What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-23 compared with 2023-02-13 · 371 added, 394 removed, 1652 unchanged (32% of the section changed)

54 unchanged sentences

Reclassification adjustment included in net income (loss), net of taxes of $ 4 , $ 3

8 ( 3 ) ( 15 )

Derivative Instruments:

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Prepaid and other current assets 17,270 14,818

Assets from discontinued operations — 119,776

Total current assets 36,458 33,108

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Dividends payable 2,020 2,014

Liabilities from discontinued operations — 33,555

Total current liabilities 51,127 56,173

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Total deferred credits and other noncurrent liabilities 108,664 111,800

Redeemable Noncontrolling Interest 1,973 —

Stockholders’ Equity

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Pension and postretirement benefit expense (credit) ( 2,552 ) ( 3,237 ) ( 3,857 )

Actuarial (gain) loss on pension and postretirement benefits ( 1,999 ) ( 4,143 ) 4,169

Actuarial and settlement (gain) loss on pension and postretirement benefits - net

1,594 ( 1,999 ) ( 4,143 )

Asset impairments and abandonments and restructuring 1,193 27,498 213

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Distributions from DIRECTV in excess of cumulative equity in earnings 2,049 2,649 1,323

(Purchases), sales and settlements of securities and investments - net

( 902 ) 82 44

Other – net ( 84 ) ( 3 ) 6

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Note payable to DIRECTV, net of payments

( 130 ) ( 1,211 ) 1,341

Payment of vendor financing ( 5,742 ) ( 4,697 ) ( 4,596 )

Issuance of preferred stock — — 3,869

Purchase of treasury stock ( 194 ) ( 890 ) ( 202 )

Issuance of treasury stock 3 28 96

Issuance of preferred interests in subsidiaries — — 1,979

Redemption of preferred interest in subsidiary ( 2,665 ) — ( 1,950 )

Issuance of preferred interests in subsidiary

Redemption of preferred interests in subsidiary

( 5,333 ) ( 2,665 ) —

Dividends paid ( 8,136 ) ( 9,859 ) ( 15,068 )

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Net Cash (Used in) Provided by Financing Activities from Continuing Operations ( 15,614 ) ( 59,564 ) 1,894

Net (decrease) increase in cash and cash equivalents and restricted cash from continuing operations ( 50,651 ) 6,575 ( 6,994 )

Net increase (decrease) in cash and cash equivalents and restricted cash from continuing operations 3,040 ( 50,651 ) 6,575

Cash flows from Discontinued Operations:

Cash (used in) provided by operating activities — ( 3,789 ) 4,788

Cash provided by (used in) investing activities 1,094 399 ( 102 )

Cash provided by investing activities

Cash provided by (used in) financing activities — 35,823 ( 316 )

Net increase (decrease) in cash and cash equivalents and restricted cash from discontinued operations — 33,128 4,871

Net (decrease) increase in cash and cash equivalents and restricted cash ( 17,523 ) 11,446 ( 2,425 )

Net increase (decrease) in cash and cash equivalents and restricted cash

3,040 ( 17,523 ) 11,446

Cash and cash equivalents and restricted cash beginning of year 3,793 21,316 9,870

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Distribution of WarnerMedia — ( 6,832 ) —

Repurchase and acquisition of

Issuance of preferred stock — — 3,869

Preferred stock dividends

Common stock dividends ($ 1.11 per

share in 2023)

( 7,991 ) — —

Issuance of treasury stock ( 379 ) ( 171 ) ( 76 )

Share-based payments ( 109 ) ( 162 ) 13

Acquisition or reclassification of interests held by noncontrolling owners 663 — 4

Redemption or reclassification of

interests held by noncontrolling owners

( 407 ) 663 —

Balance at end of year $ 114,519 $ 123,610 $ 130,112

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Balance at beginning of year $ ( 19,415 ) $ 42,350 $ 37,457

