filings.toolsItem 1. Financial Statements
110K characters. Original on sec.gov · Markdown
Item 1. Financial Statements
| AT&T INC. | |||||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||||||||||
| Dollars in millions except per share amounts | |||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||
| Three months ended | |||||||||||||||||||||||
| March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Operating Revenues | |||||||||||||||||||||||
| Service | $ | 25,478 | $ | 25,138 | |||||||||||||||||||
| Equipment | 6,028 | 5,488 | |||||||||||||||||||||
| Total operating revenues | 31,506 | 30,626 | |||||||||||||||||||||
| Operating Expenses | |||||||||||||||||||||||
| Cost of revenues | |||||||||||||||||||||||
| Equipment | 6,305 | 5,694 | |||||||||||||||||||||
| Other cost of revenues (exclusive of depreciation and amortization shown separately below) | 6,261 | 6,339 | |||||||||||||||||||||
| Selling, general and administrative | 7,316 | 7,145 | |||||||||||||||||||||
| Asset impairments and abandonments and restructuring | — | 504 | |||||||||||||||||||||
| Depreciation and amortization | 4,966 | 5,190 | |||||||||||||||||||||
| Total operating expenses | 24,848 | 24,872 | |||||||||||||||||||||
| Operating Income | 6,658 | 5,754 | |||||||||||||||||||||
| Other Income (Expense) | |||||||||||||||||||||||
| Interest expense | (1,813) | (1,658) | |||||||||||||||||||||
| Equity in net income (loss) of affiliates | (41) | 1,440 | |||||||||||||||||||||
| Other income (expense) — net | 594 | 455 | |||||||||||||||||||||
| Total other income (expense) | (1,260) | 237 | |||||||||||||||||||||
| Income from Continuing Operations Before Income Taxes | 5,398 | 5,991 | |||||||||||||||||||||
| Income tax expense on continuing operations | 1,179 | 1,299 | |||||||||||||||||||||
| Income from Continuing Operations | 4,219 | 4,692 | |||||||||||||||||||||
| Loss from discontinued operations, net of tax | (38) | — | |||||||||||||||||||||
| Net Income | 4,181 | 4,692 | |||||||||||||||||||||
| Net Income Attributable to Noncontrolling Interest | (352) | (341) | |||||||||||||||||||||
| Net Income Attributable to AT&T | $ | 3,829 | $ | 4,351 | |||||||||||||||||||
| Preferred Stock Dividends and Redemption Gain | (36) | 44 | |||||||||||||||||||||
| Net Income Attributable to Common Stock | $ | 3,793 | $ | 4,395 | |||||||||||||||||||
| Basic Earnings Per Share from continuing operations | $ | 0.54 | $ | 0.61 | |||||||||||||||||||
| Basic Loss Per Share from discontinued operations | $ | — | $ | — | |||||||||||||||||||
| Basic Earnings Per Share Attributable to Common Stock | $ | 0.54 | $ | 0.61 | |||||||||||||||||||
| Diluted Earnings Per Share from continuing operations | $ | 0.54 | $ | 0.61 | |||||||||||||||||||
| Diluted Loss Per Share from discontinued operations | $ | — | $ | — | |||||||||||||||||||
| Diluted Earnings Per Share Attributable to Common Stock | $ | 0.54 | $ | 0.61 | |||||||||||||||||||
| Weighted Average Number of Common Shares Outstanding — Basic (in millions) | 7,017 | 7,213 | |||||||||||||||||||||
| Weighted Average Number of Common Shares Outstanding — with Dilution (in millions) | 7,027 | 7,223 |
See Notes to Consolidated Financial Statements.
| AT&T INC. | |||||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||||||||||||||||||||
| Dollars in millions | |||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||
| Three months ended | |||||||||||||||||||||||
| March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Net income | $ | 4,181 | $ | 4,692 | |||||||||||||||||||
| Other comprehensive income (loss), net of tax: | |||||||||||||||||||||||
| Foreign currency: | |||||||||||||||||||||||
| Translation adjustment, net of taxes of $10 and $10 | 34 | 21 | |||||||||||||||||||||
| Securities: | |||||||||||||||||||||||
| Net unrealized gains (losses), net of taxes of $0 and $3 | (1) | 10 | |||||||||||||||||||||
| Reclassification adjustment included in net income, net of taxes of $0 and $0 | — | 1 | |||||||||||||||||||||
| Derivative instruments: | |||||||||||||||||||||||
| Net unrealized gains (losses), net of taxes of $(93) and $(203) | (270) | (624) | |||||||||||||||||||||
| Reclassification adjustment included in net income, net of taxes of $4 and $4 | 11 | 11 | |||||||||||||||||||||
| Defined benefit postretirement plans: | |||||||||||||||||||||||
| Amortization of net prior service credit included in net income, net of taxes of $(98) and $(115) | (306) | (356) | |||||||||||||||||||||
| Other comprehensive income (loss) | (532) | (937) | |||||||||||||||||||||
| Total comprehensive income | 3,649 | 3,755 | |||||||||||||||||||||
| Less: Total comprehensive income attributable to noncontrolling interest | (352) | (341) | |||||||||||||||||||||
| Total Comprehensive Income Attributable to AT&T | $ | 3,297 | $ | 3,414 |
See Notes to Consolidated Financial Statements.
