Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


Consolidated Statements of Income
	2022		2021		2020
Operating Revenues
Service	$	97,831	$	111,565	$	124,057
Equipment	22,910		22,473		18,993
Total operating revenues	120,741		134,038		143,050

Operating Expenses
Cost of revenues
Equipment	24,009		23,685		19,585
Broadcast, programming and operations	—		8,106		16,077
Other cost of revenues (exclusive of depreciation and amortization shown separately below)	26,839		28,616		29,989
Selling, general and administrative	28,961		29,669		30,817
Asset impairments and abandonments and restructuring	27,498		213		15,687
Depreciation and amortization	18,021		17,852		22,523
Total operating expenses	125,328		108,141		134,678
Operating Income (Loss)	(4,587)		25,897		8,372

Other Income (Expense)
Interest expense	(6,108)		(6,716)		(7,727)
Equity in net income of affiliates	1,791		603		89
Other income (expense) – net	5,810		9,387		(1,088)
Total other income (expense)	1,493		3,274		(8,726)
Income (Loss) from Continuing Operations Before Income Taxes	(3,094)		29,171		(354)
Income tax expense on continuing operations	3,780		5,395		1,168
Income (Loss) from Continuing Operations	(6,874)		23,776		(1,522)
Loss from discontinued operations, net of tax	(181)		(2,297)		(2,299)
Net Income (Loss)	(7,055)		21,479		(3,821)
Less: Net Income Attributable to Noncontrolling Interest	(1,469)		(1,398)		(1,355)
Net Income (Loss) Attributable to AT&T	$	(8,524)	$	20,081	$	(5,176)
Less: Preferred Stock Dividends	(203)		(207)		(193)
Net Income (Loss) Attributable to Common Stock	$	(8,727)	$	19,874	$	(5,369)
Basic Earnings (Loss) Per Share from continuing operations	$	(1.10)	$	3.07	$	(0.45)
Basic Loss Per Share from discontinued operations	$	(0.03)	$	(0.30)	$	(0.30)
Basic Earnings (Loss) Per Share Attributable to Common Stock	$	(1.13)	$	2.77	$	(0.75)
Diluted Earnings (Loss) Per Share from continuing operations	$	(1.10)	$	3.02	$	(0.45)
Diluted Loss Per Share from discontinued operations	$	(0.03)	$	(0.29)	$	(0.30)
Diluted Earnings (Loss) Per Share Attributable to Common Stock	$	(1.13)	$	2.73	$	(0.75)

The accompanying notes are an integral part of the consolidated financial statements.


AT&T Inc.
Dollars in millions except per share amounts


Consolidated Statements of Comprehensive Income
	2022		2021		2020

Net income (loss)	$	(7,055)	$	21,479	$	(3,821)
Other comprehensive income (loss), net of tax:
Foreign Currency:
Translation adjustment (includes $0, $(2) and $(59) attributable to noncontrolling interest), net of taxes of $90, $(44) and $(42)	346		(127)		(929)
Reclassification adjustment included in net income (loss), net of taxes of $0, $204 and $0	—		2,087		—
Distributions of WarnerMedia, net of taxes of $(38), $0 and $0	(182)		—		—
Securities:
Net unrealized gains (losses), net of taxes of $(49), $(21) and $27	(143)		(63)		78
Reclassification adjustment included in net income (loss), net of taxes of $3, $(1) and $(5)	8		(3)		(15)
Derivative Instruments:
Net unrealized gains (losses), net of taxes of $(183), $(192) and $(212)	(648)		(715)		(811)
Reclassification adjustment included in net income (loss), net of taxes of $25, $19 and $18	96		72		69
Distributions of WarnerMedia, net of taxes of $(12), $0 and $0	(24)		—		—
Defined benefit postretirement plans:
Net prior service (cost) credit arising during period, net of taxes of $583, $(8) and $735	1,787		(34)		2,250
Amortization of net prior service credit included in net income (loss), net of taxes of $(663), $(660) and $(601)	(2,028)		(2,020)		(1,841)
Distributions of WarnerMedia, net of taxes of $5, $0 and $0	25		—		—
Other comprehensive income (loss)	(763)		(803)		(1,199)
Total comprehensive income (loss)	(7,818)		20,676		(5,020)
Less: Total comprehensive income attributable to noncontrolling interest	(1,469)		(1,396)		(1,296)
Total Comprehensive Income (Loss) Attributable to AT&T	$	(9,287)	$	19,280	$	(6,316)

The accompanying notes are an integral part of the consolidated financial statements.


AT&T Inc.
Dollars in millions except per share amounts


Consolidated Balance Sheets
	December 31,
	2022		2021
Assets
Current Assets
Cash and cash equivalents	$	3,701	$	19,223
Accounts receivable – net of related allowance for credit loss of $588 and $658	11,466		12,313
Inventories	3,123		3,325
Prepaid and other current assets	14,818		16,131
Assets from discontinued operations	—		119,776
Total current assets	33,108		170,768

Property, Plant and Equipment – Net	127,445		121,649
Goodwill – Net	67,895		92,740
Licenses – Net	124,092		113,830


Other Intangible Assets – Net	5,354		5,391
Investments in and Advances to Equity Affiliates	3,533		6,168
Operating Lease Right-Of-Use Assets	21,814		21,824
Other Assets	19,612		19,252
Total Assets	$	402,853	$	551,622
Liabilities and Stockholders’ Equity
Current Liabilities
Debt maturing within one year	$	7,467	$	24,620
Note payable to DIRECTV	130		1,245
Accounts payable and accrued liabilities	42,644		39,095
Advanced billings and customer deposits	3,918		3,966
Dividends payable	2,014		3,749
Liabilities from discontinued operations	—		33,555
Total current liabilities	56,173		106,230
Long-Term Debt	128,423		151,011
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes	57,032		53,767
Postemployment benefit obligation	7,260		12,560
Operating lease liabilities	18,659		18,956
Other noncurrent liabilities	28,849		25,243

Total deferred credits and other noncurrent liabilities	111,800		110,526
Stockholders’ Equity
Preferred stock ($1 par value, 10,000,000 authorized at December 31, 2022 and December 31, 2021):
Series A (48,000 issued and outstanding at December 31, 2022 and December 31, 2021)	—		—
Series B (20,000 issued and outstanding at December 31, 2022 and December 31, 2021)	—		—
Series C (70,000 issued and outstanding at December 31, 2022 and December 31, 2021)	—		—
Common stock ($1 par value, 14,000,000,000 authorized at December 31, 2022 and December 31, 2021: issued 7,620,748,598 at December 31, 2022 and December 31, 2021)	7,621		7,621
Additional paid-in capital	123,610		130,112
Retained (deficit) earnings	(19,415)		42,350
Treasury stock (493,156,816 at December 31, 2022 and 479,684,705 at December 31, 2021, at cost)	(17,082)		(17,280)
Accumulated other comprehensive income	2,766		3,529
Noncontrolling interest	8,957		17,523
Total stockholders’ equity	106,457		183,855
Total Liabilities and Stockholders’ Equity	$	402,853	$	551,622

The accompanying notes are an integral part of the consolidated financial statements.


AT&T Inc.
Dollars in millions except per share amounts


Consolidated Statements of Cash Flows
	2022		2021		2020
Operating Activities
Income (loss) from continuing operations	$	(6,874)	$	23,776	$	(1,522)
Adjustments to reconcile income (loss) from continuing operations to net cash provided by operating activities from continuing operations:
Depreciation and amortization	18,021		17,852		22,523


Provision for uncollectible accounts	1,865		1,241		1,798
Deferred income tax expense	2,975		7,412		2,145
Net (gain) loss on investments, net of impairments	381		(369)		(970)
Pension and postretirement benefit expense (credit)	(3,237)		(3,857)		(2,992)
Actuarial (gain) loss on pension and postretirement benefits	(1,999)		(4,143)		4,169
Asset impairments and abandonments and restructuring	27,498		213		15,687
Changes in operating assets and liabilities:
Receivables	727		(1,125)		1,079
Other current assets	(674)		(1,288)		(2,138)
Accounts payable and other accrued liabilities	(1,109)		(1,570)		(1,895)
Equipment installment receivables and related sales	154		(271)		(1,428)
Deferred customer contract acquisition and fulfillment costs	(947)		18		382
Postretirement claims and contributions	(823)		(822)		(985)
Other – net	(146)		103		1,631
Total adjustments	42,686		13,394		39,006
Net Cash Provided by Operating Activities from Continuing Operations	35,812		37,170		37,484
Investing Activities
Capital expenditures	(19,626)		(15,545)		(14,690)
Acquisitions, net of cash acquired	(10,200)		(25,453)		(1,625)
Dispositions	199		7,136		2,472
Distributions from DIRECTV in excess of cumulative equity in earnings	2,649		1,323		—
Other – net	79		50		396



Net Cash Used in Investing Activities from Continuing Operations	(26,899)		(32,489)		(13,447)
Financing Activities
Net change in short-term borrowings with original maturities of three months or less	(519)		1,316		(17)
Issuance of other short-term borrowings	3,955		21,856		9,440
Repayment of other short-term borrowings	(18,345)		(7,510)		(9,467)
Issuance of long-term debt	2,979		9,931		31,988
Repayment of long-term debt	(25,118)		(3,039)		(39,062)
Note payable to DIRECTV, net of payments	(1,211)		1,341		—
Payment of vendor financing	(4,697)		(4,596)		(2,966)
Issuance of preferred stock	—		—		3,869
Purchase of treasury stock	(890)		(202)		(5,498)
Issuance of treasury stock	28		96		105
Issuance of preferred interests in subsidiaries	—		—		1,979
Redemption of preferred interest in subsidiary	(2,665)		—		(1,950)
Dividends paid	(9,859)		(15,068)		(14,956)
Other – net	(3,222)		(2,231)		(4,496)
Net Cash (Used in) Provided by Financing Activities from Continuing Operations	(59,564)		1,894		(31,031)
Net (decrease) increase in cash and cash equivalents and restricted cash from continuing operations	(50,651)		6,575		(6,994)
Cash flows from Discontinued Operations:
Cash (used in) provided by operating activities	(3,789)		4,788		5,645
Cash provided by (used in) investing activities	1,094		399		(102)
Cash provided by (used in) financing activities	35,823		(316)		(974)
Net increase (decrease) in cash and cash equivalents and restricted cash from discontinued operations	33,128		4,871		4,569
Net (decrease) increase in cash and cash equivalents and restricted cash	(17,523)		11,446		(2,425)
Cash and cash equivalents and restricted cash beginning of year	21,316		9,870		12,295
Cash and Cash Equivalents and Restricted Cash End of Year	$	3,793	$	21,316	$	9,870

The accompanying notes are an integral part of the consolidated financial statements.


AT&T Inc.
Dollars and shares in millions except per share amounts


Consolidated Statements of Changes in Stockholders’ Equity
	2022			2021			2020
	Shares	Amount		Shares	Amount		Shares	Amount
Preferred Stock – Series A
Balance at beginning of year	—	$	—	—	$	—	—	$	—

Balance at end of year	—	$	—	—	$	—	—	$	—
Preferred Stock – Series B
Balance at beginning of year	—	$	—	—	$	—	—	$	—

Balance at end of year	—	$	—	—	$	—	—	$	—
Preferred Stock – Series C
Balance at beginning of year	—	$	—	—	$	—	—	$	—

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

Balance at end of year	7,621	$	7,621	7,621	$	7,621	7,621	$	7,621
Additional Paid-In Capital
Balance at beginning of year		$	130,112		$	130,175		$	126,279
Distribution of WarnerMedia		(6,832)			—			—

Repurchase and acquisition of common stock		—			—			67
Issuance of preferred stock		—			—			3,869

Issuance of treasury stock		(171)			(76)			(62)
Share-based payments		(162)			13			18
Acquisition or reclassification of interests held by noncontrolling owners		663			—			4
Balance at end of year		$	123,610		$	130,112		$	130,175
Retained (Deficit) Earnings
Balance at beginning of year		$	42,350		$	37,457		$	57,936
Cumulative effect of accounting changes and other adjustments		—			—			(293)
Adjusted beginning balance		42,350			37,457			57,643
Net income (loss) attributable to AT&T		(8,524)			20,081			(5,176)
Distribution of WarnerMedia		(45,041)			—			—
Preferred stock dividends		(207)			(224)			(139)
Common stock dividends ($1.11, $2.08 and $2.08 per share)		(7,993)			(14,964)			(14,871)
Balance at end of year		$	(19,415)		$	42,350		$	37,457

The accompanying notes are an integral part of the consolidated financial statements.


AT&T Inc.
Dollars and shares in millions except per share amounts


Consolidated Statements of Changes in Stockholders’ Equity - continued
	2022			2021			2020
	Shares	Amount		Shares	Amount		Shares	Amount
Treasury Stock
Balance at beginning of year	(480)	$	(17,280)	(495)	$	(17,910)	(366)	$	(13,085)
Repurchase and acquisition of common stock	(44)	(890)		(8)	(237)		(150)	(5,631)
Issuance of treasury stock	31	1,088		23	867		21	806
Balance at end of year	(493)	$	(17,082)	(480)	$	(17,280)	(495)	$	(17,910)
Accumulated Other Comprehensive Income Attributable to AT&T, net of tax
Balance at beginning of year		$	3,529		$	4,330		$	5,470


Other comprehensive income (loss) attributable to AT&T		(763)			(801)			(1,140)
Balance at end of year		$	2,766		$	3,529		$	4,330
Noncontrolling Interest
Balance at beginning of year		$	17,523		$	17,567		$	17,713
Cumulative effect of accounting changes and other adjustments		—			—			(7)
Adjusted beginning balance		17,523			17,567			17,706
Net income attributable to noncontrolling interest		1,469			1,398			1,355
Issuance and acquisition (disposition) of noncontrolling owners		(21)			7			1,979
Redemption of noncontrolling interest		(2,665)			—			(1,950)
Reclassification of noncontrolling interest		(5,997)			—			—
Distributions		(1,352)			(1,447)			(1,464)

Translation adjustments attributable to noncontrolling interest, net of taxes		—			(2)			(59)
Balance at end of year		$	8,957		$	17,523		$	17,567
Total Stockholders’ Equity at beginning of year		$	183,855		$	179,240		$	201,934
Total Stockholders’ Equity at end of year		$	106,457		$	183,855		$	179,240

The accompanying notes are an integral part of the consolidated financial statements.


AT&T Inc.
Dollars in millions except per share amounts

Notes to Consolidated Financial Statements

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation Throughout this document, AT&T Inc. is referred to as “AT&T,” “we” 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 and technology industries.

On April 8, 2022, we completed the separation of our WarnerMedia business, which represented substantially all of our WarnerMedia segment, in a Reverse Morris Trust transaction, under which Magallanes, Inc. (Spinco), a formerly 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). (See Note 6)

Upon the separation and distribution, the WarnerMedia business met the criteria for discontinued operations. For discontinued operations, we also evaluated transactions that were components of AT&T’s single plan of a strategic shift, including dispositions that previously did not individually meet the criteria due to materiality, and have determined discontinued operations to be comprised of WarnerMedia, Vrio, Xandr and Playdemic Ltd. (Playdemic). These businesses are reflected in the accompanying financial statements as discontinued operations, including for periods prior to the consummation of the WarnerMedia/Discovery transaction. (See Notes 6 and 23)

On July 31, 2021, we closed our transaction with TPG Capital (TPG) to form a new company named DIRECTV Entertainment Holdings, LLC (DIRECTV). With the close of the transaction, we separated and deconsolidated our Video business, comprised of our U.S. video operations, and began accounting for our investment in DIRECTV under the equity method (see Notes 6, 10 and 19).

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. We treat distributions received from equity method investees as returns on investment and classify them as cash flows from operating activities until those distributions exceed our cumulative equity in the earnings of that investment. We treat the excess amount as a return of investment and classify it as cash flows from investing activities.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions, including other estimates of fair value, probable losses and expenses, that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Moreover, unfavorable changes in market conditions, including interest rates, could adversely impact those estimates and result in asset impairments. Certain prior-period amounts have been conformed to the current period’s presentation. Unless otherwise noted, the information in Notes 1 through 22 and 24 refer only to our continuing operations and do not include discussion of balances or activity of WarnerMedia, Vrio, Xandr and Playdemic, which are part of discontinued operations.

Adopted and New Accounting Standards

Convertible Instruments Beginning with 2022 interim reporting, we adopted, through retrospective application, the Financial Accounting Standards Board’s (FASB) 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 Series A Cumulative Perpetual Membership Interests in AT&T Mobility II LLC (Mobility preferred interests) in cash, settlement of this instrument in AT&T shares would result in additional dilutive impact, the magnitude of which is influenced by the fair value of the Mobility preferred interests and the average AT&T common stock price during the reporting period, which could vary from period-to-period (see Note 16).


AT&T Inc.
Dollars in millions except per share amounts

The following table presents the impact of the adoption of ASU 2020-06 on our diluted earnings per share from continuing operations:


	Historical Accounting Method	Effect of Adoption of ASU 2020-061		Under ASU 2020-06


Diluted earnings per share from continuing operations:

Year ended December 31, 2022		$	(1.10)	$	—	$	(1.10)
Year ended December 31, 2021		$	3.07	$	(0.05)	$	3.02
Year ended December 31, 2020		$	(0.45)	$	—	$	(0.45)

1See Note 2 for a discussion of the numerator and denominator adjustments.

Reference Rate Reform In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (ASU 2020-04, as amended), which provides optional expedients, and allows for certain exceptions to existing GAAP, for contract modifications triggered by the expected market transition of certain benchmark interest rates to alternative reference rates. ASU 2020-04 applies to contracts, hedging relationships, certain derivatives and other arrangements that reference the London Interbank Offering Rate (LIBOR) or any other rates ending after December 31, 2024. ASU 2020-04, as amended, became effective immediately. We do not believe our adoption of ASU 2020-04, including optional expedients, will materially impact our financial statements.

Government Assistance In November 2021, the FASB issued ASU No. 2021-10, “Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance” (ASU 2021-10), which requires annual disclosures (e.g., terms and conditions, accounting treatment, impacted financial statement lines), 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. We adopted ASU 2021-10 effective for the annual reporting period ended December 31, 2022, as required, under prospective application, with no required updates to our disclosures.

Credit Losses As of January 1, 2020, we adopted, through modified retrospective application, ASU No. 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” or Accounting Standards Codification (ASC) 326 (ASC 326), which replaces the incurred loss impairment methodology under prior GAAP with an expected credit loss model. ASC 326 affects trade receivables, loans, contract assets, certain beneficial interests, off-balance-sheet credit exposures not accounted for as insurance and other financial assets that are not subject to fair value through net income, as defined by the standard. Under the expected credit loss model, we are required to consider future economic trends to estimate expected credit losses over the lifetime of the asset. Upon adoption on January 1, 2020, we recorded a $293 reduction to “Retained earnings,” $395 increase to “Allowances for credit losses” applicable to our trade and loan receivables, $10 reduction of contract assets, $105 reduction of net deferred income tax liability and $7 reduction of “Noncontrolling interest.” Our adoption of ASC 326 did not have a material impact on our financial statements.

