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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) April 21, 2022
______________________________________________________
AT&T INC.
(Exact Name of Registrant as Specified in Charter)
______________________________________________________
Delaware001-0861043-1301883
(State or Other Jurisdiction
of Incorporation)		(Commission
File Number)		(IRS Employer
Identification No.)
  
208 S. Akard St., Dallas, Texas
(Address of Principal Executive Offices)
75202
(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 classTrading
Symbol(s)		Name of each exchange
on which registered
Common Shares (Par Value $1.00 Per Share)TNew York Stock Exchange
Depositary Shares, each representing a 1/1000th interest in a share of 5.000% Perpetual Preferred Stock, Series AT PRANew York Stock Exchange
Depositary Shares, each representing a 1/1000th interest in a share of 4.750% Perpetual Preferred Stock, Series CT PRCNew York Stock Exchange
AT&T Inc. 1.450% Global Notes due June 1, 2022T 22BNew York Stock Exchange
AT&T Inc. 2.500% Global Notes due March 15, 2023T 23New York Stock Exchange
AT&T Inc. 2.750% Global Notes due May 19, 2023T 23CNew York Stock Exchange


Title of each class
 
Trading
Symbol(s)
 
Name of each exchange
on which registered
AT&T Inc. Floating Rate Global Notes due September 5, 2023T 23DNew York Stock Exchange
AT&T Inc. 1.050% Global Notes due September 5, 2023T 23ENew York Stock Exchange
AT&T Inc. 1.300% Global Notes due September 5, 2023T 23ANew York Stock Exchange
AT&T Inc. 1.950% Global Notes due September 15, 2023T 23FNew York Stock Exchange
AT&T Inc. 2.400% Global Notes due March 15, 2024T 24ANew York Stock Exchange
AT&T Inc. 3.500% Global Notes due December 17, 2025T 25New York Stock Exchange
AT&T Inc. 0.250% Global Notes due March 4, 2026T 26ENew York Stock Exchange
AT&T Inc. 1.800% Global Notes due September 5, 2026T 26DNew York Stock Exchange
AT&T Inc. 2.900% Global Notes due December 4, 2026T 26ANew York Stock Exchange
AT&T Inc. 1.600% Global Notes due May 19, 2028T 28CNew York Stock Exchange
AT&T Inc. 2.350% Global Notes due September 5, 2029T 29DNew York Stock Exchange
AT&T Inc. 4.375% Global Notes due September 14, 2029T 29BNew York Stock Exchange
AT&T Inc. 2.600% Global Notes due December 17, 2029T 29ANew York Stock Exchange
AT&T Inc. 0.800% Global Notes due March 4, 2030T 30BNew York Stock Exchange
AT&T Inc. 2.050% Global Notes due May 19, 2032T 32ANew York Stock Exchange
AT&T Inc. 3.550% Global Notes due December 17, 2032T 32New York Stock Exchange
AT&T Inc. 5.200% Global Notes due November 18, 2033T 33New York Stock Exchange
AT&T Inc. 3.375% Global Notes due March 15, 2034T 34New York Stock Exchange
AT&T Inc. 2.450% Global Notes due March 15, 2035T 35New York Stock Exchange
AT&T Inc. 3.150% Global Notes due September 4, 2036T 36ANew York Stock Exchange
AT&T Inc. 2.600% Global Notes due May 19, 2038T 38CNew York Stock Exchange
AT&T Inc. 1.800% Global Notes due September 14, 2039T 39BNew York Stock Exchange
AT&T Inc. 7.000% Global Notes due April 30, 2040T 40New York Stock Exchange
AT&T Inc. 4.250% Global Notes due June 1, 2043T 43New York Stock Exchange
AT&T Inc. 4.875% Global Notes due June 1, 2044T 44New York Stock Exchange
AT&T Inc. 4.000% Global Notes due June 1, 2049T 49ANew York Stock Exchange
AT&T Inc. 4.250% Global Notes due March 1, 2050T 50New York Stock Exchange
AT&T Inc. 3.750% Global Notes due September 1, 2050T 50ANew York Stock Exchange
AT&T Inc. 5.350% Global Notes due November 1, 2066TBBNew York Stock Exchange
AT&T Inc. 5.625% Global Notes due August 1, 2067TBCNew 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 April 21, 2022, its results of operations for the first 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
 
  
  
104Cover 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: April 21, 2022
By: /s/ Debra L. Dial                                  .
       Debra L. Dial
 Senior Vice President and Controller

AT&T Reports First-Quarter Results


First-Quarter Consolidated Results
•Consolidated revenues of $38.1 billion
•Diluted EPS of $0.65 compared to $1.021 in the year-ago quarter
•Adjusted EPS of $0.77 compared to $0.851 in the year-ago quarter
•Cash from operations of $5.7 billion
•Capital expenditures of $4.7 billion; gross capital investment2 of $6.3 billion
•Free cash flow3 of $0.7 billion

Note: AT&T’s first-quarter earnings conference call will be webcast at 8:30 a.m. ET on Thursday, April 21, 2022. The webcast and related materials, including financial highlights, will be available on AT&T’s Investor Relations website at https://investors.att.com.

DALLAS, April 21, 2022 — AT&T Inc. (NYSE:T) reported first-quarter results that showed continued success in customer growth across wireless and fiber.

“Our momentum in growing customer relationships is reaching historical levels,” said John Stankey, AT&T CEO. “We had our best first quarter for postpaid phone net adds in more than a decade and our fiber broadband net adds remain consistently strong. Our results, including free cash flow, are in line with our expectations toward delivering on the full-year guidance provided at our recent Analyst Day.”

“AT&T has entered a new era, meeting this opportunistic moment from a position of flexibility and strength thanks to our evolving networks, enhanced customer experience, growing 5G and fiber customer base and a much stronger balance sheet. And we continue to make good consistent progress on our journey to becoming America’s best broadband provider.”

First-Quarter Highlights

Communications
•Mobility:
◦691,000 postpaid phone net adds
◦965,000 postpaid net adds
◦113,000 prepaid phone net adds
◦Postpaid phone churn of 0.79%
◦Revenues up 5.5%; service revenues up 4.8%; equipment revenues up 7.3% year over year
◦Operating income of $5.9 billion, down 3.2% year over year; EBITDA4 down 1.8%
◦Operating income margin of 29.2%; EBITDA service margin5 53.7%


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•Business Wireline
◦Operating income margin of 15.2%; EBITDA margin4 in the high-30% range

•Consumer Wireline:
◦289,000 AT&T Fiber net adds; penetration of 37%, up about 200-basis points
◦Broadband revenues up 6.8%, due to fiber revenue growth of 24.7%
◦Broadband ARPU growth of 5.9%

WarnerMedia
•Total global HBO Max and HBO subscribers6 of 76.8 million, up 12.8 million year over year; domestic subscribers7 of 48.6 million, up 4.4 million year over year

Consolidated Financial Results
Consolidated revenues for the first quarter totaled $38.1 billion versus $43.9 billion in the year-ago quarter, down 13.3% reflecting the impact of divested businesses, mainly U.S. Video in the third quarter of 2021 and Vrio in the fourth quarter of 2021, as well as lower Business Wireline revenues. These decreases were partially offset by higher Mobility revenues and, to a lesser extent, higher WarnerMedia, Consumer Wireline and Mexico revenues. Excluding impacts of the U.S. Video business and Vrio from the prior-year quarter, revenues were $38.1 billion, up 1.6% compared to $37.5 billion8 in the year-ago quarter reflecting revenue growth for standalone AT&T9 and WarnerMedia. When further excluding the impacts of WarnerMedia and Xandr from both quarters, standalone AT&T consolidated revenues totaled $29.7 billion10 compared to $29.0 billion in the year-ago quarter, up 2.5%.

Operating expenses were $32.5 billion versus $36.3 billion in the year-ago quarter. Expenses declined due to the separation of U.S. Video operations, and impacts of Vrio and other divested businesses. These declines were partially offset by higher costs for standalone AT&T, including wireless equipment costs, 3G network shutdown costs, and higher WarnerMedia programming, marketing and selling costs.

Operating income was $5.6 billion versus $7.7 billion in the year-ago quarter reflecting the divestitures. When adjusting for merger amortization costs and other items, adjusted operating income was $7.1 billion11 versus $8.9 billion in the year-ago quarter. Excluding impacts of U.S. Video and Vrio from the prior-year quarter, adjusted operating income totaled $7.1 billion compared to $7.5 billion12 in the year-ago quarter. When further excluding the impacts of WarnerMedia and Xandr for both quarters, standalone AT&T adjusted operating income totaled $5.8 billion13 compared to $5.8 billion in the year-ago quarter.

Equity in net income (loss) of affiliates of $0.5 billion includes $0.5 billion from the DIRECTV investment. With adjustment for the proportionate share of intangible amortization, adjusted equity in net income from the DIRECTV investment was $0.9 billion.14


April 20, 2022
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First-quarter net income attributable to common stock was $4.8 billion, or $0.65 per diluted common share, versus $7.5 billion, or $1.02 per diluted common share, in the year-ago quarter. Adjusting for $0.12, which includes merger-amortization costs (a proportionate share of intangible amortization at the DIRECTV equity method investment), an actuarial gain on benefit plans and other items, earnings per diluted common share was $0.77. This compares to an adjusted earnings per diluted common share of $0.85 in the year-ago quarter.

Cash from operating activities was $5.7 billion, down $4.2 billion year over year, including content spend of $5.1 billion. Capital expenditures were $4.7 billion in the quarter. Capital investment totaled $6.3 billion, which includes $1.6 billion of cash payments for vendor financing. Free cash flow, including $1.3 billion of distributions from DIRECTV classified as investing activities, was $0.7 billion for the quarter compared to $4.2 billion a year ago. Net debt increased by $12.8 billion sequentially, and net debt-to-adjusted EBITDA at the end of the first quarter was 3.42x.15

When excluding the impacts of WarnerMedia, Vrio and Xandr for both quarters, standalone AT&T cash from operating activities was $7.7 billion16, down $1.7 billion year over year. Standalone AT&T free cash flow was $2.9 billion16 for the quarter compared to $3.8 billion a year ago.

Communications Operational Highlights

First-quarter revenues were $28.9 billion, up 2.5% year over year due to increases in Mobility and Consumer Wireline more than offsetting a decline in Business Wireline. Operating contribution was $7.0 billion, down 5.4% year over year, with operating income margin of 24.3%, compared to 26.4% in the year-ago quarter.

Mobility
•Revenues were up 5.5% year over year to $20.1 billion due to higher service and equipment revenues. Service revenues were $14.7 billion, up 4.8% year over year, driven by subscriber growth. Equipment revenues were $5.4 billion, up 7.3% year over year, driven by increased sales of higher priced smartphones.
•Operating expenses were $14.2 billion, up 9.5% year over year due to higher equipment costs, 3G network shutdown costs, higher bad debt, higher HBO Max bundling costs, higher amortization of customer acquisition costs, elimination of CAFII government credits and higher FirstNet costs.
•Operating income was $5.9 billion, down 3.2% year over year. Operating income margin was 29.2%, compared to 31.8% in the year-ago quarter.
•EBITDA was $7.9 billion, down 1.8% year over year with EBITDA margin of 39.4%, down from 42.3% a year ago. EBITDA service margin was 53.7%, compared to 57.4% in the year-ago quarter.

