating income was $801 million, down 8.6%, with operating income margin of 14.2% compared to 14.8% in the year-ago quarter.

•EBITDA* was $2.2 billion, down 1.5% year over year with EBITDA margin* of 38.3%, compared to 37.2% in the year-ago quarter. EBITDA margin for both periods includes the impacts from intellectual property sales.

•AT&T Business serves the largest global companies, government agencies and small businesses. More than 750,000 U.S. business buildings are lit with fiber from AT&T, enabling high-speed fiber connections to more than 3 million U.S. business customer locations. Nationwide, more than 10 million business customer locations are on or within 1,000 feet of our fiber.3

Consumer Wireline

•Revenues were $3.2 billion, up 2.2% year over year due to gains in broadband more than offsetting declines in legacy voice and data and other services. Broadband revenues increased 7.2% due to fiber growth of more than 31%, partly offset by non-fiber revenue declines of 12.6%.

•Operating expenses were $2.9 billion, down 3.5% year over year due to lower network and customer support costs, decreased advertising costs, credits associated with a retirement benefit plan change in the third quarter of 2022, and lower content costs, partly offset by the elimination of CAF II government credits, higher depreciation expense and higher bad debt expense.

•Operating income was $376 million, up 86.1% year over year with operating income margin of 11.6%, compared to 6.4% in the year-ago quarter.

•EBITDA* was $1.2 billion, up 20.5% year over year with EBITDA margin* of 37.0%, up from 31.4% in the year-ago quarter.

•Total broadband losses, excluding DSL, were 43,000, reflecting AT&T Fiber net adds of 280,000, more than offset by losses in non-fiber services. AT&T Fiber now has the ability to serve more than 19 million customer locations and offers symmetrical, multi-gig speeds across parts of its entire footprint of more than 100 metro areas.

Latin America - Mexico Operational Highlights4

Revenues were $861 million, up 22.3% year over year primarily due to growth in both service and equipment revenues, including favorable foreign exchange impacts. Service revenues were $579 million, up 19.4% year over year, driven by growth in wholesale revenue and subscribers. Equipment revenues were $282 million, up 28.8% year over year due to higher sales.

Operating loss was ($79) million compared to ($117) million in the year-ago quarter. EBITDA* was $85 million compared to $36 million in the year-ago quarter.

Total wireless net adds were 605,000, including 515,000 prepaid net adds, 71,000 postpaid net adds and 19,000 reseller net adds.

FirstNet and the FirstNet logo are registered trademarks and service marks of the First Responder Network Authority. All other marks are the property of their respective owners.

1With the closing of the WarnerMedia transaction in April 2022, historical financial results have been recast to present WarnerMedia and other divested businesses, including Vrio, Xandr and Playdemic, as discontinued operations. Consolidated results reflect AT&T’s remaining continuing operations, which include U.S. Video and certain other dispositions in the prior year.

2Reported Earnings per Common Share from continuing operations is calculated using Income (Loss) from Continuing Operations, less Net Income Attributable to Noncontrolling Interest and Preferred Stock Dividends and adjustment for distributions on Mobility II preferred interests and share-based payments (in periods of net income) or adjustment of carrying value of noncontrolling interest (in periods of net loss), divided by the weighted average common shares outstanding for the period.

3 The more than 3 million U.S. business customer locations are included within the 10+ million U.S. business customer locations on or within 1,000 feet of our fiber.

4Latin America segment results have been recast to classify Vrio as a discontinued operation. Segment results consist solely of AT&T Mexico operations.

About AT&T

We help more than 100 million U.S. families, friends and neighbors, plus nearly 2.5 million businesses, connect to greater possibility. From the first phone call 140+ years ago to our 5G wireless and multi-gig internet offerings today, we @ATT innovate to improve lives. For more information about AT&T Inc. (NYSE:T), please visit us at about.att.com. Investors can learn more at investors.att.com.

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.

Non-GAAP Measures and Reconciliations to GAAP Measures

Schedules and reconciliations of non-GAAP financial measures cited in this document to the most directly comparable financial measures under generally accepted accounting principles (GAAP) can be found at https://investors.att.com and in our Form 8-K dated January 25, 2023. Free cash flow, EBITDA, adjusted operating income and net debt are non-GAAP financial measures frequently used by investors and credit rating agencies.

Adjusted diluted EPS from continuing operations includes adjusting items to revenues and costs that we consider non-operational in nature, including items arising from asset acquisitions or dispositions. We 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%.

For 4Q22, Adjusted EPS from continuing operations of $0.61 is Reported EPS from continuing operations of ($3.20) adjusted for $3.57 impairments, abandonments and restructuring, $0.19 actuarial loss on benefit plans, $0.04 proportionate share of intangible amortization at the DIRECTV equity method investment, $0.04 benefit-related and other costs and $0.01 impact of Accounting Standards Update (ASU) No. 2020-06, minus $0.04 benefit from tax items.

For 4Q21, Adjusted EPS from continuing operations of $0.56 is Diluted EPS from continuing operations of $0.66 adjusted for $0.05 proportionate share of intangible amortization at the DIRECTV equity method investment, $0.01 asset impairments and $0.01 impact of ASU No. 2020-06, minus $0.11 actuarial gain on benefit plans, $0.03 benefit from tax items and $0.03 of benefit-related and other costs.

For 2022, Adjusted EPS from continuing operations of $2.57 is Reported EPS from continuing operations of ($1.10) adjusted for $3.59 impairments, abandonments and restructuring, $0.19 benefit-related and other costs, $0.16 proportionate share of intangible amortization at the DIRECTV equity method investment, and $0.06 impact of ASU No. 2020-06, minus $0.20 actuarial gain on benefit plans and $0.13 benefit from tax items.

For 2021, Adjusted EPS from continuing operations of $2.63 is Diluted EPS from continuing operations of $3.02 adjusted for $0.09 proportionate share of intangible amortization at the DIRECTV equity method investment, $0.03 impact of ASU No. 2020-06, and $0.02 asset impairments, minus $0.42 actuarial gain on benefit plans, $0.08 benefit from tax items and $0.03 of benefit-related and other costs.

The company expects adjustments to 2023 reported diluted EPS to include our proportionate share of intangible amortization at the DIRECTV equity method investment in the range of $1.3 billion, a non-cash mark-to-market benefit plan gain/loss, the impact of ASU No. 2020-06 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 projected 2023 Adjusted EPS depends on future levels of revenues and expenses, most of 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.

Capital investment from continuing operations is a non-GAAP financial measure that provides an additional view of cash paid for capital investment to provide a comprehensive view of cash used to invest in our networks, product developments and support systems. 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. Capital investment from continuing operations includes capital expenditures from continuing operations and cash paid for vendor financing ($0.5 billion in 4Q22, $4.7 billion in 2022). For 2023, capital investment is expected to be about $24 billion, consistent with 2022 levels. Due to high variability and difficulty in predicting items that impact capital expenditures and vendor financing payments, the company is not able to provide a reconciliation between projected capital investment and the most comparable GAAP metrics without unreasonable effort.

Free cash flow from continuing operations for 4Q22 of $6.1 billion is cash from operating activities from continuing operations of $10.3 billion, plus cash distributions from DIRECTV classified as investing activities of $0.4 billion, minus capital expenditures from continuing operations of $4.2 billion and cash paid for vendor financing of $0.5 billion.

For 2022, free cash flow from continuing operations of $14.1 billion is cash from operating activities from continuing operations of $35.8 billion, plus cash distributions from DIRECTV classified as investing activities of $2.6 billion, minus capital expenditures from continuing operations of $19.6 billion and cash paid for vendor financing of $4.7 billion.

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

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

Adjusted EBITDA is calculated by excluding from operating revenues and operating expenses certain significant items that are non-operational or non-recurring in nature, including dispositions and merger integration and transaction costs, significant abandonments and impairment, benefit-related gains and losses, employee separation and other material gains and losses.

EBITDA and Adjusted EBITDA estimates depend on future levels of revenues and expenses which are not reasonably estimable at this time. Accordingly, we cannot provide a reconciliation between projected EBITDA and projected Adjusted EBITDA and the most comparable GAAP metrics without unreasonable effort.

Standalone AT&T results reflect the historical operating results of the company presented as continuing operations, and also excludes U.S. Video and other 2021 dispositions included in Corporate and Other. Standalone AT&T results are presented to provide 2021 full-year results that are comparable to 2022 continuing operations financial data. For the current and future quarters and 2022, standalone AT&T is the same as continuing operations. See our Form 8-K dated January 25, 2023, for further discussion and information.

Operating Revenues of standalone AT&T for 2021 of $118.2 billion is calculated as Operating Revenues from continuing operations of $134.0 billion less revenues of $15.8 billion from U.S. Video and other divested businesses.

Adjusted Operating Income of standalone AT&T for 2021 of $22.3 billion is calculated as Adjusted Operating Income from continuing operations of $26.2 billion less $3.9 billion from U.S. Video and other divested businesses, including a comparative adjustment applied to prior periods for estimated DIRECTV-related retained costs. After the 3Q21 DIRECTV transaction, we retained incurred operations and support costs and depreciation of network infrastructure, that provides both U-verse video and broadband services to customers. Approximately 60% of these costs will be received from DIRECTV through transition service agreements and commercial arrangements.

Standalone AT&T Adjusted diluted EPS for 2021 of $2.41 is calculated as Adjusted EPS from continuing operations of $2.63 less $0.22 of adjustments to exclude operating income of U.S. Video (including estimated retained costs) and other dispositions, and include our estimate of equity in net income from DIRECTV investment.

