t-20220331

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 March 31, 2022


☐			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. 1.450% 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
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


		Name of each exchange
Title of each class	Trading Symbol(s)	on which registered
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 April 27, 2022, there were 7,159 million common shares outstanding.

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
	March 31,
		2022		2021
Operating Revenues
Service		$	32,392	$	38,504
Equipment		5,713		5,435
Total operating revenues		38,105		43,939

Operating Expenses
Cost of revenues
Equipment		6,038		5,556
Broadcast, programming and operations		4,313		7,538
Other cost of revenues (exclusive of depreciation and amortization shown separately below)		7,206		7,993
Selling, general and administrative		9,368		9,382

Depreciation and amortization		5,539		5,809
Total operating expenses		32,464		36,278
Operating Income		5,641		7,661
Other Income (Expense)
Interest expense		(1,722)		(1,870)
Equity in net income (loss) of affiliates		501		52
Other income (expense) — net		2,187		4,221
Total other income (expense)		966		2,403
Income Before Income Taxes		6,607		10,064
Income tax expense		1,443		2,122
Net Income		5,164		7,942
Less: Net Income Attributable to Noncontrolling Interest		(354)		(392)
Net Income Attributable to AT&T		$	4,810	$	7,550
Less: Preferred Stock Dividends		(48)		(50)
Net Income Attributable to Common Stock		$	4,762	$	7,500
Basic Earnings Per Share Attributable to Common Stock		$	0.66	$	1.04
Diluted Earnings Per Share Attributable to Common Stock		$	0.65	$	1.02
Weighted Average Number of Common Shares Outstanding — Basic (in millions)		7,184		7,161
Weighted Average Number of Common Shares Outstanding — with Dilution (in millions)		7,556		7,482

See Notes to Consolidated Financial Statements.


AT&T INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Dollars in millions
(Unaudited)
	Three months ended
	March 31,
		2022		2021
Net income		$	5,164	$	7,942
Other comprehensive income (loss), net of tax:
Foreign currency:
Translation adjustment (includes $0 and $(4) attributable to noncontrolling interest), net of taxes of $5 and $(37)		19		(109)
Securities:
Net unrealized gains (losses), net of taxes of $(23) and $(18)		(69)		(55)
Reclassification adjustment included in net income, net of taxes of $1 and $(1)		3		(2)
Derivative instruments:
Net unrealized gains (losses), net of taxes of $69 and $136		258		511
Reclassification adjustment included in net income, net of taxes of $4 and $6		15		24
Defined benefit postretirement plans:
Amortization of net prior service credit included in net income, net of taxes of $(152) and $(165)		(465)		(504)
Other comprehensive income (loss)		(239)		(135)
Total comprehensive income		4,925		7,807
Less: Total comprehensive income attributable to noncontrolling interest		(354)		(388)
Total Comprehensive Income Attributable to AT&T		$	4,571	$	7,419

See Notes to Consolidated Financial Statements.