| AT&T INC. | |||||||||||
| CONSOLIDATED BALANCE SHEETS | |||||||||||
| Dollars in millions except per share amounts | |||||||||||
| March 31, | December 31, | ||||||||||
| 2026 | 2025 | ||||||||||
| Assets | (Unaudited) | ||||||||||
| Current Assets | |||||||||||
| Cash and cash equivalents | $ | 11,964 | $ | 18,234 | |||||||
| Accounts receivable – net of related allowances for credit loss of $363 and $429 | 8,335 | 8,843 | |||||||||
| Inventories | 2,451 | 2,420 | |||||||||
| Prepaid and other current assets | 23,532 | 19,235 | |||||||||
| Total current assets | 46,282 | 48,732 | |||||||||
| Property, plant and equipment | 349,454 | 347,570 | |||||||||
| Less: accumulated depreciation and amortization | (216,330) | (216,011) | |||||||||
| Property, Plant and Equipment – Net | 133,124 | 131,559 | |||||||||
| Goodwill – Net | 63,838 | 63,425 | |||||||||
| Licenses – Net | 129,144 | 128,148 | |||||||||
| Other Intangible Assets – Net | 6,135 | 5,254 | |||||||||
| Investments in and Advances to Equity Affiliates | 1,108 | 1,106 | |||||||||
| Operating Lease Right-Of-Use Assets | 22,756 | 22,642 | |||||||||
| Other Assets | 18,801 | 19,332 | |||||||||
| Total Assets | $ | 421,188 | $ | 420,198 | |||||||
| Liabilities and Stockholders’ Equity | |||||||||||
| Current Liabilities | |||||||||||
| Debt maturing within one year | $ | 6,818 | $ | 9,011 | |||||||
| Accounts payable and accrued liabilities | 37,304 | 38,514 | |||||||||
| Advanced billings and customer deposits | 4,330 | 4,266 | |||||||||
| Dividends payable | 1,969 | 1,989 | |||||||||
| Total current liabilities | 50,421 | 53,780 | |||||||||
| Long-Term Debt | 131,589 | 127,089 | |||||||||
| Deferred Credits and Other Noncurrent Liabilities | |||||||||||
| Noncurrent deferred tax liabilities | 59,113 | 58,312 | |||||||||
| Postemployment benefit obligation | 8,427 | 8,478 | |||||||||
| Operating lease liabilities | 18,907 | 18,943 | |||||||||
| Other noncurrent liabilities | 25,109 | 25,104 | |||||||||
| Total deferred credits and other noncurrent liabilities | 111,556 | 110,837 | |||||||||
| Redeemable Noncontrolling Interest | 2,003 | 2,001 | |||||||||
| Stockholders’ Equity | |||||||||||
| Preferred stock ($1 par value, 10,000,000 authorized at March 31, 2026 and December 31, 2025): | |||||||||||
| Series A (48,000 issued and outstanding at March 31, 2026 and December 31, 2025) | — | — | |||||||||
| Series B (20,000 issued and 0 outstanding at March 31, 2026 and December 31, 2025) | — | — | |||||||||
| Series C (70,000 issued and outstanding at March 31, 2026 and December 31, 2025) | — | — | |||||||||
| Common stock ($1 par value, 14,000,000,000 authorized at March 31, 2026 and December 31, 2025: issued 7,620,748,598 at March 31, 2026 and December 31, 2025) | 7,621 | 7,621 | |||||||||
| Additional paid-in capital | 106,084 | 106,533 | |||||||||
| Retained earnings | 17,620 | 15,768 | |||||||||
| Treasury stock (655,850,883 at March 31, 2026 and 583,246,242 at December 31, 2025, at cost) | (20,273) | (18,529) | |||||||||
| Accumulated other comprehensive income (loss) | (1,392) | (860) | |||||||||
| Noncontrolling interest | 15,959 | 15,958 | |||||||||
| Total stockholders’ equity | 125,619 | 126,491 | |||||||||
| Total Liabilities and Stockholders’ Equity | $ | 421,188 | $ | 420,198 |
See Notes to Consolidated Financial Statements.
| AT&T INC. | |||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
| Dollars in millions | |||||||||||
| (Unaudited) | |||||||||||
| Three months ended | |||||||||||
| March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Operating Activities | |||||||||||
| Income from continuing operations | $ | 4,219 | $ | 4,692 | |||||||
| Adjustments to reconcile income from continuing operations to net cash provided by operating activities from continuing operations: | |||||||||||
| Depreciation and amortization | 4,966 | 5,190 | |||||||||
| Provision for uncollectible accounts | 560 | 516 | |||||||||
| Asset impairments and abandonments and restructuring | — | 504 | |||||||||
| Pension and postretirement benefit expense (credit) | (396) | (397) | |||||||||
| Net (gain) loss on investments | 28 | 81 | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Receivables | (119) | 15 | |||||||||
| Equipment installment receivables and related sales | 255 | 1,212 | |||||||||
| Contract asset and cost deferral | (327) | (147) | |||||||||
| Inventories, prepaid and other current assets | (173) | (661) | |||||||||
| Accounts payable and other accrued liabilities | (2,770) | (3,297) | |||||||||
| Changes in income taxes | 1,147 | 1,285 | |||||||||
| Postretirement claims and contributions | (72) | (68) | |||||||||
| Other - net | 277 | 124 | |||||||||
| Total adjustments | 3,376 | 4,357 | |||||||||
| Net Cash Provided by Operating Activities from Continuing Operations | 7,595 | 9,049 | |||||||||
| Investing Activities | |||||||||||
| Capital expenditures | (4,877) | (4,277) | |||||||||
| Acquisitions, net of cash acquired | (2,674) | (20) | |||||||||
| Dispositions | 628 | 11 | |||||||||
| (Purchases), sales and settlements of securities - net | (14) | 45 | |||||||||
| Other - net | (547) | (717) | |||||||||
| Net Cash Used in Investing Activities from Continuing Operations | (7,484) | (4,958) | |||||||||
| Financing Activities | |||||||||||
| Issuance of long-term debt | 8,098 | 2,956 | |||||||||
| Repayment of long-term debt | (5,247) | (1,526) | |||||||||
| Payment of vendor financing | (212) | (203) | |||||||||
| Redemption of preferred stock | — | (2,075) | |||||||||
| Purchase of treasury stock | (2,475) | (218) | |||||||||
| Issuance of treasury stock | 1 | 17 | |||||||||
| Issuance of preferred interests in subsidiary | — | 2,221 | |||||||||
| Dividends paid | (1,997) | (2,091) | |||||||||
| Other - net | (265) | 366 | |||||||||
| Net Cash Used in Financing Activities from Continuing Operations | (2,097) | (553) | |||||||||
| Net increase (decrease) in cash and cash equivalents and restricted cash from continuing operations | (1,986) | 3,538 | |||||||||
| Cash Flows from Discontinued Operations: | |||||||||||
| Cash used in operating activities | (38) | — | |||||||||
| Cash used in investing activities | (4,171) | — | |||||||||
| Cash used in financing activities | — | — | |||||||||
| Net increase (decrease) in cash and cash equivalents and restricted cash from discontinued operations | (4,209) | — | |||||||||
| Net increase (decrease) in cash and cash equivalents and restricted cash | $ | (6,195) | $ | 3,538 | |||||||
| Cash and cash equivalents and restricted cash beginning of year | 18,527 | 3,406 | |||||||||
| Cash and Cash Equivalents and Restricted Cash End of Period | $ | 12,332 | $ | 6,944 | |||||||
| See Notes to Consolidated Financial Statements. |
| AT&T INC. | |||||||||||||||||||||||||||||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY | |||||||||||||||||||||||||||||||||||||||||||||||
| Dollars and shares in millions except per share amounts | |||||||||||||||||||||||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||||||||||||||||||||||
| Three months ended | |||||||||||||||||||||||||||||||||||||||||||||||
| March 31, 2026 | March 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock - Series A | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance at beginning of period | — | $ | — | — | $ | — | |||||||||||||||||||||||||||||||||||||||||
| Balance at end of period | — | $ | — | — | $ | — | |||||||||||||||||||||||||||||||||||||||||
| Preferred Stock - Series B | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance at beginning of period | — | $ | — | — | $ | — | |||||||||||||||||||||||||||||||||||||||||
| Balance at end of period | — | $ | — | — | $ | — | |||||||||||||||||||||||||||||||||||||||||
| Preferred Stock - Series C | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance at beginning of period | — | $ | — | — | $ | — | |||||||||||||||||||||||||||||||||||||||||
| Balance at end of period | — | $ | — | — | $ | — | |||||||||||||||||||||||||||||||||||||||||
| Common Stock | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance at beginning of period | 7,621 | $ | 7,621 | 7,621 | $ | 7,621 | |||||||||||||||||||||||||||||||||||||||||
| Balance at end of period | 7,621 | $ | 7,621 | 7,621 | $ | 7,621 | |||||||||||||||||||||||||||||||||||||||||
| Additional Paid-In Capital | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance at beginning of period | $ | 106,533 | $ | 109,108 | |||||||||||||||||||||||||||||||||||||||||||
| Redemption of preferred stock | — | (2,165) | |||||||||||||||||||||||||||||||||||||||||||||
| Issuance of treasury stock | (287) | (452) | |||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | (162) | (189) | |||||||||||||||||||||||||||||||||||||||||||||
| Balance at end of period | $ | 106,084 | $ | 106,302 | |||||||||||||||||||||||||||||||||||||||||||
| Retained Earnings | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance at beginning of period | $ | 15,768 | $ | 1,871 | |||||||||||||||||||||||||||||||||||||||||||
| Net income attributable to AT&T | 3,829 | 4,351 | |||||||||||||||||||||||||||||||||||||||||||||
| Preferred stock redemption gain | — | 90 | |||||||||||||||||||||||||||||||||||||||||||||
| Preferred stock dividends | (35) | (86) | |||||||||||||||||||||||||||||||||||||||||||||
| Common stock dividends ($0.2775 and $0.2775 per share) | (1,942) | (2,011) | |||||||||||||||||||||||||||||||||||||||||||||
| Balance at end of period | $ | 17,620 | $ | 4,215 |
See Notes to Consolidated Financial Statements.