Adjusted Operating Income from continuing operations is operating income from continuing operations adjusted for revenues and costs we consider non-operational in nature, including items arising from asset acquisitions or dispositions. For 4Q22, Adjusted Operating Income from continuing operations of $5.7 billion is calculated as operating income from continuing operations of ($21.1) billion plus $26.7 billion of adjustments. For 4Q21, Adjusted Operating Income from continuing operations of $5.0 billion is calculated as operating income from continuing operations of $4.9 billion plus $0.1 billion of adjustments.

For 2022, Adjusted Operating Income from continuing operations of $23.5 billion is calculated as Operating Income from continuing operations of ($4.6) billion plus $28.1 billion of adjustments. For 2021, Adjusted Operating Income from continuing operations of $26.2 billion is calculated as operating income from continuing operations of $25.9 billion plus $0.3 billion of adjustments. Adjustments for all periods are detailed in the Discussion and Reconciliation of Non-GAAP Measures included in our Form 8-K dated January 25, 2023.

Adjusted Equity in Net Income from DIRECTV investment of $0.7 billion for 4Q22 ($3.4 billion for 2022) is calculated as equity income from DIRECTV of $0.4 billion ($1.8 billion for 2022) reported in Equity in Net Income of Affiliates and excludes $0.4 billion ($1.5 billion for 2022) of 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. Our projected 2023 adjusted equity in net income from DIRECTV investment depends on financial projections provided by DIRECTV. The company is not able to provide a reconciliation to the most comparable GAAP metric as DIRECTV’s financial results are not reasonably estimable by AT&T.

Net Debt of $132.2 billion at December 31, 2022 is calculated as Total Debt of $135.9 billion less Cash and Cash Equivalents of $3.7 billion).

For more information, contact:

Fletcher Cook

AT&T Inc.

Phone: (214) 912-8541

Email: fletcher.cook@att.com

Brittany Siwald

AT&T Inc.

Phone: (214) 202-6630

Email: brittany.a.siwald@att.com

Document

AT&T Inc.
Financial Data
Consolidated Statements of Income
Dollars in millions except per share amounts
Unaudited	Fourth Quarter				Percent		Year Ended				Percent
	2022		2021		Change		2022		2021		Change
Operating Revenues
Service	$	24,833	$	24,225	2.5	%	$	97,831	$	111,565	(12.3)	%
Equipment	6,510		6,870		(5.2)	%	22,910		22,473		1.9	%
Total Operating Revenues	31,343		31,095		0.8	%	120,741		134,038		(9.9)	%
Operating Expenses
Cost of revenues
Equipment	6,999		7,443		(6.0)	%	24,009		23,685		1.4	%
Broadcast, programming and operations	—		—		—	%	—		8,106		—	%
Other cost of revenues (exclusive of<br><br>depreciation and amortization shown<br><br>separately below)	6,572		6,782		(3.1)	%	26,839		28,616		(6.2)	%
Selling, general and administrative	7,516		7,368		2.0	%	28,961		29,669		(2.4)	%
Asset impairments and abandonments<br> and restructuring	26,753		108		—	%	27,498		213		—	%
Depreciation and amortization	4,595		4,500		2.1	%	18,021		17,852		0.9	%
Total Operating Expenses	52,435		26,201		—	%	125,328		108,141		15.9	%
Operating Income (Loss)	(21,092)		4,894		—	%	(4,587)		25,897		—	%
Interest Expense	1,560		1,626		(4.1)	%	6,108		6,716		(9.1)	%
Equity in Net Income of Affiliates	374		444		(15.8)	%	1,791		603		—	%
Other Income (Expense) — Net	(919)		2,429		—	%	5,810		9,387		(38.1)	%
Income (Loss) from Continuing Operations<br> Before Income Taxes	(23,197)		6,141		—	%	(3,094)		29,171		—	%
Income tax expense (benefit) on continuing<br> operations	(77)		939		—	%	3,780		5,395		(29.9)	%
Income (Loss) From Continuing Operations	(23,120)		5,202		—	%	(6,874)		23,776		—	%
Income (loss) from discontinued<br> operations, net of tax	(35)		188		—	%	(181)		(2,297)		92.1	%
Net Income (Loss)	(23,155)		5,390		—	%	(7,055)		21,479		—	%
Less: Net Income Attributable to<br> Noncontrolling Interest	(362)		(347)		(4.3)	%	(1,469)		(1,398)		(5.1)	%
Net Income (Loss) Attributable to AT&T	$	(23,517)	$	5,043	—	%	$	(8,524)	$	20,081	—	%
Less: Preferred Stock Dividends	(54)		(51)		(5.9)	%	(203)		(207)		1.9	%
Net Income (Loss) Attributable to Common Stock	$	(23,571)	$	4,992	—	%	$	(8,727)	$	19,874	—	%
Basic Earnings (Loss) Per Share Attributable to<br><br>Common Stock
From continuing operations	$	(3.20)	$	0.67	—	%	$	(1.10)	$	3.07	—	%
From discontinued operations	$	—	$	0.02	—	%	$	(0.03)	$	(0.30)	90.0	%
	$	(3.20)	$	0.69	—	%	$	(1.13)	$	2.77	—	%
Weighted Average Common Shares<br><br>Outstanding (000,000)	7,157		7,172		(0.2)	%	7,166		7,168		—	%
Diluted Earnings (Loss) Per Share Attributable to<br><br>Common Stock 1
From continuing operations	$	(3.20)	$	0.66	—	%	$	(1.10)	$	3.02	—	%
From discontinued operations	$	—	$	0.02	—	%	$	(0.03)	$	(0.29)	89.7	%
	$	(3.20)	$	0.68	—	%	$	(1.13)	$	2.73	—	%
Weighted Average Common Shares<br><br>Outstanding with Dilution (000,000) 1	7,533		7,541		(0.1)	%	7,587		7,503		1.1	%
1Reflects retrospective adoption of Accounting Standards Update (ASU) No. 2020-06
AT&T Inc.
---	---	---	---	---
Financial Data
Consolidated Balance Sheets
Dollars in millions
Unaudited	Dec. 31,		Dec. 31,
	2022		2021
Assets
Current Assets
Cash and cash equivalents	$	3,701	$	19,223
Accounts receivable – net of related allowance for credit loss of $588 and $658	11,466		12,313
Inventories	3,123		3,325
Prepaid and other current assets	14,818		16,131
Assets from discontinued operations	—		119,776
Total current assets	33,108		170,768
Property, Plant and Equipment – Net	127,445		121,649
Goodwill – Net	67,895		92,740
Licenses – Net	124,092		113,830
Other Intangible Assets – Net	5,354		5,391
Investments in and Advances to Equity Affiliates	3,533		6,168
Operating Lease Right-Of-Use Assets	21,814		21,824
Other Assets	19,612		19,252
Total Assets	$	402,853	$	551,622
Liabilities and Stockholders’ Equity
Current Liabilities
Debt maturing within one year	$	7,467	$	24,620
Note payable to DIRECTV	130		1,245
Accounts payable and accrued liabilities	42,644		39,095
Advanced billings and customer deposits	3,918		3,966
Dividends payable	2,014		3,749
Liabilities from discontinued operations	—		33,555
Total current liabilities	56,173		106,230
Long-Term Debt	128,423		151,011
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes	57,032		53,767
Postemployment benefit obligation	7,260		12,560
Operating lease liabilities	18,659		18,956
Other noncurrent liabilities	28,849		25,243
Total deferred credits and other noncurrent liabilities	111,800		110,526
Stockholders’ Equity
Preferred stock	—		—
Common stock	7,621		7,621
Additional paid-in capital	123,610		130,112
Retained (deficit) earnings	(19,415)		42,350
Treasury stock	(17,082)		(17,280)
Accumulated other comprehensive income	2,766		3,529
Noncontrolling interest	8,957		17,523
Total stockholders’ equity	106,457		183,855
Total Liabilities and Stockholders’ Equity	$	402,853	$	551,622
AT&T Inc.
---	---	---	---	---
Financial Data
Consolidated Statements of Cash Flows
Dollars in millions
Unaudited	Year Ended
	2022		2021
Operating Activities
Income (loss) from continuing operations	$	(6,874)	$	23,776
Adjustments to reconcile income (loss) from continuing operations to net cash provided by<br> operating activities from continuing operations:
Depreciation and amortization	18,021		17,852
Provision for uncollectible accounts	1,865		1,241
Deferred income tax expense	2,975		7,412
Net (gain) loss on investments, net of impairments	381		(369)
Pension and postretirement benefit expense (credit)	(3,237)		(3,857)
Actuarial (gain) loss on pension and postretirement benefits	(1,999)		(4,143)
Asset impairments and abandonments and restructuring	27,498		213
Changes in operating assets and liabilities:
Receivables	727		(1,125)
Other current assets	(674)		(1,288)
Accounts payable and other accrued liabilities	(1,109)		(1,570)
Equipment installment receivables and related sales	154		(271)
Deferred customer contract acquisition and fulfillment costs	(947)		18
Postretirement claims and contributions	(823)		(822)
Other - net	(146)		103
Total adjustments	42,686		13,394
Net Cash Provided by Operating Activities from Continuing Operations	35,812		37,170
Investing Activities
Capital expenditures	(19,626)		(15,545)
Acquisitions, net of cash acquired	(10,200)		(25,453)
Dispositions	199		7,136
Distributions from DIRECTV in excess of cumulative equity in earnings	2,649		1,323
Other - net	79		50
Net Cash Used in Investing Activities from Continuing Operations	(26,899)		(32,489)
Financing Activities
Net change in short-term borrowings with original maturities of three months or less	(519)		1,316
Issuance of other short-term borrowings	3,955		21,856
Repayment of other short-term borrowings	(18,345)		(7,510)
Issuance of long-term debt	2,979		9,931
Repayment of long-term debt	(25,118)		(3,039)
Note payable to DIRECTV, net of payments	(1,211)		1,341
Payment of vendor financing	(4,697)		(4,596)
Purchase of treasury stock	(890)		(202)
Issuance of treasury stock	28		96
Redemption of preferred interest in subsidiaries	(2,665)		—
Dividends paid	(9,859)		(15,068)
Other - net	(3,222)		(2,231)
Net Cash (Used in) Provided by Financing Activities from Continuing Operations	(59,564)		1,894
Net (decrease) increase in cash and cash equivalents and restricted cash from<br> continuing operations	(50,651)		6,575
Cash flows from Discontinued Operations:
Cash (used in) provided by operating activities	(3,789)		4,788
Cash provided by (used in) investing activities	1,094		399
Cash provided by (used in) financing activities	35,823		(316)
Net increase (decrease) in cash and cash equivalents and restricted cash from discontinued operations	33,128		4,871
Net (decrease) increase in cash and cash equivalents and restricted cash	$	(17,523)	$	11,446
Cash and cash equivalents and restricted cash beginning of year	21,316		9,870
Cash and Cash Equivalents and Restricted Cash End of Year	$	3,793	$	21,316
AT&T Inc.
---	---	---	---	---	---	---	---	---	---	---	---	---	---
Consolidated Supplementary Data
Supplementary Financial Data
Dollars in millions except per share amounts
Unaudited				Percent		Year Ended						Percent
		2021		Change		2022			2021			Change
Capital expenditures
Purchase of property and equipment	4,179	$	3,453	21.0	%	$	19,452		$	15,372		26.5	%
Interest during construction		41		22.0	%	174			173			0.6	%
Total Capital Expenditures	4,229	$	3,494	21.0	%	$	19,626		$	15,545		26.3	%
Acquisitions, net of cash acquired
Business acquisitions	—	$	—	—	%	$	—		$	—		—	%
Spectrum acquisitions		1,655		—	%	9,080			24,672			(63.2)	%
Interest during construction - spectrum		265		(10.6)	%	1,120			781			43.4	%
Total Acquisitions	241	$	1,920	(87.4)	%	$	10,200		$	25,453		(59.9)	%
Cash paid for interest - continuing operations	1,791	$	1,554	15.3	%	$	7,772		$	7,485		3.8	%
Cash paid for income taxes, net of refunds - continuing operations1	192	$	36	—	%	$	592		$	251		—	%
Dividends Declared per Common Share	0.2775	$	0.52	(46.6)	%	$	1.11		$	2.08		(46.6)	%
End of Period Common Shares Outstanding (000,000)						7,128			7,141			(0.2)	%
Debt Ratio						56.1		%	48.9		%	720	BP
Total Employees						162,920			172,880			(5.8)	%
1 Total cash income taxes paid, net of refunds, by AT&T for the quarters ended December 31, 2022 and 2021 were 192 and 162, and 696 and 700 for the years ended December 31, 2022 and 2021.

