EX-99.4 5 t-4q2022exhibit994.htm EX-99.4 SUPPLEMENTAL QUARTERLY STANDALONE AT&T FINANCIAL INFORMATION Document

Standalone AT&T
Supplemental Unaudited Quarterly Financial Information
Dollars in millions
Unaudited
Operating Revenues3/31/216/30/219/30/2112/31/21 2021 3/31/226/30/229/30/2212/31/222022
Revenues from Continuing Operations$35,877 $35,740 $31,326 $31,095 $134,038 $29,712 $29,643 $30,043 $31,343 $120,741 
[A]Less: Video (6,725)(6,639)(2,149)— (15,513)— — — — — 
[B]Less: Other dispositions (Held-for-sale)(231)(158)(64)— (453)— — — — — 
[H]Less: Intercompany eliminations 62 57 17 — 136 — — — — — 
Standalone AT&T Operating Revenues$28,983 $29,000 $29,130 $31,095 $118,208 $29,712 $29,643 $30,043 $31,343 $120,741 
Revenue from Continuing Operations Growth Rate Y/Y1.5 %3.5 %-11.5 %-17.6 %-6.3 %-17.2 %-17.1 %-4.1 %0.8 %-9.9 %
Standalone AT&T Revenue Growth Rate Y/Y4.8 %6.6 %3.9 %2.2 %4.3 %2.5 %2.2 %3.1 %0.8 %2.1 %
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Operations and Support Expenses3/31/216/30/219/30/2112/31/2120213/31/226/30/229/30/2212/31/222022
Operations and Support Expenses from Continuing Operations$24,217 $23,739 $20,632 $21,701 $90,289 $19,713 $20,237 $19,517 $47,840 $107,307 
[I]Non-GAAP Adjustments(1)70 (109)(86)(126)(191)(924)(188)(26,728)(28,031)
Adjusted Operations and Support Expenses from Continuing Operations24,216 23,809 20,523 21,615 90,163 19,522 19,313 19,329 21,112 79,276 
[A]Less: Video(5,660)(5,275)(1,731)— (12,666)— — — — — 
[B]Less: Other dispositions (Held-for-sale)(194)(115)(47)— (356)— — — — — 
[H]Less: Intercompany eliminations 62 57 17 — 136 — — — — — 
[D]Less: Reclassification of allocations for separated businesses15 19 16 (4)46 — — — — — 
[C]Add: DTV-related retained costs350 350 117 — 817 — — — — — 
Standalone AT&T Adjusted Operations and Support Expenses$18,789 $18,845 $18,895 $21,611 $78,140 $19,522 $19,313 $19,329 $21,112 $79,276 
Operations and Support Expenses from Continuing Operations Growth Rate Y/Y8.3 %1.8 %-13.1 %-49.2 %-19.5 %-18.6 %-14.8 %-5.4 %120.5 %18.8 %
Adjusted Operations and Support Expenses from Continuing Operations Growth Rate Y/Y4.9 %6.0 %-13.6 %-20.4 %-6.5 %-19.4 %-18.9 %-5.8 %-2.3 %-12.1 %
Standalone AT&T Adjusted Operations and Support Expenses Growth Rate Y/Y8.7 %11.7 %4.6 %2.7 %6.7 %3.9 %2.5 %2.3 %-2.3 %1.5 %
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Depreciation and Amortization Expense3/31/216/30/219/30/2112/31/2120213/31/226/30/229/30/2212/31/222022
Depreciation and Amortization Expense from Continuing Operations$4,466 $4,429 $4,457 $4,500 $17,852 $4,462 $4,450 $4,514 $4,595 $18,021 
[I]Non-GAAP Adjustments(85)(28)(28)(28)(169)(27)(17)(16)(16)(76)
Adjusted Depreciation and Amortization Expense from Continuing Operations4,381 4,401 4,429 4,472 17,683 4,435 4,433 4,498 4,579 17,945 