| AT&T INC. | |||||||||||||||||||||||||||||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY - continued | |||||||||||||||||||||||||||||||||||||||||||||||
| Dollars and shares in millions except per share amounts | |||||||||||||||||||||||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||||||||||||||||||||||
| Three months ended | |||||||||||||||||||||||||||||||||||||||||||||||
| March 31, 2026 | March 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||
| Treasury Stock | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance at beginning of period | (583) | $ | (18,529) | (445) | $ | (15,023) | |||||||||||||||||||||||||||||||||||||||||
| Repurchase and acquisition of common stock | (95) | (2,495) | (9) | (218) | |||||||||||||||||||||||||||||||||||||||||||
| Reissuance of treasury stock | 22 | 751 | 29 | 989 | |||||||||||||||||||||||||||||||||||||||||||
| Balance at end of period | (656) | $ | (20,273) | (425) | $ | (14,252) | |||||||||||||||||||||||||||||||||||||||||
| Accumulated Other Comprehensive Income (Loss) Attributable to AT&T, net of tax | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance at beginning of period | $ | (860) | $ | 795 | |||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) attributable to AT&T | (532) | (937) | |||||||||||||||||||||||||||||||||||||||||||||
| Balance at end of period | $ | (1,392) | $ | (142) | |||||||||||||||||||||||||||||||||||||||||||
| Noncontrolling Interest****1 | |||||||||||||||||||||||||||||||||||||||||||||||
| Balance at beginning of period | $ | 15,958 | $ | 13,873 | |||||||||||||||||||||||||||||||||||||||||||
| Net income attributable to noncontrolling interest | 316 | 305 | |||||||||||||||||||||||||||||||||||||||||||||
| Issuance and acquisition by noncontrolling owners | — | 2,221 | |||||||||||||||||||||||||||||||||||||||||||||
| Distributions | (315) | (285) | |||||||||||||||||||||||||||||||||||||||||||||
| Balance at end of period | $ | 15,959 | $ | 16,114 | |||||||||||||||||||||||||||||||||||||||||||
| Total Stockholders’ Equity at beginning of period | $ | 126,491 | $ | 118,245 | |||||||||||||||||||||||||||||||||||||||||||
| Total Stockholders’ Equity at end of period | $ | 125,619 | $ | 119,858 | |||||||||||||||||||||||||||||||||||||||||||
| 1Excludes redeemable noncontrolling interest |
See Notes to Consolidated Financial Statements.
AT&T INC.
MARCH 31, 2026
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Dollars in millions except per share amounts
NOTE 1. PREPARATION OF INTERIM FINANCIAL STATEMENTS
Basis of Presentation Throughout this document, AT&T Inc. is referred to as “we,” “AT&T” or the “Company.” The consolidated financial statements include the accounts of the Company and subsidiaries and affiliates which we control. AT&T is a holding company whose subsidiaries and affiliates operate worldwide in the telecommunications and technology industries. You should read this document in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2025. The results for the interim periods are not necessarily indicative of those for the full year. These consolidated financial statements include all adjustments that are necessary to present fairly the results for the presented interim periods, consisting of normal recurring accruals and other items.
On February 2, 2026, we closed our transaction with Lumen Technologies, Inc. (Lumen) and acquired substantially all of Lumen’s Mass Markets fiber business for $5,756 cash, including purchase price adjustments. The acquisition included customer relationships, which we include with our advanced home internet services, and fiber network assets that were placed in a wholly owned subsidiary, Forged Fiber 37 Services, LLC (Forged Fiber). We plan to sell a controlling interest in Forged Fiber to an equity partner that will co-invest in the ongoing business. As such, Forged Fiber met the criteria of held-for-sale and accordingly is reflected as discontinued operations in the accompanying financial statements. (See Notes 8 and 12)
The consolidated financial statements include our controlled subsidiaries, as well as variable interest entities (VIE) where we are deemed to be the primary beneficiary. All significant intercompany transactions are eliminated in consolidation. Investments in entities that we do not control but have significant influence are accounted for under the equity method.
The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions, including estimates of 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. Unless otherwise noted, the information in Notes 1 through 11 refer only to our continued operations and do not include discussion of balances or activity of our discontinued operations.
Effective with our first-quarter 2026 reporting, we realigned our internal management and reporting structure to reflect the evolution of our business model to focus on delivering converged advanced connectivity services across 5G and fiber to consumer and business customers. This new segment reporting structure also provides better visibility into the progress of exiting our copper-based Legacy operations. (See Notes 4 and 5)
As a result of our change to this new segment reporting structure, we were required to reassess the assignment of goodwill and perform impairment testing of the previous and updated reporting units as of January 1, 2026; no impairment was recorded. The assignment of goodwill was based on the relative fair value of the reporting unit, which is deemed to be our principal operating segments or one level below. The goodwill from our previous Consumer Wireline and Mobility reporting units within the Communications segment was fully assigned to the reporting units comprising the Advanced Connectivity segment. No goodwill was assigned to the reporting unit comprising the Legacy segment as we expect sustained declines in Legacy service revenues driven by progress on our copper-based network decommissioning.
Stock Repurchase Program In December 2024, the Board of Directors authorized the repurchase of up to $10,000 of AT&T common stock. We began buying back stock under this program in the second quarter of 2025. On January 27, 2026, the Board approved an authorization to repurchase an additional $10,000 of common stock. For the three months ended March 31, 2026, we repurchased approximately 88 million shares totaling $2,279 under the December 2024 authorization, excluding brokerage fees and the one percent excise tax imposed by the Inflation Reduction Act of 2022.
To implement repurchase authorizations, we use open market repurchase programs, relying on Rule 10b5-1 of the Securities Exchange Act of 1934 where feasible.
AT&T INC.