All values are in US Dollars.

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 refine the allocation of shared infrastructure costs between the Communications segment and Corporate and Other.

Segment Results
Dollars in millions
Unaudited	Fourth Quarter				Percent		Year Ended				Percent
	2022		2021		Change		2022		2021		Change
Segment Operating Revenues
Mobility	$	21,501	$	21,146	1.7	%	$	81,780	$	78,254	4.5	%
Business Wireline	5,635		5,901		(4.5)	%	22,538		23,937		(5.8)	%
Consumer Wireline	3,229		3,159		2.2	%	12,749		12,539		1.7	%
Total Segment Operating Revenues	30,365		30,206		0.5	%	117,067		114,730		2.0	%
Segment Operating Income
Mobility	6,044		5,332		13.4	%	24,528		23,370		5.0	%
Business Wireline	801		876		(8.6)	%	3,252		4,027		(19.2)	%
Consumer Wireline	376		202		86.1	%	1,327		996		33.2	%
Total Segment Operating Income	$	7,221	$	6,410	12.7	%	$	29,107	$	28,393	2.5	%
Supplementary Operating Data
---	---	---	---	---	---	---	---	---
Subscribers and connections in thousands
Unaudited					December 31,		Percent
					2022	2021	Change
Broadband Connections
Broadband					15,075	15,074	—	%
DSL					311	430	(27.7)	%
Total Broadband Connections					15,386	15,504	(0.8)	%
Voice Connections
Retail Consumer Switched Access Lines					5,213	6,177	(15.6)	%
U-verse Consumer VoIP Connections					2,930	3,333	(12.1)	%
Total Retail Consumer Voice Connections					8,143	9,510	(14.4)	%
	Fourth Quarter		Percent		Year Ended		Percent
	2022	2021	Change		2022	2021	Change
Broadband Net Additions
Broadband	(37)	24	—	%	1	256	—	%
DSL	(29)	(30)	3.3	%	(119)	(136)	12.5	%
Total Broadband Net Additions	(66)	(6)	—	%	(118)	120	—	%

Mobility

Mobility provides nationwide wireless service and equipment.

Mobility Results
Dollars in millions
Unaudited	Fourth Quarter						Percent		Year Ended						Percent
	2022			2021			Change		2022			2021			Change
Operating Revenues
Service	$	15,434		$	14,669		5.2	%	$	60,499		$	57,590		5.1	%
Equipment	6,067			6,477			(6.3)	%	21,281			20,664			3.0	%
Total Operating Revenues	21,501			21,146			1.7	%	81,780			78,254			4.5	%
Operating Expenses
Operations and support	13,377			13,764			(2.8)	%	49,054			46,762			4.9	%
Depreciation and amortization	2,080			2,050			1.5	%	8,198			8,122			0.9	%
Total Operating Expenses	15,457			15,814			(2.3)	%	57,252			54,884			4.3	%
Operating Income	$	6,044		$	5,332		13.4	%	$	24,528		$	23,370		5.0	%
Operating Income Margin	28.1		%	25.2		%	290	BP	30.0		%	29.9		%	10	BP
Supplementary Operating Data
Subscribers and connections in thousands
Unaudited									December 31,						Percent
									2022			2021			Change
Mobility Subscribers
Postpaid									84,700			81,534			3.9	%
Postpaid phone									69,596			67,260			3.5	%
Prepaid									19,176			19,028			0.8	%
Reseller									6,043			6,113			(1.1)	%
Connected Devices									107,478			95,116			13.0	%
Total Mobility Subscribers1									217,397			201,791			7.7	%
1Wireless subscribers at December 31, 2022 excludes the impact of 10,537 subscriber and connected device disconnections resulting from our 3G network shutdown in February 2022. Postpaid disconnections were 897, including 438 phone, 234 prepaid, 749 reseller subscribers, and 8,657 connected devices. The fourth quarter includes an adjustment of 360 subscribers, primarily connected devices.
	Fourth Quarter						Percent		Year Ended						Percent
	2022			2021			Change		2022			2021			Change
Mobility Net Additions
Postpaid Phone Net Additions	656			884			(25.8)	%	2,868			3,196			(10.3)	%
Total Phone Net Additions	643			908			(29.2)	%	3,272			3,850			(15.0)	%
Postpaid	1,104			1,285			(14.1)	%	4,091			4,482			(8.7)	%
Prepaid	(9)			29			—	%	479			956			(49.9)	%
Reseller	150			(177)			—	%	462			(534)			—	%
Connected Devices	5,118			4,134			23.8	%	20,594			14,328			43.7	%
Total Mobility Net Additions	6,363			5,271			20.7	%	25,626			19,232			33.2	%
Postpaid Churn	1.01		%	1.02		%	(1)	BP	0.97		%	0.94		%	3 BP
Postpaid Phone-Only Churn	0.84		%	0.85		%	(1)	BP	0.81		%	0.76		%	5 BP

Business Wireline

Business Wireline provides advanced ethernet-based fiber services, IP Voice and managed professional serivices as well as traditional data services and related equipment to business customers.

Business Wireline Results
Dollars in millions
Unaudited	Fourth Quarter						Percent		Year Ended						Percent
	2022			2021			Change		2022			2021			Change
Operating Revenues
Service	$	5,473		$	5,727		(4.4)	%	$	21,891		$	23,224		(5.7)	%
Equipment	162			174			(6.9)	%	647			713			(9.3)	%
Total Operating Revenues	5,635			5,901			(4.5)	%	22,538			23,937			(5.8)	%
Operating Expenses
Operations and support	3,474			3,708			(6.3)	%	13,972			14,718			(5.1)	%
Depreciation and amortization	1,360			1,317			3.3	%	5,314			5,192			2.3	%
Total Operating Expenses	4,834			5,025			(3.8)	%	19,286			19,910			(3.1)	%
Operating Income	$	801		$	876		(8.6)	%	$	3,252		$	4,027		(19.2)	%
Operating Income Margin	14.2		%	14.8		%	(60)	BP	14.4		%	16.8		%	(240)	BP

Consumer Wireline

Consumer Wireline provides internet, including fiber connections that provide multi-gig services to residential customers in select locations. Consumer Wireline also provides legacy telephony voice communication services.