April 20, 2022
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•Total net adds were 5.5 million including:
◦965,000 postpaid net adds, which excludes impacts of the 3G network shutdown of 900,000 that were reflected as adjustments to the subscriber base consistent with historical practice, with:
◦691,000 postpaid phone net adds
◦62,000 postpaid tablet and other branded computing device net adds
◦212,000 other net adds
◦113,000 prepaid phone net adds
•Postpaid churn was 0.94% versus 0.93% in the year-ago quarter.
•Postpaid phone churn was 0.79% versus 0.76% in the year-ago quarter.
•Prepaid churn was less than 3%, with Cricket substantially lower.
•Postpaid phone-only ARPU was $54.00, down 0.2% versus the year-ago quarter, due to the impacts of promotional discount amortization.

Business Wireline
•Revenues were $5.6 billion, down 6.7% year over year due to lower demand for legacy voice and data services and a strategic decision to deemphasize non-core services.
•Operating expenses were $4.8 billion, down 3.7% year over year due to ongoing operational cost efficiencies and lower amortization of deferred fulfillment costs, partially offset by higher depreciation costs.
•Operating income was $0.9 billion, down 20.5% with operating income margin of 15.2%, compared to 17.9% in the year-ago quarter.
•EBITDA was $2.2 billion, down 8.5% year over year with EBITDA margin of 38.3%, compared to 39.0% in the year-ago quarter.
•AT&T Business serves nearly 2.5 million customers, from the largest global companies and government agencies to small businesses. More than 675,000 U.S. business buildings are lit with fiber from AT&T, enabling high-speed fiber connections to approximately 3 million U.S. business customer locations. Nationwide, more than 9.5 million business customer locations are on or within 1,000 feet of our fiber.17

Consumer Wireline
•Revenues were $3.2 billion, up 2.0% year over year due to gains in broadband more than offsetting declines in legacy voice and data services and other services. Broadband revenues increased 6.8% due to fiber growth of 24.7%, partially offset by non-fiber revenue declines of 5.3%.
•Operating expenses were $2.8 billion, up 1.9% year over year largely driven by higher advertising costs and the elimination of CAFII government credits, partially offset by lower amortization of deferred fulfillment costs.
•Operating income was $317 million, up 3.3% year over year with operating income margin of 10.0%, compared to 9.9% in the year-ago quarter.
•EBITDA was $1.1 billion, up 1.3% year over year with EBITDA margin of 34.3%, compared to 34.5% in the year-ago quarter.

April 20, 2022
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•Total broadband gains, excluding DSL, were 5,000, reflecting AT&T Fiber net adds of 289,000, mostly offset by losses in non-fiber services. AT&T Fiber now has the ability to serve 17 million customer locations.

WarnerMedia Operational Highlights

•Revenues for the first quarter were $8.7 billion, up 2.5% versus the year-ago quarter, driven by higher subscription revenues and higher content and other revenues, partially offset by lower advertising revenues. Subscription revenues were $4.0 billion, up 4.4%, primarily reflecting growth of HBO Max. Content and Other revenues were $3.1 billion, up 3.4%, driven by higher theatrical revenues, higher HBO Max licensing, and partially offset by lower TV licensing. Advertising revenues were $1.7 billion, down 3.0% year over year due to lower linear audiences and tough comparisons to the prior-year political environment, partially offset by higher sports.
•Operating expenses totaled $7.4 billion, up 13.0% year over year driven by higher marketing costs as well as higher programming costs and incremental selling costs associated with DIRECTV advertising revenue sharing arrangements.
•Operating contribution was $1.3 billion, down 35.7% year over year.
•Operating income was $1.3 billion, down 32.7% year over year, as a result of continued investments in HBO Max as well as in the launch of CNN+ at the end of the quarter and incremental advertising revenue sharing costs. Operating income margin was 15.1%, compared to 23.0% in the year-ago quarter.
•At the end of the quarter, there were 76.8 million global HBO Max and HBO subscribers. Global HBO Max and HBO subscribers increased 12.8 million year over year and were up 3.0 million sequentially, primarily driven by international as well as domestic retail subscriber gains reflecting strength of the programming slate. At the end of the quarter, there were 48.6 million domestic HBO Max and HBO subscribers versus 44.2 million in the year-ago quarter, up 4.4 million year over year. Domestic subscriber ARPU18 was $11.24.

Latin America Operational Highlights

Revenues were $690 million, down 49.8% year over year due to the sale of Vrio in the fourth quarter of 2021. Mexico revenues were up 9.4% year over year primarily due to increased growth in service revenues. Service revenues were $490 million, up 11.6% year over year, driven by growth in other services and subscribers. Equipment revenues were $200 million, up 4.2% year over year due to higher sales.

Operating contribution was ($102) million compared to ($173) million in the year-ago quarter. For Mexico, operating loss was ($102) million versus ($134) million in the year-ago quarter. Mexico EBITDA was $59 million compared to $11 million in the year-ago quarter.

Total wireless net adds were 141,000, including 178,000 prepaid net adds, 3,000 postpaid net adds and 40,000 reseller net losses.



April 20, 2022
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1 Diluted EPS for the prior year quarter has been recast due to the adoption of Accounting Standards Update (ASU) No. 2020-06 in the first quarter of 2022 with retrospective application. Adjusted EPS for the prior year quarter has been recast for consistency to include gains on benefit-related and other cost investments. Further information is included in the Discussion and Reconciliation of Non-GAAP Measures included in our Form 8-K dated April 21, 2022.
2 Capital investment includes capital expenditures and cash paid for vendor financing ($1.6 billion in 1Q22).
3 Free cash flow is a non-GAAP financial measure that is frequently used by investors and credit rating agencies to provide relevant and useful information. Free cash flow is cash from operating activities of $5.7 billion, plus cash distributions from DIRECTV classified as investing activities of $1.3 billion, minus capital expenditures of $4.7 billion and cash paid for vendor financing of $1.6 billion.
4 EBITDA is operating income before depreciation and amortization. EBITDA margin is operating income before depreciation and amortization, divided by total revenues.
5 EBITDA service margin is operating income before depreciation and amortization, divided by total service revenues.
6 Global HBO Max and HBO subscribers consist of domestic and international HBO Max and HBO subscribers, and exclude free trials, basic and Cinemax subscribers.
7 Domestic HBO Max and HBO subscribers consist of U.S. accounts with access to HBO Max (including wholesale subscribers and subscribers receiving access through bundled services with affiliates that may not have signed in) and HBO accounts, and exclude free trials and Cinemax subscribers.
8 Operating Revenues, excluding impacts of the U.S. Video business and Vrio, of $37.5 billion for 1Q21 is calculated as Operating Revenues of $43.9 billion minus Video operating revenues of $6.7 billion and Vrio operating revenues of $0.7 billion, plus WarnerMedia sales for content and advertising of $1.0 billion that are external after close of the U.S. Video and Vrio transactions. Further information is included in our Form 8-K dated April 21, 2022.
9 Standalone AT&T results for 1Q22 reflects the historical operating results of the company excluding certain businesses (WarnerMedia, Xandr, Playdemic, Vrio, Video and other dispositions included in Corporate and Other). See our Forms 8-K dated April 14, 2022, April 15, 2022, and April 21, 2022, for further discussion and information.
10 Operating Revenues for standalone AT&T of $29.7 billion for 1Q22 is calculated as Operating Revenues of $38.1 billion minus WarnerMedia segment operating revenues of $8.7 billion plus WarnerMedia sales for content of $0.3 billion that are external after close of the transaction. Further information is included in our Forms 8-K dated April 14, 2022, April 15, 2022, and April 21, 2022. Represents AT&T’s current best estimate of its unaudited results reflecting the discontinued operations and other dispositions. Actual results could differ from these estimates.
11 Adjusted Operating Income is Operating Income adjusted for revenues and costs we consider non-operational in nature, including items arising from asset acquisitions or dispositions. Adjusted Operating Income for 1Q22 of $7.1 billion is calculated as Operating Income of $5.6 billion plus $1.4 billion of adjustments as detailed in the Discussion and Reconciliation of Non-GAAP Measures included in our Form 8-K dated April 21, 2022.
12 Adjusted Operating Income, excluding impacts of the U.S. Video business and Vrio, of $7.5 billion for 1Q21 is calculated as Adjusted Operating Income of $8.9 billion minus $1.3 billion of adjustments to reflect the impacts of the 2021 Video separation and Vrio sale. Further detail of these adjustments and information is included in our Form 8-K dated April 21, 2022.
13 Adjusted Operating Income of standalone AT&T of $5.8 billion for 1Q22 is calculated as Adjusted Operating Income of $7.1 billion minus WarnerMedia segment operating income of $1.3 billion. Further detail of these adjustments and information is included in our Forms 8-K dated April 14, 2022, April 15, 2022, and April 21, 2022. Represents AT&T’s current best estimate of its unaudited results reflecting the discontinued operations and other dispositions. Actual results could differ from these estimates.
14 Adjusted equity in net income from DIRECTV investment is calculated as equity income from DIRECTV reported in Equity in Net Income (Loss) of Affiliates and excludes AT&T’s proportionate share of the noncash depreciation and amortization of fair value accretion from DIRECTV’s revaluation of assets and purchase price allocation
15 Net Debt to Adjusted EBITDA ratios are non-GAAP financial measures that are frequently used by investors and credit rating agencies to provide relevant and useful information. Our Net Debt to Adjusted EBITDA ratio is calculated by dividing the Net Debt of $169.0 billion (Total Debt of $207.6 billion at March 31, 2022, less Cash and Cash Equivalents of $38.6 billion) by the sum of the most recent four quarters of Adjusted EBITDA of $49.4 billion ($13.5 billion for June 30, 2021; $13.0 billion for September 30, 2021; $11.3 billion for December 31, 2021; and $11.6 billion for March 31, 2022).
16 Standalone AT&T Cash from Operations of $7.7 billion for 1Q22 is calculated as cash from operations of $5.7 billion minus WarnerMedia and Vrio cash from operations of ($2.0) billion. Standalone AT&T free cash flow of $2.9 billion for 1Q22 is calculated as standalone AT&T cash from operations of $7.7 billion, plus cash distributions from DIRECTV classified as investing activities of $1.3 billion, minus cash paid for vendor financing of $1.6 billion, minus capital expenditures of $4.7 billion, plus WarnerMedia and Vrio capital expenditures of $0.2 billion. Further detail of these adjustments and information is included in our Forms 8-K dated April 21, 2022.
17 The approximately 3 million U.S. business customer locations are included within the 9.5+ million U.S. business customer locations on or within 1,000 feet of our fiber.
18 Domestic subscriber ARPU is defined as domestic HBO Max and HBO subscriber revenues during the period divided by average domestic HBO Max and HBO subscribers during the period, excluding HBO Commercial and other bulk-billed revenues and subscribers during the period.

*About AT&T
We help more than 100 million U.S. families, friends and neighbors connect in meaningful ways every day. 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.