MARCH 31, 2026
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
Dollars in millions except per share amounts
NOTE 2. EARNINGS PER SHARE
A reconciliation of the numerators and denominators of basic and diluted earnings per share is shown in the table below:
| Three months ended | |||||||||||||||||||||||
| March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Numerators | |||||||||||||||||||||||
| Numerator for basic earnings per share: | |||||||||||||||||||||||
| Income from Continuing Operations | $ | 4,219 | $ | 4,692 | |||||||||||||||||||
| Net Income Attributable to Noncontrolling Interest | (352) | (341) | |||||||||||||||||||||
| Preferred Stock Dividends and Redemption Gain | (36) | 44 | |||||||||||||||||||||
| Income from continuing operations attributable to common stock | 3,831 | 4,395 | |||||||||||||||||||||
| Loss from discontinued operations, net of tax | (38) | — | |||||||||||||||||||||
| Net Income Attributable to Common Stock | $ | 3,793 | $ | 4,395 | |||||||||||||||||||
| Dilutive impact of share-based compensation | 3 | 4 | |||||||||||||||||||||
| Numerator for diluted earnings per share | $ | 3,796 | $ | 4,399 | |||||||||||||||||||
| Denominators (000,000) | |||||||||||||||||||||||
| Denominator for basic earnings per share: | |||||||||||||||||||||||
| Weighted average number of common shares outstanding | 7,017 | 7,213 | |||||||||||||||||||||
| Dilutive impact of share-based compensation (in shares) | 10 | 10 | |||||||||||||||||||||
| Denominator for diluted earnings per share | 7,027 | 7,223 |
NOTE 3. OTHER COMPREHENSIVE INCOME
Changes in the balances of each component included in accumulated other comprehensive income (OCI) are presented below. All amounts are net of tax.
| Foreign Currency Translation Adjustment | Net Unrealized Gains (Losses) on Securities | Net Unrealized Gains (Losses) on Derivative Instruments | Defined Benefit Postretirement Plans | Accumulated Other Comprehensive Income (Loss) | |||||||||||||||||||||||||
| Balance as of December 31, 2025 | $ | (1,401) | $ | (28) | $ | (1,209) | $ | 1,778 | $ | (860) | |||||||||||||||||||
| Other comprehensive income (loss) before reclassifications | 34 | (1) | (270) | — | (237) | ||||||||||||||||||||||||
| Amounts reclassified from accumulated OCI | — | 1 | — | 1 | 11 | 2 | (306) | 3 | (295) | ||||||||||||||||||||
| Net other comprehensive income (loss) | 34 | (1) | (259) | (306) | (532) | ||||||||||||||||||||||||
| Balance as of March 31, 2026 | $ | (1,367) | $ | (29) | $ | (1,468) | $ | 1,472 | $ | (1,392) | |||||||||||||||||||
AT&T INC.
MARCH 31, 2026
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
Dollars in millions except per share amounts
| Foreign Currency Translation Adjustment | Net Unrealized Gains (Losses) on Securities | Net Unrealized Gains (Losses) on Derivative Instruments | Defined Benefit Postretirement Plans | Accumulated Other Comprehensive Income (Loss) | |||||||||||||||||||||||||
| Balance as of December 31, 2024 | $ | (1,755) | $ | (46) | $ | (604) | $ | 3,200 | $ | 795 | |||||||||||||||||||
| Other comprehensive income (loss) before reclassifications | 21 | 10 | (624) | — | (593) | ||||||||||||||||||||||||
| Amounts reclassified from accumulated OCI | — | 1 | 1 | 1 | 11 | 2 | (356) | 3 | (344) | ||||||||||||||||||||
| Net other comprehensive income (loss) | 21 | 11 | (613) | (356) | (937) | ||||||||||||||||||||||||
| Balance as of March 31, 2025 | $ | (1,734) | $ | (35) | $ | (1,217) | $ | 2,844 | $ | (142) | |||||||||||||||||||
| 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 7). | |||||||||||||||||||||||||||||
| 3The amortization of prior service credit associated with postretirement benefits are included in “Other income (expense) - net” in the consolidated statements of income (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 three reportable segments: Advanced Connectivity, Legacy and Latin America.
Our chief operating decision maker (CODM) is our Chairman of the Board, Chief Executive Officer and President. Our CODM uses operating income to evaluate performance and allocate resources, including capital allocations, when managing the business. Our CODM manages operations through the review of actual and forecasted “Operations and Support Expenses” information, which are primarily comprised of costs for wireless devices, network access, rents, leases, sales support, customer provisioning and commissions. Operating costs and depreciation of our shared network, including copper-based assets prior to decommissioning, are managed in our Advanced Connectivity segment. Our Legacy and Latin America segments are primarily evaluated on a direct cost basis. Our CODM does not review disaggregated assets on a segment basis, therefore, that information is not presented.
The Advanced Connectivity segment provides domestic 5G and fiber-based wireless, internet and other advanced connectivity services to consumer and business customers.
The Legacy segment provides domestic legacy voice and data services to consumer and business customers over our copper-based network. Legacy segment results include revenues derived from copper-based services and direct operating costs.
The Latin America segment provides wireless service and equipment in Mexico.
Corporate and Other reconciles our segment results to consolidated operating income and income from continuing operations before income taxes and includes parent support costs, securitization fees, operations from business no longer integral to operations and significant items for which the segments are not being evaluated. Significant items typically include costs associated with the merger and integration of acquired or divested businesses, including amortization of intangible assets, legal and other items that cover historical periods, novel theories of liability and are separate and distinct from normal recurring costs, benefit-related gains and losses, employee separation charges associated with voluntary and/or strategic offers, asset impairments and abandonments and restructuring.
“Total other income (expense)” consists of “Interest expense,” “Other income (expense) – net” and “Equity in net income (loss) of affiliates” and is managed only on a total company basis and are, accordingly, reflected only in consolidated results.
AT&T INC.