Supplier Finance Obligations In September 2022, the FASB issued ASU No. 2022-04, “Liabilities – Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations” (ASU 2022-04), which establishes interim and annual reporting disclosure requirements about a company’s supplier finance programs for its purchase of goods and services. Interim and annual requirements include disclosure of outstanding amounts under the obligations as of the end of the reporting period, and annual requirements include a rollforward of those obligations for the annual reporting period, as well as a description of payment and other key terms of the programs. ASU 2022-04 will be effective for interim and annual periods beginning after December 15, 2022, with retrospective application, except for the annual rollforward requirement, which becomes effective for annual periods beginning after December 15, 2023, with prospective application. The standard allows early adoption of all requirements. In the year of adoption, the disclosure of payment and other key terms under the programs and outstanding balances under the obligations will also apply to interim reporting dates. We are in the process of evaluating the impact of our adoption of ASU 2022-04.

Accounting Policies

Income Taxes We record deferred income taxes for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the computed tax basis of those assets and liabilities. We record valuation allowances against the deferred tax assets (included, together with our deferred income tax assets, as part of our reportable net


AT&T Inc.
Dollars in millions except per share amounts

deferred income tax liabilities on our consolidated balance sheets), for which the realization is uncertain. We review these items regularly in light of changes in federal, state and foreign tax laws and changes in our business.

As of January 1, 2021, we adopted, with modified retrospective application, the FASB’s ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” (ASU 2019-12), which simplified income tax accounting requirements in areas deemed costly and complex. ASU 2019-12 did not have a material impact on our financial statements.

Cash and Cash Equivalents Cash and cash equivalents include all highly liquid investments with original maturities of three months or less. The carrying amounts approximate fair value. At December 31, 2022, we held $866 in cash and $2,835 in money market funds and other cash equivalents. Of our total cash and cash equivalents, $1,045 resided in foreign jurisdictions, some of which is subject to restrictions on repatriation.

Allowance for Credit Losses We record expense to maintain an allowance for credit losses for estimated losses that result from the failure or inability of our customers to make required payments deemed collectible from the customer when the service was provided or product was delivered. When determining the allowances for trade receivables and loans, we consider the probability of recoverability of accounts receivable based on past experience, taking into account current collection trends and general economic factors, including bankruptcy rates. We also consider future economic trends to estimate expected credit losses over the lifetime of the asset. Credit risks are assessed based on historical write-offs, net of recoveries, as well as an analysis of the aged accounts receivable balances with allowances generally increasing as the receivable ages. Accounts receivable may be fully reserved for when specific collection issues are known to exist, such as catastrophes or pending bankruptcies.

Inventories Inventories primarily consist of wireless devices and accessories and are valued at the lower of cost or net realizable value.

Property, Plant and Equipment Property, plant and equipment is stated at cost, except for assets acquired using acquisition accounting, which are initially recorded at fair value (see Note 7). The cost of additions and substantial improvements to property, plant and equipment is capitalized, and includes internal compensation costs for these projects. The cost of maintenance and repairs of property, plant and equipment is charged to operating expenses. Property, plant and equipment costs are depreciated using straight-line methods over their estimated economic lives. Certain subsidiaries follow composite group depreciation methodology. Accordingly, when a portion of their depreciable property, plant and equipment is retired in the ordinary course of business, the gross book value is reclassified to accumulated depreciation, and no gain or loss is recognized on the disposition of these assets.

Property, plant and equipment is reviewed for recoverability whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. We recognize an impairment loss when the carrying amount of a long-lived asset is not recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. (See Note 7)

The liability for the fair value of an asset retirement obligation is recorded in the period in which it is incurred if a reasonable estimate of fair value can be made. In periods subsequent to initial measurement, we recognize period-to-period changes in the liability resulting from the passage of time and revisions to either the timing or the amount of the original estimate. The increase in the carrying value of the associated long-lived asset is depreciated over the corresponding estimated economic life.

Software Costs We capitalize certain costs incurred in connection with developing or obtaining internal-use software. Capitalized software costs are included in “Property, Plant and Equipment – Net” on our consolidated balance sheets. In addition, there is certain network software that allows the equipment to provide the features and functions unique to the AT&T network, which we include in the cost of the equipment categories for financial reporting purposes.

We amortize our capitalized software costs over a three-year to seven-year period, reflecting the estimated period during which these assets will remain in service.

Goodwill and Other Intangible Assets We have the following major classes of intangible assets: goodwill; licenses, which include Federal Communications Commission (FCC) and other wireless licenses; trademarks and trade names; customer lists; and various other finite-lived intangible assets (see Note 9).

Goodwill represents the excess of consideration paid over the fair value of identifiable net assets acquired in business combinations. Wireless licenses provide us with the exclusive right to utilize certain radio frequency spectrum to provide wireless communications services. While wireless licenses are issued for a fixed period of time (generally ten years), renewals


AT&T Inc.
Dollars in millions except per share amounts

of domestic wireless licenses have occurred routinely and at nominal cost. We have determined that there are currently no legal, regulatory, contractual, competitive, economic or other factors that limit the useful lives of our FCC wireless licenses.

We amortize our wireless licenses in Mexico over their average remaining economic life of 25 years.

We acquired the rights to the AT&T and other trade names in previous acquisitions, classifying certain of those trade names as indefinite-lived. We have the effective ability to retain these exclusive rights permanently at a nominal cost.

Goodwill, FCC wireless licenses and other indefinite-lived intangible assets are not amortized but are tested at least annually for impairment (see Note 9). The testing is performed on the value as of October 1 each year and compares the book values of the assets to their fair values. Goodwill is tested by comparing the carrying amount of each reporting unit, deemed to be our principal operating segments or one level below them, to the fair value using both discounted cash flow as well as market multiple approaches. FCC wireless licenses are tested on an aggregate basis, consistent with our use of the licenses on a national scope, using a discounted cash flow approach. Trade names are tested by comparing their book values to their fair values calculated using a discounted cash flow approach on a presumed royalty rate derived from the revenues related to each brand name.

Intangible assets that have finite useful lives are amortized over their estimated economic lives (see Note 9). Customer lists and relationships are amortized using primarily the sum-of-the-months-digits method of amortization over the period in which those relationships are expected to contribute to our future cash flows. Finite-lived trademarks and trade names are amortized using the straight-line method over the estimated useful life of the assets. The remaining finite-lived intangible assets are generally amortized using the straight-line method. These assets, along with other long-lived assets, are reviewed for recoverability whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable.

Advertising Costs We expense advertising costs for products and services or for promoting our corporate image as incurred (see Note 22).

Foreign Currency Translation Our foreign subsidiaries and foreign investments generally report their earnings in their local currencies. We translate their foreign assets and liabilities at exchange rates in effect at the balance sheet dates. We translate their revenues and expenses using average rates during the year. The resulting foreign currency translation adjustments are recorded as a separate component of accumulated OCI in our consolidated balance sheets (see Note 3).

We hedge a portion of the foreign currency exchange risk involved in certain foreign currency-denominated transactions, which we explain further in our discussion of our methods of managing our foreign currency risk (see Note 12).

Pension and Other Postretirement Benefits See Note 14 for a comprehensive discussion of our pension and postretirement benefits, including a discussion of the actuarial assumptions, our policy for recognizing the associated gains and losses and our method used to estimate service and interest cost components.


AT&T Inc.
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 is shown in the table below:


Year Ended December 31,	2022		2021		2020
Numerators
Numerator for basic earnings per share:
Income (loss) from continuing operations, net of tax	$	(6,874)	$	23,776	$	(1,522)
Net income from continuing operations attributable to noncontrolling interests	(1,469)		(1,485)		(1,470)
Preferred Stock Dividends	(203)		(207)		(193)
Income (loss) from continuing operations attributable to common stock	(8,546)		22,084		(3,185)
Adjustment to carrying value of noncontrolling interest	663		—		—
Numerator for basic earnings per share from continuing operations1	(7,883)		22,084		(3,185)
Loss from discontinued operations, net of tax	(181)		(2,297)		(2,299)
Loss from discontinued operations attributable to noncontrolling interests	—		87		115
Loss from discontinued operations attributable to common stock	(181)		(2,210)		(2,184)
Numerator for basic earnings per share1	$	(8,064)	$	19,874	$	(5,369)
Dilutive potential common shares:
Mobility preferred interests2	526		560		560
Share-based payment2	17		22		23
Numerator for diluted earnings per share	$	(7,521)	$	20,456	$	(4,786)
Denominators (000,000)
Denominator for basic earnings per share:
Weighted average number of common shares outstanding	7,166		7,168		7,157
Dilutive potential common shares:
Mobility preferred interests (in shares)	378		304		283
Share-based payment (in shares)	43		31		26
Denominator for diluted earnings per share2	7,587		7,503		7,466
1For 2022, in the calculation of basic earnings per share, income (loss) attributable to common stock for continuing operations and total company has been increased by $663 from adjustment to carrying value of noncontrolling interest. (See Note 16)
2For 2022 and 2020, dilutive potential common shares are not included in the computation of diluted earnings per share because their effect is antidilutive as a result of the net loss.

Upon the adoption of ASU 2020-06 in the first quarter of 2022, the ability to settle our Mobility preferred interests in stock is reflected in our diluted earnings per share calculation, unless the effect is antidilutive. While our intent is to settle the Mobility 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 preferred interests and the average AT&T common stock price during the reporting period, which could vary from period-to-period. The numerator includes an adjustment to add back to income from continuing operations the earned distributions on the Mobility preferred interests, included in net income attributable to noncontrolling interest, and the denominator includes the potential issuance of AT&T common stock to settle the Mobility preferred interests outstanding. (See Notes 1 and 16)


AT&T Inc.
Dollars in millions except per share amounts

NOTE 3. OTHER COMPREHENSIVE INCOME

Changes in the balances of each component included in accumulated OCI are presented below. All amounts are net of tax and exclude noncontrolling interest.


	Foreign Currency Translation Adjustment			Net Unrealized Gains (Losses) on Available-for-Sale Securities			Net Unrealized Gains (Losses) on Derivative Instruments			Defined Benefit Postretirement Plans			Accumulated Other Comprehensive Income
Balance as of December 31, 2019	$	(3,056)		$	48		$	(37)		$	8,515		$	5,470
Other comprehensive income (loss) before reclassifications	(870)			78			(811)			2,250			647
Amounts reclassified from accumulated OCI	—		1	(15)		1	69		2	(1,841)		3	(1,787)
Net other comprehensive income (loss)	(870)			63			(742)			409			(1,140)
Balance as of December 31, 2020	(3,926)			111			(779)			8,924			4,330
Other comprehensive income (loss) before reclassifications	(125)			(63)			(715)			(34)			(937)
Amounts reclassified from accumulated OCI	2,087		1,4	(3)		1	72		2	(2,020)		3	136
Net other comprehensive income (loss)	1,962			(66)			(643)			(2,054)			(801)
Balance as of December 31, 2021	(1,964)			45			(1,422)			6,870			3,529
Other comprehensive income (loss) before reclassifications	346			(143)			(648)			1,787			1,342
Amounts reclassified from accumulated OCI	—		1	8		1	96		2	(2,028)		3	(1,924)
Distribution of WarnerMedia	(182)			—			(24)			25			(181)
Net other comprehensive income (loss)	164			(135)			(576)			(216)			(763)
Balance as of December 31, 2022	$	(1,800)		$	(90)		$	(1,998)		$	6,654		$	2,766
1(Gains) losses are included in “Other income (expense) – net” in the consolidated statements of income.
2(Gains) losses are primarily included in “Interest expense” in the consolidated statements of income (see Note 12).
3The amortization of prior service credits associated with postretirement benefits is included in “Other income (expense) – net” in the consolidated statements of income (see Note 14).
4Represents unrealized foreign currency translation adjustments at Vrio that were released upon sale. (See Note 6)

NOTE 4. SEGMENT INFORMATION

Our segments are comprised of strategic business units or other operations that offer products and services to different customer segments over various technology platforms and/or in different geographies that are managed accordingly. We have two reportable segments: Communications and Latin America.

We also evaluate segment and business unit performance based on EBITDA and/or EBITDA margin, which is defined as operating income excluding depreciation and amortization. EBITDA is used as part of our management reporting and we believe EBITDA to be a relevant and useful measurement to our investors as it measures the cash generation potential of our business units. EBITDA does not give effect to depreciation and amortization expenses incurred in operating income nor is it burdened by cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. EBITDA margin is EBITDA divided by total revenue.


AT&T Inc.
Dollars in millions except per share amounts

In the first quarter of 2022, we reclassified into “Corporate” certain administrative costs borne by AT&T where the business units do not influence decision making to conform with the current period presentation. This recast increased Corporate operations and support expenses by approximately $270 and $1,310 for full-year 2021 and 2020, respectively. Correspondingly, this recast lowered administrative expenses for the Communications segment and Video (our former U.S. video operations contributed to DIRECTV in July 2021), with no change on a consolidated basis.

The Communications segment provides wireless and wireline telecom and broadband services to consumers located in the U.S. and businesses globally. Our business strategies reflect bundled product offerings that cut across product lines and utilize shared assets. This segment contains the following business units:

Mobility** provides nationwide wireless service and equipment.
Business Wireline** provides advanced ethernet-based fiber services, IP Voice and managed professional services, as well as traditional voice and data services and related equipment to business customers.
Consumer Wireline** provides broadband services, including fiber connections that provide our multi-gig services to residential customers in select locations. Consumer Wireline also provides legacy telephony voice communication services.

The Latin America segment provides wireless services and equipment in Mexico.

Corporate and Other reconciles our segment results to consolidated operating income and income before income taxes.

Corporate includes*:*

DTV-related retained costs, which are costs previously allocated to the Video business that were retained after the transaction, net of reimbursements from DIRECTV under transition service agreements.
Parent administration support, which includes costs borne by AT&T where the business units do not influence decision making.
Securitization fees associated with our sales of receivables (see Note 17).
Value portfolio, which are businesses no longer integral to our operations or which we no longer actively market.

Other items consist of*:*

*•*Video, which includes our former U.S. video operations that were contributed to DIRECTV on July 31, 2021, and our share of DIRECTV’s earnings as equity in net income of affiliates (see Note 19).

Held-for-sale and other reclassifications, which includes our former Crunchyroll, Government Solutions and wireless and wireline operations in Puerto Rico and the U.S. Virgin Islands.

*•*Reclassification of prior service credits, which includes the reclassification of prior service credit amortization, where we present the impact of benefit plan amendments in our business unit results. Prior service credit amortization is presented in “Other income (expense) – net” in the consolidated statements of income and therefore has no impact on consolidated operating income or EBITDA.

Certain significant items, which includes items associated with the merger and integration of acquired or divested businesses, including amortization of intangible assets, employee separation charges associated with voluntary and/or strategic offers, asset impairments and abandonments and restructuring, and other items for which the segments are not being evaluated.

*•*Eliminations and consolidations, removed transactions involving dealings between Mobility and our Video business, prior to the July 31, 2021 separation of Video.

“Interest expense” and “Other income (expense) – net” are managed only on a total company basis and are, accordingly, reflected only in consolidated results.


AT&T Inc.
Dollars in millions except per share amounts


For the year ended December 31, 2022
	Revenues		Operations and Support Expenses		EBITDA		Depreciation and Amortization		Operating Income (Loss)
Communications
Mobility	$	81,780	$	49,054	$	32,726	$	8,198	$	24,528
Business Wireline	22,538		13,972		8,566		5,314		3,252
Consumer Wireline	12,749		8,253		4,496		3,169		1,327
Total Communications	117,067		71,279		45,788		16,681		29,107
Latin America - Mexico	3,144		2,812		332		658		(326)
Segment Total	120,211		74,091		46,120		17,339		28,781
Corporate and Other
Corporate:
DTV-related retained costs	8		737		(729)		549		(1,278)
Parent administration support	(32)		1,199		(1,231)		16		(1,247)
Securitization fees	65		419		(354)		—		(354)
Value portfolio	489		139		350		41		309
Total Corporate	530		2,494		(1,964)		606		(2,570)


Reclassification of prior service credits	—		2,691		(2,691)		—		(2,691)
Certain significant items	—		28,031		(28,031)		76		(28,107)

Total Corporate and Other	530		33,216		(32,686)		682		(33,368)
AT&T Inc.	$	120,741	$	107,307	$	13,434	$	18,021	$	(4,587)


AT&T Inc.
Dollars in millions except per share amounts


For the year ended December 31, 2021
	Revenues		Operations and Support Expenses		EBITDA		Depreciation and Amortization		Operating Income (Loss)
Communications
Mobility	$	78,254	$	46,762	$	31,492	$	8,122	$	23,370
Business Wireline	23,937		14,718		9,219		5,192		4,027
Consumer Wireline	12,539		8,448		4,091		3,095		996
Total Communications	114,730		69,928		44,802		16,409		28,393
Latin America - Mexico	2,747		2,652		95		605		(510)
Segment Total	117,477		72,580		44,897		17,014		27,883
Corporate and Other
Corporate:
DTV-related retained costs	49		243		(194)		236		(430)
Parent administration support	(18)		1,523		(1,541)		36		(1,577)
Securitization fees	61		89		(28)		—		(28)
Value portfolio	639		208		431		40		391
Total Corporate	731		2,063		(1,332)		312		(1,644)
Video	15,513		12,666		2,847		356		2,491
Held-for-sale and other reclassifications	453		310		143		—		143
Reclassification of prior service credits	—		2,680		(2,680)		—		(2,680)
Certain significant items	—		126		(126)		170		(296)
Eliminations and consolidations	(136)		(136)		—		—		—
Total Corporate and Other	16,561		17,709		(1,148)		838		(1,986)
AT&T Inc.	$	134,038	$	90,289	$	43,749	$	17,852	$	25,897


AT&T Inc.
Dollars in millions except per share amounts


For the year ended December 31, 2020
	Revenues		Operations and Support Expenses		EBITDA		Depreciation and Amortization		Operating Income (Loss)
Communications
Mobility	$	72,564	$	41,677	$	30,887	$	8,086	$	22,801
Business Wireline	25,083		15,068		10,015		5,216		4,799
Consumer Wireline	12,318		7,942		4,376		2,914		1,462
Total Communications	109,965		64,687		45,278		16,216		29,062
Latin America - Mexico	2,562		2,636		(74)		513		(587)
Segment Total	112,527		67,323		45,204		16,729		28,475
Corporate and Other
Corporate:

Parent administration support	(62)		1,681		(1,743)		12		(1,755)
Securitization fees	53		72		(19)		—		(19)
Value portfolio	775		335		440		64		376
Total Corporate	766		2,088		(1,322)		76		(1,398)
Video	28,610		24,174		4,436		2,262		2,174
Held-for-sale and other reclassifications	1,414		718		696		15		681
Reclassification of prior service credits	—		2,442		(2,442)		—		(2,442)
Certain significant items	—		15,677		(15,677)		3,441		(19,118)
Eliminations and consolidations	(267)		(267)		—		—		—
Total Corporate and Other	30,523		44,832		(14,309)		5,794		(20,103)
AT&T Inc.	$	143,050	$	112,155	$	30,895	$	22,523	$	8,372


AT&T Inc.
Dollars in millions except per share amounts

The following table is a reconciliation of operating income (loss) to “Income (Loss) from Continuing Operations Before Income Taxes” reported in our consolidated statements of income:


	2022		2021		2020
Communications	$	29,107	$	28,393	$	29,062
Latin America	(326)		(510)		(587)
Segment Operating Income	28,781		27,883		28,475
Reconciling Items:
Corporate	(2,570)		(1,644)		(1,398)
Video	—		2,491		2,174
Held-for-sale and other reclassifications	—		143		681
Transaction and other costs	(425)		(41)		(1,064)
Amortization of intangibles acquired	(76)		(170)		(3,427)
Asset impairments and abandonments and restructuring	(27,498)		(213)		(15,687)
Gain on spectrum transaction1	—		—		900
Benefit-related gains (losses)	(108)		128		160


Reclassification of prior service credits	(2,691)		(2,680)		(2,442)
AT&T Operating Income (Loss)	(4,587)		25,897		8,372
Interest Expense	6,108		6,716		7,727
Equity in net income of affiliates	1,791		603		89
Other income (expense) – net	5,810		9,387		(1,088)
Income (Loss) from Continuing Operations Before Income Taxes	$	(3,094)	$	29,171	$	(354)
1Included as a reduction of “Selling, general and administrative” expense in the consolidated statements of income.