April 20, 2022
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AT&T products and services are provided or offered by subsidiaries and affiliates of AT&T Inc. under the AT&T brand and not by AT&T Inc. Additional information is available at about.att.com. © 2022 AT&T Intellectual Property. All rights reserved. AT&T, the Globe logo and other marks are trademarks and service marks of AT&T Intellectual Property and/or AT&T affiliated companies.

Cautionary Language Concerning Forward-Looking Statements
Information set forth in this news release contains financial estimates and other forward-looking statements that are subject to risks and uncertainties, and actual results might differ materially. A discussion of factors that may affect future results is contained in AT&T’s filings with the Securities and Exchange Commission. AT&T disclaims any obligation to update and revise statements contained in this news release based on new information or otherwise. This news release may contain certain non-GAAP financial measures. Reconciliations between the non-GAAP financial measures and the GAAP financial measures are available on the company’s website at https://investors.att.com.


For more information, contact:
Fletcher Cook
AT&T Inc.
Phone: (214) 912-8541
Email: [email protected]

Brittany Siwald
AT&T Inc.
Phone: (214) 202-6630
Email: [email protected]

April 20, 2022
© 2022 AT&T Intellectual Property. All rights reserved. AT&T and the Globe logo are registered trademarks of AT&T Intellectual Property. Page 7

AT&T Inc.
Financial Data
Consolidated Statements of Income
Dollars in millions except per share amounts
UnauditedFirst QuarterPercent
20222021Change
Operating Revenues
Service$32,392 $38,504 (15.9)%
Equipment5,713 5,435 5.1 %
Total Operating Revenues38,105 43,939 (13.3)%
Operating Expenses
Cost of revenues
Equipment6,038 5,556 8.7 %
Broadcast, programming and operations4,313 7,538 (42.8)%
Other cost of revenues (exclusive of depreciation and
amortization shown separately below)
7,206 7,993 (9.8)%
Selling, general and administrative9,368 9,382 (0.1)%
Depreciation and amortization5,539 5,809 (4.6)%
Total Operating Expenses32,464 36,278 (10.5)%
Operating Income5,641 7,661 (26.4)%
Interest Expense1,722 1,870 (7.9)%
Equity in Net Income (Loss) of Affiliates501 52 — %
Other Income (Expense) — Net2,187 4,221 (48.2)%
Income Before Income Taxes6,607 10,064 (34.4)%
Income Tax Expense1,443 2,122 (32.0)%
Net Income5,164 7,942 (35.0)%
Less: Net Income Attributable to Noncontrolling Interest(354)(392)9.7 %
Net Income Attributable to AT&T$4,810 $7,550 (36.3)%
Less: Preferred Stock Dividends(48)(50)4.0 %
Net Income Attributable to Common Stock$4,762 $7,500 (36.5)%
Basic Earnings Per Share Attributable to Common Stock$0.66 $1.04 (36.5)%
Weighted Average Common Shares Outstanding (000,000)7,184 7,161 0.3 %
Diluted Earnings Per Share Attributable to Common Stock1
$0.65 $1.02 (36.3)%
Weighted Average Common Shares Outstanding with Dilution (000,000)1
7,556 7,482 1.0 %
1Reflects retrospective adoption of Accounting Standards Update (ASU) No. 2020-06
1

AT&T Inc.  
Financial Data  
Consolidated Balance Sheets
Dollars in millions
UnauditedMar. 31,Dec. 31,
20222021
Assets
Current Assets
Cash and cash equivalents$38,565 $21,169 
Accounts receivable – net of related allowances for credit loss of $788 and $77117,218 17,571 
Inventories3,153 3,464 
Prepaid and other current assets17,920 17,793 
Total current assets76,856 59,997 
Noncurrent Inventories and Theatrical Film and Television Production Costs19,803 18,983 
Property, Plant and Equipment – Net127,159 125,904 
Goodwill133,247 133,223 
Licenses – Net114,107 113,830 
Trademarks and Trade Names – Net21,781 21,938 
Distribution Networks – Net11,486 11,942 
Other Intangible Assets – Net11,452 11,783 
Investments in and Advances to Equity Affiliates5,943 7,274 
Operating Lease Right-Of-Use Assets23,941 24,180 
Deposits on Wireless Licenses9,129 — 
Other Assets22,291 22,568 
Total Assets$577,195 $551,622 
Liabilities and Stockholders’ Equity
Current Liabilities
Debt maturing within one year$27,333 $24,630 
Note payable to DIRECTV1,047 1,245 
Accounts payable and accrued liabilities46,845 50,661 
Advanced billings and customer deposits5,183 5,303 
Dividends payable2,086 3,749 
Total current liabilities82,494 85,588 
Long-Term Debt180,225 152,724 
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes65,963 65,226 
Postemployment benefit obligation11,294 12,649 
Operating lease liabilities20,917 21,261 
Other noncurrent liabilities29,746 30,223 
Noncurrent portion of note payable to DIRECTV— 96 
Total deferred credits and other noncurrent liabilities127,920 129,455 
Stockholders’ Equity
Preferred stock— — 
Common stock7,621 7,621 
Additional paid-in capital129,637 130,112 
Retained earnings45,041 42,350 
Treasury stock(16,553)(17,280)
Accumulated other comprehensive income3,290 3,529 
Noncontrolling interest17,520 17,523 
Total stockholders’ equity186,556 183,855 
Total Liabilities and Stockholders’ Equity$577,195 $551,622 
2

AT&T Inc.  
Financial Data  
Consolidated Statements of Cash Flows
Dollars in millions
UnauditedFirst Quarter
20222021
Operating Activities
Net income$5,164 $7,942 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization5,539 5,809 
Amortization of film and television costs3,009 2,886 
Distributed (undistributed) earnings from investments in equity affiliates26 (47)
Provision for uncollectible accounts460 321 
Deferred income tax expense932 1,848 
Net (gain) loss on investments, net of impairments93 (119)
Pension and postretirement benefit expense (credit)(937)(974)
Actuarial (gain) loss on pension and postretirement benefits(1,053)(2,844)
Changes in operating assets and liabilities:
Receivables(228)751 
Other current assets, inventories and theatrical film and television production costs(3,261)(3,518)
Accounts payable and other accrued liabilities(4,031)(3,060)
Equipment installment receivables and related sales541 1,190 
Deferred customer contract acquisition and fulfillment costs(259)244 
Postretirement claims and contributions(97)(343)
Other - net(166)(159)
Total adjustments568 1,985 
Net Cash Provided by Operating Activities5,732 9,927 
Investing Activities
Capital expenditures(4,748)(4,033)
Acquisitions, net of cash acquired(9,244)(22,884)
Dispositions11 51 
Distributions from DIRECTV in excess of cumulative equity in earnings1,315 — 
Other - net15 14 
Net Cash Used in Investing Activities(12,651)(26,852)
Financing Activities
Net change in short-term borrowings with original maturities of three months or less2,285 687 
Issuance of other short-term borrowings2,593 15,485 
Repayment of other short-term borrowings(3,407)— 
Issuance of long-term debt30,296 9,097 
Repayment of long-term debt(802)(902)
Repayment of note payable to DIRECTV(294)— 
Payment of vendor financing(1,566)(1,690)
Purchase of treasury stock(197)(176)
Issuance of treasury stock26 63 
Dividends paid(3,749)(3,741)
Other - net(934)(340)
Net Cash Provided by Financing Activities24,251 18,483 
Net increase in cash and cash equivalents and restricted cash17,332 1,558 
Cash and cash equivalents and restricted cash beginning of year21,316 9,870 
Cash and Cash Equivalents and Restricted Cash End of Period$38,648 $11,428 

3

AT&T Inc.
Consolidated Supplementary Data
Supplementary Financial Data
Dollars in millions except per share amounts
UnauditedFirst QuarterPercent
20222021Change
Capital expenditures
Purchase of property and equipment$4,712 $3,972 18.6 %
Interest during construction - capital expenditures36 61 (41.0)%
Total Capital Expenditures$4,748 $4,033 17.7 %
Acquisition, net of cash acquired
Business acquisitions$— $8 — %
Spectrum acquisitions8,956 22,876 (60.8)%
Interest during construction - spectrum288 — — %
Total Acquisitions$9,244 $22,884 (59.6)%
Cash Paid for Programming and Produced Film/TV Content$5,149 $4,535 13.5 %
Dividends Declared per Common Share$0.28 $0.52 (46.2)%
End of Period Common Shares Outstanding (000,000)7,159 7,140 0.3 %
Debt Ratio52.7 %49.6 %310  BP
Total Employees203,160 228,470 (11.1)%
4

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
UnauditedFirst QuarterPercent
20222021Change
Segment Operating Revenues
Mobility$20,075 $19,034 5.5 %
Business Wireline5,640 6,046 (6.7)%
Consumer Wireline3,161 3,098 2.0 %
Total Segment Operating Revenues28,876 28,178 2.5 %
Segment Operating Contribution
Mobility5,853 6,044 (3.2)%
Business Wireline859 1,080 (20.5)%
Consumer Wireline317 307 3.3 %
Total Segment Operating Contribution$7,029 $7,431 (5.4)%


Supplementary Operating Data
Subscribers and connections in thousands
UnauditedMarch 31,Percent
20222021Change
Broadband Connections
Broadband15,130 14,908 1.5 %
DSL403 527 (23.5)%
Total Broadband Connections15,533 15,435 0.6 %
Voice Connections
Retail Consumer Switched Access Lines5,956 6,988 (14.8)%
U-verse Consumer VoIP Connections3,227 3,684 (12.4)%
Total Retail Voice Connections9,183 10,672 (14.0)%
First QuarterPercent
20222021Change
Broadband Net Additions
Broadband56 90 (37.8)%
DSL(27)(39)30.8 %
Total Broadband Net Additions29 51 (43.1)%
5

Mobility

Mobility provides nationwide wireless service and equipment.
Mobility Results
Dollars in millions
UnauditedFirst QuarterPercent
20222021Change
Operating Revenues
Service$14,724 $14,048 4.8 %
Equipment5,351 4,986 7.3 %
Total Operating Revenues20,075 19,034 5.5 %
Operating Expenses
Operations and support12,163 10,976 10.8 %
Depreciation and amortization2,059 2,014 2.2 %
Total Operating Expenses14,222 12,990 9.5 %
Operating Income5,853 6,044 (3.2)%
Equity in Net Income (Loss) of Affiliates— — — %
Operating Contribution$5,853 $6,044 (3.2)%
Operating Income Margin29.2 %31.8 %(260) BP
Supplementary Operating Data
Subscribers and connections in thousands
UnauditedMarch 31,Percent
20222021Change
Mobility Subscribers
Postpaid81,639 77,934 4.8 %
Postpaid phone67,518 64,752 4.3 %
Prepaid18,859 18,387 2.6 %
Reseller5,383 6,501 (17.2)%
Connected Devices90,735 83,286 8.9 %
Total Mobility Subscribers1
196,616 186,108 5.6 %
1Wireless subscribers at March 31, 2022 includes a reduction of 10.7 million subscribers and connections (899 postpaid, including 438 phone, 234 prepaid, 749 reseller subscribers, and 8.8 million connected devices) resulting from our 3G network shutdown in February 2022.
First QuarterPercent
20222021Change
Mobility Net Additions
Postpaid Phone Net Additions691 595 16.1 %
Total Phone Net Additions804 802 0.2 %
Postpaid965 823 17.3 %
Prepaid116 279 (58.4)%
Reseller(17)(68)75.0 %
Connected Devices4,468 2,517 77.5 %
Total Mobility Net Additions5,532 3,551 55.8 %
Postpaid Churn0.94 %0.93 %1 BP
Postpaid Phone-Only Churn0.79 %0.76 %3 BP