MARCH 31, 2026
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
Dollars in millions except per share amounts
| For the three months ended March 31, 2026 | ||||||||||||||||||||||||||||||||
| Advanced Connectivity | Legacy | Latin America | Total Segment | Corporate & Other | AT&T Inc. | |||||||||||||||||||||||||||
| Operating Revenues | ||||||||||||||||||||||||||||||||
| Wireless service | $ | 16,941 | $ | — | $ | 753 | $ | 17,694 | $ | — | $ | 17,694 | ||||||||||||||||||||
| Consumer | 14,584 | |||||||||||||||||||||||||||||||
| Business | 2,357 | |||||||||||||||||||||||||||||||
| Advanced home internet | 2,799 | — | — | 2,799 | — | 2,799 | ||||||||||||||||||||||||||
| Business fiber and advanced connectivity | 1,882 | — | — | 1,882 | — | 1,882 | ||||||||||||||||||||||||||
| Business transitional and other | 1,083 | — | — | 1,083 | — | 1,083 | ||||||||||||||||||||||||||
| Other service | 158 | 1,768 | — | 1,926 | 94 | 2,020 | ||||||||||||||||||||||||||
| Total Service | 22,863 | 1,768 | 753 | 25,384 | 94 | 25,478 | ||||||||||||||||||||||||||
| Equipment | 5,608 | — | 420 | 6,028 | — | 6,028 | ||||||||||||||||||||||||||
| Operating Revenues | 28,471 | 1,768 | 1,173 | 31,412 | 94 | 31,506 | ||||||||||||||||||||||||||
| Operating Expenses | ||||||||||||||||||||||||||||||||
| Operations and support expenses | 16,913 | 1,156 | 953 | 19,022 | 714 | 19,736 | ||||||||||||||||||||||||||
| Asset impairment and abandonment and restructuring | — | — | — | — | — | — | ||||||||||||||||||||||||||
| Transaction, legal and other costs | — | — | — | — | 146 | 146 | ||||||||||||||||||||||||||
| Depreciation and amortization | 4,705 | — | 200 | 4,905 | 61 | 4,966 | ||||||||||||||||||||||||||
| Operating Expenses | 21,618 | 1,156 | 1,153 | 23,927 | 921 | 24,848 | ||||||||||||||||||||||||||
| Operating Income (Loss) | $ | 6,853 | $ | 612 | $ | 20 | $ | 7,485 | $ | (827) | $ | 6,658 | ||||||||||||||||||||
| Total other income (expense) | (1,260) | |||||||||||||||||||||||||||||||
| Income from continuing operations before income tax | $ | 5,398 |
| For the three months ended March 31, 2025 | ||||||||||||||||||||||||||||||||
| Advanced Connectivity | Legacy | Latin America | Total Segment | Corporate & Other | AT&T Inc. | |||||||||||||||||||||||||||
| Operating Revenues | ||||||||||||||||||||||||||||||||
| Wireless service | $ | 16,651 | $ | — | $ | 615 | $ | 17,266 | $ | — | $ | 17,266 | ||||||||||||||||||||
| Consumer | 14,370 | |||||||||||||||||||||||||||||||
| Business | 2,281 | |||||||||||||||||||||||||||||||
| Advanced home internet | 2,198 | — | — | 2,198 | — | 2,198 | ||||||||||||||||||||||||||
| Business fiber and advanced connectivity | 1,755 | — | — | 1,755 | — | 1,755 | ||||||||||||||||||||||||||
| Business transitional and other | 1,294 | — | — | 1,294 | — | 1,294 | ||||||||||||||||||||||||||
| Other service | 162 | 2,368 | — | 2,530 | 95 | 2,625 | ||||||||||||||||||||||||||
| Total Service | 22,060 | 2,368 | 615 | 25,043 | 95 | 25,138 | ||||||||||||||||||||||||||
| Equipment | 5,132 | — | 356 | 5,488 | — | 5,488 | ||||||||||||||||||||||||||
| Operating Revenues | 27,192 | 2,368 | 971 | 30,531 | 95 | 30,626 | ||||||||||||||||||||||||||
| Operating Expenses | ||||||||||||||||||||||||||||||||
| Operations and support expenses | 16,247 | 1,349 | 778 | 18,374 | 725 | 19,099 | ||||||||||||||||||||||||||
| Asset impairment and abandonment and restructuring | — | — | — | — | 504 | 504 | ||||||||||||||||||||||||||
| Transaction, legal and other costs | — | — | — | — | 79 | 79 | ||||||||||||||||||||||||||
| Depreciation and amortization | 4,973 | — | 150 | 5,123 | 67 | 5,190 | ||||||||||||||||||||||||||
| Operating Expenses | 21,220 | 1,349 | 928 | 23,497 | 1,375 | 24,872 | ||||||||||||||||||||||||||
| Operating Income (Loss) | $ | 5,972 | $ | 1,019 | $ | 43 | $ | 7,034 | $ | (1,280) | $ | 5,754 | ||||||||||||||||||||
| Total other income (expense) | 237 | |||||||||||||||||||||||||||||||
| Income from continuing operations before income tax | $ | 5,991 |
AT&T INC.
MARCH 31, 2026
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
Dollars in millions except per share amounts
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. Revenue is disaggregated by services provided by segment, with additional details provided for our Advanced Connectivity consumer and business relationships (see Note 4).
Deferred Customer Contract Acquisition and Fulfillment Costs
Costs to acquire and fulfill customer contracts, including commissions on service activations are deferred and amortized over the contract period or expected customer relationship life, which typically ranges from three years to seven years.
The following table presents the deferred customer contract acquisition and fulfillment costs included on our consolidated balance sheets:
| March 31, | December 31, | ||||||||||
| Consolidated Balance Sheets | 2026 | 2025 | |||||||||
| Deferred Acquisition Costs | |||||||||||
| Prepaid and other current assets | $ | 3,511 | $ | 3,550 | |||||||
| Other Assets | 4,986 | 4,778 | |||||||||
| Total deferred customer contract acquisition costs | $ | 8,497 | $ | 8,328 | |||||||
| Deferred Fulfillment Costs | |||||||||||
| Prepaid and other current assets | $ | 1,696 | $ | 1,862 | |||||||
| Other Assets | 2,896 | 2,864 | |||||||||
| Total deferred customer contract fulfillment costs | $ | 4,592 | $ | 4,726 |
The following table presents deferred customer contract acquisition and fulfillment cost amortization, which are primarily included in “Selling, general and administrative” and “Other cost of revenues,” respectively, for the three months ended:
| March 31, | March 31, | ||||||||||
| Consolidated Statements of Income | 2026 | 2025 | |||||||||
| Deferred acquisition cost amortization | $ | 1,006 | $ | 906 | |||||||
| Deferred fulfillment cost amortization | 480 | 595 | |||||||||
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., trade-in device credits) the difference between revenue recognized and consideration received is recorded as a contract asset to be amortized over the contract term.
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:
| March 31, | December 31, | ||||||||||
| Consolidated Balance Sheets | 2026 | 2025 | |||||||||
| Contract asset | $ | 8,108 | $ | 7,816 | |||||||
| Current portion in “Prepaid and other current assets” | 4,320 | 4,131 | |||||||||
| Contract liability | 4,472 | 4,409 | |||||||||
| Current portion in “Advanced billings and customer deposits” | 4,194 | 4,136 |
AT&T INC.
MARCH 31, 2026
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
Dollars in millions except per share amounts
Our beginning of period contract liability recorded as customer contract revenue during 2026 was $3,287.
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 March 31, 2026, the aggregate amount of the transaction price allocated to remaining performance obligations was $44,392, of which we expect to recognize approximately 82% by the end of 2027, with the balance recognized thereafter.
NOTE 6. PENSION AND POSTRETIREMENT BENEFITS
Many of our employees are covered by one of our noncontributory pension plans. We also provide certain medical, dental, life insurance and death benefits to certain retired employees under various plans and accrue actuarially determined postretirement benefit costs. Our objective in funding these plans, in combination with the standards of the Employee Retirement Income Security Act of 1974, as amended (ERISA), is to accumulate assets sufficient to provide benefits described in the plans to employees upon their retirement. We do not have significant funding requirements in 2026. We plan to voluntarily contribute $350 to our pension plans during 2026.