The following table sets forth revenues earned from customers, and property, plant and equipment located in different geographic areas:


	2022				2021				2020
	Revenues		Net Property, Plant & Equipment		Revenues		Net Property, Plant & Equipment		Revenues		Net Property, Plant & Equipment
United States	$	116,006	$	123,305	$	129,157	$	117,690	$	138,188	$	116,926
Mexico	3,210		3,718		2,824		3,460		2,651		3,528
Asia/Pacific Rim	592		124		747		136		816		170
Europe	584		201		907		249		1,022		347
Latin America	217		74		251		82		212		94
Other	132		23		152		32		161		39
Total	$	120,741	$	127,445	$	134,038	$	121,649	$	143,050	$	121,104


AT&T Inc.
Dollars in millions except per share amounts

The following table presents assets, investments in equity affiliates and capital expenditures by segment:


At or for the years ended December 31,	2022						2021
	Assets		Investments in Equity Method Investees		Capital Expenditures		Assets		Investments in Equity Method Investees		Capital Expenditures
Communications	$	471,444	$	—	$	18,962	$	448,757	$	—	$	14,691
Latin America	8,408		—		360		8,874		—		319
Corporate and eliminations1	(76,999)		3,533		304		93,991		6,168		535
Total	$	402,853	$	3,533	$	19,626	$	551,622	$	6,168	$	15,545
1Includes $119,776 of assets from discontinued operations at December 31, 2021.

NOTE 5. REVENUE RECOGNITION

We report our revenues net of sales taxes and record certain regulatory fees, primarily Universal Service Fund (USF) fees, on a net basis. No customer accounted for more than 10% of consolidated revenues in 2022, 2021 or 2020.

Wireless, Advanced Data, Legacy Voice & Data Services and Equipment Revenue

We offer service-only contracts and contracts that bundle equipment used to access the services and/or with other service offerings. Some contracts have fixed terms and others are cancellable on a short-term basis (i.e., month-to-month arrangements).

Examples of service revenues include wireless, strategic services (e.g., virtual private network service), and legacy voice and data (e.g., traditional local and long-distance). These services represent a series of distinct services that is considered a separate performance obligation. Service revenue is recognized when services are provided, based upon either usage (e.g., minutes of traffic/bytes of data processed) or period of time (e.g., monthly service fees).

Some of our services require customer premises equipment that, when combined and integrated with AT&T’s specific network infrastructure, facilitates the delivery of service to the customer. In evaluating whether the equipment is a separate performance obligation, we consider the customer’s ability to benefit from the equipment on its own or together with other readily available resources and if so, whether the service and equipment are separately identifiable (i.e., is the service highly dependent on, or highly interrelated with the equipment). When equipment is a separate performance obligation, we record the sale of equipment when title has passed and the products are accepted by the customer. For devices sold through indirect channels (e.g., national dealers), revenue is recognized when the dealer accepts the device, not upon activation.

Our equipment and service revenues are predominantly recognized on a gross basis, as most of our services do not involve a third party and we typically control the equipment that is sold to our customers.

Revenue recognized from fixed term contracts that bundle services and/or equipment is allocated based on the standalone selling price of all required performance obligations of the contract (i.e., each item included in the bundle). Promotional discounts are attributed to each required component of the arrangement, resulting in recognition over the contract term. Standalone selling prices are determined by assessing prices paid for service-only contracts (e.g., arrangements where customers bring their own devices) and standalone device pricing.

We offer the majority of our customers the option to purchase certain wireless devices in installments over a specified period of time, and, in many cases, they may be eligible to trade in the original equipment for a new device and have the remaining unpaid balance paid or settled. For customers that elect these equipment installment payment programs, at the point of sale, we recognize revenue for the entire amount of revenue allocated to the customer receivable net of fair value of the trade-in right guarantee. The difference between the revenue recognized and the consideration received is recorded as a note receivable when the devices are not discounted and our right to consideration is unconditional. When installment sales include promotional discounts (e.g., “buy one get one free” or equipment discounts with trade-in of a device), the difference between revenue recognized and consideration received is recorded as a contract asset to be amortized over the contract term.

Less commonly, we offer certain customers highly discounted devices when they enter into a minimum service agreement term. For these contracts, we recognize equipment revenue at the point of sale based on a standalone selling price allocation. The


AT&T Inc.
Dollars in millions except per share amounts

difference between the revenue recognized and the cash received is recorded as a contract asset that will amortize over the contract term.

Our contracts allow for customers to frequently modify their arrangement, without incurring penalties in many cases. When a contract is modified, we evaluate the change in scope or price of the contract to determine if the modification should be treated as a new contract or if it should be considered a change of the existing contract. We generally do not have significant impacts from contract modifications.

Revenues from transactions between us and our customers are recorded net of revenue-based regulatory fees and taxes. Cash incentives given to customers are recorded as a reduction of revenue. Nonrefundable, upfront service activation and setup fees associated with service arrangements are deferred and recognized over the associated service contract period or customer relationship life.

Revenue Categories

The following tables set forth reported revenue by category and by business unit:


For the year ended December 31, 2022
	Communications
	Mobility		Business Wireline		Consumer Wireline		Latin America		Corporate & Other		Elim.		Total
Wireless service	$	60,499	$	—	$	—	$	2,162	$	13	$	—	$	62,674
Business service	—		21,891		—		—		—		—		21,891
Broadband	—		—		9,669		—		—		—		9,669
Legacy voice and data	—		—		1,746		—		323		—		2,069
Other	—		—		1,334		—		194		—		1,528
Total Service	60,499		21,891		12,749		2,162		530		—		97,831
Equipment	21,281		647		—		982		—		—		22,910
Total	$	81,780	$	22,538	$	12,749	$	3,144	$	530	$	—	$	120,741


For the year ended December 31, 2021
	Communications
	Mobility		Business Wireline		Consumer Wireline		Latin America		Corporate & Other		Elim.		Total
Wireless service	$	57,590	$	—	$	—	$	1,834	$	74	$	—	$	59,498
Video service	—		—		—		—		15,423		—		15,423
Business service	—		23,224		—		—		70		—		23,294
Broadband	—		—		9,085		—		—		—		9,085

Legacy voice and data	—		—		1,977		—		429		—		2,406
Other	—		—		1,384		—		611		(136)		1,859
Total Service	57,590		23,224		12,446		1,834		16,607		(136)		111,565
Equipment	20,664		713		93		913		90		—		22,473
Total	$	78,254	$	23,937	$	12,539	$	2,747	$	16,697	$	(136)	$	134,038


AT&T Inc.
Dollars in millions except per share amounts


For the year ended December 31, 2020
	Communications
	Mobility		Business Wireline		Consumer Wireline		Latin America		Corporate & Other		Elim.		Total
Wireless service	$	55,542	$	—	$	—	$	1,656	$	528	$	—	$	57,726
Video service	—		—		—		—		28,465		—		28,465
Business service	—		24,313		—		—		314		—		24,627
Broadband	—		—		8,534		—		—		—		8,534

Legacy voice and data	—		—		2,213		—		554		—		2,767
Other	—		—		1,564		—		641		(267)		1,938
Total Service	55,542		24,313		12,311		1,656		30,502		(267)		124,057
Equipment	17,022		770		7		906		288		—		18,993
Total	$	72,564	$	25,083	$	12,318	$	2,562	$	30,790	$	(267)	$	143,050

Deferred Customer Contract Acquisition and Fulfillment Costs

Costs to acquire and fulfill customer contracts, including commissions on service activations, for our Mobility, Business Wireline and Consumer Wireline services, are deferred and amortized over the contract period or expected customer relationship life, which typically ranges from three years to five years.

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, 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 $395, or $0.04 per diluted share from continuing operations for the year ended December 31, 2022.

The following table presents the deferred customer contract acquisition and fulfillment costs included on our consolidated balance sheets at December 31:


Consolidated Balance Sheets	2022		2021
Deferred Acquisition Costs
Prepaid and other current assets	$	2,893	$	2,551
Other Assets	3,913		3,247
Total deferred customer contract acquisition costs	$	6,806	$	5,798

Deferred Fulfillment Costs
Prepaid and other current assets	$	2,481	$	2,600
Other Assets	4,206		4,148
Total deferred customer contract fulfillment costs	$	6,687	$	6,748

The following table presents deferred customer contract acquisition and fulfillment cost amortization included in “Other cost of revenue” for the years ended December 31:


Consolidated Statements of Income	2022		20211
Deferred acquisition cost amortization	$	2,935	$	2,965
Deferred fulfillment cost amortization	2,688		4,014
1Includes deferred acquisition amortization of $409 and deferred fulfillment cost amortization of $1,162 from our separated Video business for the year ended December 31, 2021.

Contract Assets and Liabilities

A contract asset is recorded when revenue is recognized in advance of our right to bill and receive consideration. The contract asset will decrease as services are provided and billed. For example, when installment sales include promotional discounts (e.g., “buy one get one free”) the difference between revenue recognized and consideration received is recorded as a contract asset to be amortized over the contract term.


AT&T Inc.
Dollars in millions except per share amounts

Our contract assets primarily relate to our wireless businesses. Promotional equipment sales where we offer handset credits, which are allocated between equipment and service in proportion to their standalone selling prices, when customers commit to a specified service period result in additional contract assets recognized. These contract assets will amortize over the service contract period, resulting in lower future service revenue.

When consideration is received in advance of the delivery of goods or services, a contract liability is recorded. Reductions in the contract liability will be recorded as we satisfy the performance obligations.

The following table presents contract assets and liabilities on our consolidated balance sheets at December 31:


Consolidated Balance Sheets	2022		2021
Contract asset	$	5,512	$	4,389
Current portion in “Prepaid and other current assets”	2,941		2,582
Contract liability	4,170		4,133
Current portion in “Advanced billings and customer deposits”	3,816		3,776

Our contract asset balance in 2022 reflects increased promotional equipment sales in our wireless business. We expect the amortization of these promotional costs to flatten in 2023.

Our beginning of period contract liabilities recorded as customer contract revenue during 2022 was $3,795.

Remaining Performance Obligations

Remaining performance obligations represent services we are required to provide to customers under bundled or discounted arrangements, which are satisfied as services are provided over the contract term. In determining the transaction price allocated, we do not include non-recurring charges and estimates for usage, nor do we consider arrangements with an original expected duration of less than one year, which are primarily prepaid wireless and residential internet agreements.

Remaining performance obligations associated with business contracts reflect recurring charges billed, adjusted to reflect estimates for sales incentives and revenue adjustments. Performance obligations associated with wireless contracts are estimated using a portfolio approach in which we review all relevant promotional activities, calculating the remaining performance obligation using the average service component for the portfolio and the average device price. As of December 31, 2022, the aggregate amount of the transaction price allocated to remaining performance obligations was $35,800, of which we expect to recognize approximately 76% by the end of 2024, with the balance recognized thereafter.

NOTE 6. ACQUISITIONS, DISPOSITIONS AND OTHER ADJUSTMENTS

Acquisitions

Spectrum Auctions On January 14, 2022, the Federal Communications Commission (FCC) announced that we were the winning bidder for 1,624 3.45 GHz licenses in Auction 110. We provided the FCC an upfront deposit of $123 in the third quarter of 2021 and paid the remaining $8,956 in the first quarter of 2022, for a total of $9,079. We funded the purchase price using cash and short-term investments. We received the licenses in May 2022 and classified the auction deposits and related capitalized interest as “Licenses – Net” on our December 31, 2022 consolidated balance sheet.

In February 2021, the FCC announced that AT&T was the winning bidder for 1,621 C-Band licenses, comprised of a total of 80 MHz nationwide, including 40 MHz in Phase I. We provided to the FCC an upfront deposit of $550 in 2020 and cash payments totaling $22,856 in the first quarter of 2021, for a total of $23,406. We received the licenses in July 2021 and classified the auction deposits, related capitalized interest and billed relocation costs as “Licenses – Net” on our December 31, 2021 consolidated balance sheet. In December 2021, we paid $955 of Incentive Payments upon clearing of Phase I spectrum and estimate that we will pay $2,112 upon clearing of Phase II spectrum, expected by the end of 2023. Additionally, we are responsible for approximately $1,100 of compensable relocation costs over the next several years as the spectrum is being cleared by satellite operators, of which we paid $650 in the fourth quarter of 2021 and $98 in the third quarter of 2022. Funding for the purchase price of the spectrum included a combination of cash on hand and short-term investments, as well as short- and long-term debt.


AT&T Inc.
Dollars in millions except per share amounts

Cash paid, including spectrum deposits (net of refunds), capitalized interest, and any payments for incentive and relocation costs are included in “Acquisitions, net of cash acquired” on our consolidated statements of cash flows. Interest is capitalized until the spectrum is ready for its intended use.

In June 2020, we completed the acquisition of $2,379 of 37/39 GHz spectrum in an FCC auction. Prior to the auction, we exchanged the 39 GHz licenses with a book value of approximately $300 that were previously acquired through FiberTower Corporation for vouchers to be applied against the winning bids and recorded a $900 gain in the first quarter of 2020. These vouchers yielded a value of approximately $1,200, which was applied toward our gross bids. In the second quarter of 2020, we made the final cash payment of $949, bringing the total cash payment to $1,186.

Dispositions

Video Business On July 31, 2021, we closed our transaction with TPG to form a new company named DIRECTV, which is jointly governed by a board with representation from both AT&T and TPG, with TPG having tie-breaking authority on certain key decisions, most significantly the appointment and removal of the CEO.

In connection with the transaction, we contributed our U.S. Video business unit to DIRECTV for $4,250 of junior preferred units, an additional distribution preference of $4,200 and a 70% economic interest in common units (collectively “equity considerations”). TPG contributed approximately $1,800 in cash to DIRECTV for $1,800 of senior preferred units and a 30% economic interest in common units. See Note 10 for additional information on our accounting for our investment in DIRECTV.

Upon close of the transaction in the third quarter of 2021, we received approximately $7,170 in cash from DIRECTV ($7,600, net of $430 cash on hand) and transferred $195 of DIRECTV debt. Approximately $1,800 of the cash received is reported as cash received from financing activities in our consolidated statement of cash flows, as it relates to a note payable to DIRECTV, for which payment is tied to our agreement to cover net losses under the remaining term of the NFL SUNDAY TICKET contract up to a cap of $2,100 over the remaining period of the contract (see Note 19). The remainder of the net proceeds is reported as cash from investing activities. This transaction did not result in a material gain or loss.

In the first quarter of 2021, we applied held-for-sale accounting treatment to the assets and liabilities of the U.S. video business, and, accordingly, included the assets in “Prepaid and other current assets,” and the related liabilities in “Accounts payable and accrued liabilities,” on our consolidated balance sheet, up until the close of the transaction. The held-for-sale classification also resulted in ceasing depreciation and amortization on the designated assets.

The assets and liabilities of the Video operations, transferred to DIRECTV upon close of the transaction, were as follows:


Current assets	$	4,893
Property, plant and equipment – net	2,673
Licenses – net	5,798
Other intangible assets – net	1,634
Other assets	1,787
Total Video assets	$	16,785

Current liabilities	$	4,267
Long-term debt	206
Other noncurrent liabilities	343
Total Video liabilities	$	4,816

Central European Media Enterprises Ltd. (CME) On October 13, 2020, we completed the sale of our 65.3% interest in CME, a European broadcasting company, for approximately $1,100. This disposition did not result in a material gain or loss.

Operations in Puerto Rico On October 31, 2020, we completed the sale of our wireless and wireline operations in Puerto Rico and the U.S. Virgin Islands for approximately $1,950 and recorded a pre-tax loss of $82. The proceeds were used to redeem $1,950 of cumulative preferred interests in a subsidiary that held notes secured by the proceeds of this sale.


AT&T Inc.
Dollars in millions except per share amounts

Dispositions Reflected as Discontinued Operations

WarnerMedia On April 8, 2022, we completed the separation and distribution of our WarnerMedia business, and merger of Spinco, an AT&T subsidiary formed to hold the WarnerMedia business, with a subsidiary of Discovery, Inc., 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. In connection with and in accordance with the terms of the Separation and Distribution Agreement (SDA), prior to the distribution and merger, AT&T received approximately $40,400, which includes $38,800 of Spinco cash and $1,600 of debt retained by WarnerMedia. During the second quarter of 2022, assets of approximately $121,100 and liabilities of $70,600 were removed from our balance sheet as well as $45,041 of retained earnings and $5,632 of additional paid-in capital associated with the transaction. Additionally, in August 2022, we and WBD finalized the post-closing adjustment, pursuant to Section 1.3 of the SDA, which resulted in a $1,200 payment to WBD in the third quarter of 2022 and was reflected in the balance sheet as an adjustment to additional paid-in capital. (See Note 23)

AT&T, Spinco and Discovery entered into a Tax Matters Agreement, which governs the parties’ rights, responsibilities and obligations with respect to tax liabilities and benefits, the preservation of the expected tax-free status of the transactions contemplated by the SDA, and other matters regarding taxes.

Xandr On June 6, 2022, we completed the sale of the marketplace component of Xandr to Microsoft Corporation. Xandr was reflected in our historical financial statements as discontinued operations.