6

Business Wireline

Business Wireline provides advanced IP-based services, as well as traditional voice and data services and related equipment to business customers.
Business Wireline Results
Dollars in millions
UnauditedFirst QuarterPercent
20222021Change
Operating Revenues
Service$5,478 $5,872 (6.7)%
Equipment162 174 (6.9)%
Total Operating Revenues5,640 6,046 (6.7)%
Operating Expenses  
Operations and support3,482 3,688 (5.6)%
Depreciation and amortization1,299 1,278 1.6 %
Total Operating Expenses4,781 4,966 (3.7)%
Operating Income859 1,080 (20.5)%
Equity in Net Income (Loss) of Affiliates— — — %
Operating Contribution$859 $1,080 (20.5)%
Operating Income Margin15.2 %17.9 %(270) BP

7

Consumer Wireline

Consumer Wireline provides broadband, including fiber, and legacy telephony voice communication services to residential customers.
Consumer Wireline Results
Dollars in millions
UnauditedFirst QuarterPercent
20222021Change
Operating Revenues
Broadband$2,355 $2,205 6.8 %
Legacy voice and data services460 519 (11.4)%
Other service and equipment346 374 (7.5)%
Total Operating Revenues3,161 3,098 2.0 %
Operating Expenses
Operations and support2,078 2,029 2.4 %
Depreciation and amortization766 762 0.5 %
Total Operating Expenses2,844 2,791 1.9 %
Operating Income317 307 3.3 %
Equity in Net Income (Loss) of Affiliates— — — %
Operating Contribution$317 $307 3.3 %
Operating Income Margin10.0 %9.9 %10  BP
 
Supplementary Operating Data
Subscribers and connections in thousands
UnauditedMarch 31,Percent
20222021Change
Broadband Connections
Total Broadband and DSL Connections14,148 14,146 — %
Broadband13,850 13,767 0.6 %
Fiber Broadband Connections6,281 5,186 21.1 %
Voice Connections
Retail Consumer Switched Access Lines2,324 2,740 (15.2)%
U-verse Consumer VoIP Connections2,628 3,096 (15.1)%
Total Retail Consumer Voice Connections4,952 5,836 (15.1)%
First QuarterPercent
20222021Change
Broadband Net Additions
Total Broadband and DSL Net Additions(12)46 — %
Broadband5 74 (93.2)%
Fiber Broadband Net Additions289 235 23.0 %
8

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
UnauditedFirst QuarterPercent
20222021Change
Operating Revenues
Wireless service$2,134 $1,969 8.4 %
Wireline service5,478 5,872 (6.7)%
Wireless equipment899 790 13.8 %
Wireline equipment162 174 (6.9)%
Total Operating Revenues8,673 8,805 (1.5)%
Operating Expenses
Operations and support5,608 5,519 1.6 %
Depreciation and amortization1,660 1,614 2.9 %
Total Operating Expenses7,268 7,133 1.9 %
Operating Income1,405 1,672 (16.0)%
Equity in Net Income (Loss) of Affiliates— — — %
Operating Contribution$1,405 $1,672 (16.0)%
Operating Income Margin16.2 %19.0 %(280) BP



9

WARNERMEDIA SEGMENT

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

On April 8, 2022, we completed the WarnerMedia/Discovery transaction. With the separation and distribution of WarnerMedia, the WarnerMedia business will meet the criteria for discontinued operations for our second-quarter 2022 reporting.
Segment Results
Dollars in millions
UnauditedFirst QuarterPercent
20222021Change
Segment Operating Revenues
Subscription$3,997 $3,830 4.4 %
Content and other3,059 2,959 3.4 %
Advertising1,685 1,737 (3.0)%
Total Segment Operating Revenues8,741 8,526 2.5 %
Direct Costs
Programming3,976 3,774 5.4 %
Marketing1,096 850 28.9 %
Other869 813 6.9 %
Selling, general and administrative1,354 966 40.2 %
Depreciation and amortization127 163 (22.1)%
Total Operating Expenses7,422 6,566 13.0 %
Operating Income1,319 1,960 (32.7)%
Equity in Net Income (Loss) of Affiliates(13)70 — %
Total Segment Operating Contribution$1,306 $2,030 (35.7)%

10

LATIN AMERICA SEGMENT

The Latin America segment provides entertainment and wireless service outside of the U.S. Our international subsidiaries conduct business in their local currency and operating results are converted to U.S. dollars using official exchange rates. The Latin America segment contains two business units: Mexico and Vrio, which was sold in November 2021.
Segment Results
Dollars in millions  
UnauditedFirst QuarterPercent
 20222021Change
Segment Operating Revenues   
Mexico$690 $631 9.4 %
Vrio— 743 — %
Total Segment Operating Revenues690 1,374 (49.8)%
Segment Operating Contribution
Mexico(102)(134)23.9 %
Vrio— (39)— %
Total Segment Operating Contribution$(102)$(173)41.0 %

11

Mexico

Mexico provides wireless services and equipment to customers in Mexico.
Mexico Results
Dollars in millions
UnauditedFirst QuarterPercent
 20222021Change
Operating Revenues
Wireless service$490 $439 11.6 %
Wireless equipment200 192 4.2 %
Total Operating Revenues690 631 9.4 %
Operating Expenses
Operations and support631 620 1.8 %
Depreciation and amortization161 145 11.0 %
Total Operating Expenses792 765 3.5 %
Operating Income (Loss)(102)(134)23.9 %
Equity in Net Income (Loss) of Affiliates— — — %
Operating Contribution$(102)$(134)23.9 %
Operating Income Margin(14.8)%(21.2)%640  BP
Supplementary Operating Data
Subscribers and connections in thousands
UnauditedMarch 31,Percent
 20222021Change
Mexico Wireless Subscribers
Postpaid4,810 4,725 1.8 %
Prepaid15,235 13,756 10.8 %
Reseller458 500 (8.4)%
Total Mexico Wireless Subscribers20,503 18,981 8.0 %
 First QuarterPercent
 20222021Change
Mexico Wireless Net Additions
Postpaid3 29 (89.7)%
Prepaid178 (2)— %
Reseller(40)11 — %
Total Mexico Wireless Net Additions141 38 — %
   

12

SUPPLEMENTAL SEGMENT RECONCILIATION
Three Months Ended
Dollars in millions
Unaudited
March 31, 2022
RevenuesOperations
and Support
Expenses		EBITDADepreciation
and
Amortization		Operating
Income (Loss)		Equity in Net
Income (Loss) of
Affiliates		Operating
Contribution
Communications
Mobility$20,075 $12,163 $7,912 $2,059 $5,853 $— $5,853 
Business Wireline5,640 3,482 2,158 1,299 859 — 859 
Consumer Wireline3,161 2,078 1,083 766 317 — 317 
Total Communications28,876 17,723 11,153 4,124 7,029 — 7,029 
WarnerMedia8,741 7,295 1,446 127 1,319 (13)1,306 
Latin America - Mexico690 631 59 161 (102)— (102)
Segment Total38,307 25,649 12,658 4,412 8,246 (13)8,233 
Corporate and Other
Corporate:
DTV stranded costs8 128 (120)134 (254)— (254)
Parent administration
   support		(12)312 (324)4 (328)(8)(336)
Securitization fees16 82 (66)— (66)— (66)
Value portfolio118 24 94 9 85 — 85 
Total Corporate130 546 (416)147 (563)(8)(571)
Video— — — — — 522 522 
Held-for-sale and other
reclassifications
29 16 13 9 4 — 4 
Reclassification of prior
service credits
— 617 (617)— (617)— (617)
Merger & Significant Items— 458 (458)971 (1,429)— (1,429)
Eliminations and
consolidations
(361)(361)— — — — — 
Total Corporate and Other(202)1,276 (1,478)1,127 (2,605)514 (2,091)
AT&T Inc.$38,105 $26,925 $11,180 $5,539 $5,641 $501 $6,142 
13

Three Months Ended
Dollars in millions
Unaudited
March 31, 2021
RevenuesOperations and Support ExpensesEBITDADepreciation and AmortizationOperating Income (Loss)Equity in Net
Income (Loss) of
Affiliates		Operating Contribution
Communications
Mobility$19,034 $10,976 $8,058 $2,014 $6,044 $— $6,044 
Business Wireline6,046 3,688 2,358 1,278 1,080 — 1,080 
Consumer Wireline3,098 2,029 1,069 762 307 — 307 
Total Communications28,178 16,693 11,485 4,054 7,431 — 7,431 
WarnerMedia8,526 6,403 2,123 163 1,960 70 2,030 
Latin America
Mexico631 620 11 145 (134)— (134)
Vrio743 661 82 117 (35)(4)(39)
Total Latin America1,374 1,281 93 262 (169)(4)(173)
Segment Total38,078 24,377 13,701 4,479 9,222 66 9,288 
Corporate and Other
Corporate:
DTV stranded costs— — — — — — — 
Parent administration
   support		(12)334 (346)6 (352)(9)(361)
Securitization fees13 40 (27)— (27)— (27)
Value portfolio163 41 122 9 113 — 113 
Total Corporate164 415 (251)15 (266)(9)(275)
Video6,725 5,660 1,065 164 901 — 901 
Held-for-sale and other
reclassifications
262 228 34 20 14 (5)9 
Reclassification of prior
service credits
— 669 (669)— (669)— (669)
Merger & Significant Items— 61 (61)1,131 (1,192)— (1,192)
Eliminations and
consolidations
(1,290)(941)(349)— (349)— (349)
Total Corporate and Other5,861 6,092 (231)1,330 (1,561)(14)(1,575)
AT&T Inc.$43,939 $30,469 $13,470 $5,809 $7,661 $52 $7,713 

14

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

Free Cash Flow

Free cash flow is defined as cash from operations and cash distributions from DIRECTV classified as investing activities minus capital expenditures 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 
 First Quarter
 20222021
Net cash provided by operating activities1
$5,732 $9,927 
Add: Distributions from DIRECTV classified as investing activities1,315 — 
Less: Capital expenditures(4,748)(4,033)
Less: Cash paid for vendor financing(1,566)(1,690)
Free Cash Flow733 4,204 
Less: Dividends paid(3,749)(3,741)
Free Cash Flow after Dividends$(3,016)$463 
Free Cash Flow Dividend Payout Ratio511.5 %89.0 %
1Includes distributions from DIRECTV of $522 in the first quarter of 2022.

