UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-8610

AT&T INC.

Incorporated under the laws of the State of Delaware

I.R.S. Employer Identification Number 43-1301883

208 S. Akard St., Dallas, Texas 75202

Telephone Number: (210) 821-4105

Securities registered pursuant to Section 12(b) of the Act

		Name of each exchange
Title of each class	Trading Symbol(s)	on which registered
Common Shares (Par Value $1.00 Per Share)	T	New York Stock Exchange
Depositary Shares, each representing a 1/1000th interest in a share of 5.000% Perpetual Preferred Stock, Series A	T PRA	New York Stock Exchange
Depositary Shares, each representing a 1/1000th interest in a share of 4.750% Perpetual Preferred Stock, Series C	T PRC	New York Stock Exchange
AT&T Inc. 1.875% Global Notes due December 4, 2020	T 20	New York Stock Exchange
AT&T Inc. 2.650% Global Notes due December 17, 2021	T 21B	New York Stock Exchange
AT&T Inc. 1.450% Global Notes due June 1, 2022	T 22B	New York Stock Exchange
AT&T Inc. 2.500% Global Notes due March 15, 2023	T 23	New York Stock Exchange
AT&T Inc. 2.750% Global Notes due May 19, 2023	T 23C	New York Stock Exchange
AT&T Inc. Floating Rate Global Notes due September 5, 2023	T 23D	New York Stock Exchange
AT&T Inc. 1.050% Global Notes due September 5, 2023	T 23E	New York Stock Exchange
AT&T Inc. 1.300% Global Notes due September 5, 2023	T 23A	New York Stock Exchange
AT&T Inc. 1.950% Global Notes due September 15, 2023	T 23F	New York Stock Exchange
AT&T Inc. 2.400% Global Notes due March 15, 2024	T 24A	New York Stock Exchange
AT&T Inc. 3.500% Global Notes due December 17, 2025	T 25	New York Stock Exchange
AT&T Inc. 0.250% Global Notes due March 4, 2026	T 26E	New York Stock Exchange
AT&T Inc. 1.800% Global Notes due September 5, 2026	T 26D	New York Stock Exchange

		Name of each exchange
Title of each class	Trading Symbol(s)	on which registered
AT&T Inc. 2.900% Global Notes due December 4, 2026	T 26A	New York Stock Exchange
AT&T Inc. 1.600% Global Notes due May 19, 2028	T 28C	New York Stock Exchange
AT&T Inc. 2.350% Global Notes due September 5, 2029	T 29D	New York Stock Exchange
AT&T Inc. 4.375% Global Notes due September 14, 2029	T 29B	New York Stock Exchange
AT&T Inc. 2.600% Global Notes due December 17, 2029	T 29A	New York Stock Exchange
AT&T Inc. 0.800% Global Notes due March 4, 2030	T 30B	New York Stock Exchange
AT&T Inc. 2.050% Global Notes due May 19, 2032	T 32A	New York Stock Exchange
AT&T Inc. 3.550% Global Notes due December 17, 2032	T 32	New York Stock Exchange
AT&T Inc. 5.200% Global Notes due November 18, 2033	T 33	New York Stock Exchange
AT&T Inc. 3.375% Global Notes due March 15, 2034	T 34	New York Stock Exchange
AT&T Inc. 2.450% Global Notes due March 15, 2035	T 35	New York Stock Exchange
AT&T Inc. 3.150% Global Notes due September 4, 2036	T 36A	New York Stock Exchange
AT&T Inc. 2.600% Global Notes due May 19, 2038	T 38C	New York Stock Exchange
AT&T Inc. 1.800% Global Notes due September 14, 2039	T 39B	New York Stock Exchange
AT&T Inc. 7.000% Global Notes due April 30, 2040	T 40	New York Stock Exchange
AT&T Inc. 4.250% Global Notes due June 1, 2043	T 43	New York Stock Exchange
AT&T Inc. 4.875% Global Notes due June 1, 2044	T 44	New York Stock Exchange
AT&T Inc. 4.000% Global Notes due June 1, 2049	T 49A	New York Stock Exchange
AT&T Inc. 4.250% Global Notes due March 1, 2050	T 50	New York Stock Exchange
AT&T Inc. 3.750% Global Notes due September 1, 2050	T 50A	New York Stock Exchange
AT&T Inc. 5.350% Global Notes due November 1, 2066	TBB	New York Stock Exchange
AT&T Inc. 5.625% Global Notes due August 1, 2067	TBC	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 of 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See definition of “accelerated filer,” “large accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	☒	Accelerated Filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by checkmark 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.