Consumer Wireline Results
Dollars in millions
Unaudited	Fourth Quarter						Percent		Year Ended						Percent
	2022			2021			Change		2022			2021			Change
Operating Revenues
Broadband	$	2,492		$	2,324		7.2	%	$	9,669		$	9,085		6.4	%
Legacy voice and data services	414			470			(11.9)	%	1,746			1,977			(11.7)	%
Other service and equipment	323			365			(11.5)	%	1,334			1,477			(9.7)	%
Total Operating Revenues	3,229			3,159			2.2	%	12,749			12,539			1.7	%
Operating Expenses
Operations and support	2,035			2,168			(6.1)	%	8,253			8,448			(2.3)	%
Depreciation and amortization	818			789			3.7	%	3,169			3,095			2.4	%
Total Operating Expenses	2,853			2,957			(3.5)	%	11,422			11,543			(1.0)	%
Operating Income	$	376		$	202		86.1	%	$	1,327		$	996		33.2	%
Operating Income Margin	11.6		%	6.4		%	520	BP	10.4		%	7.9		%	250	BP
Supplementary Operating Data
Subscribers and connections in thousands
Unaudited									December 31,						Percent
									2022			2021			Change
Broadband Connections
Total Broadband and DSL Connections									13,991			14,160			(1.2)	%
Broadband									13,753			13,845			(0.7)	%
Fiber Broadband Connections									7,215			5,992			20.4	%
Voice Connections
Retail Consumer Switched Access Lines									2,028			2,423			(16.3)	%
U-verse Consumer VoIP Connections									2,311			2,736			(15.5)	%
Total Retail Consumer Voice Connections									4,339			5,159			(15.9)	%
	Fourth Quarter						Percent		Year Ended						Percent
	2022			2021			Change		2022			2021			Change
Broadband Net Additions
Total Broadband and DSL Net Additions	(64)			(20)			—	%	(169)			60			—	%
Broadband Net Additions	(43)			(1)			—	%	(92)			152			—	%
Fiber Broadband Net Additions	280			271			3.3	%	1,223			1,041			17.5	%

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.

Business Solutions Results
Dollars in millions
Unaudited	Fourth Quarter						Percent		Year Ended						Percent
	2022			2021			Change		2022			2021			Change
Operating Revenues
Wireless service	$	2,258		$	2,108		7.1	%	$	8,789		$	8,161		7.7	%
Wireline service	5,473			5,727			(4.4)	%	21,891			23,224			(5.7)	%
Wireless equipment	937			1,030			(9.0)	%	3,569			3,414			4.5	%
Wireline equipment	162			174			(6.9)	%	647			713			(9.3)	%
Total Operating Revenues	8,830			9,039			(2.3)	%	34,896			35,512			(1.7)	%
Operating Expenses
Operations and support	5,656			6,035			(6.3)	%	22,479			22,778			(1.3)	%
Depreciation and amortization	1,724			1,667			3.4	%	6,749			6,570			2.7	%
Total Operating Expenses	7,380			7,702			(4.2)	%	29,228			29,348			(0.4)	%
Operating Income	$	1,450		$	1,337		8.5	%	$	5,668		$	6,164		(8.0)	%
Operating Income Margin	16.4		%	14.8		%	160	BP	16.2		%	17.4		%	(120)	BP

LATIN AMERICA SEGMENT

The segment provides wireless services and equipment to customers in Mexico.

Segment Results
Dollars in millions
Unaudited	Fourth Quarter						Percent		Year Ended						Percent
	2022			2021			Change		2022			2021			Change
Operating Revenues
Wireless service	$	579		$	485		19.4	%	$	2,162		$	1,834		17.9	%
Wireless equipment	282			219			28.8	%	982			913			7.6	%
Total Operating Revenues	861			704			22.3	%	3,144			2,747			14.5	%
Operating Expenses
Operations and support	776			668			16.2	%	2,812			2,652			6.0	%
Depreciation and amortization	164			153			7.2	%	658			605			8.8	%
Total Operating Expenses	940			821			14.5	%	3,470			3,257			6.5	%
Operating Income (Loss)	$	(79)		$	(117)		32.5	%	$	(326)		$	(510)		36.1	%
Operating Income Margin	(9.2)		%	(16.6)		%	740	BP	(10.4)		%	(18.6)		%	820	BP
Supplementary Operating Data
Subscribers and connections in thousands
Unaudited									December 31,						Percent
									2022			2021			Change
Mexico Wireless Subscribers
Postpaid									4,925			4,807			2.5	%
Prepaid									16,204			15,057			7.6	%
Reseller									474			498			(4.8)	%
Total Mexico Wireless Subscribers									21,603			20,362			6.1	%
	Fourth Quarter						Percent		Year Ended						Percent
	2022			2021			Change		2022			2021			Change
Mexico Wireless Net Additions
Postpaid	71			26			—	%	118			111			6.3	%
Prepaid	515			858			(40.0)	%	1,147			1,299			(11.7)	%
Reseller	19			5			—	%	(24)			9			—	%
Total Mexico Wireless Net Additions	605			889			(31.9)	%	1,241			1,419			(12.5)	%

SUPPLEMENTAL SEGMENT RECONCILIATION

Three Months Ended
Dollars in millions
Unaudited
December 31, 2022
	Revenues		Operations<br>and Support<br>Expenses		EBITDA		Depreciation<br>and<br>Amortization		Operating<br>Income (Loss)
Communications
Mobility	$	21,501	$	13,377	$	8,124	$	2,080	$	6,044
Business Wireline	5,635		3,474		2,161		1,360		801
Consumer Wireline	3,229		2,035		1,194		818		376
Total Communications	30,365		18,886		11,479		4,258		7,221
Latin America - Mexico	861		776		85		164		(79)
Segment Total	31,226		19,662		11,564		4,422		7,142
Corporate and Other
Corporate:
DTV-related retained costs	—		205		(205)		141		(346)
Parent administration support	(8)		326		(334)		4		(338)
Securitization fees	17		156		(139)		—		(139)
Value portfolio	108		33		75		12		63
Total Corporate	117		720		(603)		157		(760)
Reclassification of prior service credits	—		730		(730)		—		(730)
Merger & Significant Items	—		26,728		(26,728)		16		(26,744)
Total Corporate and Other	117		28,178		(28,061)		173		(28,234)
AT&T Inc.	$	31,343	$	47,840	$	(16,497)	$	4,595	$	(21,092)
Three Months Ended
---	---	---	---	---	---	---	---	---	---	---
Dollars in millions
Unaudited
December 31, 2021
	Revenues		Operations and Support Expenses		EBITDA		Depreciation and Amortization		Operating Income (Loss)
Communications
Mobility	$	21,146	$	13,764	$	7,382	$	2,050	$	5,332
Business Wireline	5,901		3,708		2,193		1,317		876
Consumer Wireline	3,159		2,168		991		789		202
Total Communications	30,206		19,640		10,566		4,156		6,410
Latin America - Mexico	704		668		36		153		(117)
Segment Total	30,910		20,308		10,602		4,309		6,293
Corporate and Other
Corporate:
DTV-related retained costs	29		174		(145)		144		(289)
Parent administration support	(6)		376		(382)		9		(391)
Securitization fees	17		36		(19)		—		(19)
Value portfolio	145		47		98		10		88
Total Corporate	185		633		(448)		163		(611)
Held-for-sale and other reclassifications	—		4		(4)		—		(4)
Reclassification of prior service credits	—		669		(669)		—		(669)
Merger & Significant Items	—		87		(87)		28		(115)
Total Corporate and Other	185		1,393		(1,208)		191		(1,399)
AT&T Inc.	$	31,095	$	21,701	$	9,394	$	4,500	$	4,894

SUPPLEMENTAL SEGMENT RECONCILIATION

Year Ended
Dollars in millions
Unaudited
December 31, 2022
	Revenues		Operations<br>and Support<br>Expenses		EBITDA		Depreciation<br>and<br>Amortization		Operating<br>Income (Loss)
Communications
Mobility	$	81,780	$	49,054	$	32,726	$	8,198	$	24,528
Business Wireline	22,538		13,972		8,566		5,314		3,252
Consumer Wireline	12,749		8,253		4,496		3,169		1,327
Total Communications	117,067		71,279		45,788		16,681		29,107
Latin America - Mexico	3,144		2,812		332		658		(326)
Segment Total	120,211		74,091		46,120		17,339		28,781
Corporate and Other
Corporate:
DTV-related retained costs	8		737		(729)		549		(1,278)
Parent administration support	(32)		1,199		(1,231)		16		(1,247)
Securitization fees	65		419		(354)		—		(354)
Value portfolio	489		139		350		41		309
Total Corporate	530		2,494		(1,964)		606		(2,570)
Reclassification of prior service credits	—		2,691		(2,691)		—		(2,691)
Merger & Significant Items	—		28,031		(28,031)		76		(28,107)
Total Corporate and Other	530		33,216		(32,686)		682		(33,368)
AT&T Inc.	$	120,741	$	107,307	$	13,434	$	18,021	$	(4,587)
Year Ended
---	---	---	---	---	---	---	---	---	---	---
Dollars in millions
Unaudited
December 31, 2021
	Revenues		Operations and Support Expenses		EBITDA		Depreciation and Amortization		Operating Income (Loss)
Communications
Mobility	$	78,254	$	46,762	$	31,492	$	8,122	$	23,370
Business Wireline	23,937		14,718		9,219		5,192		4,027
Consumer Wireline	12,539		8,448		4,091		3,095		996
Total Communications	114,730		69,928		44,802		16,409		28,393
Latin America - Mexico	2,747		2,652		95		605		(510)
Segment Total	117,477		72,580		44,897		17,014		27,883
Corporate and Other
Corporate:
DTV-related retained costs	49		243		(194)		236		(430)
Parent administration support	(18)		1,523		(1,541)		36		(1,577)
Securitization fees	61		89		(28)		—		(28)
Value portfolio	639		208		431		40		391
Total Corporate	731		2,063		(1,332)		312		(1,644)
Video	15,513		12,666		2,847		356		2,491
Held-for-sale and other reclassifications	453		310		143		—		143
Reclassification of prior service credits	—		2,680		(2,680)		—		(2,680)
Merger & Significant Items	—		126		(126)		170		(296)
Eliminations and consolidations	(136)		(136)		—		—		—
Total Corporate and Other	16,561		17,709		(1,148)		838		(1,986)
AT&T Inc.	$	134,038	$	90,289	$	43,749	$	17,852	$	25,897

Document

Discussion and Reconciliation of Non-GAAP Measures for Continuing Operations

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).