Vrio On November 15, 2021, we completed the sale of our Latin America video operations, Vrio, to Grupo Werthein and recorded a note receivable of $610 to be paid over four years, of which $300 is in the form of seller financing and the remainder is related to working capital adjustments. In the second quarter of 2021, we classified the Vrio disposal group as held-for-sale and reported the disposal group at fair value less cost to sell, which resulted in a noncash, pre-tax impairment charge of $4,555, including approximately $2,100 related to accumulated foreign currency translation adjustments and $2,500 related to property, plant and equipment and intangible assets. Approximately $80 of the impairment was attributable to noncontrolling interest. The assets and liabilities removed from our consolidated balance sheet included $851 of Vrio held-for-sale assets primarily related to deferred customer contract acquisition and fulfillment costs, prepaids and other deferred charges, and $2,872 of related liabilities primarily for reserves associated with accumulated foreign currency translation adjustments, which reversed against accumulated other comprehensive income upon close of the transaction. This disposition did not result in a net material gain or loss.

Otter Media During the third quarter of 2021, we disposed of substantially all of the assets of Otter Media. We received approximately $1,540 in cash and removed approximately $1,200 of goodwill associated with these assets. The dispositions did not result in a material gain or loss.

Playdemic Ltd. On September 20, 2021, we sold WarnerMedia’s mobile games app studio, Playdemic for approximately $1,370 in cash and recognized a pre-tax gain of $706 in “Other income (expense) – net,” on our consolidated statement of income. Approximately $600 of goodwill was removed related to this business.


AT&T Inc.
Dollars in millions except per share amounts

NOTE 7. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is summarized as follows at December 31:


	Lives (years)	2022		2021
Land	-	$	1,381	$	1,401
Buildings and improvements	2-44	38,751		38,204
Central office equipment1	3-10	98,468		97,070
Cable, wiring and conduit	15-50	84,447		79,961
Satellites	14-17	103		103
Other equipment	3-20	81,658		85,929
Software	3-7	17,640		16,520
Under construction	-	7,182		5,425
		329,630		324,613
Accumulated depreciation and amortization		202,185		202,964
Property, plant and equipment – net		$	127,445	$	121,649
1 Includes certain network software.

Our depreciation expense was $17,852 in 2022, $17,634 in 2021, and $19,028 in 2020. Depreciation expense included amortization of software totaling $2,972 in 2022, $2,909 in 2021 and $3,343 in 2020.

In December 2022, we recorded a noncash pre-tax charge of $1,413 to abandon conduits that will not be utilized to support future network activity. The abandonment was considered outside the ordinary course of business.

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 $280, or $0.03 per diluted share from continuing operations for the year ended December 31, 2022.

In December 2020, we reassessed our grouping of long-lived assets and identified certain impairment indicators, requiring us to evaluate the recoverability of the long-lived assets of our former Video business. Based on this evaluation, we determined that these assets were not fully recoverable and recognized pre-tax impairment charges totaling $7,255, of which $1,681 related to property, plant and equipment, including satellites. The reduced carrying amounts of the impaired assets became their new cost basis.

NOTE 8. LEASES

We have operating and finance leases for certain facilities and equipment used in our operations. Our leases generally have remaining lease terms of up to 15 years. Some of our real estate operating leases contain renewal options that may be exercised, and some of our leases include options to terminate the leases within one year.

We have recognized a right-of-use asset for both operating and finance leases, and a corresponding lease liability that represents the present value of our obligation to make payments over the lease term. The present value of the lease payments is calculated using the incremental borrowing rate for operating and finance leases, which was determined using a portfolio approach based on the rate of interest that we would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term. We use the unsecured borrowing rate and risk-adjust that rate to approximate a collateralized rate in the currency of the lease, which will be updated on a quarterly basis for measurement of new lease liabilities.


AT&T Inc.
Dollars in millions except per share amounts

The components of lease expense were as follows:


	2022		2021		2020
Operating lease cost	$	5,437	$	5,363	$	5,331
Finance lease cost:
Amortization of right-of-use assets	$	204	$	179	$	185
Interest on lease obligation	159		145		133
Total finance lease cost	$	363	$	324	$	318

The following table provides supplemental cash flows information related to leases:


	2022		2021		2020
Cash Flows from Operating Activities
Cash paid for amounts included in lease obligations:
Operating cash flows from operating leases	$	4,679	$	4,580	$	4,496

Supplemental Lease Cash Flow Disclosures
Operating lease right-of-use assets obtained in exchange for new operating lease obligations	3,751		3,396		4,057

The following tables set forth supplemental balance sheet information related to leases at December 31:


	2022			2021
Operating Leases
Operating lease right-of-use assets	$	21,814		$	21,824

Accounts payable and accrued liabilities	$	3,547		$	3,393
Operating lease obligation	18,659			18,956
Total operating lease obligation	$	22,206		$	22,349

Finance Leases
Property, plant and equipment, at cost	$	2,770		$	2,494
Accumulated depreciation and amortization	(1,224)			(1,053)
Property, plant and equipment – net	$	1,546		$	1,441

Current portion of long-term debt	$	170		$	127
Long-term debt	1,647			1,442
Total finance lease obligation	$	1,817		$	1,569


	2022			2021
Weighted-Average Remaining Lease Term (years)
Operating leases	8.1			8.2
Finance leases	7.9			8.9

Weighted-Average Discount Rate
Operating leases	3.7		%	3.7		%
Finance leases	8.0		%	8.2		%


AT&T Inc.
Dollars in millions except per share amounts

The following table provides the expected future minimum maturities of lease obligations:


At December 31, 2022	Operating Leases		Finance Leases
2023	$	4,657	$	315
2024	4,203		306
2025	3,543		315
2026	2,830		291
2027	2,302		290
Thereafter	8,933		1,032
Total lease payments	26,468		2,549
Less: imputed interest	(4,262)		(732)
Total	$	22,206	$	1,817

NOTE 9. GOODWILL AND OTHER INTANGIBLE ASSETS

We test goodwill for impairment at a reporting unit level, which is deemed to be our principal operating segments or one level below. With our annual impairment testing as of October 1, 2022, the calculated fair value of the Mobility reporting unit exceeded its book value; we recorded noncash impairment charges of $13,478 in our Business Wireline reporting unit, $10,508 in our Consumer Wireline reporting unit and $826 in our Mexico reporting unit. The decline in fair values was primarily due to changes in the macroeconomic environment, namely increased weighted-average cost of capital. Also, inflation pressure and lower projected cash flows driven by secular declines, predominantly at Business Wireline, impacted the fair values. A combination of discounted cash flow and market multiple approaches was used to determine the fair values. In the Communications segment, if all other assumptions were to remain unchanged, we expect the impairment charge would increase by approximately $3,400 if the weighted average cost of capital increased by 25 basis points, or $2,100 if the projected terminal growth rate declined by 25 basis points, or $2,800 if the projected long-term EBITDA margin declined 100 basis points.

Changes to our goodwill in 2022 primarily resulted from noncash impairments. Changes to our goodwill in 2021 primarily resulted from the sale of our Government Solutions business.

At December 31, 2022, our Communications segment has three reporting units: Mobility, Business Wireline and Consumer Wireline. The reporting unit is deemed to be the operating segment for Latin America.

The following table sets forth the changes in the carrying amounts of goodwill by operating segment:


	2022						2021
	Balance at Jan. 1		Impairments		Dispositions, currency exchange and other		Balance at Dec. 31		Balance at Jan. 1		Dispositions, currency exchange and other		Balance at Dec. 31
Communications
Goodwill	$	91,924	$	—	$	(43)	$	91,881	$	91,976	$	(52)	$	91,924
Impairments	—		(23,986)		—		(23,986)		—		—		—
Net goodwill	91,924		(23,986)		(43)		67,895		91,976		(52)		91,924
Latin America	816		(826)		10		—		836		(20)		816




Total	$	92,740	$	(24,812)	$	(33)	$	67,895	$	92,812	$	(72)	$	92,740

We review amortizing intangible assets for impairment whenever events or circumstances indicate that the carrying amount may not be recoverable over the remaining life of the asset or asset group.

Indefinite-lived wireless licenses increased in 2022 primarily due to recent auction activity and $1,120 of capitalized interest (see Note 6).

In 2021, as a result of the separation of our U.S. video business (see Note 6), we removed $5,798 of orbital slot licenses and $1,585 of customer lists that were transferred to DIRECTV. Indefinite-lived wireless licenses increased in 2021 primarily due to auction activity, compensable relocation and incentive payments, and capitalized interest (see Notes 6 and 22).


AT&T Inc.
Dollars in millions except per share amounts

Our other intangible assets at December 31 are summarized as follows:


	2022							2021
Other Intangible Assets	Weighted-Average Life	Gross Carrying Amount		Accumulated Amortization		Currency Translation Adjustment		Gross Carrying Amount		Accumulated Amortization		Currency Translation Adjustment
Amortized intangible assets:
Wireless licenses	21.6 years	$	3,045	$	425	$	(297)	$	3,083	$	307	$	(440)
Trademarks and trade names	15.0 years	26		11		(6)		27		11		(7)
Customer lists and relationships	12.6 years	413		304		(75)		577		429		(98)
Other	8.5 years	304		234		—		349		258		—
Total	21.1 years	$	3,788	$	974	$	(378)	$	4,036	$	1,005	$	(545)

Indefinite-lived intangible assets not subject to amortization:


Wireless licenses	$	121,769	$	111,494
Trade names	5,241		5,241
Total	$	127,010	$	116,735

Amortized intangible assets are definite-life assets, and, as such, we record amortization expense based on a method that most appropriately reflects our expected cash flows from these assets. Amortization expense for definite-life intangible assets was $169 for the year ended December 31, 2022, $218 for the year ended December 31, 2021 (reflecting the separation of our U.S. video business) and $3,495 for the year ended December 31, 2020. Estimated amortization expense for the next five years is: $161 for 2023, $154 for 2024, $142 for 2025, $142 for 2026 and $142 for 2027.


AT&T Inc.
Dollars in millions except per share amounts

NOTE 10. EQUITY METHOD INVESTMENTS

Investments in partnerships, joint ventures and less than majority-owned subsidiaries in which we have significant influence are accounted for under the equity method.

On July 31, 2021, we closed our transaction with TPG to form a new company named DIRECTV (see Note 6). The transaction resulted in our deconsolidation of the Video business, with DIRECTV being accounted for under the equity method beginning August 1, 2021.

Our investments in equity affiliates at December 31, 2022 primarily included our interests in DIRECTV and SKY Mexico.

DIRECTV We account for our investment in DIRECTV under the equity method of accounting. DIRECTV is considered a variable interest entity for accounting purposes. As DIRECTV is jointly governed by a board with representation from both AT&T and TPG, with TPG having tie-breaking authority on certain key decisions, most significantly the appointment and removal of the CEO, we have concluded that we are not the primary beneficiary of DIRECTV.

The ownership interests in DIRECTV, based on seniority are as follows:

Preferred units with distribution rights of $1,800 held by TPG, which were fully distributed in 2021.
Junior preferred units with distribution rights of $4,250 held by AT&T, of which $702 of distribution rights remain as of December 31, 2022.
Distribution preference associated with Common units of $4,200 held by AT&T.
Common units, with 70% held by AT&T and 30% held by TPG.

The initial fair value of the equity considerations on July 31, 2021 was $6,852, which was determined using a discounted cash flow model reflecting distribution rights and preference of the individual instruments. During 2022 and 2021, we recognized $1,808 and $619 of equity in net income of affiliates and received total distributions of $4,457 and $1,942, respectively, from DIRECTV. The book value of our investment in DIRECTV was $2,911 and $5,539 at December 31, 2022 and 2021.

Our share of net income or loss may differ from the stated ownership percentage interest of DIRECTV as the terms of the arrangement prescribe substantive non-proportionate cash distributions, both from operations and in liquidation, that are based on classes of interests held by investors. In the event that DIRECTV records a loss, that loss will be allocated to ownership interests based on their seniority, beginning with the most subordinated interests.

SKY Mexico We hold a 41.3% interest in SKY Mexico, which is a leading pay-TV provider in Mexico.

The following table presents summarized financial information for DIRECTV and our other equity method investments, consisting primarily of SKY Mexico and certain sports-related programming investments, at December 31, or for the year then ended:


	2022		2021		2020
Income Statements1

Operating revenues	$	25,794	$	12,220	$	1,282
Operating income	3,175		1,179		157
Net income	2,581		938		91





Balance Sheets

Current assets	4,240		5,295
Noncurrent assets	14,211		17,022
Current liabilities	6,681		7,191
Noncurrent liabilities	7,951		8,614
1Does not include DIRECTV for periods prior to August 1, 2021.


AT&T Inc.
Dollars in millions except per share amounts

The following table is a reconciliation of our investments in equity affiliates as presented on our consolidated balance sheets:


	2022		2021
Beginning of year	$	6,168	$	742
Additional investments	3		—
Receipt of equity interest in DIRECTV	—		6,852
Distributions from DIRECTV in excess of cumulative equity in earnings	(2,649)		(1,323)
Other capital distributions	—		(6)
Dividends and distributions of cumulative earnings received	(1,815)		(701)
Equity in net income of affiliates	1,791		603


Currency translation adjustments	25		(14)
Other adjustments	10		15
End of year	$	3,533	$	6,168

NOTE 11. DEBT

Long-term debt of AT&T and its subsidiaries, including interest rates and maturities, is summarized as follows at December 31:


							2022		2021
Notes and debentures
	Interest Rates1			Maturities
	0.00%	-	2.99%	2022	-	2039	$	24,603	$	31,612
	3.00%	-	4.99%	2022	-	2061	91,201		107,635
	5.00%	-	6.99%	2022	-	2095	20,083		23,023
	7.00%	-	12.00%	2022	-	2097	4,884		5,056
Credit agreement borrowings							2,500		10,400
Fair value of interest rate swaps recorded in debt							13		16
							143,284		177,742
Unamortized (discount) premium – net							(9,650)		(9,758)
Unamortized issuance costs							(427)		(508)
Total notes and debentures							133,207		167,476
Finance lease obligations							1,817		1,569
Total long-term debt, including current maturities							135,024		169,045
Current maturities of long-term debt							(6,601)		(7,934)
Current maturities of credit agreement borrowings							—		(10,100)
Total long-term debt							$	128,423	$	151,011
1Foreign debt includes the impact from hedges, when applicable.

We had outstanding Euro, British pound sterling, Canadian dollar, Mexican peso, Australian dollar, and Swiss franc denominated debt of approximately $35,525 and $41,063 at December 31, 2022 and 2021, respectively.

The weighted-average interest rate of our long-term debt portfolio, including credit agreement borrowings and the impact of derivatives, was approximately 4.1% as of December 31, 2022 and 3.8% as of December 31, 2021.

Debt maturing within one year consisted of the following at December 31:


	2022		2021
Current maturities of long-term debt	$	6,601	$	7,934
Commercial paper	866		6,586
Credit agreement borrowings	—		10,100
Total	$	7,467	$	24,620


AT&T Inc.
Dollars in millions except per share amounts

Financing Activities

During 2022, we received net proceeds of $479 on the issuance of $479 in long-term debt and proceeds of $3,250 on the issuance of credit agreement borrowings in various markets, with an average weighted maturity of approximately 2.0 years and a weighted average interest rate of 5.2%. We repaid $34,835 of long-term debt and credit agreement borrowings with a weighted average interest rate of 3.1%. Our debt activity during 2022 primarily consisted of the following:


	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Full Year 2022
Net commercial paper borrowings	$	1,471	$	(5,219)	$	(724)	$	(1,337)	$	(5,809)
Issuance of Notes and Debentures:
Private Financing	$	—	$	—	$	750	$	—	$	750
2025 Term Loan	—		—		—		2,500		2,500
Other	479		—		—		—		479
Debt Issuances	$	479	$	—	$	750	$	2,500	$	3,729

Repayments:
2021 Syndicated Term Loan	$	—	$	(7,350)	$	—	$	—	$	(7,350)
BAML Bilateral Term Loan – Tranche A	—		(1,000)		—		—		(1,000)
Private financing	—		(750)		—		(750)		(1,500)
Repayment of other short-term borrowings	$	—	$	(9,100)	$	—	$	(750)	$	(9,850)

USD notes1,2,3	$	(123)	$	(18,957)	$	—	$	(287)	$	(19,367)
Euro notes	—		(3,343)		—		—		(3,343)
BAML Bilateral Term Loan – Tranche B	—		(1,000)		—		—		(1,000)
Other	(667)		(123)		(199)		(419)		(1,408)
Repayments of long-term debt	$	(790)	$	(23,423)	$	(199)	$	(706)	$	(25,118)
1On April 11, 2022, we issued notices for the redemption in full of all of the outstanding approximately $9,042 aggregate principal amount of various global notes due 2022 to 2026 with coupon rates ranging from 2.625% to 4.450% (Make-Whole Notes). The Make-Whole Notes were redeemed on the redemption dates set forth in the notices of redemption, at “make whole” redemption prices calculated as set forth in the respective redemption notices in the second quarter.
2Includes $7,954 of cash paid toward the $8,822 aggregate principal amount of various notes that were tendered for cash in May 2022. The notes had interest rates ranging between 3.100% and 8.750% and original maturities ranging from 2026 to 2061.
3Includes $287 of principal repayment on a $592 zero coupon note that matured in November 2022. The other $305 was applied to operating cash flows related to interest expense that accreted to the note over its life.

As of December 31, 2022 and 2021, we were in compliance with all covenants and conditions of instruments governing our debt. Substantially all of our outstanding long-term debt is unsecured. Maturities of outstanding long-term notes and debentures, as of December 31, 2022, and the corresponding weighted-average interest rate scheduled for repayment are as follows:


	2023			2024			2025			2026			2027			Thereafter
Debt repayments1	$	6,929		$	8,950		$	5,948		$	8,619		$	6,278		$	110,949
Weighted-average interest rate 2	3.7		%	4.1		%	5.5		%	3.1		%	3.7		%	4.2		%
1Debt repayments represent maturity value. Foreign debt includes the impact from hedges, when applicable. Includes credit agreement borrowings.
2Includes credit agreement borrowings.

Credit Facilities

General

On January 29, 2021, we entered into a $14,700 Term Loan Credit Agreement (2021 Syndicated Term Loan), with Bank of America, N.A., as agent. On March 23, 2021, we borrowed $7,350 under the 2021 Syndicated Term Loan and the remaining $7,350 of lenders’ commitments was terminated. In the first quarter of 2022, the maturity date of the 2021 Syndicated Term Loan was extended to December 31, 2022. On April 13, 2022, the 2021 Syndicated Term Loan was paid off and terminated.