Yes ☐ No ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

At October 31, 2020, there were 7,126 million common shares outstanding.

AT&T INC.

SEPTEMBER 30, 2020

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

AT&T INC.
CONSOLIDATED STATEMENTS OF INCOME
Dollars in millions except per share amounts
(Unaudited)
	Three months ended				Nine months ended
	September 30,				September 30,
	2020		2019		2020		2019
Operating Revenues
Service	$	37,782	$	40,317	$	113,716	$	122,024
Equipment	4,558		4,271		12,353		12,348
Total operating revenues	42,340		44,588		126,069		134,372
Operating Expenses
Cost of revenues
Equipment	4,552		4,484		12,622		13,047
Broadcast, programming and operations	6,912		7,066		19,555		22,448
Other cost of revenues (exclusive of depreciation and amortization shown separately below)	8,375		8,604		24,833		25,910
Selling, general and administrative	9,266		9,584		27,857		29,077
Asset impairments and abandonments	73		—		2,515		—
Depreciation and amortization	7,030		6,949		21,537		21,256
Total operating expenses	36,208		36,687		108,919		111,738
Operating Income	6,132		7,901		17,150		22,634
Other Income (Expense)
Interest expense	(1,972)		(2,083)		(6,031)		(6,373)
Equity in net income (loss) of affiliates	5		3		(11)		36
Other income (expense) — net	(231)		(935)		1,589		(967)
Total other income (expense)	(2,198)		(3,015)		(4,453)		(7,304)
Income Before Income Taxes	3,934		4,886		12,697		15,330
Income tax expense	766		937		3,003		3,059
Net Income	3,168		3,949		9,694		12,271
Less: Net Income Attributable to Noncontrolling Interest	(352)		(249)		(987)		(762)
Net Income Attributable to AT&T	$	2,816	$	3,700	$	8,707	$	11,509
Less: Preferred Stock Dividends	(54)		—		(138)		—
Net Income Attributable to Common Stock	$	2,762	$	3,700	$	8,569	$	11,509
Basic Earnings Per Share Attributable to Common Stock	$	0.39	$	0.50	$	1.19	$	1.57
Diluted Earnings Per Share Attributable to Common Stock	$	0.39	$	0.50	$	1.19	$	1.57
Weighted Average Number of Common Shares Outstanding — Basic (in millions)	7,147		7,327		7,160		7,321
Weighted Average Number of Common Shares Outstanding — with Dilution (in millions)	7,173		7,356		7,186		7,350

See Notes to Consolidated Financial Statements.

3

AT&T INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Dollars in millions
(Unaudited)
	Three months ended				Nine months ended
	September 30,				September 30,
	2020		2019		2020		2019
Net income	$	3,168	$	3,949	$	9,694	$	12,271
Other comprehensive income (loss), net of tax:
Foreign currency:
Translation adjustment (includes $(2), $(17), $(61) and $(15) attributable to noncontrolling interest), net of taxes of $47, $(69), $(150) and $(21)	90		(342)		(1,459)		(181)
Securities:
Net unrealized gains (losses), net of taxes of $1, $7, $28 and $22	1		25		81		67
Derivative instruments:
Net unrealized gains (losses), net of taxes of $229, $(168), $(574) and $(299)	860		(516)		(2,166)		(1,006)
Reclassification adjustment included in net income, net of taxes of $7, $2, $11 and $7	27		7		44		24
Defined benefit postretirement plans:
Amortization of net prior service credit included in net income, net of taxes of $(150), $(112), $(451) and $(332)	(460)		(343)		(1,382)		(1,031)
Other comprehensive income (loss)	518		(1,169)		(4,882)		(2,127)
Total comprehensive income	3,686		2,780		4,812		10,144
Less: Total comprehensive income attributable to noncontrolling interest	(350)		(232)		(926)		(747)
Total Comprehensive Income Attributable to AT&T	$	3,336	$	2,548	$	3,886	$	9,397

See Notes to Consolidated Financial Statements.