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
 First Quarter
 20222021
Capital Expenditures$(4,748)$(4,033)
Cash paid for vendor financing(1,566)(1,690)
Cash paid for Capital Investment$(6,314)$(5,723)



EBITDA

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

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

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

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

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

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

EBITDA, EBITDA Margin and EBITDA Service Margin
Dollars in millions 
 First Quarter
 20222021
Net Income$5,164 $7,942 
Additions:  
Income Tax Expense1,443 2,122 
Interest Expense1,722 1,870 
Equity in Net (Income) Loss of Affiliates(501)(52)
Other (Income) Expense - Net(2,187)(4,221)
Depreciation and amortization5,539 5,809 
EBITDA11,180 13,470 
Merger and other costs364 37 
   Employee separation costs and benefit-related (gain) loss94 24 
Adjusted EBITDA 1
$11,638 $13,531 
1 See page 5 for additional discussion and reconciliation of adjusted items.

2

Segment and Business Unit EBITDA, EBITDA Margin and EBITDA Service Margin
Dollars in millions 
 First Quarter
 20222021
Communications Segment
Operating Contribution$7,029 $7,431 
Additions:  
Depreciation and amortization4,124 4,054 
EBITDA11,153 11,485 
Total Operating Revenues28,876 28,178 
Operating Income Margin24.3 %26.4 %
EBITDA Margin38.6 %40.8 %
Mobility
Operating Contribution$5,853 $6,044 
Additions:  
Depreciation and amortization2,059 2,014 
EBITDA7,912 8,058 
Total Operating Revenues20,075 19,034 
Service Revenues14,724 14,048 
Operating Income Margin29.2 %31.8 %
EBITDA Margin39.4 %42.3 %
EBITDA Service Margin53.7 %57.4 %
Business Wireline
Operating Contribution$859 $1,080 
Additions:  
Depreciation and amortization1,299 1,278 
EBITDA2,158 2,358 
Total Operating Revenues5,640 6,046 
Operating Income Margin15.2 %17.9 %
EBITDA Margin38.3 %39.0 %
Consumer Wireline
Operating Contribution$317 $307 
Additions:  
Depreciation and amortization766 762 
EBITDA1,083 1,069 
Total Operating Revenues3,161 3,098 
Operating Income Margin10.0 %9.9 %
EBITDA Margin34.3 %34.5 %

3

Segment and Business Unit EBITDA, EBITDA Margin and EBITDA Service Margin
Dollars in millions
 First Quarter
 20222021
WarnerMedia Segment
Operating Contribution$1,306 $2,030 
Additions:
Equity in Net (Income) of Affiliates13 (70)
Depreciation and amortization127 163 
EBITDA1,446 2,123 
Total Operating Revenues8,741 8,526 
Operating Income Margin15.1 %23.0 %
EBITDA Margin16.5 %24.9 %

Segment and Business Unit EBITDA, EBITDA Margin and EBITDA Service Margin
Dollars in millions
 First Quarter
 20222021
Latin America Segment
Operating Contribution$(102)$(173)
Additions:
Equity in Net (Income) of Affiliates— 4 
Depreciation and amortization161 262 
EBITDA59 93 
Total Operating Revenues690 1,374 
Operating Income Margin-14.8 %-12.3 %
EBITDA Margin8.6 %6.8 %
Mexico
Operating Contribution$(102)$(134)
Additions:
Equity in Net (Income) Loss of Affiliates— — 
Depreciation and amortization161 145 
EBITDA59 11 
Total Operating Revenues690 631 
Operating Income Margin-14.8 %-21.2 %
EBITDA Margin8.6 %1.7 %
4



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 
 First Quarter
 20222021
Operating Expenses  
Transaction and other costs$364 $37 
   Employee separation costs and benefit-related (gain) loss94 24 
Adjustments to Operations and Support Expenses458 61 
   Amortization of intangible assets971 1,131 
Adjustments to Operating Expenses1,429 1,192 
Other  
 DIRECTV intangible amortization (proportionate share)416 — 
   Benefit-related (gain) loss, transaction financing costs and other169 (119)
Actuarial (gain) loss(1,053)(2,844)
Adjustments to Income Before Income Taxes961 (1,771)
Tax impact of adjustments171 (490)
Tax-related items— 118 
Adjustments to Net Income$790 $(1,399)

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

5

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,
Adjusted EBITDA, and Adjusted EBITDA Margin
Dollars in millions 
 First Quarter
 20222021
Operating Income$5,641 $7,661 
Adjustments to Operating Expenses1,429 1,192 
Adjusted Operating Income7,070 8,853 
EBITDA11,180 13,470 
Adjustments to Operations and Support Expenses458 61 
Adjusted EBITDA11,638 13,531 
Total Operating Revenues38,105 43,939 
Operating Income Margin14.8 %17.4 %
Adjusted Operating Income Margin18.6 %20.1 %
Adjusted EBITDA Margin30.5 %30.8 %

Adjusted Diluted EPS
 First Quarter
 20222021
Diluted Earnings Per Share (EPS)$0.65 $1.02 
Amortization of intangible assets0.10 0.12 
Transaction costs0.04 0.01 
 DIRECTV intangible amortization (proportionate share)0.04 — 
Actuarial (gain) loss 1
(0.11)(0.29)
Benefit-related (gain) loss, employee separation costs and other 2
0.05 0.01 
Tax-related items— (0.02)
Adjusted EPS$0.77 $0.85 
Year-over-year growth - Adjusted-9.4 % 
Weighted Average Common Shares Outstanding with Dilution (000,000)7,556 7,482 
1Includes adjustments for actuarial gains or losses associated with our pension benefit plan, which we immediately recognize in the income statement, pursuant to our accounting policy for the recognition of actuarial gains/losses. We recorded total net actuarial gain of $1.1 billion in the first quarter of 2022. As a result, adjusted EPS reflects an expected return on plan assets of $0.9 billion (based on an average expected return on plan assets of 6.75% for our pension trust), rather than the actual return on plan assets of $(3.6) billion (actual pension return of -5.2%), included in the GAAP measure of income.
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. For these reasons, we have excluded the impact of ASU 2020-06 from our adjusted EPS calculation. The per share impact of ASU 2020-06 was to decrease reported diluted EPS $0.02 and $0.01 for the quarters ended March 31, 2022 and 2021, respectively.

6

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 
 June 30,Sept. 30Dec. 31,March 31,Four Quarters
 
2021 1
2021 1
2021 1
2022
Adjusted EBITDA$13,514 $13,016 $11,281 $11,638 $49,449 
End-of-period current debt    27,333 
End-of-period long-term debt    180,225 
Total End-of-Period Debt    207,558 
Less: Cash and Cash Equivalents    38,565 
Net Debt Balance    168,993 
Annualized Net Debt to Adjusted EBITDA Ratio 2
  3.42 
1As reported in AT&T's Form 8-K furnished April 15, 2022.
2Annualized Net Debt to Adjusted EBITDA Ratio of 3.59 when adjusted to remove the impacts for Video and Vrio EBITDA of $1,735, $624 and $47 in the second, third and fourth quarters of 2021, respectively. Additional information on Video and Vrio can be found in exhibit 99.4.


Net Debt to Adjusted EBITDA - 2021
Dollars in millions   
 Three Months Ended 
 June 30,Sept. 30Dec. 31,March 31,Four Quarters
 
2020 1
2020 1
2020 1
2021 1
Adjusted EBITDA$14,112 $13,313 $12,888 $13,531 $53,844 
End-of-period current debt    19,505 
End-of-period long-term debt    160,694 
Total End-of-Period Debt    180,199 
Less: Cash and Cash Equivalents    11,342 
Net Debt Balance    168,857 
Annualized Net Debt to Adjusted EBITDA Ratio  3.14 
1As reported in AT&T's Form 8-K furnished April 15, 2022.


















7

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 Measures
 First Quarter
 March 31, 2022March 31, 2021
 MobilityBusiness
Wireline
Adjustments1
Business
Solutions		MobilityBusiness
Wireline
Adjustments1
Business
Solutions
Operating Revenues        
Wireless service$14,724 $— $(12,590)$2,134 $14,048 $— $(12,079)$1,969 
Wireline service— 5,478 — 5,478 — 5,872 — 5,872 
Wireless equipment5,351 — (4,452)899 4,986 — (4,196)790 
Wireline equipment— 162 — 162 — 174 — 174 
Total Operating Revenues20,075 5,640 (17,042)8,673 19,034 6,046 (16,275)8,805 
Operating Expenses
Operations and support12,163 3,482 (10,037)5,608 10,976 3,688 (9,145)5,519 
EBITDA7,912 2,158 (7,005)3,065 8,058 2,358 (7,130)3,286 
Depreciation and amortization2,059 1,299 (1,698)1,660 2,014 1,278 (1,678)1,614 
Total Operating Expenses14,222 4,781 (11,735)7,268 12,990 4,966 (10,823)7,133 
Operating Income5,853 859 (5,307)1,405 6,044 1,080 (5,452)1,672 
Equity in Net Income (Loss) of Affiliates— — — — — — — — 
Operating Contribution$5,853 $859 $(5,307)$1,405 $6,044 $1,080 $(5,452)$1,672 
1Non-business wireless reported in the Communication segment under the Mobility business unit.
Results have been recast to conform to the current period's classification.
 
 
 
 
8

Quarterly Financial Information Excluding Video (US & Vrio)
Supplemental Unaudited Quarterly Financial Information1
Dollars in millions
Unaudited
Operating Revenues3/31/216/30/219/30/2112/31/21 2021 3/31/22
Reported AT&T Operating Revenues$43,939 $44,045 $39,922 $40,958 $168,864 $38,105 
Less: Video (A1)(6,725)(6,639)(2,149)— (15,513)— 
Add: WarnerMedia sales to Video (A2)524 508 167 — 1,199 — 
Add: WarnerMedia sales of DIRECTV advertising inventory (A3)388 410 111 — 909 — 
Add: Other eliminations61 58 17 — 136 — 
Less: Vrio (A4)(743)(749)(756)(359)(2,607)— 
Add: WarnerMedia sales to Vrio (A5)64 65 63 30 222 — 
Operating Revenues excluding Video$37,508 $37,698 $37,375 $40,629 $153,210 $38,105 
Reported Revenue Growth Rate Y/Y-13.3 %
Revenue excluding Video Growth Rate Y/Y1.6 %


Operations and Support Expenses3/31/216/30/219/30/2112/31/2120213/31/22
Reported AT&T Operations and Support Expenses$30,469 $35,015 $27,194 $29,977 $122,655 $26,925 
Adjustments (B1)(61)(4,484)(288)(300)(5,133)(458)
Adjusted Operations and Support Expenses30,408 30,531 26,906 29,677 117,522 26,467 
Less: Video (A1)(5,660)(5,275)(1,731)— (12,666)— 
Add: WarnerMedia sales to Video (A2)524 508 167 — 1,199 — 
Add: WarnerMedia sales of DIRECTV advertising inventory (A3)39 38 12 — 89 — 
Add: WarnerMedia/DIRECTV 70% revenue share (A3)271 287 78 — 636 — 
Add: Other eliminations61 58 17 — 136 — 
Less: Vrio (A4)(661)(660)(660)(321)(2,302)— 
Add: WarnerMedia sales to Vrio (A5)64 65 63 30 222 — 
Less: Reclassification of allocations for separated businesses15 17 14 9 55 — 
Add: DTV-related retained costs350 350 117 — 817 — 
Adjusted Operations and Support Expenses excluding Video$25,411 $25,919 $24,983 $29,395 $105,708 $26,467 
Reported Operations and Support Expense Growth Rate Y/Y-11.6 %
Adjusted Operations and Support Expense Growth Rate Y/Y-13.0 %
Adjusted Operations and Support Expense excluding Video Growth Rate Y/Y4.2 %