[A]Less: Video(164)(148)(44)— (356)— — — — — 
[B]Less: Other dispositions (Held-for-sale)— — — — — — — — — — 
[C]Add: DTV-related retained costs180 180 60 — 420 — — — — — 
Standalone AT&T Adjusted Depreciation and Amortization Expense$4,397 $4,433 $4,445 $4,472 $17,747 $4,435 $4,433 $4,498 $4,579 $17,945 
Depreciation and Amortization Expense from Continuing Operations Growth Rate Y/Y-21.7 %-21.7 %-20.6 %-19.0 %-20.7 %-0.1 %0.5 %1.3 %2.1 %0.9 %
Adjusted Depreciation and Amortization Expense from Continuing Operations Growth Rate Y/Y-8.6 %-7.9 %-7.2 %-5.7 %-7.3 %1.2 %0.7 %1.6 %2.4 %1.5 %
Standalone AT&T Adjusted Depreciation and Amortization Expense Growth Rate Y/Y0.5 %1.7 %1.3 %1.7 %1.3 %0.9 %0.0 %1.2 %2.4 %1.1 %
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Operating Income3/31/216/30/219/30/2112/31/2120213/31/226/30/229/30/2212/31/222022
Operating Income from Continuing Operations$7,194 $7,572 $6,237 $4,894 $25,897 $5,537 $4,956 $6,012 $(21,092)$(4,587)
[I]Non-GAAP Adjustments86 (42)137 114 295 218 941 204 26,744 28,107 
Adjusted Operating Income from Continuing Operations7,280 7,530 6,374 5,008 26,192 5,755 5,897 6,216 5,652 23,520 
Less: Video (901)(1,216)(374)— (2,491)— — — — — 
Less: Other dispositions (Held-for-sale)(37)(43)(17)— (97)— — — — — 
Less: Intercompany eliminations — — — — — — — — — — 
Less: Reclassification of allocations for separated businesses(15)(19)(16)4 (46)— — — — — 
Add: DTV-related retained costs(530)(530)(177)— (1,237)— — — — — 
Standalone AT&T Adjusted Operating Income $5,797 $5,722 $5,790 $5,012 $22,321 $5,755 $5,897 $6,216 $5,652 $23,520 
Operating Income from Continuing Operations Growth Rate Y/Y-1.2 %36.2 %2.9 %146.5 %209.3 %-23.0 %-34.5 %-3.6 %-531.0 %-117.7 %
Adjusted Operating Income Growth Rate Y/Y-2.6 %3.2 %-7.2 %-14.4 %-4.7 %-20.9 %-21.7 %-2.5 %12.9 %-10.2 %
Standalone AT&T Adjusted Operating Income Growth Rate Y/Y-3.1 %-4.0 %3.6 %0.6 %-0.9 %-0.7 %3.1 %7.4 %12.8 %5.4 %
Operating Income Margin from Continuing Operations20.1 %21.2 %19.9 %15.7 %19.3 %18.6 %16.7 %20.0 %-67.3 %-3.8 %
Adjusted Operating Income Margin20.3 %21.1 %20.3 %16.1 %19.5 %19.4 %19.9 %20.7 %18.0 %19.5 %
Standalone AT&T Adjusted Operating Income Margin20.0 %19.7 %19.9 %16.1 %18.9 %19.4 %19.9 %20.7 %18.0 %19.5 %
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Other Income (Expense)3/31/216/30/219/30/2112/31/2120213/31/226/30/229/30/2212/31/222022
Interest expense$(1,823)$(1,640)$(1,627)$(1,626)$(6,716)$(1,626)$(1,502)$(1,420)$(1,560)$(6,108)
Equity in net income (loss) of affiliates(6)(18)183 444 603 521 504 392 374 1,791 
Other income (expense) - net4,230 1,206 1,522 2,429 9,387 2,157 2,302 2,270 (919)5,810 
Other Income (Expense) from Continuing Operations2,401 (452)78 1,247 3,274 1,052 1,304 1,242 (2,105)1,493 
[I]Non-GAAP Adjustments(2,968)(16)18 (769)(3,735)(545)(635)(648)2,618 790 