On April 8, 2022, we completed the previously announced separation of our WarnerMedia business. With the separation and distribution, the WarnerMedia business met the criteria for discontinued operations. For discontinued operations, we evaluated transactions that were components of AT&T’s single plan of a strategic shift, including dispositions that may not have individually met the criteria due to materiality, and have determined discontinued operations to be comprised of WarnerMedia, Vrio, Xandr and Playdemic Ltd. (Playdemic). These businesses are reflected in our historical financial statements as discontinued operations, including for periods prior to the consummation of the WarnerMedia/Discovery transaction. The information below refers only to our continuing operations and does not include discussion of balances or activity of WarnerMedia, Vrio, Xandr and Playdemic.

Free Cash Flow

Free cash flow is defined as cash from operations and cash distributions from DIRECTV (classified as investing activities) minus capital expenditures and cash paid for vendor financing (classified as financing activities). Free cash flow after dividends is defined as cash from operations and cash distributions from DIRECTV, minus capital expenditures, cash paid for vendor financing 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 vendor financing, 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
						Year Ended
			2021			2022			2021
Net cash provided by operating activities from continuing operations1	10,348		$	8,077		$	35,812		$	37,170
Add: Distributions from DIRECTV classified as investing activities			1,323			2,649			1,323
Less: Capital expenditures			(3,494)			(19,626)			(15,545)
Less: Cash paid for vendor financing			(583)			(4,697)			(4,596)
Free Cash Flow2			5,323			14,138			18,352
Less: Dividends paid			(3,749)			(9,859)			(15,068)
Free Cash Flow after Dividends	4,089		$	1,574		$	4,279		$	3,284
Free Cash Flow Dividend Payout Ratio		%	70.4		%	69.7		%	82.1		%
1Includes distributions from DIRECTV of 379 in the fourth quarter and 1,808 for the year ended December 31, 2022.
2For Standalone free cash flow see Exhibit 99.4

All values are in US Dollars.

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
	2022		2021		2022		2021
Capital Expenditures	$	(4,229)	$	(3,494)	$	(19,626)	$	(15,545)
Cash paid for vendor financing	(460)		(583)		(4,697)		(4,596)
Cash paid for Capital Investment	$	(4,689)	$	(4,077)	$	(24,323)	$	(20,141)

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.

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 cash generation potential 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
	2022		2021		2022		2021
Income (Loss) from Continuing Operations	$	(23,120)	$	5,202	$	(6,874)	$	23,776
Additions:
Income Tax Expense (Benefit)	(77)		939		3,780		5,395
Interest Expense	1,560		1,626		6,108		6,716
Equity in Net (Income) of Affiliates	(374)		(444)		(1,791)		(603)
Other (Income) Expense - Net	919		(2,429)		(5,810)		(9,387)
Depreciation and amortization	4,595		4,500		18,021		17,852
EBITDA	(16,497)		9,394		13,434		43,749
Transaction and other cost	84		(2)		425		41
Benefit-related (gain) loss	(109)		(20)		108		(128)
Assets impairments and abandonment and restructuring	26,753		108		27,498		213
Adjusted EBITDA1	$	10,231	$	9,480	$	41,465	$	43,875
Less: Video and Other dispositions	—		4		—		(3,807)
Standalone AT&T Adjusted EBITDA2	$	10,231	$	9,484	$	41,465	$	40,068
1See page 5 for additional discussion and reconciliation of adjusted items.
2See Exhibit 99.4 for reconciliation of Standalone AT&T Adjusted EBITDA.
Segment and Business Unit EBITDA, EBITDA Margin and EBITDA Service Margin
---	---	---	---	---	---	---	---	---	---	---	---	---
Dollars in millions
	Fourth Quarter						Year Ended
	2022			2021			2022			2021
Communications Segment
Operating Income	$	7,221		$	6,410		$	29,107		$	28,393
Additions:
Depreciation and amortization	4,258			4,156			16,681			16,409
EBITDA	11,479			10,566			45,788			44,802
Total Operating Revenues	30,365			30,206			117,067			114,730
Operating Income Margin	23.8		%	21.2		%	24.9		%	24.7		%
EBITDA Margin	37.8		%	35.0		%	39.1		%	39.0		%
Mobility
Operating Income	$	6,044		$	5,332		$	24,528		$	23,370
Additions:
Depreciation and amortization	2,080			2,050			8,198			8,122
EBITDA	8,124			7,382			32,726			31,492
Total Operating Revenues	21,501			21,146			81,780			78,254
Service Revenues	15,434			14,669			60,499			57,590
Operating Income Margin	28.1		%	25.2		%	30.0		%	29.9		%
EBITDA Margin	37.8		%	34.9		%	40.0		%	40.2		%
EBITDA Service Margin	52.6		%	50.3		%	54.1		%	54.7		%
Business Wireline
Operating Income	$	801		$	876		$	3,252		$	4,027
Additions:
Depreciation and amortization	1,360			1,317			5,314			5,192
EBITDA	2,161			2,193			8,566			9,219
Total Operating Revenues	5,635			5,901			22,538			23,937
Operating Income Margin	14.2		%	14.8		%	14.4		%	16.8		%
EBITDA Margin	38.3		%	37.2		%	38.0		%	38.5		%
Consumer Wireline
Operating Income	$	376		$	202		$	1,327		$	996
Additions:
Depreciation and amortization	818			789			3,169			3,095
EBITDA	1,194			991			4,496			4,091
Total Operating Revenues	3,229			3,159			12,749			12,539
Operating Income Margin	11.6		%	6.4		%	10.4		%	7.9		%
EBITDA Margin	37.0		%	31.4		%	35.3		%	32.6		%
Latin America Segment - Mexico
Operating Income	$	(79)		$	(117)		$	(326)		$	(510)
Additions:
Depreciation and amortization	164			153			658			605
EBITDA	85			36			332			95
Total Operating Revenues	861			704			3,144			2,747
Operating Income Margin	-9.2		%	-16.6		%	-10.4		%	-18.6		%
EBITDA Margin	9.9		%	5.1		%	10.6		%	3.5		%

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. Prior periods have been recast for consistency to include gains on benefit-related and other cost investments.

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
	2022		2021		2022		2021
Operating Expenses
Transaction and other costs	84		(2)		425		41
Benefit-related (gain) loss	(109)		(20)		108		(128)
Asset impairments and abandonment and restructuring	26,753		108		27,498		213
Adjustments to Operations and Support Expenses	26,728		86		28,031		126
Amortization of intangible assets	16		28		76		170
Adjustments to Operating Expenses	26,744		114		28,107		296
Other
DIRECTV intangible amortization (proportionate share)	359		434		1,547		826
Benefit-related (gain) loss, transaction financing costs and other	420		(84)		1,242		(421)
Actuarial (gain) loss	1,839		(1,119)		(1,999)		(4,140)
Adjustments to Income Before Income Taxes	29,362		(655)		28,897		(3,439)
Tax impact of adjustments	1,082		(131)		882		(854)
Tax-related items	329		240		977		608
Adjustments to Net Income	$	27,951	$	(764)	$	27,038	$	(3,193)

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, benefit-related gains and losses, employee separation 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.