Cumulative effect of accounting

changes and other adjustments

Adjusted beginning balance 42,350 37,457 57,643

Net income (loss) attributable to AT&T 14,400 ( 8,524 ) 20,081

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Common stock dividends ($ 1.11

and $ 2.08 per share)

and $ 2.08 per share in 2022 and 2021,

respectively)

— ( 7,993 ) ( 14,964 )

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Balance at beginning of year $ 8,957 $ 17,523 $ 17,567

Cumulative effect of accounting

changes and other adjustments

Adjusted beginning balance 17,523 17,567 17,706

Net income attributable to

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noncontrolling interest, net of taxes

— ( 2 ) ( 59 )

Balance at end of year $ 14,145 $ 8,957 $ 17,523

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$ 117,442 $ 106,457 $ 183,855

1 Excludes redeemable noncontrolling interest.

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

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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.

Supplier Finance Obligations As of January 1, 2023, we adopted, with retrospective application, the Financial Accounting Standards Board’s (FASB) Accounting Standards Update (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.

We elected to adopt the annual rollforward requirement for the year ended December 31, 2023, with prospective application (see Note 22).

In the year of adoption, the disclosure of payment and other key terms under the programs and outstanding balances under the obligations also applies to interim reporting dates.

Convertible Instruments Beginning with 2022 interim reporting, we adopted, through retrospective application, 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):

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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).

Prior to the April 2023 repurchase, settlement of our Series A Cumulative Perpetual Membership Interests in AT&T Mobility II LLC (Mobility preferred interests) could have resulted in additional

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 2020-06 1

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 )

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

dilutive impact, the magnitude of which was influenced by the fair value of the Mobility preferred interests and the average AT&T common stock price during the reporting period, which varied from period-to-period (see Note 16).

Reference Rate Reform In March 2020, the FASB issued ASU No.

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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):

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.

We do not believe our adoption of ASU 2020-04, including optional expedients, materially impacts our financial statements.

Segment Reporting In November 2023, the FASB issued ASU No.

2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures” (ASU 2023-07), which requires that a public entity disclose, on an interim and annual basis, significant segment expense categories and amounts that are regularly provided to its chief operating decision maker (CODM) and included in each reported measure of segment profit or loss.

An entity must also disclose, by reportable segment, the amount and composition of other expenses.

The standard requires an entity disclose the title and position of its CODM and explain how the CODM uses these reported measures in assessing segment performance and determining how to allocate resources.

ASU 2023-07 will be effective for annual periods beginning after December 15, 2023, and interim periods beginning after December 31, 2024, with retrospective application.

The standard allows early adoption of these requirements;

we are currently evaluating the disclosure impacts of our adoption.

Income Taxes In December 2023, the FASB issued ASU No.

2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures” (ASU 2023-09), which requires that a public entity disclose specific categories in its annual income tax rate reconciliation table and provide additional qualitative information for reconciling items representing at least 5% of pre-tax income or loss from continuing operations, using the federal statutory tax rate.

The standard also requires an annual breakdown of income taxes paid by jurisdiction (i.e., federal, state and foreign), with further disaggregation by jurisdictions representing at least 5% of total income taxes paid.

ASU 2023-09 will be effective for annual periods beginning after December 15, 2024, with prospective application.

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

Dollars in millions except per share amounts

deferred income tax liabilities on our consolidated balance sheets), for which the realization is uncertain.

We record valuation allowances against the deferred tax assets (included, together with our deferred income tax assets, as part of our reportable net 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.

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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).

Property, Plant and Equipment Property, plant and equipment is stated at cost, except for assets acquired through business combinations, which are initially recorded at fair value.

The cost of additions and substantial improvements to property, plant and equipment is capitalized, and includes internal compensation costs for these projects.

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Property, plant and equipment costs are depreciated using straight-line methods over their estimated economic lives.

Certain subsidiaries follow composite group depreciation methodology.

Certain subsidiaries follow composite group depreciation

Dollars in millions except per share amounts

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.

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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.

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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).

customer lists and relationships;

and trademarks, trade names 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

Dollars in millions except per share amounts

of domestic wireless licenses have occurred routinely and at nominal cost.