Adjusted Other Income (Expense) from Continuing Operations(567)(468)96 478 (461)507 669 594 513 2,283 
[F]Less: Estimated interest expense impact of debt redemptions371 371 371 371 1,484 371 371 — — 742 
[E]Add: Estimated equity in net income from DIRECTV investment746 955 293 — 1,994 — — — — — 
Standalone AT&T Adjusted Other Income (Expense)$550 $858 $760 $849 $3,017 $878 $1,040 $594 $513 $3,025 
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Income From Continuing Operations3/31/216/30/219/30/2112/31/2120213/31/226/30/229/30/2212/31/222022
Income from Continuing Operations$7,586 $5,969 $5,019 $5,202 $23,776 $5,149 $4,751 $6,346 $(23,120)$(6,874)
[I]Non-GAAP Adjustments(2,276)(307)153 (764)(3,194)(224)347 (1,036)27,951 27,038 
Adjusted Income from Continuing Operations5,310 5,662 5,172 4,438 20,582 4,925 5,098 5,310 4,831 20,164 
Less: Operating Income of Video and Other dispositions(1,483)(1,808)(584)4 (3,871)— — — — — 
Add: Estimated equity in net income from DIRECTV investment746 955 293 — 1,994 — — — — — 
Less: Estimated interest expense impact of debt redemptions371 371 371 371 1,484 371 371 — — 742 
[G]Less: Estimated tax on Video & Other dispositions(73)(95)16 75 (76)74 74 — — 148 
Add: Adjustment of estimated interest expense impact of debt redemptions(297)(297)(297)(297)(1,187)(297)(297)— — (594)
Standalone AT&T Adjusted Net Income4,720 4,978 4,939 4,441 19,078 4,925 5,098 5,310 4,831 20,164 
Less: Income from Continuing Operations attributable to Noncontrolling Interest(394)(387)(356)(348)(1,485)(354)(380)(373)(362)(1,469)
Less: Preferred Stock Dividends(50)(56)(50)(51)(207)(48)(52)(49)(54)(203)
Adjusted Standalone AT&T Income Attributable to Common Stock$4,276 $4,535 $4,533 $4,042 $17,386 $4,523 $4,666 $4,888 $4,415 $18,492 
Earnings from Continuing Operations per share of common stock:1
Basic$0.99 $0.77 $0.64 $0.67 $3.07 $0.66 $0.60 $0.82 $(3.20)$(1.10)
Diluted$0.97 $0.76 $0.63 $0.66 $3.02 $0.65 $0.59 $0.79 $(3.20)$(1.10)
[J]Continuing Operations Adjusted Diluted$0.68 $0.73 $0.66 $0.56 $2.63 $0.63 $0.65 $0.68 $0.61 $2.57 
[J]Standalone AT&T Adjusted Diluted$0.58 $0.64 $0.62 $0.56 $2.41 $0.63 $0.65 $0.68 $0.61 $2.57 
Weighted Average Common Shares Outstanding7,161 7,168 7,171 7,172 7,168 7,184 7,169 7,153 7,157 7,166 
Weighted Average Common Shares Outstanding with Dilution under ASU 2020-067,482 7,484 7,506 7,541 7,503 7,556 7,611 7,647 7,533 7,587 
Weighted Average Common Shares Outstanding with Dilution under historical7,188 7,200 7,202 7,204 7,199 7,217 7,212 7,201 7,205 7,209 
1 Earnings per share from continuing operations is calculated using Income from Continuing Operations, less Income from Continuing Operations Attributable to Noncontrolling Interest and Preferred Stock Dividends divided by the weighted average common shares outstanding for the period.