Adjusted Operating Income, Adjusted Operating Income Margin,<br>Adjusted EBITDA and Adjusted EBITDA Margin
Dollars in millions
	Fourth Quarter						Year Ended
	2022			2021			2022			2021
Operating Income	$	(21,092)		$	4,894		$	(4,587)		$	25,897
Adjustments to Operating Expenses	26,744			114			28,107			296
Adjusted Operating Income	5,652			5,008			23,520			26,193
EBITDA	(16,497)			9,394			13,434			43,749
Adjustments to Operations and Support Expenses	26,728			86			28,031			126
Adjusted EBITDA	10,231			9,480			41,465			43,875
Total Operating Revenues	31,343			31,095			120,741			134,038
Operating Income Margin	(67.3)		%	15.7		%	(3.8)		%	19.3		%
Adjusted Operating Income Margin	18.0		%	16.1		%	19.5		%	19.5		%
Adjusted EBITDA Margin	32.6		%	30.5		%	34.3		%	32.7		%
Adjusted Diluted EPS
---	---	---	---	---	---	---	---	---	---
					Year Ended
			2021		2022			2021
Diluted Earnings Per Share (EPS)	(3.20)		$	0.66	$	(1.10)		$	3.02
DIRECTV intangible amortization (proportionate share)			0.05		0.16			0.09
Actuarial (gain) loss 1			(0.11)		(0.20)			(0.42)
Impairments, abandonments and restructuring			0.01		3.59			0.02
Benefit-related, transaction and other costs1, 2			(0.02)		0.25			—
Tax-related items			(0.03)		(0.13)			(0.08)
Adjusted EPS	0.61		$	0.56	$	2.57		$	2.63
Less: Video and Other dispositions			—		—			(0.22)
Standalone AT&T Adjusted EPS	0.61		$	0.56	$	2.57		$	2.41
Year-over-year growth - Adjusted		%			6.6		%
Weighted Average Common Shares Outstanding with Dilution (000,000)			7,541		7,587			7,503
1Includes adjustments for actuarial gains or losses associated with our pension and 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 gains of 2.0 billion in 2022. As a result, adjusted EPS reflects an expected return on plan assets of 3.2 billion (based on an average expected return on plan assets of 6.75% for our pension trust and 4.5% for our VEBA trusts), rather than the actual return on plan assets of 11.3 billion loss (actual pension return of -14.8% and VEBA return of -13.2%), included in the GAAP measure of income. Adjustments also include the impact to our 2022 quarterly benefit expense accruals that resulted from quarterly remeasurements of plan assets and obligations, which included increases in the assumed discount rates.
2As of January 1, 2022, we adopted, through retrospective application, Accounting Standards Update (ASU) No. 2020-06, which requires that instruments which may be settled in cash or stock to be presumed settled in stock in calculating diluted EPS. While our intent is to settle the Mobility II preferred interests in cash, the ability to settle this instrument in AT&T shares will result in additional dilutive impact, the magnitude of which is influenced by the fair value of the Mobility II preferred interests and the average AT&T common stock price during the reporting period, which could vary from period-to-period. Additionally, in the fourth quarter of 2022, all outstanding Mobility II preferred interests were put to us, with approximately one-third redeemed in the fourth-quarter; approximately 107 million interests will be redeemed primarily in October 2023 and 107 million redeemed in October 2024, per the terms of the agreement, unless called or put is accepted by AT&T prior. With the certainty of redemption, the remaining Mobility preferred interest was reclassified from equity to a liability at fair value, with approximately 2.7 billion recorded in current as “Accounts payable and accrued liabilities” and 2.7 billion as “Other noncurrent liabilities. The difference between the carrying value of the Mobility preferred interest and the fair value of the instrument upon settlement and/or balance sheet reclassification was recorded as an adjustment to additional paid-in capital; the fair value adjustment of these instruments is required to be included when calculating EPS. Given our intent to settle the Mobility II preferred interests in cash, and the nonoperational fair value adjustment recorded as "Additional Paid in Capital," we have excluded these impacts from our adjusted EPS calculation. The per share impact was to decrease reported diluted EPS 0.01 and 0.01 for the quarters ended December 31, 2022 and 2021, and 0.06 and 0.03 for the year ended December 31, 2022 and 2021, respectively.
3See Exhibit 99.4 for reconciliation of Standalone AT&T Adjusted EPS.

All values are in US Dollars.

Net Debt to 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 Adjusted EBITDA ratio is calculated by dividing the Net Debt by the sum of the most recent four quarters 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 Adjusted EBITDA - 2022
Dollars in millions
	Three Months Ended
	March. 31		June 30,		Sept. 30,		Dec. 31,		Four Quarters
	2022 1		2022 1		2022 1		2022 1
Adjusted EBITDA	$	10,190	$	10,330	$	10,714	$	10,231	$	41,465
End-of-period current debt									7,467
End-of-period long-term debt									128,423
Total End-of-Period Debt									135,890
Less: Cash and Cash Equivalents									3,701
Net Debt Balance									132,189
Annualized Net Debt to Adjusted EBITDA Ratio									3.19
1As reported in Exhibit 99.4											Net Debt to 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 1
Adjusted EBITDA	$	11,661	$	11,931	$	10,803	$	9,480	$	43,875
End-of-period current debt									24,620
End-of-period long-term debt									151,011
Total End-of-Period Debt									175,631
Less: Cash and Cash Equivalents									19,223
Net Debt Balance									156,408
Annualized Net Debt to Adjusted EBITDA Ratio									3.56
1As reported in Exhibit 99.4

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, 2022								December 31, 2021
	Mobility		Business<br>Wireline		Adjustments1		Business<br>Solutions		Mobility		Business<br>Wireline		Adjustments1		Business<br>Solutions
Operating Revenues
Wireless service	$	15,434	$	—	$	(13,176)	$	2,258	$	14,669	$	—	$	(12,561)	$	2,108
Wireline services	—		5,473		—		5,473		—		5,727		—		5,727
Wireless equipment	6,067		—		(5,130)		937		6,477		—		(5,447)		1,030
Wireline equipment	—		162		—		162		—		174		—		174
Total Operating Revenues	21,501		5,635		(18,306)		8,830		21,146		5,901		(18,008)		9,039
Operating Expenses
Operations and support	13,377		3,474		(11,195)		5,656		13,764		3,708		(11,437)		6,035
EBITDA	8,124		2,161		(7,111)		3,174		7,382		2,193		(6,571)		3,004
Depreciation and amortization	2,080		1,360		(1,716)		1,724		2,050		1,317		(1,700)		1,667
Total Operating Expenses	15,457		4,834		(12,911)		7,380		15,814		5,025		(13,137)		7,702
Operating Income	6,044		801		(5,395)		1,450		5,332		876		(4,871)		1,337
1Non-business wireless reported in the Communications segment under the Mobility business unit.
Results have been recast to conform to the current period's classification.																	Supplemental Operational Measure
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
	Year Ended
	December 31, 2022								December 31, 2021
	Mobility		Business<br>Wireline		Adjustments1		Business<br>Solutions		Mobility		Business<br>Wireline		Adjustments1		Business<br>Solutions
Operating Revenues
Wireless service	$	60,499	$	—	$	(51,710)	$	8,789	$	57,590	$	—	$	(49,429)	$	8,161
Wireline service	—		21,891		—		21,891		—		23,224		—		23,224
Wireless equipment	21,281		—		(17,712)		3,569		20,664		—		(17,250)		3,414
Wireline equipment	—		647		—		647		—		713		—		713
Total Operating Revenues	81,780		22,538		(69,422)		34,896		78,254		23,937		(66,679)		35,512
Operating Expenses
Operations and support	49,054		13,972		(40,547)		22,479		46,762		14,718		(38,702)		22,778
EBITDA	32,726		8,566		(28,875)		12,417		31,492		9,219		(27,977)		12,734
Depreciation and amortization	8,198		5,314		(6,763)		6,749		8,122		5,192		(6,744)		6,570
Total Operating Expenses	57,252		19,286		(47,310)		29,228		54,884		19,910		(45,446)		29,348
Operating Income	24,528		3,252		(22,112)		5,668		23,370		4,027		(21,233)		6,164
1Non-business wireless reported in the Communications segment under the Mobility business unit.
Results have been recast to conform to the current period's classification.