We recognize actuarial gains and losses on pension and postretirement plan assets in our consolidated results as a component of “Other income (expense) – net” at our annual measurement date of December 31, unless earlier remeasurements are required.
The following table details qualified pension and postretirement benefit costs included in the accompanying consolidated statements of income. The service cost component of net periodic pension (credit) cost is recorded in operating expenses in the consolidated statements of income while the remaining components are recorded in “Other income (expense) – net.”
| Three months ended | |||||||||||||||||||||||
| March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Pension cost: | |||||||||||||||||||||||
| Service cost – benefits earned during the period | $ | 101 | $ | 107 | |||||||||||||||||||
| Interest cost on projected benefit obligation | 361 | 400 | |||||||||||||||||||||
| Expected return on assets | (525) | (507) | |||||||||||||||||||||
| Amortization of prior service credit | (11) | (12) | |||||||||||||||||||||
| Net pension (credit) cost | $ | (74) | $ | (12) | |||||||||||||||||||
| Postretirement cost: | |||||||||||||||||||||||
| Service cost – benefits earned during the period | $ | 4 | $ | 4 | |||||||||||||||||||
| Interest cost on accumulated postretirement benefit obligation | 73 | 80 | |||||||||||||||||||||
| Expected return on assets | (6) | (10) | |||||||||||||||||||||
| Amortization of prior service credit | (393) | (459) | |||||||||||||||||||||
| Net postretirement (credit) cost | $ | (322) | $ | (385) | |||||||||||||||||||
| Combined net pension and postretirement (credit) cost | $ | (396) | $ | (397) |
AT&T INC.
MARCH 31, 2026
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
Dollars in millions except per share amounts
NOTE 7. 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 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, 2025.
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:
| March 31, 2026 | December 31, 2025 | ||||||||||||||||||||||
| Carrying | Fair | Carrying | Fair | ||||||||||||||||||||
| Amount | Value | Amount | Value | ||||||||||||||||||||
| Notes and debentures1 | $ | 137,017 | $ | 127,709 | $ | 134,718 | $ | 127,852 | |||||||||||||||
| Investment securities2 | 1,595 | 1,595 | 1,609 | 1,609 | |||||||||||||||||||
| 1Includes credit agreement borrowings. | |||||||||||||||||||||||
| 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 March 31, 2026 and December 31, 2025. Derivatives designated as hedging instruments are reflected as “Prepaid and other current assets,” “Other Assets,” “Accounts payable and accrued liabilities,” and “Other noncurrent liabilities” on our consolidated balance sheets.
| March 31, 2026 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Equity Securities | |||||||||||||||||||||||
| Domestic equities | $ | 541 | $ | — | $ | — | $ | 541 | |||||||||||||||
| International equities | 8 | — | — | 8 | |||||||||||||||||||
| Fixed income equities | 217 | — | — | 217 | |||||||||||||||||||
| Available-for-Sale Debt Securities | — | 583 | — | 583 | |||||||||||||||||||
| Asset Derivatives | |||||||||||||||||||||||
| Cross-currency swaps | — | 458 | — | 458 | |||||||||||||||||||
| Liability Derivatives | |||||||||||||||||||||||
| Cross-currency swaps | — | (2,626) | — | (2,626) | |||||||||||||||||||
AT&T INC.
MARCH 31, 2026
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
Dollars in millions except per share amounts
| December 31, 2025 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| Equity Securities | |||||||||||||||||||||||
| Domestic equities | $ | 566 | $ | — | $ | — | $ | 566 | |||||||||||||||
| International equities | 8 | — | — | 8 | |||||||||||||||||||
| Fixed income equities | 217 | — | — | 217 | |||||||||||||||||||
| Available-for-Sale Debt Securities | — | 587 | — | 587 | |||||||||||||||||||
| Asset Derivatives | |||||||||||||||||||||||
| Cross-currency swaps | — | 876 | — | 876 | |||||||||||||||||||
| Liability Derivatives | |||||||||||||||||||||||
| Cross-currency swaps | — | (2,050) | — | (2,050) | |||||||||||||||||||
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 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:
| Three months ended | |||||||||||||||||||||||
| March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Total gains (losses) recognized on equity securities | $ | (32) | $ | (27) | |||||||||||||||||||
| Gains (losses) recognized on equity securities sold | — | — | |||||||||||||||||||||
| Unrealized gains (losses) recognized on equity securities held at end of period | $ | (32) | $ | (27) |
At March 31, 2026, available-for-sale debt securities totaling $583 have maturities as follows - less than one year: $55; one to three years: $151; three to five years: $118; five or more years: $259.
Our cash equivalents (money market securities) and short-term investments (certificate and time deposits) are recorded at amortized cost, and the respective carrying amounts approximate fair values. Short-term investments 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
AT&T INC.
MARCH 31, 2026
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
Dollars in millions except per share amounts
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 three months ended March 31, 2026 and 2025, no ineffectiveness was measured on fair value hedges.
Cash Flow Hedging We designate 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 and interest rate risk generated from our foreign-denominated debt. These agreements include initial and final exchanges of principal from fixed foreign 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 denominated interest rate to a fixed U.S. dollar denominated interest rate.
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 March 31, 2026, we had posted collateral of $28 (a deposit asset) and held collateral of $183 (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 March, we would have been required to post additional collateral of $60. 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 $2,219. At December 31, 2025, we had posted collateral of $513 (a deposit asset) and held collateral of $314 (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:
| March 31, | December 31, | ||||||||||
| 2026 | 2025 | ||||||||||
| Cross-currency swaps | $ | 36,069 | $ | 35,741 | |||||||
| Total | $ | 36,069 | $ | 35,741 |
AT&T INC.
MARCH 31, 2026
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
Dollars in millions except per share amounts
Following are the related hedged items affecting our financial position and performance:
| Effect of Derivatives on the Consolidated Statements of Income | |||||||||||||||||||||||
| Three months ended | |||||||||||||||||||||||
| March 31, | |||||||||||||||||||||||
| Fair Value Hedging Relationships | 2026 | 2025 | |||||||||||||||||||||
| Interest rate swaps (“Interest expense”): | |||||||||||||||||||||||
| Gain (loss) on interest rate swaps | $ | (1) | $ | (1) | |||||||||||||||||||
| Gain (loss) on long-term debt | 1 | 1 | |||||||||||||||||||||
| Cross-currency swaps: | |||||||||||||||||||||||
| Gain (loss) on cross-currency swaps | (587) | 1,124 | |||||||||||||||||||||
| Gain (loss) on long-term debt | 587 | (1,124) | |||||||||||||||||||||
| Gain (loss) recognized in accumulated OCI | (375) | (831) | |||||||||||||||||||||
In addition, the net swap settlements that accrued and settled in the periods above were offset against “Interest expense.”