While wireless licenses are issued for a fixed period of time (generally ten years ), renewals 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.

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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.

Dollars in millions except per share amounts

EARNINGS PER SHARE

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to noncontrolling interests

Loss from discontinued operations

attributable to common stock

Loss from discontinued operations attributable to common stock

— ( 181 ) ( 2,210 )

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(See Note 16)

2 For 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)

2 For 2022, 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.

On April 5, 2023, we repurchased all our Mobility preferred interests (see Note 16).

For periods prior to repurchase, under ASU 2020-06, the ability to settle the Mobility preferred interests in stock was reflected in our diluted earnings per share calculation (see Note 1).

Dollars in millions except per share amounts

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Adjustment Net Unrealized

Gains (Losses) on

Available-for-Sale

Securities Net Unrealized

Gains (Losses) on

Derivative Instruments Defined Benefit

Gains (Losses) on Securities

Net Unrealized

Gains (Losses) on Derivative Instruments

Defined Benefit

Postretirement

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— 1 8 1 96 2 ( 2,028 ) 3 ( 1,924 )

Distribution of WarnerMedia ( 182 ) — ( 24 ) 25 ( 181 )

Net other comprehensive

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— 1 11 1 47 2 ( 1,963 ) 3 ( 1,905 )

Distribution of WarnerMedia ( 182 ) — ( 24 ) 25 ( 181 )

Net other comprehensive

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3 The 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).

4 Represents unrealized foreign currency translation adjustments at Vrio that were released upon sale.

4 Represents unrealized foreign currency translation adjustments at Vrio that were released upon sale (see Note 6).

SEGMENT INFORMATION

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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.

Effective for the first quarter of 2023, we stopped recording prior service credits to our individual business units or the corresponding charge to Corporate and Other, and segment operating expenses were recast to remove prior service credits from our historical reporting.

Prior service credits are, and will continue to be, recorded as other income in our consolidated income statement in accordance with GAAP.

This recast increased Communications segment operations and support expenses by approximately $ 2,400 in 2022 and $ 2,100 in 2021.

Correspondingly, this recast lowered administrative expenses within Corporate and Other, 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.

Our business strategies reflect integrated product offerings that cut across product lines and utilize shared assets.

This segment contains the following business units:

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• 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 provides broadband services, including fiber connections that provide multi-gig services to residential customers in select locations and our fixed wireless access product that provides home internet services delivered over our 5G wireless network where available.

Consumer Wireline also provides legacy telephony voice communication services.

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• 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.

video operations that were contributed to DIRECTV on July 31, 2021 (see Note 19).

• Held-for-sale and other reclassifications, which includes our former Crunchyroll and Government Solutions businesses.

• 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.

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Latin America – Mexico

3,932 3,349 583 724 ( 141 )

Segment Total 121,970 76,223 45,747 18,087 27,660

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Total Corporate 458 2,805 ( 2,347 ) 614 ( 2,961 )

Reclassification of prior service credits — 2,691 ( 2,691 ) — ( 2,691 )

Certain significant items — 1,162 ( 1,162 ) 76 ( 1,238 )

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$ 122,428 $ 80,190 $ 42,238 $ 18,777 $ 23,461

Dollars in millions except per share amounts

For the year ended December 31, 2022

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Latin America – Mexico

3,144 2,812 332 658 ( 326 )

Segment Total 120,211 76,462 43,749 17,339 26,410

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Total Corporate 530 2,814 ( 2,284 ) 606 ( 2,890 )

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 — 28,031 ( 28,031 ) 76 ( 28,107 )

Eliminations and consolidations ( 136 ) ( 136 ) — — —

Total Corporate and Other 530 30,845 ( 30,315 ) 682 ( 30,997 )

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Latin America – Mexico

2,747 2,652 95 605 ( 510 )

Segment Total 117,477 74,680 42,797 17,014 25,783

Corporate and Other

DTV-related retained costs 49 413 ( 364 ) 236 ( 600 )