Depreciation and Amortization Expense3/31/216/30/219/30/2112/31/2120213/31/22
Reported AT&T Depreciation and Amortization Expense$5,809 $5,761 $5,619 $5,673 $22,862 $5,539 
Adjustments (B1)(1,131)(1,069)(1,012)(1,021)(4,233)(971)
Adjusted Depreciation and Amortization Expense4,678 4,692 4,607 4,652 18,629 4,568 
Less: Video Depreciation (A1)(164)(148)(44)— (356)— 
Less: Vrio Depreciation (A4)(117)(114)— — (231)— 
Add: DTV-related retained costs180 180 60 — 420 — 
Adjusted Depreciation and Amortization Expense excluding Video$4,577 $4,610 $4,623 $4,652 $18,462 $4,568 
Reported Depreciation and Amortization Expense Growth Rate Y/Y-4.6 %
Adjusted Depreciation and Amortization Expense Growth Rate Y/Y-2.4 %
Adjusted Depreciation and Amortization Expense excluding Video Growth Rate Y/Y-0.2 %


Operating Income3/31/216/30/219/30/2112/31/2120213/31/22
Reported AT&T Operating Income (Loss)$7,661 $3,269 $7,109 $5,308 $23,347 $5,641 
Adjustments (B1)1,192 5,553 1,300 1,321 9,366 1,429 
Adjusted Operating Income8,853 8,822 8,409 6,629 32,713 7,070 
Less: Video (A1)(901)(1,216)(374)— (2,491)— 
Add: WarnerMedia sales to Video (A2)— — — — — — 
Add: WarnerMedia sales of DIRECTV advertising inventory (A3)349 372 99 — 820 — 
Add: WarnerMedia/DIRECTV 70% revenue share (A3)(271)(287)(78)— (636)— 
Add: Other eliminations— — — — — — 
Less: Vrio (A4)35 25 (96)(38)(74)— 
Add: WarnerMedia sales to Vrio (A5)— — — — — — 
Less: Reclassification of allocations for separated businesses(15)(17)(14)(9)(55)— 
Add: DTV-related retained costs(530)(530)(177)— (1,237)— 
Adjusted Operating Income excluding Video $7,520 $7,169 $7,769 $6,582 $29,040 $7,070 
Reported Operating Income Growth Rate Y/Y-26.4 %
Adjusted Operating Income Growth Rate Y/Y-20.1 %
Adjusted Operating Income excluding Video Growth Rate Y/Y-6.0 %
Reported Operating Income Margin17.4 %7.4 %17.8 %13.0 %13.8 %14.8 %
Adjusted Operating Income Margin20.1 %20.0 %21.1 %16.2 %19.4 %18.6 %
Adjusted Operating Income excluding Video Margin20.0 %19.0 %20.8 %16.2 %19.0 %18.6 %


EBITDA3/31/216/30/219/30/2112/31/2120213/31/22
Reported AT&T Net Income (Loss)$7,942 $1,874 $6,273 $5,390 $21,479 $5,164 
Additions:
Income Tax Expense (Benefit)2,122 751 1,539 1,056 5,468 1,443 
Interest Expense1,870 1,684 1,667 1,663 6,884 1,722 
Equity in Net Income (Loss) of Affiliates(52)(41)(91)(447)(631)(501)
Other (Income) Expense - net(4,221)(999)(2,279)(2,354)(9,853)(2,187)
Depreciation and amortization5,809 5,761 5,619 5,673 22,862 5,539 
EBITDA13,470 9,030 12,728 10,981 46,209 11,180 
Adjustments (B1)61 4,484 288 300 5,133 458 
Adjusted EBITDA13,531 13,514 13,016 11,281 51,342 11,638 
Less: Video (A1)(1,065)(1,364)(418)— (2,847)— 
Add: WarnerMedia sales to Video (A2)— — — — — — 
Add: WarnerMedia sales of DIRECTV advertising inventory (A3)349 372 99 — 820 — 
Add: WarnerMedia/DIRECTV 70% revenue share (A3)(271)(287)(78)— (636)— 
Add: Other eliminations— — — — — — 
Less: Vrio (A4)(82)(89)(96)(38)(305)— 
Add: WarnerMedia sales to Vrio (A5)— — — — — — 
Less: Reclassification of allocations for separated businesses(15)(17)(14)(9)(55)— 
Add: DTV-related retained costs(350)(350)(117)— (817)— 
Adjusted EBITDA excluding Video $12,097 $11,779 $12,392 $11,234 $47,502 $11,638 
Adjusted EBITDA Growth Rate Y/Y-14.0 %
Adjusted EBITDA excluding Video Growth Rate Y/Y-3.8 %
Adjusted EBITDA Margin30.8 %30.7 %32.6 %27.5 %30.4 %30.5 %
Adjusted EBITDA Margin excluding Video 32.3 %31.2 %33.2 %27.7 %31.0 %30.5 %


1 After the transaction, AT&T expects to retain incurred operations and support costs in the range of ~$500M per quarter and depreciation costs for network infrastructure that provides both U-verse video and broadband services of ~$150M per quarter, of which approximately 50% will be received from DIRECTV through transition service agreements and commercial arrangements.
NOTES
(A) Notes to Adjustments
(A1) Video business results as reported in AT&T's consolidated financial results; quarters ended 2021 exclude retained depreciation on assets supporting U-verse products
(A2) Intercompany transactions between WarnerMedia and Video that are external following the close of the transaction
(A3) DIRECTV's advertising inventory sold by WarnerMedia (Xandr business) pursuant to commercial agreement, with WarnerMedia recording all the advertising revenues and an expense for DIRECTV's 70% revenue share
(A4) Vrio business results as reported in AT&T's consolidated financial results
(A5) Intercompany transactions between WarnerMedia and Vrio that are external following the close of the transaction
(B1) Non-GAAP Adjustments2:
3/31/216/30/219/30/2112/31/2120213/31/22
Merger Costs$37 $— $130 $132 $299 $364 
Employee separation costs and benefit-related (gain) loss24 (71)(3)(20)(70)94 
Impairments— 4,555 161 188 4,904 — 
Gain (loss) on spectrum transaction— — — — — — 
Adjustments to Operations and Support Expenses/ EBITDA61 4,484 288 300 5,133 458 
Amortization of intangibles1,131 1,069 1,012 1,021 4,233 971 
Impairments— — — — — — 
Adjustments to Operating Income$1,192 $5,553 $1,300 $1,321 $9,366 $1,429 
2 As reported in exhibit 99.3 in AT&T's Form 8-K filed April 21, 2002 and exhibit 99.1 to AT&T's Form 8-K filed April 15, 2022.


Standalone AT&T Adjusted Consolidated Financial Information
Supplemental Unaudited Quarterly Comparative Financial Information
Dollars in millions
Unaudited
Operating Revenues3/31/206/30/209/30/2012/31/2020203/31/216/30/219/30/2112/31/2120213/31/22
Reported AT&T Operating Revenues$42,779 $40,950 $42,340 $45,691 $171,760 $43,939 $44,045 $39,922 $40,958 $168,864 $38,105 
[A]Less: WarnerMedia (7,765)(6,728)(7,395)(8,554)(30,442)(8,526)(8,791)(8,442)(9,873)(35,632)(8,741)
[B]Less: Vrio (887)(752)(753)(762)(3,154)(743)(749)(756)(359)(2,607)— 
[C]Less: Securitization - Revolver (WarnerMedia)(14)(23)(21)(22)(80)(31)(35)(41)(29)(136)(29)
[D]Add: Other items (conveyed) retained12 9 13 18 52 11 16 14 15 56 17 
[K]Less: Intercompany eliminations 1,232 1,070 1,223 1,388 4,913 1,228 1,254 628 383 3,493 361 
Revenues from Continuing Operations35,357 34,526 35,407 37,759 143,049 35,878 35,740 31,325 31,095 134,038 29,713 
[E]Less: Video (7,407)(7,021)(7,014)(7,168)(28,610)(6,725)(6,639)(2,149)— (15,513)— 
[F]Less: Other dispositions (Held-for-sale)(369)(369)(420)(256)(1,414)(231)(158)(64)— (453)— 
[K]Less: Intercompany eliminations 64 55 65 83 267 62 57 17 — 136 — 
Standalone AT&T Operating Revenues$27,645 $27,191 $28,038 $30,418 $113,292 $28,984 $29,000 $29,129 $31,095 $118,208 $29,713 
Reported Revenue Growth Rate Y/Y2.7 %7.6 %(5.7)%(10.4)%(1.7)%(13.3)%
Revenue from Continuing Operations Growth Rate Y/Y1.5 %3.5 %(11.5)%(17.6)%(6.3)%(17.2)%
Standalone AT&T Revenue Growth Rate Y/Y4.8 %6.7 %3.9 %2.2 %4.3 %2.5 %

1

Operations and Support Expenses3/31/206/30/209/30/2012/31/2020203/31/216/30/219/30/2112/31/2120213/31/22
Reported AT&T Operations and
   Support Expenses		$28,071 $30,133 $29,178 $49,457 $136,839 $30,469 $35,015 $27,194 $29,977 $122,655 $26,925 
[A]Less: WarnerMedia (5,605)(4,656)(5,483)(5,835)(21,579)(6,403)(6,934)(6,271)(8,129)(27,737)(7,295)
[B]Less: Vrio (783)(661)(675)(681)(2,800)(661)(660)(660)(321)(2,302)— 
[L]Less: Merger & Significant items related to WarnerMedia and Vrio(242)(2,440)(183)(1,082)(3,947)(59)(4,555)(179)(215)(5,008)(267)
[D]Add: Other items (conveyed) retained57 67 55 75 254 41 42 48 40 171 39 
[C]Less: WarnerMedia Film amortization
   recharacterization and receivable
   securitization		13 54 (11)(16)40 (49)(52)(28)(33)(162)(51)
[K]Less: Intercompany eliminations 858 814 853 823 3,348 879 882 529 383 2,673 361 
Operations and Support Expenses
   from Continuing Operations		22,369 23,311 23,734 42,741 112,155 24,217 23,738 20,633 21,702 90,290 19,712 
[D]Less: Video(6,020)(5,809)(5,887)(6,458)(24,174)(5,660)(5,275)(1,731)— (12,666)— 
[E]Less: Other dispositions (Held-for-sale)(272)(268)(310)(190)(1,040)(194)(115)(47)— (356)— 
[L]Less: Merger & Significant items related
   to DTV and other dispositions		(32)(98)(24)(15,529)(15,683)(13)(22)37 11 13 — 
[K]Less: Intercompany eliminations 64 55 65 83 267 62 57 17 — 136 — 
[M]Less: Reclassification of allocations for
   separated businesses		(76)(86)(76)(84)(322)(15)(19)(16)4 (46)— 
[G]Add: DTV-related retained costs350 350 350 350 1,400 350 350 117 — 817 — 
Standalone AT&T Operations and
   Support Expenses		16,535 17,627 18,004 21,081 73,247 18,777 18,752 19,042 21,709 78,280 19,712 
[L]Standalone AT&T Merger & Significant
   items		750 (757)56 (43)6 11 93 (146)(96)(138)(191)
Standalone AT&T Adjusted Operations
   and Support Expenses		$17,285 $16,870 $18,060 $21,038 $73,253 $18,788 $18,845 $18,896 $21,613 $78,142 $19,521 
Reported Operations and Support Expense Growth Rate Y/Y8.5 %16.2 %(6.8)%(39.4)%(10.4)%(11.6)%
Operations and Support Expenses from Continuing Operations Growth Rate Y/Y8.3 %1.8 %(13.1)%(49.2)%(19.5)%(18.6)%
Standalone AT&T Operations and Support Expense Growth Rate Y/Y13.6 %6.4 %5.8 %3.0 %6.9 %5.0 %
Standalone AT&T Adjusted Operations and Support Expense Growth Rate Y/Y8.7 %11.7 %4.6 %2.7 %6.7 %3.9 %