AT&T INC.
CONSOLIDATED BALANCE SHEETS
Dollars in millions except per share amounts
	March 31,		December 31,
	2022		2021
Assets	(Unaudited)
Current Assets
Cash and cash equivalents	$	38,565	$	21,169
Accounts receivable – net of related allowances for credit loss of $788 and $771	17,218		17,571
Inventories	3,153		3,464
Prepaid and other current assets	17,920		17,793
Total current assets	76,856		59,997
Noncurrent Inventories and Theatrical Film and Television Production Costs	19,803		18,983
Property, plant and equipment	323,434		329,488
Less: accumulated depreciation and amortization	(196,275)		(203,584)
Property, Plant and Equipment – Net	127,159		125,904
Goodwill	133,247		133,223
Licenses – Net	114,107		113,830
Trademarks and Trade Names – Net	21,781		21,938
Distribution Networks – Net	11,486		11,942
Other Intangible Assets – Net	11,452		11,783
Investments in and Advances to Equity Affiliates	5,943		7,274
Operating Lease Right-Of-Use Assets	23,941		24,180
Deposits on Wireless Licenses	9,129		—
Other Assets	22,291		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 DIRECTV	1,047		1,245
Accounts payable and accrued liabilities	46,845		50,661
Advanced billings and customer deposits	5,183		5,303
Dividends payable	2,086		3,749
Total current liabilities	82,494		85,588
Long-Term Debt	180,225		152,724
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes	65,963		65,226
Postemployment benefit obligation	11,294		12,649
Operating lease liabilities	20,917		21,261
Other noncurrent liabilities	29,746		30,223
Noncurrent portion of note payable to DIRECTV	—		96
Total deferred credits and other noncurrent liabilities	127,920		129,455
Stockholders’ Equity
Preferred stock ($1 par value, 10,000,000 authorized at March 31, 2022 and December 31, 2021):
Series A (48,000 issued and outstanding at March 31, 2022 and December 31, 2021)	—		—
Series B (20,000 issued and outstanding at March 31, 2022 and December 31, 2021)	—		—
Series C (70,000 issued and outstanding at March 31, 2022 and December 31, 2021)	—		—
Common stock ($1 par value, 14,000,000,000 authorized at March 31, 2022 and December 31, 2021: issued 7,620,748,598 at March 31, 2022 and December 31, 2021)	7,621		7,621
Additional paid-in capital	129,637		130,112
Retained earnings	45,041		42,350
Treasury stock (461,896,657 at March 31, 2022 and 479,684,705 at December 31, 2021, at cost)	(16,553)		(17,280)
Accumulated other comprehensive income	3,290		3,529
Noncontrolling interest	17,520		17,523
Total stockholders’ equity	186,556		183,855
Total Liabilities and Stockholders’ Equity	$	577,195	$	551,622
See Notes to Consolidated Financial Statements.


AT&T INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Dollars in millions
(Unaudited)
	Three months ended
	March 31,
	2022		2021
Operating Activities
Net income	$	5,164	$	7,942
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	5,539		5,809
Amortization of film and television costs	3,009		2,886
Distributed (undistributed) earnings from investments in equity affiliates	26		(47)
Provision for uncollectible accounts	460		321
Deferred income tax expense	932		1,848
Net (gain) loss on investments, net of impairments	93		(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 sales	541		1,190
Deferred customer contract acquisition and fulfillment costs	(259)		244
Postretirement claims and contributions	(97)		(343)
Other - net	(166)		(159)
Total adjustments	568		1,985
Net Cash Provided by Operating Activities	5,732		9,927
Investing Activities
Capital expenditures	(4,748)		(4,033)
Acquisitions, net of cash acquired	(9,244)		(22,884)
Dispositions	11		51
Distributions from DIRECTV in excess of cumulative equity in earnings	1,315		—
Other - net	15		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 less	2,285		687
Issuance of other short-term borrowings	2,593		15,485
Repayment of other short-term borrowings	(3,407)		—
Issuance of long-term debt	30,296		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 stock	26		63


Dividends paid	(3,749)		(3,741)
Other - net	(934)		(340)
Net Cash Provided by Financing Activities	24,251		18,483
Net increase in cash and cash equivalents and restricted cash	17,332		1,558
Cash and cash equivalents and restricted cash beginning of year	21,316		9,870
Cash and Cash Equivalents and Restricted Cash End of Period	$	38,648	$	11,428

See Notes to Consolidated Financial Statements.