Document

	Standalone AT&T
	Supplemental Unaudited Quarterly Financial Information
	Dollars in millions
	Unaudited
	Operating Revenues	3/31/21			6/30/21			9/30/21			12/31/21			2021			3/31/22			6/30/22			9/30/22			12/31/22			2022
	Revenues from Continuing Operations	$	35,877		$	35,740		$	31,326		$	31,095		$	134,038		$	29,712		$	29,643		$	30,043		$	31,343		$	120,741
[A]	Less: Video	(6,725)			(6,639)			(2,149)			—			(15,513)			—			—			—			—			—
[B]	Less: Other dispositions (Held-for-sale)	(231)			(158)			(64)			—			(453)			—			—			—			—			—
[H]	Less: Intercompany eliminations	62			57			17			—			136			—			—			—			—			—
	Standalone AT&T Operating Revenues	$	28,983		$	29,000		$	29,130		$	31,095		$	118,208		$	29,712		$	29,643		$	30,043		$	31,343		$	120,741
	Revenue from Continuing Operations Growth Rate Y/Y	1.5		%	3.5		%	-11.5		%	-17.6		%	-6.3		%	-17.2		%	-17.1		%	-4.1		%	0.8		%	-9.9		%
	Standalone AT&T Revenue Growth Rate Y/Y	4.8		%	6.6		%	3.9		%	2.2		%	4.3		%	2.5		%	2.2		%	3.1		%	0.8		%	2.1		%
	Operations and Support Expenses	3/31/21			6/30/21			9/30/21			12/31/21			2021			3/31/22			6/30/22			9/30/22			12/31/22			2022
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
	Operations and Support Expenses from Continuing Operations	$	24,217		$	23,739		$	20,632		$	21,701		$	90,289		$	19,713		$	20,237		$	19,517		$	47,840		$	107,307
[I]	Non-GAAP Adjustments	(1)			70			(109)			(86)			(126)			(191)			(924)			(188)			(26,728)			(28,031)
	Adjusted Operations and Support Expenses from Continuing Operations	24,216			23,809			20,523			21,615			90,163			19,522			19,313			19,329			21,112			79,276
[A]	Less: Video	(5,660)			(5,275)			(1,731)			—			(12,666)			—			—			—			—			—
[B]	Less: Other dispositions (Held-for-sale)	(194)			(115)			(47)			—			(356)			—			—			—			—			—
[H]	Less: Intercompany eliminations	62			57			17			—			136			—			—			—			—			—
[D]	Less: Reclassification of allocations for separated businesses	15			19			16			(4)			46			—			—			—			—			—
[C]	Add: DTV-related retained costs	350			350			117			—			817			—			—			—			—			—
	Standalone AT&T Adjusted Operations and Support Expenses	$	18,789		$	18,845		$	18,895		$	21,611		$	78,140		$	19,522		$	19,313		$	19,329		$	21,112		$	79,276
	Operations and Support Expenses from Continuing Operations Growth Rate Y/Y	8.3		%	1.8		%	-13.1		%	-49.2		%	-19.5		%	-18.6		%	-14.8		%	-5.4		%	120.5		%	18.8		%
	Adjusted Operations and Support Expenses from Continuing Operations Growth Rate Y/Y	4.9		%	6.0		%	-13.6		%	-20.4		%	-6.5		%	-19.4		%	-18.9		%	-5.8		%	-2.3		%	-12.1		%
	Standalone AT&T Adjusted Operations and Support Expenses Growth Rate Y/Y	8.7		%	11.7		%	4.6		%	2.7		%	6.7		%	3.9		%	2.5		%	2.3		%	-2.3		%	1.5		%
	Depreciation and Amortization Expense	3/31/21			6/30/21			9/30/21			12/31/21			2021			3/31/22			6/30/22			9/30/22			12/31/22			2022
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
	Depreciation and Amortization Expense from Continuing Operations	$	4,466		$	4,429		$	4,457		$	4,500		$	17,852		$	4,462		$	4,450		$	4,514		$	4,595		$	18,021
[I]	Non-GAAP Adjustments	(85)			(28)			(28)			(28)			(169)			(27)			(17)			(16)			(16)			(76)
	Adjusted Depreciation and Amortization Expense from Continuing Operations	4,381			4,401			4,429			4,472			17,683			4,435			4,433			4,498			4,579			17,945
[A]	Less: Video	(164)			(148)			(44)			—			(356)			—			—			—			—			—
[B]	Less: Other dispositions (Held-for-sale)	—			—			—			—			—			—			—			—			—			—
[C]	Add: DTV-related retained costs	180			180			60			—			420			—			—			—			—			—
	Standalone AT&T Adjusted Depreciation and Amortization Expense	$	4,397		$	4,433		$	4,445		$	4,472		$	17,747		$	4,435		$	4,433		$	4,498		$	4,579		$	17,945
	Depreciation and Amortization Expense from Continuing Operations Growth Rate Y/Y	-21.7		%	-21.7		%	-20.6		%	-19.0		%	-20.7		%	-0.1		%	0.5		%	1.3		%	2.1		%	0.9		%
	Adjusted Depreciation and Amortization Expense from Continuing Operations Growth Rate Y/Y	-8.6		%	-7.9		%	-7.2		%	-5.7		%	-7.3		%	1.2		%	0.7		%	1.6		%	2.4		%	1.5		%
	Standalone AT&T Adjusted Depreciation and Amortization Expense Growth Rate Y/Y	0.5		%	1.7		%	1.3		%	1.7		%	1.3		%	0.9		%	0.0		%	1.2		%	2.4		%	1.1		%
	Operating Income	3/31/21			6/30/21			9/30/21			12/31/21			2021			3/31/22			6/30/22			9/30/22			12/31/22			2022
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
	Operating Income from Continuing Operations	$	7,194		$	7,572		$	6,237		$	4,894		$	25,897		$	5,537		$	4,956		$	6,012		$	(21,092)		$	(4,587)
[I]	Non-GAAP Adjustments	86			(42)			137			114			295			218			941			204			26,744			28,107
	Adjusted Operating Income from Continuing Operations	7,280			7,530			6,374			5,008			26,192			5,755			5,897			6,216			5,652			23,520
	Less: Video	(901)			(1,216)			(374)			—			(2,491)			—			—			—			—			—
	Less: Other dispositions (Held-for-sale)	(37)			(43)			(17)			—			(97)			—			—			—			—			—
	Less: Intercompany eliminations	—			—			—			—			—			—			—			—			—			—
	Less: Reclassification of allocations for separated businesses	(15)			(19)			(16)			4			(46)			—			—			—			—			—
	Add: DTV-related retained costs	(530)			(530)			(177)			—			(1,237)			—			—			—			—			—
	Standalone AT&T Adjusted Operating Income	$	5,797		$	5,722		$	5,790		$	5,012		$	22,321		$	5,755		$	5,897		$	6,216		$	5,652		$	23,520
	Operating Income from Continuing Operations Growth Rate Y/Y	-1.2		%	36.2		%	2.9		%	146.5		%	209.3		%	-23.0		%	-34.5		%	-3.6		%	-531.0		%	-117.7		%
	Adjusted Operating Income Growth Rate Y/Y	-2.6		%	3.2		%	-7.2		%	-14.4		%	-4.7		%	-20.9		%	-21.7		%	-2.5		%	12.9		%	-10.2		%
	Standalone AT&T Adjusted Operating Income Growth Rate Y/Y	-3.1		%	-4.0		%	3.6		%	0.6		%	-0.9		%	-0.7		%	3.1		%	7.4		%	12.8		%	5.4		%
	Operating Income Margin from Continuing Operations	20.1		%	21.2		%	19.9		%	15.7		%	19.3		%	18.6		%	16.7		%	20.0		%	-67.3		%	-3.8		%
	Adjusted Operating Income Margin	20.3		%	21.1		%	20.3		%	16.1		%	19.5		%	19.4		%	19.9		%	20.7		%	18.0		%	19.5		%
	Standalone AT&T Adjusted Operating Income Margin	20.0		%	19.7		%	19.9		%	16.1		%	18.9		%	19.4		%	19.9		%	20.7		%	18.0		%	19.5		%
	Other Income (Expense)	3/31/21		6/30/21		9/30/21		12/31/21		2021		3/31/22		6/30/22		9/30/22		12/31/22		2022
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
	Interest expense	$	(1,823)	$	(1,640)	$	(1,627)	$	(1,626)	$	(6,716)	$	(1,626)	$	(1,502)	$	(1,420)	$	(1,560)	$	(6,108)
	Equity in net income (loss) of affiliates	(6)		(18)		183		444		603		521		504		392		374		1,791
	Other income (expense) - net	4,230		1,206		1,522		2,429		9,387		2,157		2,302		2,270		(919)		5,810
	Other Income (Expense) from Continuing Operations	2,401		(452)		78		1,247		3,274		1,052		1,304		1,242		(2,105)		1,493
[I]	Non-GAAP Adjustments	(2,968)		(16)		18		(769)		(3,735)		(545)		(635)		(648)		2,618		790
	Adjusted Other Income (Expense) from Continuing Operations	(567)		(468)		96		478		(461)		507		669		594		513		2,283
[F]	Less: Estimated interest expense impact of debt redemptions	371		371		371		371		1,484		371		371		—		—		742
[E]	Add: Estimated equity in net income from DIRECTV investment	746		955		293		—		1,994		—		—		—		—		—
	Standalone AT&T Adjusted Other Income (Expense)	$	550	$	858	$	760	$	849	$	3,017	$	878	$	1,040	$	594	$	513	$	3,025
	Income From Continuing Operations	3/31/21		6/30/21		9/30/21		12/31/21		2021		3/31/22		6/30/22		9/30/22		12/31/22		2022
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
	Income from Continuing Operations	$	7,586	$	5,969	$	5,019	$	5,202	$	23,776	$	5,149	$	4,751	$	6,346	$	(23,120)	$	(6,874)
[I]	Non-GAAP Adjustments	(2,276)		(307)		153		(764)		(3,194)		(224)		347		(1,036)		27,951		27,038
	Adjusted Income from Continuing Operations	5,310		5,662		5,172		4,438		20,582		4,925		5,098		5,310		4,831		20,164
	Less: Operating Income of Video and Other dispositions	(1,483)		(1,808)		(584)		4		(3,871)		—		—		—		—		—
	Add: Estimated equity in net income from DIRECTV investment	746		955		293		—		1,994		—		—		—		—		—
	Less: Estimated interest expense impact of debt redemptions	371		371		371		371		1,484		371		371		—		—		742
[G]	Less: Estimated tax on Video & Other dispositions	(73)		(95)		16		75		(76)		74		74		—		—		148
	Add: Adjustment of estimated interest expense impact of debt redemptions	(297)		(297)		(297)		(297)		(1,187)		(297)		(297)		—		—		(594)
	Standalone AT&T Adjusted Net Income	4,720		4,978		4,939		4,441		19,078		4,925		5,098		5,310		4,831		20,164
	Less: Income from Continuing Operations attributable to Noncontrolling Interest	(394)		(387)		(356)		(348)		(1,485)		(354)		(380)		(373)		(362)		(1,469)
	Less: Preferred Stock Dividends	(50)		(56)		(50)		(51)		(207)		(48)		(52)		(49)		(54)		(203)
	Adjusted Standalone AT&T Income Attributable to Common Stock	$	4,276	$	4,535	$	4,533	$	4,042	$	17,386	$	4,523	$	4,666	$	4,888	$	4,415	$	18,492
	Earnings from Continuing Operations per share of common stock:1
	Basic	$	0.99	$	0.77	$	0.64	$	0.67	$	3.07	$	0.66	$	0.60	$	0.82	$	(3.20)	$	(1.10)
	Diluted	$	0.97	$	0.76	$	0.63	$	0.66	$	3.02	$	0.65	$	0.59	$	0.79	$	(3.20)	$	(1.10)
[J]	Continuing Operations Adjusted Diluted	$	0.68	$	0.73	$	0.66	$	0.56	$	2.63	$	0.63	$	0.65	$	0.68	$	0.61	$	2.57
[J]	Standalone AT&T Adjusted Diluted	$	0.58	$	0.64	$	0.62	$	0.56	$	2.41	$	0.63	$	0.65	$	0.68	$	0.61	$	2.57
	Weighted Average Common Shares Outstanding	7,161		7,168		7,171		7,172		7,168		7,184		7,169		7,153		7,157		7,166
	Weighted Average Common Shares Outstanding with Dilution under ASU 2020-06	7,482		7,484		7,506		7,541		7,503		7,556		7,611		7,647		7,533		7,587
	Weighted Average Common Shares Outstanding with Dilution under historical	7,188		7,200		7,202		7,204		7,199		7,217		7,212		7,201		7,205		7,209
	1 Earnings per share from continuing operations is calculated using Income from Continuing Operations, less Income from Continuing Operations Attributable to Noncontrolling Interest and Preferred Stock Dividends divided by the weighted average common shares outstanding for the period.
EBITDA2	3/31/21			6/30/21			9/30/21			12/31/21			2021			3/31/22			6/30/22			9/30/22			12/31/22			2022
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
Net Income from Continuing Operations	$	7,586		$	5,969		$	5,019		$	5,202		$	23,776		$	5,149		$	4,751		$	6,346		$	(23,120)		$	(6,874)
Additions:
Income Tax Expense (Benefit)	2,009			1,151			1,296			939			5,395			1,440			1,509			908			(77)			3,780
Interest Expense	1,823			1,640			1,627			1,626			6,716			1,626			1,502			1,420			1,560			6,108
Equity in Net Income (Loss) of Affiliates	6			18			(183)			(444)			(603)			(521)			(504)			(392)			(374)			(1,791)
Other (Income) Expense - net	(4,230)			(1,206)			(1,522)			(2,429)			(9,387)			(2,157)			(2,302)			(2,270)			919			(5,810)
Depreciation and amortization	4,466			4,429			4,457			4,500			17,852			4,462			4,450			4,514			4,595			18,021
EBITDA	11,660			12,001			10,694			9,394			43,749			9,999			9,406			10,526			(16,497)			13,434
Non-GAAP Adjustments	1			(70)			109			86			126			191			924			188			26,728			28,031
Adjusted EBITDA	11,661			11,931			10,803			9,480			43,875			10,190			10,330			10,714			10,231			41,465
Less: Video	(1,065)			(1,364)			(418)			—			(2,847)			—			—			—			—			—
Less: Other dispositions (Held-for-sale)	(37)			(43)			(17)			—			(97)			—			—			—			—			—
Less: Intercompany eliminations	—			—			—			—			—			—			—			—			—			—
Less: Reclassification of allocations for separated businesses	(15)			(19)			(16)			4			(46)			—			—			—			—			—
Add: DTV-related retained costs	(350)			(350)			(117)			—			(817)			—			—			—			—			—
Standalone AT&T Adjusted EBITDA	$	10,194		$	10,155		$	10,235		$	9,484		$	40,068		$	10,190		$	10,330		$	10,714		$	10,231		$	41,465
Adjusted EBITDA Growth Rate Y/Y	-4.9		%	-1.2		%	-7.2		%	-10.5		%	-5.8		%	-12.6		%	-13.4		%	-0.8		%	7.9		%	-5.5		%
Standalone AT&T Adjusted EBITDA Growth Rate Y/Y	-1.6		%	-1.6		%	2.6		%	1.1		%	0.1		%	0.0		%	1.7		%	4.7		%	7.9		%	3.5		%
Adjusted EBITDA Margin	32.5		%	33.4		%	34.5		%	30.5		%	32.7		%	34.3		%	34.8		%	35.7		%	32.6		%	34.3		%
Standalone AT&T Adjusted EBITDA Margin	35.2		%	35.0		%	35.1		%	30.5		%	33.9		%	34.3		%	34.8		%	35.7		%	32.6		%	34.3		%
2 EBITDA is operating income before depreciation and amortization. It excludes depreciation and amortization, interest expense, other income (expense) - net and income taxes from net income.
	Free Cash Flow (B)3							3/31/21		6/30/21		9/30/21		12/31/21		2021		3/31/22		6/30/22		9/30/22		12/31/22		2022
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
	Net cash provided by operating activities from Continuing Operations	$	9.6	$	10.2	$	9.3	$	8.1	$	37.2	$	7.6	$	7.7	$	10.1	$	10.3	$	35.8
	Add: Distributions from DIRECTV classified as investing activities	—		—		1.3		1.3		1.3		0.3		0.6		0.4		2.6
	Less: Capital expenditures							(3.9)		(3.7)		(4.5)		(3.5)		(15.6)		(4.6)		(4.9)		(5.9)		(4.2)		(19.6)
	Less: Cash paid vendor financing							(1.7)		(1.3)		(1.0)		(0.6)		(4.6)		(1.6)		(1.8)		(0.9)		(0.5)		(4.7)
	Free Cash Flow from Continuing Operations							4.0		5.2		3.8		5.3		18.3		2.8		1.4		3.8		6.1		14.1
[E]	Add: Estimated equity in net income from DIRECTV investment	—		0.7		—		0.7		—		—		—		—		—
	Standalone AT&T Free Cash Flow							$	4.0	$	5.2	$	4.5	$	5.3	$	19.0	$	2.8	$	1.4	$	3.8	$	6.1	$	14.1
	3 May not foot due to rounding. Historical presentation may differ due to insignificant reclasses between continuing and discontinued operations.