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EBITDA2
3/31/216/30/219/30/2112/31/2120213/31/226/30/229/30/2212/31/222022
Net Income from Continuing Operations$7,586 $5,969 $5,019 $5,202 $23,776 $5,149 $4,751 $6,346 $(23,120)$(6,874)
Additions:
Income Tax Expense (Benefit)2,009 1,151 1,296 939 5,395 1,440 1,509 908 (77)3,780 
Interest Expense1,823 1,640 1,627 1,626 6,716 1,626 1,502 1,420 1,560 6,108 
Equity in Net Income (Loss) of Affiliates6 18 (183)(444)(603)(521)(504)(392)(374)(1,791)
Other (Income) Expense - net(4,230)(1,206)(1,522)(2,429)(9,387)(2,157)(2,302)(2,270)919 (5,810)
Depreciation and amortization4,466 4,429 4,457 4,500 17,852 4,462 4,450 4,514 4,595 18,021 
EBITDA11,660 12,001 10,694 9,394 43,749 9,999 9,406 10,526 (16,497)13,434 
Non-GAAP Adjustments1 (70)109 86 126 191 924 188 26,728 28,031 
Adjusted EBITDA11,661 11,931 10,803 9,480 43,875 10,190 10,330 10,714 10,231 41,465 
Less: Video(1,065)(1,364)(418)— (2,847)— — — — — 
Less: Other dispositions (Held-for-sale)(37)(43)(17)— (97)— — — — — 
Less: Intercompany eliminations— — — — — — — — — — 
Less: Reclassification of allocations for separated businesses(15)(19)(16)4 (46)— — — — — 
Add: DTV-related retained costs(350)(350)(117)— (817)— — — — — 
Standalone AT&T Adjusted EBITDA$10,194 $10,155 $10,235 $9,484 $40,068 $10,190 $10,330 $10,714 $10,231 $41,465 
Adjusted EBITDA Growth Rate Y/Y-4.9 %-1.2 %-7.2 %-10.5 %-5.8 %-12.6 %-13.4 %-0.8 %7.9 %-5.5 %
Standalone AT&T Adjusted EBITDA Growth Rate Y/Y-1.6 %-1.6 %2.6 %1.1 %0.1 %0.0 %1.7 %4.7 %7.9 %3.5 %
Adjusted EBITDA Margin32.5 %33.4 %34.5 %30.5 %32.7 %34.3 %34.8 %35.7 %32.6 %34.3 %
Standalone AT&T Adjusted EBITDA Margin35.2 %35.0 %35.1 %30.5 %33.9 %34.3 %34.8 %35.7 %32.6 %34.3 %
2 EBITDA is operating income before depreciation and amortization. It excludes depreciation and amortization, interest expense, other income (expense) - net and income taxes from net income.
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Free Cash Flow ($B)3
3/31/216/30/219/30/2112/31/2120213/31/226/30/229/30/2212/31/222022
Net cash provided by operating activities from Continuing Operations$9.6 $10.2 $9.3 $8.1 $37.2 $7.6 $7.7 $10.1 $10.3 $35.8 
Add: Distributions from DIRECTV classified as investing activities— — — 1.3 1.3 1.3 0.3 0.6 0.4 2.6 
Less: Capital expenditures(3.9)(3.7)(4.5)(3.5)(15.6)(4.6)(4.9)(5.9)(4.2)(19.6)
Less: Cash paid vendor financing(1.7)(1.3)(1.0)(0.6)(4.6)(1.6)(1.8)(0.9)(0.5)(4.7)
Free Cash Flow from Continuing Operations4.0 5.2 3.8 5.3 18.3 2.8 1.4 3.8 6.1 14.1 
[E]Add: Estimated equity in net income from DIRECTV investment— — 0.7 — 0.7 — — — — — 
Standalone AT&T Free Cash Flow$4.0 $5.2 $4.5 $5.3 $19.0 $2.8 $1.4 $3.8 $6.1 $14.1 
3 May not foot due to rounding. Historical presentation may differ due to insignificant reclasses between continuing and discontinued operations.
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NOTES
[A]Video business results as reported in AT&T's consolidated financial results; quarters ended 2021 include retained depreciation on assets supporting U-verse products.
[B]Other dispositions include the held-for-sale businesses, Crunchyroll, Government Solutions and operations in Puerto Rico that do not meet the requirements for presentation in discontinued operations.