AT&T Inc.
Dollars in millions except per share amounts

In March 2021, we entered into and drew on a $2,000 term loan credit agreement (BAML Bilateral Term Loan) consisting of (i) a $1,000 facility originally due December 31, 2021 (BAML Tranche A Facility) and subsequently extended to December 31, 2022 in the fourth quarter of 2021, and (ii) a $1,000 facility due December 31, 2022 (BAML Tranche B Facility), with Bank of America, N.A., as agent. On April 13, 2022, the BAML Bilateral Term Loan was paid off and terminated.

In November 2022, we entered into and drew on a $2,500 term loan agreement due February 16, 2025 (2025 Term Loan), with Mizuho Bank, Ltd., as agent. As of December 31, 2022, $2,500 was outstanding under this agreement.

Revolving Credit Agreements

In November 2022, we terminated one of our revolving credit agreements and amended and restated the other. We currently have one $12,000 revolving credit agreement that terminates on November 18, 2027 (Revolving Credit Agreement). No amounts were outstanding as of December 31, 2022.

Each of our credit and loan agreements contains covenants that are customary for an issuer with an investment grade senior debt credit rating. Our Revolving Credit Agreement and 2025 Term Loan include a net debt-to-EBITDA financial ratio covenant requiring AT&T to maintain, as of the last day of each fiscal quarter, a ratio of not more than 3.75-to-1. Other loan agreements include a net debt-to-EBITDA financial ratio covenant requiring AT&T to maintain, as of the last day of each fiscal quarter through June 30, 2023 a ratio of not more than 4.0-to-1, and a ratio of not more than 3.5-to-1 for any fiscal quarter thereafter.

The events of default are customary for agreements of this type and such events would result in the acceleration of, or would permit the lenders to accelerate, as applicable, required payments and would increase each agreement’s relevant Applicable Margin by 2.00% per annum.

The obligations of the lenders under the Revolving Credit Agreement to provide advances will terminate on November 18, 2027, unless the commitments are terminated in whole prior to that date. All advances must be repaid no later than the date on which lenders are no longer obligated to make any advances under the Revolving Credit Agreement.

The Revolving Credit Agreement provides that we and lenders representing more than 50% of the facility amount may agree to extend their commitments under the credit agreement for two one-year periods beyond the initial termination date. We have the right to terminate, in whole or in part, amounts committed by the lenders under the credit agreement in excess of any outstanding advances; however, any such terminated commitments may not be reinstated.

Advances under the Revolving Credit Agreement would bear interest, at our option, either:

at a variable annual rate equal to: (1) the highest of (but not less than zero) (a) the rate of interest announced publicly by Citibank in New York, New York, from time to time, as Citibank’s base rate, (b) 0.5% per annum above the federal funds rate, and (c) the forward-looking term rate based on the secured overnight financing rate (“Term SOFR”) for a period of one month plus a credit spread adjustment of 0.10% plus 1.00%, plus (2) an applicable margin, as set forth in the credit agreement (the “Applicable Margin for Base Advances”); or
at a rate equal to: (i) Term SOFR for a period of one, three or six months, as applicable, plus (ii) a credit spread adjustment of 0.10% plus (iii) an applicable margin, as set forth in the Revolving Credit Agreement (the “Applicable Margin for Benchmark Rate Advances”).

We pay a facility fee of 0.060%, 0.070%, 0.080% or 0.100% per annum of the amount of the lender commitments, depending on AT&T’s credit rating.

NOTE 12. FAIR VALUE MEASUREMENTS AND DISCLOSURE

The Fair Value Measurement and Disclosure framework in ASC 820, “Fair Value Measurement,” provides a three-tiered fair value hierarchy based on the reliability of the inputs used to determine fair value. Level 1 refers to fair values determined based on quoted prices in active markets for identical assets. Level 2 refers to fair values estimated using significant other observable inputs and Level 3 includes fair values estimated using significant unobservable inputs.

The level of an asset or liability within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Our valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs.

The valuation methodologies described above may produce a fair value calculation that may not be indicative of future net realizable value or reflective of future fair values. We believe our valuation methods are appropriate and consistent with other market participants. The use of different methodologies or assumptions to determine the fair value of certain financial


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Dollars in millions except per share amounts

instruments could result in a different fair value measurement at the reporting date. There have been no changes in the methodologies used since December 31, 2021.

Long-Term Debt and Other Financial Instruments

The carrying amounts and estimated fair values of our long-term debt, including current maturities, and other financial instruments, are summarized as follows:


	December 31, 2022				December 31, 2021
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Notes and debentures1	$	133,207	$	122,524	$	167,476	$	193,068
Commercial paper	866		866		6,586		6,586

Investment securities2	2,692		2,692		3,214		3,214

1Includes credit agreement borrowings. Excludes note payable to DIRECTV.

2Excludes investments accounted for under the equity method.

The carrying amount of debt with an original maturity of less than one year approximates fair value. The fair value measurements used for notes and debentures are considered Level 2 and are determined using various methods, including quoted prices for identical or similar securities in both active and inactive markets.

Following is the fair value leveling for investment securities that are measured at fair value and derivatives as of December 31, 2022 and December 31, 2021. Derivatives designated as hedging instruments are reflected as “Other Assets,” “Other noncurrent liabilities,” “Prepaid and other current assets” and “Accounts payable and accrued liabilities” on our consolidated balance sheets.


	December 31, 2022
	Level 1		Level 2		Level 3		Total
Equity Securities
Domestic equities	$	995	$	—	$	—	$	995
International equities	198		—		—		198
Fixed income equities	189		—		—		189
Available-for-Sale Debt Securities	—		1,132		—		1,132
Asset Derivatives

Cross-currency swaps	—		28		—		28


Liability Derivatives

Cross-currency swaps	—		(6,010)		—		(6,010)

Foreign exchange contracts	—		(23)		—		(23)

	December 31, 2021
	Level 1		Level 2		Level 3		Total
Equity Securities
Domestic equities	$	1,213	$	—	$	—	$	1,213
International equities	221		—		—		221
Fixed income equities	219		—		—		219
Available-for-Sale Debt Securities	—		1,380		—		1,380
Asset Derivatives

Cross-currency swaps	—		211		—		211


Liability Derivatives

Cross-currency swaps	—		(3,170)		—		(3,170)

Investment Securities

Our investment securities include both equity and debt securities that are measured at fair value, as well as equity securities without readily determinable fair values. A substantial portion of the fair values of our investment securities is estimated based on quoted market prices. Investments in equity securities not traded on a national securities exchange are valued at cost, less


AT&T Inc.
Dollars in millions except per share amounts

any impairment, and adjusted for changes resulting from observable, orderly transactions for identical or similar securities. Investments in debt securities not traded on a national securities exchange are valued using pricing models, quoted prices of securities with similar characteristics or discounted cash flows.

The components comprising total gains and losses in the period on equity securities are as follows:


For the years ended December 31,	2022		2021		2020
Total gains (losses) recognized on equity securities	$	(309)	$	293	$	171
Gains (Losses) recognized on equity securities sold	(80)		(5)		(25)
Unrealized gains (losses) recognized on equity securities held at end of period	$	(229)	$	298	$	196

At December 31, 2022, available-for-sale debt securities totaling $1,132 have maturities as follows - less than one year: $38; one to three years: $158; three to five years: $170; five or more years: $766.

Our cash equivalents (money market securities), short-term investments (certificate and time deposits) and nonrefundable customer deposits are recorded at amortized cost, and the respective carrying amounts approximate fair values. Short-term investments and nonrefundable customer deposits are recorded in “Prepaid and other current assets” and our investment securities are recorded in “Other Assets” on the consolidated balance sheets.

Derivative Financial Instruments

We enter into derivative transactions to manage certain market risks, primarily interest rate risk and foreign currency exchange risk. This includes the use of interest rate swaps, interest rate locks, foreign exchange forward contracts and combined interest rate foreign exchange contracts (cross-currency swaps). We do not use derivatives for trading or speculative purposes. We record derivatives on our consolidated balance sheets at fair value that is derived from observable market data, including yield curves and foreign exchange rates (all of our derivatives are Level 2). Cash flows associated with derivative instruments are presented in the same category on the consolidated statements of cash flows as the item being hedged.

Fair Value Hedging Periodically, we enter into and designate fixed-to-floating interest rate swaps as fair value hedges. The purpose of these swaps is to manage interest rate risk by managing our mix of fixed-rate and floating-rate debt. These swaps involve the receipt of fixed-rate amounts for floating interest rate payments over the life of the swaps without exchange of the underlying principal amount.

We also designate most of our cross-currency swaps and foreign exchange contracts as fair value hedges. The purpose of these contracts is to hedge foreign currency risk associated with changes in spot rates on foreign denominated debt. For cross-currency hedges, we have elected to exclude the change in fair value of the swap related to both time value and cross-currency basis spread from the assessment of hedge effectiveness. For foreign exchange contracts, we have elected to exclude the change in fair value of forward points from the assessment of hedge effectiveness.

Unrealized and realized gains or losses from fair value hedges impact the same category on the consolidated statements of income as the item being hedged, including the earnings impact of excluded components. In instances where we have elected to exclude components from the assessment of hedge effectiveness related to fair value hedges, unrealized gains or losses on such excluded components are recorded as a component of accumulated OCI and recognized into earnings over the life of the hedging instrument. Unrealized gains on derivatives designated as fair value hedges are recorded at fair value as assets, and unrealized losses are recorded at fair market value as liabilities. Except for excluded components, changes in the fair value of derivative instruments designated as fair value hedges are offset against the change in fair value of the hedged assets or liabilities through earnings. In the years ended December 31, 2022 and 2021, no ineffectiveness was measured on fair value hedges.

Cash Flow Hedging We designated some of our cross-currency swaps as cash flow hedges to hedge our exposure to variability in expected future cash flows that are attributable to foreign currency risk generated from our foreign-denominated debt. These agreements include initial and final exchanges of principal from fixed foreign currency denominated amounts to fixed U.S. dollar denominated amounts, to be exchanged at a specified rate that is usually determined by the market spot rate upon issuance. They also include an interest rate swap of a fixed or floating foreign currency-denominated interest rate to a fixed U.S. dollar denominated interest rate.

On September 30, 2022, we de-designated most of our cross-currency swaps from cash flow hedges and re-designated these swaps as fair value hedges. The amount remaining in accumulated other comprehensive loss related to cash flow hedges on the de-designation date was $1,857. The amount will be reclassified to earnings when the hedged item is recognized in earnings or


AT&T Inc.
Dollars in millions except per share amounts

when it becomes probable that the forecasted transactions will not occur. The election of fair value hedge designation for cross-currency swaps does not have an impact on our financial results.

Unrealized gains on derivatives designated as cash flow hedges are recorded at fair value as assets, and unrealized losses are recorded at fair value as liabilities. For derivative instruments designated as cash flow hedges, changes in fair value are reported as a component of accumulated OCI and are reclassified into the consolidated statements of income in the same period the hedged transaction affects earnings.

Periodically, we enter into and designate interest rate locks to partially hedge the risk of changes in interest payments attributable to increases in the benchmark interest rate during the period leading up to the probable issuance of fixed-rate debt. We designate our interest rate locks as cash flow hedges. Gains and losses when we settle our interest rate locks are amortized into income over the life of the related debt. Over the next 12 months, we expect to reclassify $59 from accumulated OCI to “Interest expense” due to the amortization of net losses on historical interest rate locks.

Collateral and Credit-Risk Contingency We have entered into agreements with our derivative counterparties establishing collateral thresholds based on respective credit ratings and netting agreements. At December 31, 2022, we had posted collateral of $886 (a deposit asset) and held collateral of $0 (a receipt liability). Under the agreements, if AT&T’s credit rating had been downgraded two ratings levels by Fitch Ratings, one level by S&P and one level by Moody’s, before the final collateral exchange in December, we would have been required to post additional collateral of $42. If AT&T’s credit rating had been downgraded three ratings levels by Fitch Ratings, two levels by S&P, and two levels by Moody’s, we would have been required to post additional collateral of $5,728. At December 31, 2021, we had posted collateral of $135 (a deposit asset) and held collateral of $7 (a receipt liability). We do not offset the fair value of collateral, whether the right to reclaim cash collateral (a receivable) or the obligation to return cash collateral (a payable) exists, against the fair value of the derivative instruments.

Following are the notional amounts of our outstanding derivative positions at December 31:


	2022		2021

Cross-currency swaps	$	38,213	$	40,737

Foreign exchange contracts	617		—
Total	$	38,830	$	40,737

Following are the related hedged items affecting our financial position and performance:


Effect of Derivatives on the Consolidated Statements of Income
Fair Value Hedging Relationships
For the years ended December 31,	2022		2021		2020
Interest rate swaps (Interest expense):
Gain (Loss) on interest rate swaps	$	(3)	$	(4)	$	(6)
Gain (Loss) on long-term debt	3		4		6
Cross-currency swaps:
Gain (Loss) on cross-currency swaps	2,195		(91)		—
Gain (Loss) on long-term debt	(2,195)		91		—
Gain (Loss) recognized in accumulated OCI	297		(17)		—
Foreign exchange contracts:
Gain (Loss) on foreign exchange contracts	(12)		—		—
Gain (Loss) on long-term debt	12		—		—
Gain (Loss) recognized in accumulated OCI	(12)		—		—


AT&T Inc.
Dollars in millions except per share amounts

In addition, the net swap settlements that accrued and settled in the periods above were offset against “Interest expense.”


Cash Flow Hedging Relationships
For the years ended December 31,	2022		2021		2020
Cross-currency swaps:
Gain (Loss) recognized in accumulated OCI	$	(1,119)	$	(873)	$	(378)
Foreign exchange contracts:
Gain (Loss) recognized in accumulated OCI	3		(17)		3
Other income (expense) – net reclassified from accumulated OCI into income	1		1		(3)
Interest rate locks:
Gain (Loss) recognized in accumulated OCI	—		—		(648)
Interest income (expense) reclassified from accumulated OCI into income	(65)		(92)		(84)
Other income (expense) reclassified from accumulated OCI into income	(45)		—		—
Distribution of WarnerMedia	(12)		—		—

Nonrecurring Fair Value Measurements

In addition to assets and liabilities that are recorded at fair value on a recurring basis, impairment indicators may subject goodwill and long-lived assets to nonrecurring fair value measurements. The implied fair values of the Business Wireline, Consumer Wireline and Mexico reporting units and the former U.S. video business were estimated using both the discounted cash flow as well as market multiple approaches (see Note 9). The inputs to these models are considered Level 3.

NOTE 13. INCOME TAXES

Significant components of our deferred tax liabilities (assets) are as follows at December 31:


	2022		2021
Depreciation and amortization	$	36,570	$	35,894
Licenses and nonamortizable intangibles	19,339		15,573
Employee benefits	(2,251)		(3,178)
Deferred fulfillment costs	1,989		1,797
Equity in partnership	3,284		3,285
Net operating loss and other carryforwards	(5,817)		(6,109)
Other – net	(343)		2,153
Subtotal	52,771		49,415
Deferred tax assets valuation allowance	4,175		4,343
Net deferred tax liabilities	$	56,946	$	53,758

Noncurrent deferred tax liabilities	$	57,032	$	53,767
Less: Noncurrent deferred tax assets	(86)		(9)
Net deferred tax liabilities	$	56,946	$	53,758

At December 31, 2022, we had combined net operating and capital loss carryforwards (tax effected) for federal income tax purposes of $892, state of $747 and foreign of $2,441, expiring through 2042. Additionally, we had federal credit carryforwards of $293 and state credit carryforwards of $1,444, expiring primarily through 2042.

We recognize a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion, or all, of a deferred tax asset will not be realized. Our valuation allowances at December 31, 2022 and 2021 related primarily to state and foreign net operating losses and state credit carryforwards.

We consider post-1986 unremitted foreign earnings subjected to the one-time transition tax not to be indefinitely reinvested as such earnings can be repatriated without any significant incremental tax costs. We consider other types of unremitted foreign earnings to be indefinitely reinvested. U.S. income and foreign withholding taxes have not been recorded on temporary


AT&T Inc.
Dollars in millions except per share amounts

differences related to investments in certain foreign subsidiaries as such differences are considered indefinitely reinvested. Determination of the amount of unrecognized deferred tax liability is not practicable.

We recognize the financial statement effects of a tax return position when it is more likely than not, based on the technical merits, that the position will ultimately be sustained. For tax positions that meet this recognition threshold, we apply our judgment, taking into account applicable tax laws, our experience in managing tax audits and relevant GAAP, to determine the amount of tax benefits to recognize in our financial statements. For each position, the difference between the benefit realized on our tax return and the benefit reflected in our financial statements is recorded on our consolidated balance sheets as an unrecognized tax benefit (UTB). We update our UTBs at each financial statement date to reflect the impacts of audit settlements and other resolutions of audit issues, the expiration of statutes of limitation, developments in tax law and ongoing discussions with taxing authorities. A reconciliation of the change in our UTB balance from January 1 to December 31 for 2022 and 2021 is as follows:


Federal, State and Foreign Tax	2022		2021
Balance at beginning of year	$	8,954	$	9,415
Increases for tax positions related to the current year	1,389		677
Increases for tax positions related to prior years	577		332
Decreases for tax positions related to prior years	(1,079)		(1,169)
Lapse of statute of limitations	(2)		(6)
Settlements	(182)		(295)


Balance at end of year	9,657		8,954
Accrued interest and penalties	1,930		2,054
Gross unrecognized income tax benefits	11,587		11,008
Less: Deferred federal and state income tax benefits	(723)		(728)
Less: Tax attributable to timing items included above	(4,640)		(3,428)
Total UTB that, if recognized, would impact the effective income tax rate as of the end of the year	$	6,224	$	6,852

Periodically we make deposits to taxing jurisdictions which reduce our UTB balance but are not included in the reconciliation above. The amount of deposits that reduced our UTB balance was $1,767 at December 31, 2022 and $377 at December 31, 2021.

Accrued interest and penalties included in UTBs were $1,930 as of December 31, 2022 and $2,054 as of December 31, 2021. We record interest and penalties related to federal, state and foreign UTBs in income tax expense. The net interest and penalty expense (benefit) included in income tax expense was $(86) for 2022, $(129) for 2021 and $127 for 2020.

We file income tax returns in the U.S. federal jurisdiction and various state, local and foreign jurisdictions. As a large taxpayer, our income tax returns are regularly audited by the Internal Revenue Service (IRS) and other taxing authorities.

The IRS has completed field examinations of our tax returns through 2015. All audit periods prior to 2005 are closed for federal examination purposes and we have effectively resolved all outstanding audit issues for years through 2010 with the IRS Appeals Division. Those years will be closed as the final paperwork is processed in the coming months.

While we do not expect material changes, we are generally unable to estimate the range of impacts on the balance of the remaining uncertain tax positions or the impact on the effective tax rate from the resolution of these issues until each year is closed; and it is possible that the amount of unrecognized benefit with respect to our uncertain tax positions could increase or decrease within the next 12 months.