All values are in US Dollars.

	NOTES
[A]	Video business results as reported in AT&T's consolidated financial results; quarters ended 2021 include retained depreciation on assets supporting U-verse products.
[B]	Other dispositions include the held-for-sale businesses, Crunchyroll, Government Solutions and operations in Puerto Rico that do not meet the requirements for presentation in discontinued operations.
[C]	After the DIRECTV transaction, we expect to retain incurred operations and support costs in the range of ~500M per quarter and depreciation of network infrastructure that provides both U-verse video and broadband services to customers of ~150M per quarter, of which approximately 60% will be received from DIRECTV through transition service agreements and commercial arrangements. These estimated net retained costs have been applied to prior periods for comparability.
[D]	Adjustment to reflect AT&T's first-quarter 2022 reclassification of certain administrative costs borne by AT&T where the business units did not influence decision making. These costs are not expected to continue in standalone AT&T.
[E]	Estimated equity in net income of affiliates from DIRECTV. Calculated at 70% of Video EBITDA, which excludes the noncash depreciation and amortization of fair value accretion expected to result from DIRECTV’s revaluation of assets and purchase price allocation.
[F]	Reflects the use of proceeds to pay down approximately 39.0 billion of borrowings and the resulting reduction to interest expense. The estimated impact of interest expense reduction was determined using the weighted-average interest rate of AT&T’s long-term debt portfolio, including credit agreement borrowings and the impact of derivatives, of 3.8%. This adjustment is required for pro forma financial information prepared in accordance with Article 11 of Regulation S-X.
[G]	Estimated tax impact of pro forma and other adjustments at AT&T's adjusted effective tax rate.
[H]	Under GAAP, AT&T removed transactions involving dealing between segments, including advertising arrangements with Video.
[I]	Non-GAAP Adjustments:		6/30/21		9/30/21		12/31/21		2021		3/31/22		6/30/22		9/30/22		12/31/22		2022
	Transaction and other costs	35	$	—	$	8	$	(2)	$	41	$	98	$	185	$	58	$	84	$	425
	Employee separation costs and benefit-related (gain) loss		(70)		(4)		(20)		(128)		93		108		16		(109)		108
	Asset impairments and abandonments and restructuring		—		105		108		213		—		631		114		26,753		27,498
	Adjustments to Operations and Support Expenses/ EBITDA		(70)		109		86		126		191		924		188		26,728		28,031
	Amortization of intangible assets		28		28		28		169		27		17		16		16		76
	Adjustments to Operating Income		(42)		137		114		295		218		941		204		26,744		28,107
	Other income (expense) net		(16)		18		(769)		(3,735)		(545)		(635)		(648)		2,618		790
	Tax impact of adjustments and discrete items		(249)		(2)		(109)		246		103		41		(592)		(1,411)		(1,859)
	Adjustments to Net Income	(2,276)	$	(307)	$	153	$	(764)	$	(3,194)	$	(224)	$	347	$	(1,036)	$	27,951	$	27,038
[J]	As of January 1, 2022, we adopted, through retrospective application, Accounting Standards Update (ASU) No. 2020-06, which requires that instruments which may be settled in cash or stock to be presumed settled in stock in calculating diluted EPS. While our intent is to settle the Mobility II preferred interests in cash, the ability to settle this instrument in AT&T shares will result in additional dilutive impact, the magnitude of which is influenced by the fair value of the Mobility II preferred interests and the average AT&T common stock price during the reporting period, which could vary from period-to-period. For these reasons, we have excluded the impact of ASU 2020-06 from our adjusted EPS calculation. Additionally, in the fourth-quarter of 2022, all outstanding Mobility II preferred interests were put to us, with approximately one-third redeemed in the fourth-quarter; approximately 107 million interests will be redeemed primarily in October 2023 and 107 million redeemed in October 2024, per the terms of the agreement, unless called or put is accepted by AT&T prior. With the certainty of redemption, the remaining Mobility preferred interest was reclassified from equity to a liability at fair value, with approximately 2.7 billion recorded in current as “Accounts payable and accrued liabilities” and 2.7 billion as “Other noncurrent liabilities.” The difference between the carrying value of the Mobility preferred interest and the fair value of the instrument upon settlement and/or balance sheet reclassification was recorded as an adjustment to additional paid-in capital; the fair value adjustment of these instruments is required to be included when calculating EPS. Given the nonoperational fair value adjustment recorded as "Additional Paid in Capital," we have excluded the impact from our adjusted EPS calculation.

All values are in US Dollars.