2

Depreciation and Amortization Expense3/31/206/30/209/30/2012/31/2020203/31/216/30/219/30/2112/31/2120213/31/22
Reported AT&T Depreciation and
   Amortization Expense		$7,222 $7,285 $7,030 $6,979 $28,516 $5,809 $5,761 $5,619 $5,673 $22,862 $5,539 
[A]Less: WarnerMedia (161)(164)(169)(177)(671)(163)(165)(163)(165)(656)(127)
[B]Less: Vrio (147)(127)(126)(120)(520)(117)(114)— — (231)— 
[D]Add: Other items (conveyed) retained3 3 3 3 12 3 3 3 3 12 3 
[C]Less: WarnerMedia Film amortization
  recharacterization 		(69)(77)(47)(38)(231)(20)(16)(18)(19)(73)(9)
[L]Less: Merger & Significant items related
   to WarnerMedia and Vrio		(1,143)(1,267)(1,082)(1,093)(4,585)(1,045)(1,040)(1,021)(1,014)(4,120)(944)
[K]Less: Intercompany eliminations — 1 — — 1 — — — — — — 
Depreciation and Amortization Expense
   from Continuing Operations		5,705 5,654 5,609 5,554 22,522 4,467 4,429 4,420 4,478 17,794 4,462 
[E]Less: Video(591)(593)(557)(521)(2,262)(164)(148)(44)— (356)— 
[F]Less: Other dispositions (Held-for-sale)(4)(4)(4)(3)(15)— — — — — — 
[L]Less: Merger & Significant items related
   to DTV and other dispositions		(879)(846)(813)(780)(3,318)— — — — — — 
[G]Add: DTV-related retained costs180 180 180 180 720 180 180 60 — 420 — 
Standalone AT&T Depreciation and
   Amortization Expense		4,411 4,391 4,415 4,430 17,647 4,483 4,461 4,436 4,478 17,858 4,462 
[L]Standalone AT&T Merger & Significant
   items		(34)(32)(26)(31)(123)(86)(29)9 (7)(113)(27)
Standalone AT&T Adjusted Depreciation
   and Amortization Expense		$4,377 $4,359 $4,389 $4,399 $17,524 $4,397 $4,432 $4,445 $4,471 $17,745 $4,435 
Reported Depreciation and Amortization Expense Growth Rate Y/Y(19.6)%(20.9)%(20.1)%(18.7)%(19.8)%(4.6)%
Depreciation and Amortization Expense from Continuing Operations Growth Rate Y/Y(21.7)%(21.7)%(21.2)%(19.4)%(21.0)%(0.1)%
Standalone AT&T Depreciation and Amortization Expense Growth Rate Y/Y1.6 %1.6 %0.5 %1.1 %1.2 %(0.5)%
Standalone AT&T Adjusted Depreciation and Amortization Expense Growth Rate Y/Y0.5 %1.7 %1.3 %1.6 %1.3 %0.9 %


3

Operating Income3/31/206/30/209/30/2012/31/2020203/31/216/30/219/30/2112/31/2120213/31/22
Reported AT&T Operating Income$7,486 $3,532 $6,132 $(10,745)$6,405 $7,661 $3,269 $7,109 $5,308 $23,347 $5,641 
Less: WarnerMedia (1,999)(1,908)(1,743)(2,542)(8,192)(1,960)(1,692)(2,008)(1,579)(7,239)(1,319)
Less: Vrio 43 36 48 39 166 35 25 (96)(38)(74)— 
Less: Merger & Significant items related
   to WarnerMedia and Vrio		1,385 3,707 1,265 2,175 8,532 1,104 5,595 1,200 1,229 9,128 1,211 
Add: Other items conveyed (retained)(48)(61)(45)(60)(214)(33)(29)(37)(28)(127)(25)
Less: WarnerMedia Film amortization
   recharacterization and receivable
   securitization		42 — 37 32 111 38 33 5 23 99 31 
Less: Intercompany eliminations 374 255 370 565 1,564 349 372 99 — 820 — 
Operating Income from
   Continuing Operations		7,283 5,561 6,064 (10,536)8,372 7,194 7,573 6,272 4,915 25,954 5,539 
Less: Video (796)(619)(570)(189)(2,174)(901)(1,216)(374)— (2,491)— 
Less: Other dispositions (Held-for-sale)(93)(97)(106)(63)(359)(37)(43)(17)— (97)— 
Less: Merger & Significant items related
   to DTV and other dispositions		911 944 837 16,309 19,001 13 22 (37)(11)(13)— 
Less: Intercompany eliminations — — — — — — — — — — — 
Less: Reclassification of allocations for
   separated businesses		(76)(86)(76)(84)(322)(15)(19)(16)4 (46)— 
Add: Retained costs(530)(530)(530)(530)(2,120)(530)(530)(177)— (1,237)— 
Standalone AT&T Operating Income$6,699 $5,173 $5,619 $4,907 $22,398 $5,724 $5,787 $5,651 $4,908 $22,070 $5,539 
Standalone AT&T Merger & Significant
   items		(716)789 (30)74 117 75 (64)137 103 251 218 
Standalone AT&T Adjusted
   Operating Income 		$5,983 $5,962 $5,589 $4,981 $22,515 $5,799 $5,723 $5,788 $5,011 $22,321 $5,757 
Reported Operating Income Growth Rate Y/Y2.3 %(7.4)%15.9 %149.4 %264.5 %(26.4)%
Operating Income from Continuing Operations
   Growth Rate Y/Y		(1.2)%36.2 %3.4 %146.6 %210.0 %(23.0)%
Standalone AT&T Operating Income Growth
   Rate Y/Y		(14.6)%11.9 %0.6 %— %(1.5)%(3.2)%
Standalone AT&T Adjusted Operating Income
   Growth Rate Y/Y		(3.1)%(4.0)%3.6 %0.6 %(0.9)%(0.7)%
Reported Operating Income Margin17.5 %8.6 %14.5 %(23.5)%3.7 %17.4 %7.4 %17.8 %13.0 %13.8 %14.8 %
Operating Income Margin from Continuing
   Operations		20.6 %16.1 %17.1 %(27.9)%5.9 %20.1 %21.2 %20.0 %15.8 %19.4 %18.6 %
Standalone AT&T Operating Income Margin24.2 %19.0 %20.0 %16.1 %19.8 %19.7 %20.0 %19.4 %15.8 %18.7 %18.6 %
Standalone AT&T Adjusted Operating
   Income Margin		21.6 %21.9 %19.9 %16.4 %19.9 %20.0 %19.7 %19.9 %16.1 %18.9 %19.4 %
4


Other Income (Expense)3/31/206/30/209/30/2012/31/2020203/31/216/30/219/30/2112/31/2120213/31/22
Interest expense$(2,018)$(2,041)$(1,972)$(1,894)$(7,925)$(1,870)$(1,684)$(1,667)$(1,663)$(6,884)$(1,722)
Equity in net income (loss) of affiliates(6)(10)5 106 95 52 41 91 447 631 501 
Other income (expense) - net803 1,017 (231)(3,020)(1,431)4,221 999 2,279 2,354 9,853 2,187 
Reported AT&T Other Income (Expense)(1,221)(1,034)(2,198)(4,808)(9,261)2,403 (644)703 1,138 3,600 966 
Less: Interest expense on debt conveyed54 52 49 43 198 46 45 40 31 162 32 
Less: Equity method investments
   conveyed		(25)1 (7)20 (11)(68)(56)74 1 (49)13 
Less: Other income (expense) - net
   related to WarnerMedia and Vrio		(24)(42)(41)220 113 (22)(215)119 (179)(297)(54)
[L]Less: Merger & Significant items related
   to WarnerMedia and Vrio		24 158 37 2 221 — 135 (703)124 (444)78 
Other Income (Expense) from
   Continuing Operations		(1,192)(865)(2,160)(4,523)(8,740)2,359 (735)233 1,115 2,972 1,035 
[I]Less: Estimated interest expense impact
   of debt redemptions		— — — — — 371 371 371 371 1,484 371 
[H]Add: Estimated equity in net income from
   DIRECTV investment		971 848 789 497 3,105 746 955 293 — 1,994 — 
[L]Less: Merger & Significant items related
   to DTV and other dispositions		5 — — 82 87 (64)— (2)67 1 — 
Standalone AT&T Other Income
   (Expense)		$(216)$(17)$(1,371)$(3,944)$(5,548)$3,412 $591 $895 $1,553 $6,451 $1,406 
[L]Standalone AT&T Merger & Significant
   items		288 (26)1,225 3,862 5,349 (2,899)(12)25 (854)(3,740)(546)
Standalone AT&T Adjusted Other Income
    (Expense)		$72 $(43)$(146)$(82)$(199)$513 $579 $920 $699 $2,711 $860 