AT&T Inc.
Dollars in millions except per share amounts

The components of income tax (benefit) expense are as follows:


	2022		2021		2020
Federal:
Current	$	579	$	(2,400)	$	(346)
Deferred	2,206		6,872		858
	2,785		4,472		512
State and local:
Current	21		289		338
Deferred	912		648		272
	933		937		610
Foreign:
Current	106		(66)		14
Deferred	(44)		52		32
	62		(14)		46
Total	$	3,780	$	5,395	$	1,168

“Income (Loss) from Continuing Operations Before Income Taxes” in the Consolidated Statements of Income included the following components for the years ended December 31:


	2022		2021		2020
U.S. income (loss) before income taxes	$	(1,480)	$	29,678	$	510
Foreign income (loss) before income taxes	(1,614)		(507)		(864)
Total	$	(3,094)	$	29,171	$	(354)

A reconciliation of income tax expense (benefit) on continuing operations and the amount computed by applying the statutory federal income tax rate of 21% to income from continuing operations before income taxes is as follows:


	2022			2021			2020
Taxes computed at federal statutory rate	$	(650)		$	6,126		$	(74)
Increases (decreases) in income taxes resulting from:
State and local income taxes – net of federal income tax benefit	795			936			170
CARES Act federal NOL carryback	—			(471)			—
Tax on foreign investments	43			47			(124)
Noncontrolling interest	(308)			(291)			(286)
Permanent items and R&D credit	(121)			(153)			(195)
Audit resolutions	(642)			(220)			(112)
Divestitures	(481)			(558)			107
Goodwill impairment1	5,210			16			1,702
Other – net	(66)			(37)			(20)
Total	$	3,780		$	5,395		$	1,168
Effective Tax Rate	(122.2)		%	18.5		%	(329.9)		%

1 Goodwill impairments are not deductible for tax purposes.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was enacted, which allows for a Net Operating Loss (NOL) generated in 2020 to be carried back to a year with a federal rate of 35%. During 2021, we recorded a $471 tax benefit for the rate impact of the 2020 NOL carryback adjusted for the domestic manufacturing deduction limitation in the carryback year and applicable unrecognized tax benefits.

AT&T is subject to the Global Intangible Low Taxed Income (GILTI) provisions created under the Tax Cuts and Jobs Act of 2017. We report the tax impact of GILTI as a period cost when incurred.


AT&T Inc.
Dollars in millions except per share amounts

NOTE 14. PENSION AND POSTRETIREMENT BENEFITS

We offer noncontributory pension programs covering the majority of domestic nonmanagement employees in our Communications business. Nonmanagement employees’ pension benefits are generally calculated using one of two formulas: a flat dollar amount applied to years of service according to job classification or a cash balance plan with negotiated annual pension band credits as well as interest credits. Most employees can elect to receive their pension benefits in either a lump sum payment or an annuity.

Pension programs covering U.S. management employees are closed to new entrants. These programs continue to provide benefits to participants that were generally hired before January 1, 2015, who receive benefits under either cash balance pension programs that include annual or monthly credits based on salary as well as interest credits, or a traditional pension formula (i.e., a stated percentage of employees’ adjusted career income).

We also provide a variety of medical, dental and life insurance benefits to certain retired employees under various plans and accrue actuarially determined postretirement benefit costs as active employees earn these benefits.

During the third quarter of 2022, we committed to, and reflected in our results, plan changes impacting postretirement health and welfare benefits. This plan change aligns our benefit plans to market level.

Obligations and Funded Status

For defined benefit pension plans, the benefit obligation is the projected benefit obligation, the actuarial present value, as of our December 31 measurement date, of all benefits attributed by the pension benefit formula to employee service rendered to that date. The amount of benefit to be paid depends on a number of future events incorporated into the pension benefit formula, including estimates of the average life of employees and their beneficiaries and average years of service rendered. It is measured based on assumptions concerning future interest rates and future employee compensation levels as applicable.

For postretirement benefit plans, the benefit obligation is the accumulated postretirement benefit obligation, the actuarial present value as of the measurement date of all future benefits attributed under the terms of the postretirement benefit plans to employee service.

The following table presents the change in the projected benefit obligation for the years ended December 31:


	Pension Benefits				Postretirement Benefits
	2022		2021		2022		2021
Benefit obligation at beginning of year	$	57,212	$	62,158	$	12,552	$	13,928
Service cost - benefits earned during the period	617		957		32		45
Interest cost on projected benefit obligation	1,747		1,276		277		210
Amendments	—		—		(2,370)		—
Actuarial (gain) loss	(10,894)		(1,237)		(1,919)		(275)
Benefits paid, including settlements	(5,854)		(5,942)		(1,292)		(1,356)


Benefit obligation at end of year	$	42,828	$	57,212	$	7,280	$	12,552


AT&T Inc.
Dollars in millions except per share amounts

The following table presents the change in the fair value of plan assets for the years ended December 31 and the plans’ funded status at December 31:


	Pension Benefits				Postretirement Benefits
	2022		2021		2022		2021
Fair value of plan assets at beginning of year	$	54,401	$	54,606	$	3,198	$	3,843
Actual return on plan assets	(7,673)		5,737		(370)		210
Benefits paid, including settlements 1	(5,854)		(5,942)		(788)		(1,163)
Contributions	—		—		120		308

Fair value of plan assets at end of year	40,874		54,401		2,160		3,198
Unfunded status at end of year 2	$	(1,954)	$	(2,811)	$	(5,120)	$	(9,354)
1At our discretion, certain postretirement benefits may be paid from our cash accounts, which does not reduce Voluntary Employee Benefit Association (VEBA) assets. Future benefit payments may be made from VEBA trusts and thus reduce those asset balances.
2Funded status is not indicative of our ability to pay ongoing pension benefits or of our obligation to fund retirement trusts. Required pension funding is determined in accordance with the Employee Retirement Income Security Act of 1974, as amended (ERISA) and applicable regulations.

Amounts recognized on our consolidated balance sheets at December 31 are listed below:


	Pension Benefits				Postretirement Benefits
	2022		2021		2022		2021
Current portion of employee benefit obligation 1	$	—	$	—	$	(1,058)	$	(1,106)
Employee benefit obligation 2	(1,954)		(2,811)		(4,062)		(8,248)
Net amount recognized	$	(1,954)	$	(2,811)	$	(5,120)	$	(9,354)
1Included in “Accounts payable and accrued liabilities.”
2Included in “Postemployment benefit obligation,” combined with international pension obligations and other postemployment obligations of $161 and $1,083 at December 31, 2022, and $364 and $1,226 at December 31, 2021, respectively.

The accumulated benefit obligation for our pension plans represents the actuarial present value of benefits based on employee service and compensation as of a certain date and does not include an assumption about future compensation levels. The accumulated benefit obligation for our pension plans was $42,137 at December 31, 2022, and $56,159 at December 31, 2021.

Net Periodic Benefit Cost and Other Amounts Recognized in Other Comprehensive Income

Periodic Benefit Costs

The service cost component of net periodic pension cost (credit) is recorded in operating expenses in the consolidated statements of income while the remaining components are recorded in “Other income (expense) – net.” Our combined net pension and postretirement cost (credit) recognized in our consolidated statements of income was $(4,789), $(7,652) and $711 for the years ended December 31, 2022, 2021 and 2020.

The following table presents the components of net periodic benefit cost (credit):


	Pension Benefits						Postretirement Benefits
	2022		2021		2020		2022		2021		2020
Service cost – benefits earned during the period	$	617	$	957	$	1,029	$	32	$	45	$	53
Interest cost on projected benefit obligation	1,747		1,276		1,687		277		210		416
Expected return on assets	(3,107)		(3,513)		(3,557)		(112)		(151)		(178)
Amortization of prior service credit	(133)		(144)		(113)		(2,558)		(2,537)		(2,329)
Net periodic benefit cost (credit) before remeasurement	(876)		(1,424)		(954)		(2,361)		(2,433)		(2,038)
Actuarial (gain) loss	(115)		(3,461)		2,404		(1,437)		(334)		1,299
Net pension and postretirement cost (credit)	$	(991)	$	(4,885)	$	1,450	$	(3,798)	$	(2,767)	$	(739)


AT&T Inc.
Dollars in millions except per share amounts

Other Changes in Benefit Obligations Recognized in Other Comprehensive Income

The following table presents the after-tax changes in benefit obligations recognized in OCI and the after-tax prior service credits that were amortized from OCI into net periodic benefit costs:


	Pension Benefits						Postretirement Benefits
	2022		2021		2020		2022		2021		2020
Balance at beginning of year	$	416	$	525	$	361	$	6,496	$	8,408	$	8,163
Prior service (cost) credit	—		—		250		1,786		—		2,001
Amortization of prior service credit	(100)		(109)		(86)		(1,928)		(1,912)		(1,756)
Total recognized in other comprehensive (income) loss	(100)		(109)		164		(142)		(1,912)		245
Balance at end of year	$	316	$	416	$	525	$	6,354	$	6,496	$	8,408

Assumptions

In determining the projected benefit obligation and the net pension and postretirement benefit cost, we used the following significant weighted-average assumptions:


	Pension Benefits						Postretirement Benefits
	2022		2021		2020		2022		2021		2020
Weighted-average discount rate for determining benefit obligation at December 31	5.20	%	3.00	%	2.70	%	5.20	%	2.80	%	2.40	%
Discount rate in effect for determining service cost1	4.40	%	3.30	%	3.60	%	4.00	%	2.90	%	3.50	%
Discount rate in effect for determining interest cost1	3.90	%	2.30	%	2.90	%	3.20	%	1.60	%	2.70	%
Weighted-average interest credit rate for cash balance pension programs2	4.10	%	3.20	%	3.10	%	—	%	—	%	—	%
Long-term rate of return on plan assets	6.75	%	6.75	%	7.00	%	4.50	%	4.50	%	4.75	%
Composite rate of compensation increase for determining benefit obligation	3.00	%	3.00	%	3.00	%	3.00	%	3.00	%	3.00	%
Composite rate of compensation increase for determining net cost (credit)	3.00	%	3.00	%	3.00	%	3.00	%	3.00	%	3.00	%
1Weighted-average discount rates shown for years with interim remeasurements: 2022 and 2021 for pension benefits and 2022 for postretirement benefits.
2Weighted-average interest crediting rates for cash balance pension programs relate only to the cash balance portion of total pension benefits. A 0.50% increase in the weighted-average interest crediting rate would increase the pension benefit obligation by $135.

We recognize gains and losses on pension and postretirement plan assets and obligations immediately in “Other income (expense) – net” in our consolidated statements of income. These gains and losses are generally measured annually as of December 31 and accordingly, will normally be recorded during the fourth quarter, unless an earlier remeasurement is required. Should actual experience differ from actuarial assumptions, the projected pension benefit obligation and net pension cost and accumulated postretirement benefit obligation and postretirement benefit cost would be affected in future years.

Discount Rate Our assumed weighted-average discount rates for both pension and postretirement benefits of 5.20%, at December 31, 2022, reflect the hypothetical rate at which the projected benefit obligation could be effectively settled or paid out to participants. We determined our discount rate based on a range of factors, including a yield curve composed of the rates of return on several hundred high-quality, fixed income corporate bonds available at the measurement date and corresponding to the related expected durations of future cash outflows. These bonds had an average rating of at least Aa3 or AA- by the nationally recognized statistical rating organizations, denominated in U.S. dollars, and generally not callable, convertible or index linked. For the year ended December 31, 2022, when compared to the year ended December 31, 2021, we increased our pension discount rate by 2.20%, resulting in a decrease in our pension plan benefit obligation of $11,738 and increased our postretirement discount rate by 2.40%, resulting in a decrease in our postretirement benefit obligation of $2,102. For the year ended December 31, 2021, we increased our pension discount rate by 0.30%, resulting in a decrease in our pension plan benefit


AT&T Inc.
Dollars in millions except per share amounts

obligation of $1,645 and increased our postretirement discount rate by 0.40%, resulting in a decrease in our postretirement benefit obligation of $341.

We utilize a full yield curve approach in the estimation of the service and interest components of net periodic benefit costs for pension and other postretirement benefits. Under this approach, we apply discounting using individual spot rates from a yield curve composed of the rates of return on several hundred high-quality, fixed income corporate bonds available at the measurement date. These spot rates align to each of the projected benefit obligations and service cost cash flows. The service cost component relates to the active participants in the plan, so the relevant cash flows on which to apply the yield curve are considerably longer in duration on average than the total projected benefit obligation cash flows, which also include benefit payments to retirees. Interest cost is computed by multiplying each spot rate by the corresponding discounted projected benefit obligation cash flows. The full yield curve approach reduces any actuarial gains and losses based upon interest rate expectations (e.g., built-in gains in interest cost in an upward sloping yield curve scenario), or gains and losses merely resulting from the timing and magnitude of cash outflows associated with our benefit obligations. Neither the annual measurement of our total benefit obligations nor annual net benefit cost is affected by the full yield curve approach.

Expected Long-Term Rate of Return In 2023, our expected long-term rate of return is 7.50% on pension plan assets and 6.50% on postretirement plan assets, an increase of 0.75% for pension plan assets and 2.00% for postretirement plan assets. This update to our asset return assumptions was due to economic forecasts and changes in the asset mix. Our long-term rates of return reflect the average rate of earnings expected on the funds invested, or to be invested, to provide for the benefits included in the projected benefit obligations. In setting the long-term assumed rate of return, management considers capital markets’ future expectations, the asset mix of the plans’ investment and average historical asset return. Actual long-term returns can, in relatively stable markets, also serve as a factor in determining future expectations. We consider many factors that include, but are not limited to, historical returns on plan assets, current market information on long-term returns (e.g., long-term bond rates) and current and target asset allocations between asset categories. The target asset allocation is determined based on consultations with external investment advisers. If all other factors were to remain unchanged, we expect that a 0.50% decrease in the expected long-term rate of return would cause 2023 combined pension and postretirement cost to increase $201. However, any differences in the rate and actual returns will be included with the actuarial gain or loss recorded in the fourth quarter when our plans are remeasured.

Composite Rate of Compensation Increase Our expected composite rate of compensation increase cost of 3.00% in 2022 and 2021 reflects the long-term average rate of salary increases.

Healthcare Cost Trend Our healthcare cost trend assumptions are developed based on historical cost data, the near-term outlook and an assessment of likely long-term trends. Based on our assessment of expectations of healthcare industry inflation, our 2023 assumed annual healthcare prescription drug cost trend and medical cost trend for eligible participants will increase from an annual and ultimate trend rate of 4.25% to an annual and ultimate trend rate of 4.50%. This change in assumption increased our obligation by $19. For 2022, our assumed annual healthcare prescription drug cost trend and medical cost trend for eligible participants increased from an annual and ultimate trend rate of 4.00% to an annual and ultimate trend rate of 4.25%. This change in assumption increased our obligation by $31.

Plan Assets

Plan assets consist primarily of private and public equity, government and corporate bonds, and real assets (real estate and natural resources). The asset allocations of the pension plans are maintained to meet ERISA requirements. Any plan contributions, as determined by ERISA regulations, are made to a pension trust for the benefit of plan participants. We do not have significant ERISA required contributions to our pension plans for 2023.

We maintain VEBA trusts to partially fund postretirement benefits; however, there are no ERISA or regulatory requirements that these postretirement benefit plans be funded annually. We made discretionary contributions of $120 in December 2022 and $308 in December 2021 to our postretirement plan.

The principal investment objectives are to ensure the availability of funds to pay pension and postretirement benefits as they become due under a broad range of future economic scenarios, maximize long-term investment return with an acceptable level of risk based on our pension and postretirement obligations, and diversify broadly across and within the capital markets to insulate asset values against adverse experience in any one market. Each asset class has broadly diversified characteristics. Substantial biases toward any particular investing style or type of security are sought to be avoided by managing the aggregation of all accounts with portfolio benchmarks. Asset and benefit obligation forecasting studies are conducted periodically, generally every two to three years, or when significant changes have occurred in market conditions, benefits, participant demographics or funded status. Decisions regarding investment policy are made with an understanding of the effect of asset allocation on funded status, future contributions and projected expenses.


AT&T Inc.
Dollars in millions except per share amounts

The plans’ weighted-average asset targets and actual allocations as a percentage of plan assets, including the notional exposure of future contracts by asset categories at December 31 are as follows:


	Pension Assets									Postretirement (VEBA) Assets
	Target					2022		2021		Target					2022		2021
Equity securities:
Domestic	5	%	-	25	%	7	%	16	%	16	%	-	26	%	21	%	19	%
International	1	%	-	21	%	4		13		16	%	-	26	%	21		19
Fixed income securities	40	%	-	50	%	45		38		42	%	-	52	%	47		39
Real assets	—	%	-	20	%	16		10		—	%	-	6	%	1		1
Private equity	—	%	-	16	%	14		12		—	%	-	6	%	1		1
Preferred interests	8	%	-	18	%	13		10		—	%	-	—	%	—		—
Other	—	%	-	5	%	1		1		5	%	-	15	%	9		21
Total						100	%	100	%						100	%	100	%

The pension trust holds preferred equity interests valued at $5,427 in AT&T Mobility II LLC (Mobility II), the primary holding company for our wireless business. The preferred equity interests were valued at $5,562 as of December 31, 2021. On December 27, 2022, the pension trust provided written notice of its right to require AT&T to purchase Mobility preferred interests outstanding. (See Note 16)

At December 31, 2022, AT&T securities represented 14% of assets held by our pension trust, including the preferred interests in Mobility II. The VEBA trusts included in these financial statements no longer hold AT&T securities.

Investment Valuation

Investments are stated at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability at the measurement date.

Investments in securities traded on a national securities exchange are valued at the last reported sales price on the final business day of the year. If no sale was reported on that date, they are valued at the last reported bid price. Investments in securities not traded on a national securities exchange are valued using pricing models, quoted prices of securities with similar characteristics or discounted cash flows. Shares of registered investment companies are valued based on quoted market prices, which represent the net asset value of shares held at year-end.

Other commingled investment entities are valued at quoted redemption values that represent the net asset values of units held at year-end which management has determined approximates fair value.

Real estate and natural resource direct investments are valued at amounts based upon appraisal reports. Fixed income securities valuation is based upon observable prices for comparable assets, broker/dealer quotes (spreads or prices), or a pricing matrix that derives spreads for each bond based on external market data, including the current credit rating for the bonds, credit spreads to Treasuries for each credit rating, sector add-ons or credits, issue-specific add-ons or credits as well as call or other options.

The preferred interests in Mobility II are valued by an independent fiduciary using an income approach.

Purchases and sales of securities are recorded as of the trade date. Realized gains and losses on sales of securities are determined on the basis of average cost. Interest income is recognized on the accrual basis. Dividend income is recognized on the ex-dividend date.

Non-interest bearing cash and overdrafts are valued at cost, which approximates fair value.

Fair Value Measurements

See Note 12 for a discussion of the fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.