The following table presents information for our cash flow hedging relationships:
| Three months ended | |||||||||||||||||||||||
| March 31, | |||||||||||||||||||||||
| Cash Flow Hedging Relationships | 2026 | 2025 | |||||||||||||||||||||
| Cross-currency swaps: | |||||||||||||||||||||||
| Gain (loss) recognized in accumulated OCI | $ | 12 | $ | 4 | |||||||||||||||||||
| Interest rate locks: | |||||||||||||||||||||||
| Interest income (expense) reclassified from accumulated OCI into income | (15) | (15) | |||||||||||||||||||||
NOTE 8. ACQUISITIONS, DISPOSITIONS AND OTHER ADJUSTMENTS
Fiber On February 2, 2026, we acquired substantially all of Lumen’s Mass Markets fiber business for $5,756, including purchase price adjustments. The preliminary values of assets acquired were approximately $900 in customer relationships, $3,400 in property, plant and equipment, and $800 of goodwill. The customer relationships are managed in our Advanced Connectivity segment and will be amortized using the sum-of-the-months method over six years. Property, plant and equipment primarily represent the acquired fiber network, which we placed in Forged Fiber, a wholly owned subsidiary.
In connection with this transaction, we plan to sell a controlling interest in Forged Fiber to an equity partner that will co-invest in the ongoing business. As such, Forged Fiber met the criteria of held-for-sale and accordingly is reflected as discontinued operations. These discontinued operations include the fiber network assets, which support the acquired customer relationships through intercompany transactions. The discontinued operations were also assigned a proportionate share of goodwill and acquisition costs and related cash flows. (See Note 12)
NOTE 9. 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 are discussed in detail below and generally consist of (1) receivables arising from equipment installment plans, which are sold for cash and beneficial interests, such as deferred purchase price, when applicable, and (2) revolving trade receivables, which are sold for cash. Under the terms of our agreements for these programs, we continue to service the transferred receivables on behalf of the financial institutions.
AT&T INC.
MARCH 31, 2026
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
Dollars in millions except per share amounts
The following table sets forth a summary of cash proceeds received, net of remittances paid, from sales of receivables:
| Three months ended | |||||||||||||||||||||||
| March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Net cash received (paid) from equipment installment receivables program1 | $ | 268 | $ | 859 | |||||||||||||||||||
| Net cash received (paid) from revolving receivables program | (34) | 133 | |||||||||||||||||||||
| Total net cash impact to cash flows from operating activities2 | $ | 234 | $ | 992 | |||||||||||||||||||
| 1Cash from initial sales of $3,483 and $3,798 for the three months ended March 31, 2026 and 2025, respectively. | |||||||||||||||||||||||
| 2Net of facility fees. |
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. In the event cash is received on the beneficial interests, those receipts are classified as cash flows from investing activities, when applicable.
Our equipment installment and revolving receivables programs are discussed in detail below. The following table sets forth a summary of the receivables and accounts being serviced:
| March 31, 2026 | December 31, 2025 | ||||||||||||||||||||||
| Equipment | Equipment | ||||||||||||||||||||||
| Installment | Revolving | Installment | Revolving | ||||||||||||||||||||
| Gross receivables: | $ | 2,961 | $ | 377 | $ | 3,725 | $ | 425 | |||||||||||||||
| Balance sheet classification | |||||||||||||||||||||||
| Accounts receivable | |||||||||||||||||||||||
| Notes receivable | 1,532 | — | 1,886 | — | |||||||||||||||||||
| Trade receivables | 282 | 377 | 304 | 425 | |||||||||||||||||||
| Other Assets | |||||||||||||||||||||||
| Noncurrent notes and trade receivables | 1,147 | — | 1,535 | — | |||||||||||||||||||
| Outstanding portfolio of receivables derecognized from our consolidated balance sheets | $ | 12,585 | $ | 2,940 | $ | 11,987 | $ | 2,940 | |||||||||||||||
| Cash proceeds received, net of remittances1 | 9,838 | 2,940 | 9,617 | 2,940 | |||||||||||||||||||
| 1Represents amounts to which financial institutions remain entitled, excluding the beneficial interests. |
Equipment Installment Receivables Program
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 beneficial interests. 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.
AT&T INC.
MARCH 31, 2026
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
Dollars in millions except per share amounts
The following table sets forth a summary of equipment installment receivables sold under this program:
| Three months ended | |||||||||||||||||||||||
| March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Gross receivables sold1 | $ | 3,516 | $ | 3,835 | |||||||||||||||||||
| Net receivables sold2 | 3,355 | 3,688 | |||||||||||||||||||||
| Cash proceeds received | 3,483 | 3,798 | |||||||||||||||||||||
| Guarantee obligation recorded | 279 | 280 | |||||||||||||||||||||
| 1Receivables net of promotion credits. | |||||||||||||||||||||||
| 2Receivables net of allowance and other reserves. |
Beneficial interests, when applicable, and guarantee obligations 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 contemplates changes in value after the launch of a device model. The fair value measurements used for the beneficial interests and the guarantee obligation are considered Level 3 under the Fair Value Measurement and Disclosure framework (see Note 7).
The following table presents the previously transferred equipment installment receivables, which we repurchased in exchange for the associated beneficial interests:
| Three months ended | |||||||||||||||||||||||
| March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Fair value of repurchased receivables | $ | 725 | $ | 1,937 | |||||||||||||||||||
| Carrying value of beneficial interests | 726 | 1,933 | |||||||||||||||||||||
| Gain (loss) on repurchases1 | $ | (1) | $ | 4 | |||||||||||||||||||
| 1These gains (losses) are included in “Selling, general and administrative” expense in the consolidated statements of income. |
At March 31, 2026 and December 31, 2025, our beneficial interests were $2,463 and $2,067, respectively, of which $1,737 and $1,338 are included in “Prepaid and other current assets” on our consolidated balance sheets, with the remainder in “Other Assets.” The guarantee obligation at March 31, 2026 and December 31, 2025 was $447 and $410, respectively, of which $227 and $216 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 beneficial interests and guarantee obligation.
Revolving Receivables Program
During 2025, we expanded our revolving agreement to transfer up to $2,940 of certain receivables through our bankruptcy-remote subsidiaries to various financial institutions on a recurring basis in exchange for cash equal to the gross receivables transferred. This agreement is subject to renewal on an annual basis and the transfer limit may be expanded or reduced from time to time. As customers pay their balances, we transfer additional receivables into the program, resulting in our gross receivables sold exceeding net cash flow impacts (e.g., collect and reinvest). The transferred receivables are fully guaranteed by our bankruptcy-remote subsidiaries, which hold additional receivables in the amount of $377 that are pledged as collateral under this agreement. The transfers are recorded at fair value of the proceeds received and obligations assumed less derecognized receivables. Our maximum exposure to loss related to these receivables transferred is limited to the derecognized amount outstanding.
AT&T INC.