Parent administration support ( 18 ) 1,699 ( 1,717 ) 36 ( 1,753 )

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Video 15,513 12,900 2,613 356 2,257

Held-for-sale and other reclassifications 1,414 718 696 15 681

Reclassification of prior service credits — 2,442 ( 2,442 ) — ( 2,442 )

Held-for-sale and other

reclassifications

453 310 143 — 143

Certain significant items — 126 ( 126 ) 170 ( 296 )

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$ 134,038 $ 90,289 $ 43,749 $ 17,852 $ 25,897

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:

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Asset impairments and abandonments and restructuring ( 1,193 ) ( 27,498 ) ( 213 )

Gain on spectrum transaction 1

Benefit-related gains (losses) 129 ( 108 ) 128

Reclassification of prior service credits ( 2,691 ) ( 2,680 ) ( 2,442 )

AT&T Operating Income (Loss) 23,461 ( 4,587 ) 25,897

Interest expense

6,704 6,108 6,716

Equity in net income of affiliates 1,675 1,791 603

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Income (Loss) from Continuing Operations Before Income Taxes $ 19,848 $ ( 3,094 ) $ 29,171

1 Included as a reduction of “Selling, general and administrative” expense in the consolidated statements of income.

Dollars in millions except per share amounts

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

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Total $ 122,428 $ 128,489 $ 120,741 $ 127,445 $ 134,038 $ 121,649

Dollars in millions except per share amounts

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

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Total $ 407,060 $ 1,251 $ 17,853 $ 402,853 $ 3,533 $ 19,626

1 Includes $ 119,776 of assets from discontinued operations at December 31, 2021.

REVENUE RECOGNITION

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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).

Some contracts have fixed terms and others are cancelable 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).

Service revenue is recognized when services are provided, based upon either usage (e.g., 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.

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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.

For devices sold through indirect channels (e.g., national retailers), revenue is recognized when the retailer 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.

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Promotional discounts are attributed to each required component of the arrangement, resulting in recognition over the contract term.

Dollars in millions except per share amounts

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.

When installment sales include promotional discounts that are earned by customers over the contract term (e.g., “buy one get one free” or equipment discounts with trade-in of a device), notes receivable are recognized net of discounts and 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.

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.

The 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.

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Total $ 83,982 $ 20,883 $ 13,173 $ 3,932 $ 458 $ — $ 122,428

Dollars in millions except per share amounts

For the year ended December 31, 2022

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Wireless service $ 60,499 $ — $ — $ 2,162 $ 13 $ — $ 62,674

Video service — — — — 15,423 — 15,423

Business service — 21,891 — — — — 21,891

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Total $ 81,780 $ 22,538 $ 12,749 $ 3,144 $ 530 $ — $ 120,741

Dollars in millions except per share amounts

For the year ended December 31, 2021

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Video service

— — — — 15,423 — 15,423

Business service — 23,224 — — 70 — 23,294

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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.

As of January 1, 2022, we extended the amortization period for deferred acquisition and fulfillment contract costs within Mobility, Business Wireline, and Consumer 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.

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Total deferred customer contract fulfillment costs $ 6,183 $ 6,687

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

Dollars in millions except per share amounts

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 years ended December 31:

Consolidated Statements of Income 2023 2022

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Deferred fulfillment cost amortization 2,700 2,688

1 Includes 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

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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.

Dollars in millions except per share amounts

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.

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Our contract asset balance in 2023 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 2023 was $ 3,830 .

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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.

Dollars in millions except per share amounts

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.

1 unchanged sentence

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.

In December 2021, we paid $ 955 of Incentive Payments upon clearing of Phase I spectrum and paid $ 2,112 upon clearing of Phase II spectrum in 2023.

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.

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 .

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.

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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).

Approximately $ 1,800 of the cash received is reported as cash received from financing activities in our consolidated statement of cash flows, as it related to a note payable to DIRECTV, for which payment was 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.