AT&T INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
Dollars and shares in millions except per share amounts
(Unaudited)
	Three months ended
		March 31, 2022	March 31, 2021
			Shares	Amount		Shares	Amount
Preferred Stock - Series A
Balance at beginning of period			—	$	—	—	$	—

Balance at end of period			—	$	—	—	$	—
Preferred Stock - Series B
Balance at beginning of period			—	$	—	—	$	—

Balance at end of period			—	$	—	—	$	—
Preferred Stock - Series C
Balance at beginning of period			—	$	—	—	$	—

Balance at end of period			—	$	—	—	$	—
Common Stock
Balance at beginning of period			7,621	$	7,621	7,621	$	7,621

Balance at end of period			7,621	$	7,621	7,621	$	7,621
Additional Paid-In Capital
Balance at beginning of period				$	130,112		$	130,175


Issuance of treasury stock				(126)			(70)
Share-based payments				(349)			(249)

Balance at end of period				$	129,637		$	129,856
Retained Earnings
Balance at beginning of period				$	42,350		$	37,457


Net income attributable to AT&T				4,810			7,550
Preferred stock dividends				(99)			(117)
Common stock dividends ($0.2775 and $0.52 per share)				(2,020)			(3,736)
Balance at end of period				$	45,041		$	41,154

See Notes to Consolidated Financial Statements.


AT&T INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY - continued
Dollars and shares in millions except per share amounts
(Unaudited)
	Three months ended
		March 31, 2022	March 31, 2021
			Shares	Amount		Shares	Amount
Treasury Stock
Balance at beginning of period			(480)	$	(17,280)	(495)	$	(17,910)
Repurchase and acquisition of common stock			(8)	(197)		(6)	(176)
Reissuance of treasury stock			26	924		20	744
Balance at end of period			(462)	$	(16,553)	(481)	$	(17,342)
Accumulated Other Comprehensive Income Attributable to AT&T, net of tax
Balance at beginning of period				$	3,529		$	4,330
Other comprehensive income attributable to AT&T				(239)			(131)
Balance at end of period				$	3,290		$	4,199
Noncontrolling Interest
Balance at beginning of period				$	17,523		$	17,567


Net income attributable to noncontrolling interest				354			392

Acquisition of interest held by noncontrolling owners				(16)			—
Distributions				(341)			(364)
Translation adjustments attributable to noncontrolling interest, net of taxes				—			(4)
Balance at end of period				$	17,520		$	17,591
Total Stockholders' Equity at beginning of period				$	183,855		$	179,240
Total Stockholders' Equity at end of period				$	186,556		$	183,079

See Notes to Consolidated Financial Statements.

AT&T INC.

MARCH 31, 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Dollars in millions except per share amounts

NOTE 1. PREPARATION OF INTERIM FINANCIAL STATEMENTS

Basis of Presentation Throughout this document, AT&T Inc. is referred to as “we,” “AT&T” or the “Company.” The consolidated financial statements include the accounts of the Company and subsidiaries and affiliates which we control. AT&T is a holding company whose subsidiaries and affiliates operate worldwide in the telecommunications, media and technology industries. You should read this document in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2021. The results for the interim periods are not necessarily indicative of those for the full year. These consolidated financial statements include all adjustments that are necessary to present fairly the results for the presented interim periods, consisting of normal recurring accruals and other items.

On April 8, 2022, we completed the previously announced separation of our WarnerMedia business, which represented substantially all of our WarnerMedia segment except for certain retained assets such as Xandr, in a Reverse Morris Trust transaction, under which Magallanes, Inc. (Spinco), a wholly-owned subsidiary of AT&T that held the WarnerMedia business, was distributed to AT&T stockholders via a pro rata dividend, followed by the combination of Spinco with a subsidiary of Discovery, Inc. (Discovery), which was renamed Warner Bros. Discovery, Inc. (WBD). Each AT&T shareholder was entitled to receive 0.241917 shares of WBD common stock for each share of AT&T common stock held as of the record date, which represented approximately 71% of WBD. (See Notes 8 and 13)

As of March 31, 2022, the results of the WarnerMedia business are included in the continuing operations of AT&T for all periods presented herein. With the separation and distribution, the WarnerMedia business will meet the criteria for discontinued operations beginning with our second-quarter 2022 reporting. For discontinued operations, we evaluated transactions completed during 2021 that were components of AT&T’s single plan of a strategic shift, including dispositions that may not have individually met the criteria due to materiality, and have determined discontinued operations to be comprised of WarnerMedia, Vrio, Xandr and Playdemic Ltd. (Playdemic). These businesses will be reflected in our historical financial statements as discontinued operations, including for periods prior to the consummation of the WarnerMedia/Discovery transaction.