MARCH 31, 2026
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
Dollars in millions except per share amounts
The following table sets forth a summary of the revolving receivables sold:
| Three months ended | |||||||||||||||||||||||
| March 31, | |||||||||||||||||||||||
| 2026 | 2025 | ||||||||||||||||||||||
| Gross receivables sold/cash proceeds received1 | $ | 7,501 | $ | 7,343 | |||||||||||||||||||
| Total collections under revolving agreement | 7,501 | 7,173 | |||||||||||||||||||||
| Net cash proceeds received | $ | — | $ | 170 | |||||||||||||||||||
| Net receivables sold2 | $ | 7,294 | $ | 7,142 | |||||||||||||||||||
| 1Includes initial sales of receivables of $0 and $170 for the three months ended March 31, 2026 and 2025, respectively. | |||||||||||||||||||||||
| 2Receivables net of allowance and other reserves. |
NOTE 10. SUPPLIER AND VENDOR FINANCING PROGRAMS
Supplier Financing Program
We actively manage the timing of our supplier payments for operating items to optimize the use of our cash and seek to make payments on 90-day or greater terms, while providing suppliers with access to bank facilities that permit earlier payment at their cost. Our supplier financing program does not result in changes to our normal, contracted payment cycles or cash from operations.
At the supplier’s election, they can receive payment of AT&T obligations prior to the scheduled due dates, at a discounted price from the third-party financial institution. The discounted price paid to participating suppliers is based on a variable rate that is indexed to the overnight borrowing rate. We agree to pay the financial institution the stated amount generally within 90 days of receipt of the invoice. We do not have pledged assets or other guarantees under our supplier financing program.
Suppliers had elected to sell to the third-party financial institutions $4,082 and $3,090 of our outstanding payment obligations as of March 31, 2026 and December 31, 2025, respectively. These amounts are included in “Accounts payable and accrued liabilities” on our consolidated balance sheets. Our supplier financing programs are reported as operating or investing (when capitalizable) activities in our consolidated statements of cash flows when paid.
Direct Supplier Financing
We also have arrangements with suppliers of handset inventory that allow us to extend the stated payment terms by up to approximately 120 days, with an average of 85 days outstanding, at an additional cost to us (variable rate extension fee). We had $5,820 of direct supplier financing outstanding as of March 31, 2026 and $6,901 as of December 31, 2025, which are included in “Accounts payable and accrued liabilities” on our consolidated balance sheets. Our direct supplier financing is reported as operating activities in our statements of cash flows when paid.
Vendor Financing
We enter into multi-year software licensing arrangements, which, consistent with industry standards, are paid over the license terms of two to five years. Additionally, in connection with capital improvements and the acquisition of other productive assets, we negotiate favorable payment terms of 120 days or more. We refer to these arrangements as vendor financing, with the balances and activities including equipment and software arrangements. Vendor financing payments are reported as financing activities in our statements of cash flows when paid. For the three months ended March 31, 2026 and 2025, we recorded vendor financing commitments of $732 and $378, respectively. We had $2,437 of vendor financing payables at March 31, 2026, with $1,474 included in “Accounts payable and accrued liabilities” and $1,892 of vendor financing payables at December 31, 2025, with $956 included in “Accounts payable and accrued liabilities.”
AT&T INC.
MARCH 31, 2026
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
Dollars in millions except per share amounts
NOTE 11. ADDITIONAL FINANCIAL INFORMATION
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:
| March 31, | December 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2025 | 2024 | ||||||||||||||||||||
| Cash and cash equivalents | $ | 11,964 | $ | 6,885 | $ | 18,234 | $ | 3,298 | |||||||||||||||
| Restricted cash in Prepaid and other current assets | 282 | 1 | 157 | 1 | |||||||||||||||||||
| Restricted cash in Other Assets | 86 | 58 | 136 | 107 | |||||||||||||||||||
| Cash and Cash Equivalents and Restricted Cash | $ | 12,332 | $ | 6,944 | $ | 18,527 | $ | 3,406 | |||||||||||||||
The following table summarizes cash paid during the periods for interest and income taxes:
| Three months ended | |||||||||||
| March 31, | |||||||||||
| Cash paid (received) during the period for: | 2026 | 2025 | |||||||||
| Interest | $ | 1,936 | $ | 1,804 | |||||||
| Income taxes, net of refunds | 1 | 11 | |||||||||
| The following table summarizes capital expenditures: | |||||||||||
| Three months ended | |||||||||||
| March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Purchase of property and equipment | $ | 4,835 | $ | 4,240 | |||||||
| Interest during construction - capital expenditures2 | 42 | 37 | |||||||||
| Total Capital Expenditures | $ | 4,877 | $ | 4,277 | |||||||
| The following table summarizes acquisitions, net of cash acquired: | |||||||||||
| Three months ended | |||||||||||
| March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Business acquisitions1 | $ | 1,656 | $ | — | |||||||
| Spectrum acquisitions | 1,018 | 1 | |||||||||
| Interest during construction - spectrum2 | — | 19 | |||||||||
| Total Acquisitions1 | $ | 2,674 | $ | 20 | |||||||
| 1Approximately $4,100 of cash paid for acquisitions was reported as investing activities from discontinued operations. | |||||||||||
| 2Total capitalized interest was $42 and $56 for the three months ended March 31, 2026 and 2025, respectively. |
AT&T INC.
MARCH 31, 2026
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued
Dollars in millions except per share amounts
NOTE 12. DISCONTINUED OPERATIONS
As discussed in Notes 1 and 8, on February 2, 2026, we acquired substantially all of Lumen’s Mass Markets fiber business, including fiber network assets that are held in a new, wholly owned subsidiary, Forged Fiber, which is reflected as discontinued operations. Forged Fiber will continue to support the accompanying acquired fiber customers retained by our Advanced Connectivity segment. To reflect ongoing commercial arrangements following the disposal, results have been presented on a gross basis, with approximately $95 of operating expenses reported in continuing operations and the corresponding revenues reported in discontinued operations. Discontinued operations were also allocated a proportionate share of goodwill, acquisition-related costs and related cash flows.
The following is a summary of operating results included in income (loss) from discontinued operations for the three months ended March 31:
| 2026 | ||||||||
| Revenues | $ | 99 | ||||||
| Operating Expenses | ||||||||
| Cost of revenues | 51 | |||||||
| Selling, general and administrative1 | 81 | |||||||
| Total operating expenses | 132 | |||||||
| Other income (expense) – net | (17) | |||||||
| Net income (loss) before income taxes | (50) | |||||||
| Income tax (benefit) expense | (12) | |||||||
| Loss from discontinued operations, net of tax | $ | (38) | ||||||
| 1Includes proportionate transaction costs. | ||||||||
The following are the preliminary values for the major classes of assets and liabilities associated with our discontinued operations and classified as held-for-sale on our consolidated balance sheet at March 31:
| 2026 | ||||||||
| Assets: | ||||||||
| Current Assets | $ | 132 | ||||||
| Property, Plant and Equipment1 | 3,544 | |||||||
| Goodwill | 392 | |||||||
| Other Assets | 204 | |||||||
| Total Assets, discontinued operations****2 | $ | 4,272 | ||||||
| Liabilities: | ||||||||
| Current liabilities | $ | 185 | ||||||
| Other liabilities | 1 | |||||||
| Total Liabilities, discontinued operations****2 | $ | 186 | ||||||
| 1Includes $71 of capital additions after acquisition. | ||||||||
| 2Held-for-sale assets are reported in “Other current assets” and held-for-sale liabilities are reported in “Accounts payable and accrued liabilities.” |
AT&T INC.
MARCH 31, 2026
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