Dollars in millions except per share amounts

Dispositions Reflected as Discontinued Operations

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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.

During the second quarter of 2022, $ 45,041 of retained earnings and $ 5,632 of additional paid-in capital associated with the transaction were removed from our balance sheet.

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 24)

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.

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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.

We received approximately $ 1,540 in cash.

The disposition did not result in a material gain or loss.

Dollars in millions except per share amounts

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.

Dollars in millions except per share amounts

PROPERTY, PLANT AND EQUIPMENT

8 unchanged sentences

90,109 84,447

Satellites 14 - 17

Other equipment 3 - 20

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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.

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.

Some of our operating leases (e.g., for towers and real estate) 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.

1 unchanged sentence

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.

Dollars in millions except per share amounts

The components of lease expense were as follows:

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Finance lease cost:

Amortization of right-of-use assets $ 204 $ 179 $ 185

Amortization of leased assets in property, plant and equipment

$ 232 $ 204 $ 179

Interest on lease obligation 184 159 145

Total finance lease cost $ 416 $ 363 $ 324

Dollars in millions except per share amounts

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

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

At December 31, 2022 Operating Leases Finance

At December 31, 2023

Operating Leases Finance

2024 $ 4,699 $ 334

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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.

With our annual impairment testing as of October 1, the calculated fair value of each reporting unit exceeded its book value;

however, the Consumer Wireline fair value exceeded its book value by less than 10%, with interest rates negatively impacting fair value, offset by higher long-term cash flow projections driven by our fiber investment.

In 2022, 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.

1 unchanged sentence

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.

In the Communications segment, if all other assumptions were to remain unchanged, we expect the impairment charge would have increased 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 2023 primarily resulted from goodwill attributed to assets contributed to the formation of strategic joint ventures.

Changes to our goodwill in 2022 primarily resulted from the noncash impairments discussed above.

At December 31, 2023, our Communications segment has three reporting units:

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

1 Impairments Dispositions,

and other Balance at

31 Balance at

1 Dispositions

31 Balance at

1 Impairments Dispositions,

and other Balance at

1 unchanged sentence

Goodwill $ 91,881 $ ( 41 ) $ 91,840 $ 91,924 $ — $ ( 43 ) $ 91,881

Impairments — ( 23,986 ) — ( 23,986 ) — — —

( 23,986 ) — ( 23,986 ) — ( 23,986 ) — ( 23,986 )

Net goodwill 67,895 ( 41 ) 67,854 91,924 ( 23,986 ) ( 43 ) 67,895

2 unchanged sentences

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).

Dollars in millions except per share amounts

Indefinite-lived wireless licenses increased in 2023 primarily due to compensable relocation and incentive payments and $ 695 of capitalized interest (see Notes 6 and 23).

Indefinite-lived wireless licenses increased in 2022 primarily due to auction activity and $ 1,120 of capitalized interest (see Notes 6 and 23).

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

Other Intangible Assets Weighted-Average Life Gross Carrying

Amount Accumulated

Other Intangible Assets Weighted-Average

Amortization Currency

Adjustment Gross Carrying

Amount Accumulated

Adjustment Gross

Amortization Currency

Amortized intangible assets:

Amortized intangible

Wireless licenses

21.6 years $ 3,034 $ 572 $ 23 $ 3,045 $ 425 $ ( 297 )

Trademarks and trade names

15.0 years 26 11 ( 6 ) 27 11 ( 7 )

Customer lists and relationships

Customer lists and

relationships

14.3 years 379 286 ( 74 ) 413 304 ( 75 )

Trademarks, trade names

7.8 years 289 261 ( 5 ) 330 245 ( 6 )

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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.

Amortization expense for definite-life intangible assets was $ 184 for the year ended December 31, 2023, $ 169 for the year ended December 31, 2022 and $ 218 for the year ended December 31, 2021.

Estimated amortization expense for the next five years is:

$ 171 for 2024, $ 164 for 2025, $ 164 for 2026, $ 164 for 2027 and $ 163 for 2028.