AT&T Inc.
Dollars in millions except per share amounts

The following tables set forth by level, within the fair value hierarchy, the pension and postretirement assets and liabilities at fair value as of December 31, 2022:


Pension Assets and Liabilities at Fair Value as of December 31, 2022
	Level 1		Level 2		Level 3		Total
Non-interest bearing cash	$	158	$	—	$	—	$	158
Interest bearing cash	5		—		—		5
Foreign currency contracts	—		4		—		4
Equity securities:
Domestic equities	2,312		—		2		2,314
International equities	1,251		—		—		1,251
Preferred interests	—		—		5,427		5,427
Fixed income securities:
Corporate bonds and other investments	—		9,366		1		9,367
Government and municipal bonds	—		5,450		—		5,450
Mortgage-backed securities	—		220		—		220
Real estate and real assets	—		—		4,343		4,343
Securities lending collateral	1,137		1,407		—		2,544
Receivable for variation margin	5		—		—		5
Assets at fair value	4,868		16,447		9,773		31,088
Investments sold short and other liabilities at fair value	(261)		(5)		—		(266)
Total plan net assets at fair value	$	4,607	$	16,442	$	9,773	$	30,822
Assets held at net asset value practical expedient
Private equity funds							5,866
Real estate funds							1,907
Commingled funds							5,045
Total assets held at net asset value practical expedient							12,818
Other assets (liabilities) 1							(2,766)
Total Plan Net Assets							$	40,874
1Other assets (liabilities) include amounts receivable, accounts payable and net adjustment for securities lending payable.


Postretirement Assets and Liabilities at Fair Value as of December 31, 2022
	Level 1		Level 2		Level 3		Total
Interest bearing cash	$	191	$	4	$	—	$	195
Equity securities:
Domestic equities	258		—		—		258
International equities	233		—		1		234




Securities lending collateral	—		12		—		12
Assets at fair value	682		16		1		699
Securities lending payable and other liabilities	—		(12)		—		(12)
Total plan net assets at fair value	$	682	$	4	$	1	$	687
Assets held at net asset value practical expedient
Private equity funds							13
Real estate funds							13
Commingled funds							1,445
Total assets held at net asset value practical expedient							1,471
Other assets (liabilities)1							2
Total Plan Net Assets							$	2,160
1Other assets (liabilities) include amounts receivable and accounts payable.


AT&T Inc.
Dollars in millions except per share amounts

The following tables set forth by level, within the fair value hierarchy, the pension and postretirement assets and liabilities at fair value as of December 31, 2021:


Pension Assets and Liabilities at Fair Value as of December 31, 2021
	Level 1		Level 2		Level 3		Total
Non-interest bearing cash	$	167	$	—	$	—	$	167
Interest bearing cash	11		—		—		11
Foreign currency contracts	—		5		—		5
Equity securities:
Domestic equities	7,693		—		1		7,694
International equities	4,117		—		7		4,124
Preferred interests	—		—		5,562		5,562
Fixed income securities:
Corporate bonds and other investments	—		11,168		2		11,170
Government and municipal bonds	—		6,977		—		6,977
Mortgage-backed securities	—		268		—		268
Real estate and real assets	—		—		3,318		3,318
Securities lending collateral	1,645		1,285		—		2,930
Receivable for variation margin	8		—		—		8
Assets at fair value	13,641		19,703		8,890		42,234
Investments sold short and other liabilities at fair value	(529)		(3)		(1)		(533)
Total plan net assets at fair value	$	13,112	$	19,700	$	8,889	$	41,701
Assets held at net asset value practical expedient
Private equity funds							6,454
Real estate funds							2,329
Commingled funds							6,780
Total assets held at net asset value practical expedient							15,563
Other assets (liabilities) 1							(2,863)
Total Plan Net Assets							$	54,401
1Other assets (liabilities) include amounts receivable, accounts payable and net adjustment for securities lending payable.


Postretirement Assets and Liabilities at Fair Value as of December 31, 2021
	Level 1		Level 2		Level 3		Total
Interest bearing cash	$	371	$	295	$	—	$	666
Equity securities:
Domestic equities	323		—		—		323
International equities	287		—		1		288
Fixed income securities:
Corporate bonds and other investments	1		—		—		1


Securities lending collateral	—		9		—		9
Assets at fair value	982		304		1		1,287
Securities lending payable and other liabilities	—		(9)		—		(9)
Total plan net assets at fair value	$	982	$	295	$	1	$	1,278
Assets held at net asset value practical expedient
Commingled funds							1,883
Private equity funds							19
Real estate funds							16
Total assets held at net asset value practical expedient							1,918
Other assets (liabilities) 1							2
Total Plan Net Assets							$	3,198
1Other assets (liabilities) include amounts receivable and accounts payable.


AT&T Inc.
Dollars in millions except per share amounts

For the years ended December 31, 2022 and 2021, our postretirement assets did not include significant investments in Level 3 assets, nor were there significant changes in fair value of those assets during the period. The tables below set forth a summary of changes in the fair value of the Level 3 pension assets for the years ended:


	Equities		Fixed Income Funds		Real Estate and Real Assets		Total
Balance as of December 31, 2021	$	5,569	$	2	$	3,318	$	8,889
Realized gains (losses)	1		—		22		23
Unrealized gains (losses)	(139)		—		802		663
Transfers in	1		1		20		22
Transfers out	—		(2)		(29)		(31)
Purchases	—		—		716		716
Sales	(3)		—		(506)		(509)
Balance as of December 31, 2022	$	5,429	$	1	$	4,343	$	9,773


	Equities		Fixed Income Funds		Real Estate and Real Assets		Total
Balance as of December 31, 2020	$	5,793	$	53	$	2,544	$	8,390
Realized gains (losses)	2		—		(31)		(29)
Unrealized gains (losses)	(203)		—		558		355
Transfers in	—		1		—		1
Transfers out	(7)		(8)		—		(15)
Purchases	7		1		425		433
Sales	(23)		(45)		(178)		(246)
Balance as of December 31, 2021	$	5,569	$	2	$	3,318	$	8,889

Estimated Future Benefit Payments

Expected benefit payments are estimated using the same assumptions used in determining our benefit obligation at December 31, 2022. Because benefit payments will depend on future employment and compensation levels; average years employed; average life spans; and payment elections, among other factors, changes in any of these assumptions could significantly affect these expected amounts. The following table provides expected benefit payments under our pension and postretirement plans:


	Pension Benefits		Postretirement Benefits
2023	$	5,612	$	1,211
2024	3,734		801
2025	3,747		640
2026	3,632		598
2027	3,561		568
Years 2028 - 2032	16,688		2,322

Supplemental Retirement Plans

We also provide certain senior- and middle-management employees with nonqualified, unfunded supplemental retirement and savings plans. While these plans are unfunded, we have assets in a designated non-bankruptcy remote trust that are independently managed and used to provide for certain of these benefits. These plans include supplemental pension benefits as well as compensation-deferral plans, some of which include a corresponding match by us based on a percentage of the compensation deferral. For our supplemental retirement plans, the projected benefit obligation was $1,544 and the net supplemental retirement pension credit was $234 at and for the year ended December 31, 2022. The projected benefit obligation was $2,326 and the net supplemental retirement pension credit was $41 at and for the year ended December 31, 2021.

We use the same significant assumptions for the composite rate of compensation increase in determining our projected benefit obligation and the net pension and postemployment benefit cost. Our discount rates of 5.10% at December 31, 2022 and 2.70% at December 31, 2021 were calculated using the same methodologies used in calculating the discount rates for our qualified pension and postretirement benefit plans.


AT&T Inc.
Dollars in millions except per share amounts

Deferred compensation expense was $94 in 2022, $171 in 2021 and $183 in 2020.

Contributory Savings Plans

We maintain contributory savings plans that cover substantially all employees. Under the savings plans, we match in cash or company stock a stated percentage of eligible employee contributions, subject to a specified ceiling. There are no debt-financed shares held by the Employee Stock Ownership Plans, allocated or unallocated.

Our match of employee contributions to the savings plans is fulfilled with purchases of our stock on the open market or company cash. Benefit cost, which is based on the cost of shares or units allocated to participating employees’ accounts or the cash contributed to participant accounts, was $611, $614 and $646 for the years ended December 31, 2022, 2021 and 2020.

NOTE 15. SHARE-BASED PAYMENTS

Under our various plans, senior and other management employees and nonemployee directors have received nonvested stock and stock units. The shares will vest over a period of one to four years in accordance with the terms of those plans.

We grant performance stock units, which are nonvested stock units, based upon our stock price at the date of grant and award them in the form of AT&T common stock and cash at the end of a three-year period, subject to the achievement of certain performance goals. We treat the cash settled portion of these awards as a liability. Effective with the 2021 plan year, for the majority of employees, performance shares were replaced with restricted stock units that do not have any performance conditions. These new restricted stock units vest ratably over a three-year period. We grant forfeitable restricted stock and stock units, which are valued at the market price of our common stock at the date of grant and predominantly vest over a three- to five-year period. We also grant other nonvested stock units and award them in cash at the end of a three-year period, subject to the achievement of certain market-based conditions. As of December 31, 2022, we were authorized to issue up to approximately 128 million shares of common stock (in addition to shares that may be issued upon exercise of outstanding options or upon vesting of performance stock units or other nonvested stock units) to officers, employees and directors pursuant to these various plans.

We account for our share-based payment arrangements based on the fair value of the awards on their respective grant date, which may affect our ability to fully realize the value shown on our consolidated balance sheets of deferred tax assets associated with compensation expense. We record a valuation allowance when our future taxable income is not expected to be sufficient to recover the asset. Accordingly, there can be no assurance that the current stock price of our common shares will rise to levels sufficient to realize the entire tax benefit currently reflected on our consolidated balance sheets. However, to the extent we generate excess tax benefits (i.e., those additional tax benefits in excess of the deferred taxes associated with compensation expense previously recognized) the potential future impact on income would be reduced.

Our consolidated statements of income include the compensation cost recognized for those plans as operating expenses, as well as the associated tax benefits, which are reflected in the table below:


	2022		2021		2020
Performance stock units	$	168	$	248	$	348
Restricted stock and stock units	350		199		74
Other nonvested stock units	—		—		—
Stock options	—		—		—
Total	$	518	$	447	$	422
Income tax benefit	$	127	$	110	$	104


AT&T Inc.
Dollars in millions except per share amounts

A summary of the status of our nonvested stock units as of December 31, 2022, and changes during the year then ended is presented as follows (shares in millions):


Nonvested Stock Units	Shares	Weighted-Average Grant- Date Fair Value
Nonvested at January 1, 2022	35	$	32.33
Granted	21	23.64
Vested	(28)	27.64
Forfeited	(5)	23.76
Spin-off Adjustment 1	13	NA
Nonvested at December 31, 2022	36	$	22.07
1 In connection with the WarnerMedia transaction, AT&T made certain adjustments to the number of stock awards to maintain the intrinsic value prior to the spin-off.

As of December 31, 2022, there was $547 of total unrecognized compensation cost related to nonvested share-based payment arrangements granted. That cost is expected to be recognized over a weighted-average period of 1.69 years. The total fair value of shares vested during the year was $783 for 2022, compared to $608 for 2021 and $471 for 2020.

It is our intent to satisfy share option exercises using our treasury stock. Cash received from stock option exercises was $2 for 2022, $11 for 2021 and $21 for 2020.

NOTE 16. STOCKHOLDERS’ EQUITY

Authorized Shares We have authorized 14 billion common shares of AT&T stock and 10 million preferred shares of AT&T stock, each with a par value of $1.00 per share. Cumulative perpetual preferred shares consist of the following:

Series A: 48 thousand shares outstanding at December 31, 2022 and December 31, 2021, with a $25,000 per share liquidation preference and a dividend rate of 5.000%.
Series B: 20 thousand shares outstanding at December 31, 2022 and December 31, 2021, with a €100,000 per share liquidation preference, and an initial rate of 2.875%, subject to reset after May 1, 2025.
Series C: 70 thousand shares outstanding at December 31, 2022 and December 31, 2021, with a $25,000 per share liquidation preference, and a dividend rate of 4.75%.

So long as the quarterly preferred dividends are declared and paid on a timely basis on each series of preferred shares, there are no limitations on our ability to declare a dividend on or repurchase AT&T common shares. The preferred shares are optionally redeemable by AT&T at the liquidation price on or after five years from the issuance date, or upon certain other contingent events.

Stock Repurchase Program From time to time, we repurchase shares of common stock for distribution through our employee benefit plans or in connection with certain acquisitions. Our Board of Directors has approved the following authorization to repurchase common stock: (1) March 2013 authorization program of 300 million shares, which was completed in 2020 and (2) March 2014 authorization program for 300 million shares, with approximately 144 million outstanding at December 31, 2022.

To implement these authorizations, we used open market repurchases, relying on Rule 10b5-1 of the Securities Exchange Act of 1934, where feasible. We also used accelerated share repurchase agreements with large financial institutions to repurchase our stock. During 2021, there were no shares repurchased under the March 2014 authorization. During 2022, we repurchased approximately 34 million shares totaling $662 under the March 2014 authorization.

Dividend Declarations In December 2022 and December 2021, AT&T declared a quarterly preferred dividend of $36. In December 2022 and December 2021, AT&T declared a common dividend of $0.2775 and $0.52 per share of common stock, respectively.

Preferred Interests Issued by Subsidiaries We have issued cumulative perpetual preferred membership interests in certain subsidiaries. The preferred interests are entitled to cash distributions, subject to declaration. The preferred interests are included in “Noncontrolling interest” on the consolidated balance sheets.


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Dollars in millions except per share amounts

Mobility II

In 2018, we issued 320 million Series A Cumulative Perpetual Preferred Membership Interests in Mobility II (Mobility preferred interests), which pay cash distributions of 7% per annum, subject to declaration. So long as the distributions are declared and paid, the terms of the Mobility preferred equity interests will not impose any limitations on cash movements between affiliates, or our ability to declare a dividend on or repurchase AT&T shares.

A holder of the Mobility preferred interests may put the interests to Mobility II. Mobility II may redeem the interests upon a change in control of Mobility II or on or after September 9, 2022. When either option arises due to a passage of time, that option may be exercised only during certain periods.

The price at which a put option or a redemption option can be exercised is the greater of (1) the market value of the interests as of the last date of the quarter preceding the date of the exercise of a put or redemption option and (2) the sum of (a) twenty-five dollars plus (b) any accrued and unpaid distributions. The redemption price may be paid with cash, AT&T common stock, or a combination of cash and AT&T common stock, at Mobility II’s sole election. In no event shall Mobility II be required to deliver more than 250 million shares of AT&T common stock to settle put and redemption options. We have the intent and ability to settle the Mobility preferred equity interests with cash.

On October 24, 2022, approximately 105 million Mobility preferred interests were put to AT&T by a third-party investor, for which we paid approximately $2,600 cash to redeem. On December 27, 2022, the AT&T pension trust provided written notice of its right to require us to purchase the remaining 213 million, or approximately $5,340, of Mobility preferred interests outstanding. The terms of the instruments limit the amount we are required to redeem in any 12-month period to approximately 107 million shares, or $2,670. We expect to redeem approximately $2,670 of the Mobility preferred interests primarily in October 2023 and $2,670 in October 2024, unless the interests are called or the puts are accepted by AT&T prior to those dates. With the certainty of redemption, the remaining Mobility preferred interests were reclassified from equity to a liability at fair value, with approximately $2,670 recorded in current liabilities as “Accounts payable and accrued liabilities” and $2,670 recorded in “Other noncurrent liabilities.” The liabilities associated with the Mobility preferred interests are considered Level 3 under the Fair Value Measurement and Disclosure framework (see Notes 12 and 14). The difference between the carrying value of the Mobility preferred interest, which represented fair value at contribution, and the fair value of the instrument upon settlement and/or balance sheet reclassification was recorded as an adjustment to additional paid-in capital.

As of December 31, 2022, we have approximately 213 million Mobility preferred interests outstanding, which have a redemption value of approximately $5,340 and pay cash distributions of $373 per annum, subject to declaration.

Tower Holdings

In 2019, we issued $6,000 nonconvertible cumulative preferred interests in a wireless subsidiary (Tower Holdings) that holds interests in various tower assets and have the right to receive approximately $6,000 if the purchase options from the tower companies are exercised.

The membership interests in Tower Holdings consist of (1) common interests, which are held by a consolidated subsidiary of AT&T, and (2) two series of preferred interests (collectively the “Tower preferred interests”). The September series (Class A-1) of the preferred interests totals $1,500 and pays an initial preferred distribution of 5.0%, and the December series (Class A-2) totals $4,500 and pays an initial preferred distribution of 4.75%. Distributions are paid quarterly, subject to declaration, and reset every five years. Any failure to declare or pay distributions on the Tower preferred interests would not impose any limitation on cash movements between affiliates, or our ability to declare a dividend on or repurchase AT&T shares. We can call the Tower preferred interests at the issue price beginning five years from the issuance date or upon the receipt of proceeds from the sale of the underlying assets.

The holders of the Tower preferred interests have the option to require redemption upon the occurrence of certain contingent events, such as the failure of AT&T to pay the preferred distribution for two or more periods or to meet certain other requirements, including a minimum credit rating. If notice is given upon such an event, all other holders of equal or more subordinate classes of membership interests in Tower Holdings are entitled to receive the same form of consideration payable to the holders of the preferred interests, resulting in a deemed liquidation for accounting purposes.

Telco LLC

In September 2020, we issued $2,000 nonconvertible cumulative preferred interests out of a newly created limited liability company (Telco LLC) that was formed to hold telecommunication-related assets.

Members’ equity in Telco LLC consist of (1) member’s interests, which are held by a consolidated subsidiary of AT&T, and (2) preferred interests (Telco preferred interests), which pay an initial preferred distribution of 4.25% annually, subject to declaration, and subject to reset every seven years. Failure to pay distributions on the Telco preferred interests would not limit


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Dollars in millions except per share amounts

cash movements between affiliates, or our ability to declare a dividend on or repurchase AT&T shares. We can call the Telco preferred interests at the issue price beginning seven years from the issuance date.

The holders of the Telco preferred interests have the option to require redemption upon the occurrence of certain contingent events, such as the failure of Telco LLC to pay the preferred distribution for two or more periods or to meet certain other requirements, including a minimum credit rating. If notice is given, all other holders of equal or more subordinate classes of members’ equity are entitled to receive the same form of consideration payable to the holders of the preferred interests, resulting in a deemed liquidation for accounting purposes.

PR Holdings

In 2019, we issued $1,950 nonconvertible cumulative preferred interests in a subsidiary (PR Holdings) that held notes secured by the proceeds from our agreement to sell wireless and wireline operations in Puerto Rico and the U.S. Virgin Islands. These preferred interests were redeemed on November 6, 2020. (See Note 6)

The membership interests in PR Holdings consisted of (1) common interests, which were held by consolidated subsidiaries of AT&T, and (2) preferred interests (PR preferred interests). The PR preferred interests paid an initial preferred distribution at an annual rate of 4.75%. Distributions were paid quarterly, subject to declaration.