5

Income From Continuing Operations3/31/206/30/209/30/2012/31/2020203/31/216/30/219/30/2112/31/2120213/31/22
Revenues$35,357 $34,526 $35,407 $37,759 $143,049 $35,878 $35,740 $31,325 $31,095 $134,038 $29,713 
Operations and Support Expenses 22,369 23,311 23,734 42,741 112,155 24,217 23,738 20,633 21,702 90,290 19,712 
Depreciation and Amortization Expense 5,705 5,654 5,609 5,554 22,522 4,467 4,429 4,420 4,478 17,794 4,462 
Operating Income 7,283 5,561 6,064 (10,536)8,372 7,194 7,573 6,272 4,915 25,954 5,539 
Other Income (Expense) (1,192)(865)(2,160)(4,523)(8,740)2,359 (735)233 1,115 2,972 1,035 
Income (Loss) Before Income Taxes6,091 4,696 3,904 (15,059)(368)9,553 6,838 6,505 6,030 28,926 6,574 
Income tax expense1,280 1,026 741 (1,900)1,147 2,028 1,047 1,335 906 5,316 1,425 
Income from Continuing Operations4,811 3,670 3,163 (13,159)(1,515)7,525 5,791 5,170 5,124 23,610 5,149 
Less: Pro Forma adjustments to
   Operating Income		(584)(388)(445)15,443 14,026 (1,470)(1,786)(621)(7)(3,884)— 
Less: Pro forma adjustments Other
   Income (Expense)		976 848 789 579 3,192 1,053 1,326 662 438 3,479 371 
[J]Less: Estimated tax on pro forma
   adjustments		92 113 64 1,773 2,042 (62)(101)41 17 (105)78 
Standalone AT&T Net Income5,111 4,017 3,443 1,090 13,661 7,170 5,432 5,170 5,538 23,310 5,442 
Standalone AT&T Merger & Significant
   items		(341)596 966 2,930 4,151 (2,251)(72)20 (802)(3,105)(210)
[M]Add: Adjustment of estimated interest
   expense impact of debt redemptions		— — — — — (297)(297)(297)(297)(1,188)(293)
Standalone AT&T Adjusted Net Income4,770 4,613 4,409 4,020 17,812 4,622 5,063 4,893 4,439 19,017 4,939 
Less: Income from Continuing
   Operations attributable to
   Noncontrolling Interest		(353)(282)(352)(368)(1,355)(392)(304)(355)(347)(1,398)(354)
Less: Preferred Stock Dividends(32)(52)(54)(55)(193)(50)(56)(50)(51)(207)(48)
Less: Merger & Significant items related
   to WarnerMedia and Vrio		— (105)— — (105)— (81)— — (81)— 
Adjusted Income from Continuing
   Operations Attributable to AT&T		$4,385 $4,174 $4,003 $3,597 $16,159 $4,180 $4,622 $4,488 $4,041 $17,331 $4,537 
Comparative Basis Adjusted Diluted EPS$0.61 $0.58 $0.56 $0.50 $2.25 $0.58 $0.64 $0.62 $0.56 $2.41 $0.63 


6

EBITDA1
3/31/206/30/209/30/2012/31/2020203/31/216/30/219/30/2112/31/2120213/31/22
Reported AT&T Net Income$4,963 $1,563 $3,168 $(13,515)$(3,821)$7,942 $1,874 $6,273 $5,390 $21,479 $5,164 
Additions:
Income Tax Expense (Benefit)1,302 935 766 (2,038)965 2,122 751 1,539 1,056 5,468 1,443 
Interest Expense2,018 2,041 1,972 1,894 7,925 1,870 1,684 1,667 1,663 6,884 1,722 
Equity in Net Income (Loss) of Affiliates6 10 (5)(106)(95)(52)(41)(91)(447)(631)(501)
Other (Income) Expense - net(803)(1,017)231 3,020 1,431 (4,221)(999)(2,279)(2,354)(9,853)(2,187)
Depreciation and amortization7,222 7,285 7,030 6,979 28,516 5,809 5,761 5,619 5,673 22,862 5,539 
EBITDA14,708 10,817 13,162 (3,766)34,921 13,470 9,030 12,728 10,981 46,209 11,180 
[L]Adjustments(476)3,295 151 16,654 19,625 61 4,484 288 300 5,133 458 
Adjusted EBITDA14,232 14,112 13,313 12,888 54,545 13,531 13,514 13,016 11,281 51,342 11,638 
Less: WarnerMedia(2,160)(2,072)(1,912)(2,719)(8,863)(2,123)(1,857)(2,171)(1,744)(7,895)(1,446)
Less: Vrio (104)(91)(78)(81)(354)(82)(89)(96)(38)(305)— 
Add: Other items conveyed (retained)(45)(58)(42)(57)(202)(30)(26)(34)(25)(115)(22)
Less: WarnerMedia Film amortization
   recharacterization and receivable
   securitization		(27)(77)(10)(6)(120)18 17 (13)4 26 22 
Less: Other dispositions (Held-for-sale)(97)(101)(110)(66)(374)(37)(43)(17)— (97)— 
Less: Video(1,387)(1,212)(1,127)(710)(4,436)(1,065)(1,364)(418)— (2,847)— 
Less: Intercompany eliminations374 256 370 565 1,565 349 372 99 — 820 — 
Less: Reclassification of allocations for
   separated businesses		(76)(86)(76)(84)(322)(15)(19)(16)4 (46)— 
Add: Retained costs(350)(350)(350)(350)(1,400)(350)(350)(117)— (817)— 
Standalone AT&T Adjusted EBITDA$10,360 $10,321 $9,978 $9,380 $40,039 $10,196 $10,155 $10,233 $9,482 $40,066 $10,192 
Adjusted EBITDA Growth Rate Y/Y(4.9)%(4.2)%(2.2)%(12.5)%(5.9)%(14.0)%
Standalone AT&T Adjusted EBITDA Growth
   Rate Y/Y		(1.6)%(1.6)%2..61.1 %0.1 %— %
Standalone AT&T EBITDA Margin33.3 %34.5 %31.4 %28.2 %31.8 %30.8 %30.7 %32.6 %27.5 %30.4 %30.5 %
Standalone AT&T Adjusted EBITDA Margin37.5 %38.0 %35.6 %30.8 %35.3 %35.2 %35.0 %35.1 %30.5 %33.9 %34.3 %
1 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.
7

NOTES

[A]WarnerMedia segment results as reported in AT&T's consolidated financial statements, including Otter, Xandr and Playdemic.
[B]Vrio business unit results within the Latin America segment as reported in AT&T's consolidated statements. AT&T retained the investment in Sky Mexico.
[C]Adjustments for impacts from receivable securitizations related to WarnerMedia and the recharacterization of programming intangible assets amortization for released programming acquired in the Time Warner acquisition, which we continued to report with the WarnerMedia segment operating expenses.
[D]Adjustments for AT&T's retention of the addressable TV advertising business, Invidi, and historically allocated general corporate overhead costs that do not meet the requirements for presentation in discontinued operations.
[E]Video business results as reported in AT&T's consolidated financial results; quarters ended 2021 include retained depreciation on assets supporting U-verse products.
[F]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.
[G]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.
[H]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.
[I]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%. As of the date of the filing to which these unaudited pro forma financial statements are attached, the Company has committed to approximately $10.1 billion of term loan repayments with a weighted-average rate of 1.1% and make-whole or other redemptions totaling $9.3 billion with a weighted-average rate of 3.5%. This adjustment is required for forma financial information prepared in accordance with Article 11 of Regulation S-X.
[J]Estimated tax impact of pro forma and other adjustments at AT&T's adjusted effective tax rate of 20.0% for the year ended December 31, 2021, and 19.6% for the year ended December 31, 2020.
[K]Under GAAP, AT&T removed transactions involving dealing between segments, including channel distribution of WarnerMedia content, and advertising arrangements.
8

3/31/206/30/209/30/2012/31/2020203/31/216/30/219/30/2112/31/2120213/31/21
Intercompany Eliminations as reported by AT&T:
DTC (HBO Max) sales to Mobility &
   Consumer Wireline		$— $(61)$(190)$(217)$(468)$(235)$(253)$(261)$(302)$(1,051)$(310)
WarnerMedia video distribution sales
   to DIRECTV and Vrio		(794)(704)(600)(544)(2,642)(585)(570)(226)(31)(1,412)— 
WarnerMedia sales of DIRECTV
   advertising inventory		(413)(294)(408)(603)(1,718)(388)(410)(111)— (909)— 
Other(89)(66)(90)(107)(352)(82)(78)(47)(50)(257)(51)
Revenue Eliminations(1,296)(1,125)(1,288)(1,471)(5,180)(1,290)(1,311)(645)(383)(3,629)(361)
DTC (HBO Max) sales to Mobility &
   Consumer Wireline		— (61)(190)(217)(468)(235)(253)(261)(302)(1,051)(310)
WarnerMedia video distribution sales
   to DIRECTV and Vrio		(794)(704)(600)(544)(2,642)(585)(570)(226)(31)(1,412)— 
WarnerMedia sales of DIRECTV
   advertising inventory		(39)(38)(38)(38)(153)(39)(38)(12)— (89)— 
Other(89)(66)(90)(107)(352)(82)(78)(47)(50)(257)(51)
Operations and Support Eliminations(922)(869)(918)(906)(3,615)(941)(939)(546)(383)(2,809)(361)
Operating Income & EBITDA$(374)$(256)$(370)$(565)$(1,565)$(349)$(372)$(99)$— $(820)$— 

9

[L] Non-GAAP Adjustments1:
3/31/206/30/209/30/2012/31/2020203/31/216/30/219/30/2112/31/2120213/31/21
Merger costs$182 $211 $38 $37 $468 $37 $— $130 $132 $299 $364 
Employee separation costs and
   benefit-related (gain) loss		119 765 40 252 1,176 24 (71)(3)(20)(70)94 
Asset impairments and abandonments123 2,319 73 16,365 18,880 — 4,555 161 188 4,904 — 
Gain on spectrum transaction(900)— — — (900)— — — — — — 
Adjustments to Operations and Support
    Expenses/ EBITDA		(476)3,295 151 16,654 19,624 61 4,484 288 300 5,133 458 
Amortization of intangible assets2,056 2,145 1,921 1,890 8,012 1,131 1,069 1,012 1,021 4,233 971 
Impairments— — — 14 14 — — — — — — 
Adjustments to Operating Income1,580 5,440 2,072 18,558 27,650 1,192 5,553 1,300 1,321 9,366 1,429 
Other income (expense) net317 132 1,262 3,971 5,682 (2,963)123 (680)(645)(4,165)(468)
Tax impact of adjustments and discrete
    items		(394)(749)(648)(3,227)(5,018)372 (962)(196)(197)(983)(171)
Noncontrolling interest— (105)— — (105)— (81)— — (81)— 
Adjustments to Net Income$1,503 $4,718 $2,686 $19,302 $28,209 $(1,399)$4,633 $424 $479 $4,137 $790 

[M]Adjustment to reflect AT&T's first-quarter 2022 reclassification of certain administrative costs born by AT&T where the business units did not influence decision making. These costs are not expected to continue in standalone AT&T.
10

Standalone AT&T
Reconciliation of Free Cash Flow
Dollars in billions
Unaudited
First Quarter
Cash From Operations20222021
Reported AT&T Cash from Operations$5.7 $9.9 
Less: WarnerMedia & Vrio2.0 (0.5)
Pro Forma Cash from Operations$7.7 $9.4 
Capital Expenditures20222021
Reported AT&T Capital Expenditures$(4.7)$(4.0)
Less: WarnerMedia & Vrio0.2 0.1 
Pro Forma Capital Expenditures$(4.5)$(3.9)
Free Cash Flow1
20222021
Standalone AT&T Cash from Operations$7.7 $9.4 
Standalone AT&T Capital Expenditures(4.5)(3.9)
Distributions from DIRECTV classified as investing activities1.3 — 
Vendor Financing(1.6)(1.7)
Standalone AT&T Free Cash Flow$2.9 $3.8 
1 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).