[C]After the DIRECTV transaction, we expect to retain incurred operations and support costs in the range of ~$500M per quarter and depreciation of network infrastructure that provides both U-verse video and broadband services to customers of ~$150M per quarter, of which approximately 60% will be received from DIRECTV through transition service agreements and commercial arrangements. These estimated net retained costs have been applied to prior periods for comparability.
[D]Adjustment to reflect AT&T's first-quarter 2022 reclassification of certain administrative costs borne by AT&T where the business units did not influence decision making. These costs are not expected to continue in standalone AT&T.
[E]Estimated equity in net income of affiliates from DIRECTV. Calculated at 70% of Video EBITDA, which excludes the noncash depreciation and amortization of fair value accretion expected to result from DIRECTV’s revaluation of assets and purchase price allocation.
[F]Reflects the use of proceeds to pay down approximately $39.0 billion of borrowings and the resulting reduction to interest expense. The estimated impact of interest expense reduction was determined using the weighted-average interest rate of AT&T’s long-term debt portfolio, including credit agreement borrowings and the impact of derivatives, of 3.8%. This adjustment is required for pro forma financial information prepared in accordance with Article 11 of Regulation S-X.
[G]Estimated tax impact of pro forma and other adjustments at AT&T's adjusted effective tax rate.
[H]Under GAAP, AT&T removed transactions involving dealing between segments, including advertising arrangements with Video.
[I]Non-GAAP Adjustments:3/31/216/30/219/30/2112/31/2120213/31/226/30/229/30/2212/31/222022
Transaction and other costs$35 $— $8 $(2)$41 $98 $185 $58 $84 $425 
Employee separation costs and benefit-related (gain) loss(34)(70)(4)(20)(128)93 108 16 (109)108 
Asset impairments and abandonments and restructuring— — 105 108 213 — 631 114 26,753 27,498 
Adjustments to Operations and Support Expenses/ EBITDA1 (70)109 86 126 191 924 188 26,728 28,031 
Amortization of intangible assets85 28 28 28 169 27 17 16 16 76 
Adjustments to Operating Income86 (42)137 114 295 218 941 204 26,744 28,107 
Other income (expense) net(2,968)(16)18 (769)(3,735)(545)(635)(648)2,618 790 
Tax impact of adjustments and discrete items606 (249)(2)(109)246 103 41 (592)(1,411)(1,859)
Adjustments to Net Income$(2,276)$(307)$153 $(764)$(3,194)$(224)$347 $(1,036)$27,951 $27,038 
[J]
As of January 1, 2022, we adopted, through retrospective application, Accounting Standards Update (ASU) No. 2020-06, which requires that instruments which may be settled in cash or stock to be presumed settled in stock in calculating diluted EPS. While our intent is to settle the Mobility II preferred interests in cash, the ability to settle this instrument in AT&T shares will result in additional dilutive impact, the magnitude of which is influenced by the fair value of the Mobility II preferred interests and the average AT&T common stock price during the reporting period, which could vary from period-to-period. For these reasons, we have excluded the impact of ASU 2020-06 from our adjusted EPS calculation.

Additionally, in the fourth-quarter of 2022, all outstanding Mobility II preferred interests were put to us, with approximately one-third redeemed in the fourth-quarter; approximately 107 million interests will be redeemed primarily in October 2023 and 107 million redeemed in October 2024, per the terms of the agreement, unless called or put is accepted by AT&T prior. With the certainty of redemption, the remaining Mobility preferred interest was reclassified from equity to a liability at fair value, with approximately $2.7 billion recorded in current as “Accounts payable and accrued liabilities” and $2.7 billion as “Other noncurrent liabilities.” The difference between the carrying value of the Mobility preferred interest and the fair value of the instrument upon settlement and/or balance sheet reclassification was recorded as an adjustment to additional paid-in capital; the fair value adjustment of these instruments is required to be included when calculating EPS. Given the nonoperational fair value adjustment recorded as "Additional Paid in Capital," we have excluded the impact from our adjusted EPS calculation.
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