NOTE 17. SALES OF RECEIVABLES

We have agreements with various third-party financial institutions pertaining to the sales of certain types of our accounts receivable. The most significant of these programs consists of receivables arising from equipment installment plans, which are sold for cash and a deferred purchase price. Under this program, we transfer receivables to purchasers in exchange for cash and additional consideration upon settlement of the receivables. Under the terms of our agreement for this program, we continue to service the transferred receivables on behalf of the financial institutions.

The following table sets forth a summary of cash proceeds received, net of remittances paid, from sales of receivables for the years ended December 31:


	2022		2021		2020
Net cash received (paid) from equipment installment receivables1	$	1,875	$	1,000	$	(1,565)
Net cash received (paid) from other programs	620		(295)		295
Total net cash impact to cash flows from operating activities	$	2,495	$	705	$	(1,270)
1Net cash from initial sales of $11,129, $9,740 and $6,089 for the years ended December 31, 2022, 2021 and 2020, respectively.

The sales of receivables did not have a material impact on our consolidated statements of income or to “Total Assets” reported on our consolidated balance sheets. We reflect cash receipts on sold receivables as cash flows from operations in our consolidated statements of cash flows. Cash receipts on the deferred purchase price are classified as cash flows from investing activities, when applicable.

The following table sets forth a summary of the equipment installment receivables and accounts being serviced at December 31:


	2022		2021

Gross receivables:	$	4,165		$	4,361
Balance sheet classification
Accounts receivable
Notes receivable	1,789			1,846
Trade receivables	522			606
Other Assets
Noncurrent notes and trade receivables	1,854			1,909

Outstanding portfolio of receivables derecognized from our consolidated balance sheets	$	11,030		$	9,767
Cash proceeds received, net of remittances1	8,519			6,644
1Represents amounts to which financial institutions remain entitled, excluding the deferred purchase price.


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Dollars in millions except per share amounts

We offer our customers the option to purchase certain wireless devices in installments over a specified period of time and, in many cases, once certain conditions are met, they may be eligible to trade in the original equipment for a new device and have the remaining unpaid balance paid or settled.

We maintain a program under which we transfer a portion of these receivables through our bankruptcy-remote subsidiary in exchange for cash and additional consideration upon settlement of the receivables, referred to as the deferred purchase price. In the event a customer trades in a device prior to the end of the installment contract period, we agree to make a payment to the financial institutions equal to any outstanding remaining installment receivable balance. Accordingly, we record a guarantee obligation for this estimated amount at the time the receivables are transferred.

The following table sets forth a summary of equipment installment receivables sold under this program:


	2022		2021		2020
Gross receivables sold	$	11,510	$	10,793	$	7,270
Net receivables sold1	11,061		10,502		7,026
Cash proceeds received	11,129		9,740		6,089
Deferred purchase price recorded	245		1,080		1,021
Guarantee obligation recorded	703		434		157
1Receivables net of allowance, imputed interest and equipment trade-in right guarantees.

The deferred purchase price and guarantee obligation are initially recorded at estimated fair value and subsequently adjusted for changes in present value of expected cash flows. The estimation of their fair values is based on remaining installment payments expected to be collected and the expected timing and value of device trade-ins. The estimated value of the device trade-ins considers prices offered to us by independent third parties and contemplate changes in value after the launch of a device model. The fair value measurements used for the deferred purchase price and the guarantee obligation are considered Level 3 under the Fair Value Measurement and Disclosure framework (see Note 12).

The following table presents the previously transferred equipment installment receivables, which we repurchased in exchange for the associated deferred purchase price:


	2022		2021		2020
Fair value of repurchased receivables	$	3,314	$	1,424	$	1,271
Carrying value of deferred purchase price	3,335		1,334		1,235
Gain (loss) on repurchases1	$	(21)	$	90	$	36
1These gains (losses) are included in “Selling, general and administrative” expense in the consolidated statements of income.

At December 31, 2022 and December 31, 2021, our deferred purchase price receivable was $2,318 and $3,177, respectively, of which $1,278 and $2,123 are included in “Prepaid and other current assets” on our consolidated balance sheets, with the remainder in “Other Assets.” The guarantee obligation at December 31, 2022 and December 31, 2021 was $419 and $371, respectively, of which $73 and $101 are included in “Accounts payable and accrued liabilities” on our consolidated balance sheets, with the remainder in “Other noncurrent liabilities.” Our maximum exposure to loss as a result of selling these equipment installment receivables is limited to the total amount of our deferred purchase price and guarantee obligation.

NOTE 18. TOWER TRANSACTION

In December 2013, we closed our transaction with Crown Castle International Corp. (Crown Castle) in which Crown Castle gained the exclusive rights to lease and operate 9,048 wireless towers and purchased 627 of our wireless towers for $4,827 in cash. The leases have various terms with an average length of approximately 28 years. As the leases expire, Crown Castle will have fixed price purchase options for these towers totaling approximately $4,200, based on their estimated fair market values at the end of the lease terms. We sublease space on the towers from Crown Castle for an initial term of ten years at current market rates, subject to optional renewals in the future.

We determined that we did not transfer control of the tower assets, which prevented us from achieving sale-leaseback accounting for the transaction, and we accounted for the cash proceeds from Crown Castle as a financing obligation on our consolidated balance sheets. We record interest on the financing obligation using the effective interest method at a rate of approximately 3.9%. The financing obligation is increased by interest expense and estimated future net cash flows generated and retained by Crown Castle from operation of the tower sites, and reduced by our contractual payments. We continue to include the tower assets in “Property, Plant and Equipment – Net” on our consolidated balance sheets and depreciate them


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Dollars in millions except per share amounts

accordingly. At December 31, 2022 and 2021, the tower assets had a balance of $686 and $725, respectively. Our depreciation expense for these assets was $39 for each of 2022, 2021 and 2020.

Payments made to Crown Castle under this arrangement were $258 for 2022. At December 31, 2022, the future minimum payments under the sublease arrangement are $264 for 2023, $269 for 2024, $274 for 2025, $280 for 2026, $285 for 2027 and $421 thereafter.

NOTE 19. TRANSACTIONS WITH DIRECTV

Effective August 1, 2021, we began accounting for our investment in DIRECTV under the equity method and recorded our share of DIRECTV earnings as equity in net income of affiliates, with DIRECTV considered a related party (see Note 10).

For the year ended December 31, 2022, our share of DIRECTV’s earnings included in equity in net income of affiliates was $1,808. Cash distributions from DIRECTV totaled $4,457, with $1,808 classified as operating activities and $2,649 classified as investing activities in our consolidated statement of cash flows. Our investment in DIRECTV at December 31, 2022 was $2,911.

In addition to the assets and liabilities contributed to DIRECTV, we recorded total obligations of $2,100 to cover certain net losses under the NFL SUNDAY TICKET contract, of which $1,800 is in the form of a note payable to DIRECTV. For the year ended December 31, 2022, cash payments to DIRECTV on the note totaled $1,211 and were classified as financing activities in our consolidated statement of cash flows. Amounts due under the DIRECTV note were $130 at December 31, 2022.

We also provide DIRECTV with network transport for U-verse products and sales services under commercial arrangements for up to five years. Under separate transition services agreements, we provide DIRECTV certain operational support, including servicing of certain of their customer receivables for up to three years. For the year ended December 31, 2022, we billed DIRECTV approximately $1,260 for these costs, which were primarily recorded as a reduction to the operations and support expenses incurred and resulted in net retained costs to AT&T of approximately $737.

At December 31, 2022, we had accounts receivable from DIRECTV of $360 and accounts payable to DIRECTV of $120.

We are not committed, implicitly or explicitly, to provide financial or other support, other than noted above, as our involvement with DIRECTV is limited to the carrying amount of the assets and liabilities recognized on our balance sheet.

NOTE 20. FIRSTNET

In 2017, the First Responder Network Authority (FirstNet) selected AT&T to build and manage the first nationwide broadband network dedicated to America’s first responders. Under the 25-year agreement, FirstNet provides 20 MHz of valuable telecommunications spectrum and success-based payments of $6,500 over the first five years to support network buildout. We are required to construct a network that achieves coverage and nationwide interoperability requirements and have a contractual commitment to make sustainability payments of $18,000 over the 25-year contract. These sustainability payments represent our commitment to fund FirstNet’s operating expenses and future reinvestments in the network which we own and operate, which we estimate in the $3,000 or less range over the life of the 25-year contract. After FirstNet’s operating expenses are paid, we anticipate the remaining amount, expected to be in the $15,000 range, will be reinvested into the network.

During 2022, we submitted $195 in sustainability payments, with future payments under the agreement of $195 for 2023, 2024 and 2025; $1,590 for 2026, $1,665 for 2027; and $13,365 thereafter. Amounts paid to FirstNet, which are not expected to be returned to AT&T to be reinvested into our network, will be expensed in the period paid. In the event FirstNet does not reinvest any funds to construct, operate, improve and maintain this network, our maximum exposure to loss is the total amount of the sustainability payments, which would be reflected in higher expense.

The $6,500 of initial funding from FirstNet is contingent on the achievement of six operating capability milestones and certain first responder subscriber adoption targets. These milestones are based on coverage objectives of the first responder network during the construction period, which is expected to be over five years, and subscriber adoption targets. Funding payments received from FirstNet are reflected as a reduction from the costs capitalized in the construction of the network and, as appropriate, a reduction of associated operating expenses. As of December 31, 2022, we have collected approximately $6,120 for the completion of certain tasks and anticipate collecting nearly all of the remainder of the $6,500 as we fulfill contractual deliveries set out by FirstNet in 2023.


AT&T Inc.
Dollars in millions except per share amounts

NOTE 21. CONTINGENT LIABILITIES

We are party to numerous lawsuits, regulatory proceedings and other matters arising in the ordinary course of business. In evaluating these matters on an ongoing basis, we take into account amounts already accrued on the balance sheet. In our opinion, although the outcomes of these proceedings are uncertain, they should not have a material adverse effect on our financial position, results of operations or cash flows.

We have contractual obligations to purchase certain goods or services from various other parties. Our purchase obligations are expected to be approximately $12,313 in 2023, $11,424 in total for 2024 and 2025, $2,457 in total for 2026 and 2027 and $821 in total for years thereafter.

See Note 12 for a discussion of collateral and credit-risk contingencies.

NOTE 22. ADDITIONAL FINANCIAL INFORMATION


	December 31,
Consolidated Balance Sheets	2022		2021
Accounts payable and accrued liabilities:
Accounts payable	$	31,101	$	29,511
Accrued payroll and commissions	1,605		2,082
Current portion of employee benefit obligation	1,173		1,234
Current portion of Mobility preferred interests1	2,670		—
Accrued interest	2,160		2,438
Accrued taxes	798		1,148
Other	3,137		2,682
Total accounts payable and accrued liabilities	$	42,644	$	39,095
1Reported as noncontrolling interest in 2021. (See Note 16)


Consolidated Statements of Income	2022		2021		2020
Advertising expense	$	2,462	$	2,732	$	2,705
Interest expense incurred	$	7,402	$	7,670	$	7,850
Capitalized interest – capital expenditures	(174)		(173)		(123)
Capitalized interest – spectrum1	(1,120)		(781)		—
Total interest expense	$	6,108	$	6,716	$	7,727
1Included in “Acquisitions, net of cash acquired” on our consolidated statements of cash flows.

Cash and Cash Flows We typically maintain our restricted cash balances for purchases and sales of certain investment securities and funding of certain deferred compensation benefit payments.

The following table summarizes cash and cash equivalents and restricted cash balances contained on our consolidated balance sheets:


	December 31,
Cash and Cash Equivalents and Restricted Cash	2022		2021		2020		2019
Cash and cash equivalents from continuing operations	$	3,701	$	19,223	$	7,924	$	9,702
Cash and cash equivalents from discontinued operations	—		1,946		1,816		2,428
Restricted cash in Prepaid and other current assets	1		3		9		69
Restricted cash in Other Assets	91		144		121		96
Cash and cash equivalents and restricted cash	$	3,793	$	21,316	$	9,870	$	12,295


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Dollars in millions except per share amounts

The following tables summarize certain cash flow activities from continuing operations:


Consolidated Statements of Cash Flows	2022		2021		2020
Cash paid (received) during the year for:
Interest	$	7,772	$	7,485	$	8,010
Income taxes, net of refunds1	592		252		577
1Total cash income taxes paid, net of refunds, by AT&T was $696, $700 and $993 for 2022, 2021 and 2020, respectively.



Purchase of property and equipment	$	19,452	$	15,372	$	14,567
Interest during construction - capital expenditures1	174		173		123
Total Capital expenditures	$	19,626	$	15,545	$	14,690



Business acquisitions	$	—	$	—	$	12
Spectrum acquisitions	9,080		24,672		1,613
Interest during construction - spectrum1	1,120		781		—
Total Acquisitions, net of cash acquired	$	10,200	$	25,453	$	1,625
1Total capitalized interest was $1,294, $954 and $123 for 2022, 2021 and 2020, respectively.

Noncash Investing and Financing Activities In connection with capital improvements and the acquisition of other productive assets, we negotiate favorable payment terms (referred to as vendor financing), which are reported as financing activities in our statements of cash flows when paid. We recorded $5,817 of vendor financing commitments related to capital investments in 2022, $5,282 in 2021 and $4,664 in 2020.

Total vendor financing payables included in our December 31, 2022 consolidated balance sheet were approximately $6,147, with $4,592 due within one year (in “Accounts payable and accrued liabilities”) and the remainder predominantly due within five years (in “Other noncurrent liabilities”).

Labor Contracts As of January 31, 2023, we employed approximately 160,700 persons. Approximately 42% of our employees are represented by the Communications Workers of America (CWA), the International Brotherhood of Electrical Workers (IBEW) or other unions. After expiration of in place agreements with these groups, work stoppages or labor disruptions may occur in the absence of new contracts or other agreements being reached. The main contracts included the following:

A contract covering approximately 7,000 Mobility employees in nine states, for which we reached tentative agreement in February 2023.
A contract covering approximately 400 employees supporting internet-based products is set to expire in July 2023.
A contract covering approximately 200 Mobility employees in Illinois is set to expire in May 2023.


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Dollars in millions except per share amounts

NOTE 23. DISCONTINUED OPERATIONS

The following is a summary of operating results included in income (loss) from discontinued operations for the years ended:


	2022		2021		2020
Revenues	$	9,454	$	34,826	$	28,710
Operating Expenses
Cost of revenues	5,481		19,400		14,269
Selling, general and administrative	2,791		8,275		7,222
Asset abandonments and impairments1	—		4,691		3,193
Depreciation and amortization	1,172		5,010		5,993
Total operating expenses	9,444		37,376		30,677
Interest expense	131		168		198
Equity in net income (loss) of affiliates	(27)		28		6
Other income (expense) — net2	(87)		466		(343)
Total other income (expense)	(245)		326		(535)
Net loss before income taxes	(235)		(2,224)		(2,502)
Income tax expense (benefit)	(54)		73		(203)
Net loss from discontinued operations	$	(181)	$	(2,297)	$	(2,299)
12021 includes $4,555 impairment resulting from our assessment of the recoverability of Vrio’s net assets. 2020 includes approximately $2,200 of goodwill impairment at Vrio and $1,000 from production, content and other impairment at WarnerMedia. The implied fair value of the Vrio business was estimated using both the discounted cash flow as well as market multiple approaches. The fair values of film productions were estimated using a discounted cash flow approach. The inputs to all of these approaches are considered Level 3.
2“Other income (expense) - net” includes the gain of $706 from Playdemic for the year ended 2021.

The following is a summary of assets and liabilities attributable to discontinued operations, which were included in our historical Consolidated Balance Sheet at December 31:


	2021
Assets:
Current assets	$	9,005
Noncurrent Inventories and Theatrical Film and Television Production Costs	18,983
Property, Plant and Equipment — Net	4,255
Goodwill	40,484
Other Intangibles — Net	40,273
Other Assets	6,776
Total Assets, discontinued operations	$	119,776

Liabilities:
Current liabilities	$	12,912
Other liabilities	20,643
Total Liabilities, discontinued operations	$	33,555

In preparation for close of the separation and distribution, on April 7, 2022, Spinco drew $10,000 on its $10,000 term loan credit agreement (Spinco Term Loan), which conveyed to WBD. Total debt conveyed was approximately $41,600, which included $1,600 of existing WarnerMedia debt, $30,000 of Spinco senior notes issued in March 2022 and the $10,000 Spinco Term Loan. WarnerMedia cash transfer to Discovery was approximately $2,660.


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Dollars in millions except per share amounts

NOTE 24. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

The following tables represent our quarterly financial results:


	2022 Calendar Quarter
	First1		Second1		Third1		Fourth1,2		Annual
Total Operating Revenues	$	29,712	$	29,643	$	30,043	$	31,343	$	120,741
Operating Income (Loss)	5,537		4,956		6,012		(21,092)		(4,587)
Net Income (Loss) from Continuing Operations	5,149		4,751		6,346		(23,120)		(6,874)
Net Income (Loss) from Continuing Operations Attributable to Common Stock	4,747		4,319		5,924		(23,536)		(8,546)
Basic Earnings (Loss) Per Share
Attributable to Common Stock from Continuing Operations3	$	0.66	$	0.60	$	0.82	$	(3.20)	$	(1.10)
Diluted Earnings (Loss) Per Share
Attributable to Common Stock from Continuing Operations3	$	0.65	$	0.59	$	0.79	$	(3.20)	$	(1.10)
1Includes actuarial gains and losses on pension and postretirement benefit plans (Note 14).
2Includes goodwill impairments (Note 9) and an asset abandonment charge (Note 7).
3Quarterly earnings per share impacts may not add to full-year earnings per share impacts due to the difference in weighted-average common shares for the quarters versus the weighted-average common shares for the year.


	2021 Calendar Quarter
	First1		Second1		Third1		Fourth1		Annual
Total Operating Revenues	$	35,877	$	35,740	$	31,326	$	31,095	$	134,038
Operating Income	7,194		7,572		6,237		4,894		25,897
Net Income from Continuing Operations	7,586		5,969		5,019		5,202		23,776
Net Income from Continuing Operations Attributable to Common Stock	7,143		5,526		4,613		4,802		22,084
Basic Earnings Per Share
Attributable to Common Stock from Continuing Operations2	$	0.99	$	0.77	$	0.64	$	0.67	$	3.07
Diluted Earnings Per Share
Attributable to Common Stock from Continuing Operations2	$	0.97	$	0.76	$	0.63	$	0.66	$	3.02
1Includes actuarial gains and losses on pension and postretirement benefit plans (Note 14).
2Quarterly earnings per share impacts may not add to full-year earnings per share impacts due to the difference in weighted-average common shares for the quarters versus the weighted-average common shares for the year.


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Dollars in millions except per share amounts

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