Dollars in millions except per share amounts

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 May 11, 2023, we closed our transaction with BlackRock, through a fund managed by its Diversified Infrastructure business, related to Gigapower, LLC (Gigapower).

We deconsolidated Gigapower’s operations and began accounting for it as an equity method investment on May 12, 2023.

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.

Our investments in equity affiliates at December 31, 2023, primarily included our interests in DIRECTV, Gigapower and SKY Mexico.

DIRECTV We account for our investment in DIRECTV under the equity method of accounting.

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• 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.

Dollars in millions except per share amounts

• Junior preferred units with distribution rights of $ 4,250 held by AT&T, which were fully distributed as of December 31, 2023.

• Distribution preference associated with Common units of $ 4,200 held by AT&T, of which $ 2,975 of distribution rights remain as of December 31, 2023.

• Common units, with 70 % held by AT&T and 30 % held by TPG.

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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.

Gigapower We hold a 50 % interest in this joint venture with BlackRock, which will provide a fiber network to internet service providers and other businesses across the U.S.

that serve customers outside of our wireline service area.

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:

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

2023 2022 2021

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1 Does not include DIRECTV for periods prior to August 1, 2021.

Dollars in millions except per share amounts

2 Does not include Gigapower for periods prior to May 12, 2023.

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

1 unchanged sentence

Additional investments 135 3

Receipt of equity interest in DIRECTV — 6,852

Distributions from DIRECTV in excess of cumulative equity in earnings ( 2,049 ) ( 2,649 )

Other capital distributions — ( 6 )

Dividends and distributions of cumulative earnings received ( 1,668 ) ( 1,815 )

Equity in net income of affiliates 1,675 1,791

Impairments ( 450 ) —

Currency translation adjustments 61 25

1 unchanged sentence

End of year $ 1,251 $ 3,533

Dollars in millions except per share amounts

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

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Current maturities of long-term debt ( 7,386 ) ( 6,601 )

Current maturities of credit agreement borrowings — ( 10,100 )

Total long-term debt $ 127,854 $ 128,423

1 Foreign 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.

We had outstanding Euro, British pound sterling, Canadian dollar, Swiss franc, and Australian dollar denominated debt of approximately $ 35,192 and $ 35,525 at December 31, 2023 and 2022, respectively.

The weighted-average interest rate of our long-term debt portfolio, including credit agreement borrowings and the impact of derivatives, was approximately 4.2 % as of December 31, 2023 and 4.1 % as of December 31, 2022.

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Commercial paper 2,091 866

Credit agreement borrowings — 10,100

Total $ 9,477 $ 7,467

The weighted average interest rate on our outstanding short-term borrowings was approximately 6.0 % as of December 31, 2023 and 4.8 % as of December 31, 2022.

Dollars in millions except per share amounts

9 unchanged sentences

Issuance of notes and debentures:

Private Financing $ — $ — $ 750 $ — $ 750

2025 Term Loan — — — 2,500 2,500

$ 1,747 $ 2,730 $ — $ — $ 4,477

1,319 3,537 — — 4,856

Other 1,050 — — 371 1,421

Debt issuances

2021 Syndicated Term Loan $ — $ ( 7,350 ) $ — $ — $ ( 7,350 )

BAML Bilateral Term Loan – Tranche A — ( 1,000 ) — — ( 1,000 )

$ 4,116 $ 6,267 $ — $ 371 $ 10,754

Private financing $ — $ ( 750 ) $ — $ — $ ( 750 )

Repayment of other short-term borrowings $ — $ ( 750 ) $ — $ — $ ( 750 )

USD notes 1,2,3

$ ( 376 ) $ ( 750 ) $ — $ — $ ( 1,126 )

Euro notes — ( 3,343 ) — — ( 3,343 )

BAML Bilateral Term Loan – Tranche B — ( 1,000 ) — — ( 1,000 )

( 1,626 ) ( 473 ) ( 3,503 ) — ( 5,602 )

— — ( 450 ) — ( 450 )

2025 Term Loan

( 2,500 ) — — — ( 2,500 )

Other ( 1,443 ) ( 441 ) ( 327 ) ( 155 ) ( 2,366 )

Repayments of long-term debt $ ( 5,945 ) $ ( 1,664 ) $ ( 4,280 ) $ ( 155 ) $ ( 12,044 )

1 On 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.

2 Includes $ 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.

3 Includes $ 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, 2023 and 2022, we were in compliance with all covenants and conditions of instruments governing our debt.