4

AT&T INC.
CONSOLIDATED BALANCE SHEETS
Dollars in millions except per share amounts
	September 30, 2020		December 31, 2019
Assets	(Unaudited)
Current Assets
Cash and cash equivalents	$	9,758	$	12,130
Accounts receivable — net of related allowances for credit loss of $1,386 and $1,235	19,379		22,636
Prepaid expenses	1,420		1,631
Other current assets	19,414		18,364
Total current assets	49,971		54,761
Noncurrent Inventories and Theatrical Film and Television Production Costs	13,948		12,434
Property, plant and equipment	333,797		333,538
Less: accumulated depreciation and amortization	(205,075)		(203,410)
Property, Plant and Equipment — Net	128,722		130,128
Goodwill	143,688		146,241
Licenses — Net	98,397		97,907
Trademarks and Trade Names — Net	23,575		23,567
Distribution Networks — Net	14,249		15,345
Other Intangible Assets — Net	17,523		20,798
Investments in and Advances to Equity Affiliates	2,325		3,695
Operating Lease Right-Of-Use Assets	24,546		24,039
Other Assets	21,609		22,754
Total Assets	$	538,553	$	551,669
Liabilities and Stockholders’ Equity
Current Liabilities
Debt maturing within one year	$	5,898	$	11,838
Accounts payable and accrued liabilities	42,728		45,956
Advanced billings and customer deposits	5,862		6,124
Accrued taxes	1,336		1,212
Dividends payable	3,741		3,781
Total current liabilities	59,565		68,911
Long-Term Debt	152,980		151,309
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes	60,448		59,502
Postemployment benefit obligation	17,928		18,788
Operating lease liabilities	22,056		21,804
Other noncurrent liabilities	30,520		29,421
Total deferred credits and other noncurrent liabilities	130,952		129,515
Stockholders’ Equity
Preferred stock ($1 par value, 10,000,000 authorized):
Series A (48,000 issued and outstanding at September 30, 2020 and December 31, 2019)	—		—
Series B (20,000 issued and outstanding at September 30, 2020 and 0 issued and outstanding at December 31, 2019)	—		—
Series C (70,000 issued and outstanding at September 30, 2020 and 0 issued and outstanding at December 31, 2019)	—		—
Common stock ($1 par value, 14,000,000,000 authorized at September 30, 2020 and December 31, 2019: issued 7,620,748,598 at September 30, 2020 and December 31, 2019)	7,621		7,621
Additional paid-in capital	130,139		126,279
Retained earnings	55,094		57,936
Treasury stock (495,703,331 at September 30, 2020 and 366,193,458 at December 31, 2019,  at cost)	(17,950)		(13,085)
Accumulated other comprehensive income	649		5,470
Noncontrolling interest	19,503		17,713
Total stockholders’ equity	195,056		201,934
Total Liabilities and Stockholders’ Equity	$	538,553	$	551,669

See Notes to Consolidated Financial Statements.

5

AT&T INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Dollars in millions
(Unaudited)
	Nine months ended
	September 30,
	2020		2019
Operating Activities
Net income	$	9,694	$	12,271
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	21,537		21,256
Amortization of television and film costs	6,448		7,059
Undistributed earnings from investments in equity affiliates	108		81
Provision for uncollectible accounts	1,611		1,855
Deferred income tax expense	2,248		1,039
Net (gain) loss on investments, net of impairments	(689)		(1,014)
Pension and postretirement benefit expense (credit)	(2,245)		(1,297)
Actuarial (gain) loss on pension and postretirement benefits	63		4,048
Asset impairments and abandonments	2,515		—
Changes in operating assets and liabilities:
Receivables	2,321		2,503
Other current assets, inventories and theatrical film and television production costs	(7,836)		(9,337)
Accounts payable and other accrued liabilities	(4,905)		(936)
Equipment installment receivables and related sales	(148)		848
Deferred customer contract acquisition and fulfillment costs	453		(796)
Postretirement claims and contributions	(409)		(635)
Other - net	2,282		(