All significant intercompany transactions are eliminated in the consolidation process. Investments in subsidiaries and partnerships which we do not control but have significant influence are accounted for under the equity method. Earnings from certain investments accounted for using the equity method are included in our results on a one quarter lag. We also record our proportionate share of our equity method investees’ other comprehensive income (OCI) items, including translation adjustments.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions, including estimates of probable losses and expenses, that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Certain prior period amounts have been conformed to the current period’s presentation (see Note 4).

In the tables throughout this document, percentage increases and decreases that are not considered meaningful are denoted with a dash.

Accounting Policies, Adopted and Pending Accounting Standards and Other Changes

Customer Acquisition and Fulfillment Costs During the first quarter of 2022, we updated our analysis of expected economic lives of customer relationships. As of January 1, 2022, we extended the amortization period for deferred acquisition and fulfillment contract costs within Mobility and broadband/fiber in Consumer Wireline and Business Wireline to better reflect the estimated economic lives of the relationships. These changes in accounting estimate decreased other cost of revenues approximately $135, or $0.01 per diluted share, in the first quarter of 2022.

AT&T INC.

MARCH 31, 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Dollars in millions except per share amounts

Fiber Network Assets During the first quarter of 2022, we updated our analysis of economic lives of AT&T owned fiber network assets. As of January 1, 2022, we extended the estimated economic life and depreciation period of such costs to better reflect the physical life of the assets that we had been experiencing and absence of technological changes that would replace fiber as the best broadband technology in the industry. The change in accounting estimate decreased depreciation expense $70, or $0.01 per diluted share, in the first quarter of 2022.

Convertible Instruments As of January 1, 2022, we adopted, through retrospective application, Accounting Standards Update (ASU) No. 2020-06, “Debt—Debt With Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (ASU 2020-06). ASU 2020-06 requires that instruments which may be settled in cash or stock are presumed settled in stock in calculating diluted earnings per share. 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.


The following table presents the impact of the adoption of ASU 2020-06 on our diluted earnings per share:
	Historical Accounting Method	Effect of Adoption of ASU 2020-061		Under ASU 2020-06


Diluted earnings per share:
Three months ended March 31, 2022		$	0.66	$	(0.01)	$	0.65
Three months ended March 31, 2021		$	1.04	$	(0.02)	$	1.02
1See Note 2 for a discussion of the numerator and denominator adjustments.

Government Assistance The Financial Accounting Standards Board (FASB) issued ASU No, 2021-10, “Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance” (ASU 2021-10), which requires annual disclosures, beginning with the 2022 Annual Report on Form 10-K, in the notes to the financial statements, about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy to other guidance. The annual disclosures include terms and conditions, accounting treatment and impacted financial statement lines reflecting the impact of the transactions. ASU 2021-10 will be effective for annual reporting periods beginning after December 15, 2021, which we plan to adopt under prospective application for all in scope government transactions in the financial statements as of our adoption date or thereafter.

AT&T INC.

MARCH 31, 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Dollars in millions except per share amounts

NOTE 2. EARNINGS PER SHARE

A reconciliation of the numerators and denominators of basic and diluted earnings per share for the three months ended March 31, 2022 and 2021, is shown in the table below:


	Three months ended
	March 31,
		2022		2021
Numerators
Numerator for basic earnings per share:
Net Income Attributable to Common Stock		$	4,762	$	7,500
Dilutive potential common shares:
Mobility II preferred interests		140		140
Share-based payment		6		6
Numerator for diluted earnings per share		$	4,908	$	7,646
Denominators (000,000)
Denominator for basic earnings per share:
Weighted average number of common shares outstanding