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2 Includes credit agreement borrowings.

Credit Facilities

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.

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.

On March 30, 2023, the $ 2,500 Term Loan was paid off and terminated.

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 (BAML Tranche A Facility), and (ii) a $ 1,000 facility (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 January 2021, we entered into a $ 14,700 Term Loan Credit Agreement (2021 Syndicated Term Loan), with Bank of America, N.A., as agent.

In March 2021, we borrowed $ 7,350 under the 2021 Syndicated Term Loan and the remaining $ 7,350 of lenders’ commitments was terminated.

On April 13, 2022, the 2021 Syndicated Term Loan was paid off and terminated.

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.

Revolving Credit Agreement

We currently have a $ 12,000 revolving credit agreement that terminates on November 18, 2028 (Revolving Credit Agreement), for which we extended the termination date, pursuant to the terms of the agreement, by one year in November 2023.

No amount was outstanding under the Revolving Credit Agreement as of December 31, 2023.

Our Revolving Credit Agreement contains covenants that are customary for an issuer with investment grade senior debt credit rating as well as 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.

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.

1 unchanged sentence

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.

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 one additional 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;

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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

Dollars in millions except per share amounts

instruments could result in a different fair value measurement at the reporting date.

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, 2022.

Dollars in millions except per share amounts

Long-Term Debt and Other Financial Instruments

8 unchanged sentences

1 Includes credit agreement borrowings.

Excludes note payable to DIRECTV.

2 Excludes investments accounted for under the equity method.

2 unchanged sentences

Following is the fair value leveling for investment securities that are measured at fair value and derivatives as of December 31, 2023 and December 31, 2022.

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.

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.

December 31, 2023

8 unchanged sentences

Liability Derivatives

Interest rate swaps — ( 2 ) — ( 2 )

Cross-currency swaps — ( 3,601 ) — ( 3,601 )

Foreign exchange contracts — ( 23 ) — ( 23 )

December 31, 2022

9 unchanged sentences

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

Foreign exchange contracts — ( 23 ) — ( 23 )

Investment Securities

1 unchanged sentence

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

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.

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.

28 unchanged sentences

In the years ended December 31, 2023 and 2022, 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.

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 currency-denominated interest rate to a fixed U.S.

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.

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

Interest rate swaps $ 1,750 $ —

Cross-currency swaps 38,006 38,213

11 unchanged sentences

Gain (loss) on cross-currency swaps

1,121 2,195 ( 91 )

Gain (loss) on long-term debt

( 1,121 ) ( 2,195 ) 91

Gain (loss) recognized in accumulated OCI

1,126 297 ( 17 )

Foreign exchange contracts:

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Interest rate locks:

Gain (Loss) recognized in accumulated OCI

Interest income (expense) reclassified from accumulated OCI into income

Interest income (expense) reclassified from

accumulated OCI into income

( 59 ) ( 65 ) ( 92 )

4 unchanged sentences

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 implied fair values of the Business Wireline, Consumer Wireline and Mexico reporting units 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.

2 unchanged sentences

Licenses and nonamortizable intangibles 20,049 19,339

Lease right-of-use assets

Lease liabilities ( 5,146 ) ( 5,417 )

Employee benefits ( 2,970 ) ( 2,251 )

14 unchanged sentences

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.

income and foreign withholding taxes have not been recorded on temporary

We consider other types of unremitted foreign

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.

earnings to be indefinitely reinvested.

income and foreign withholding taxes have not been recorded on temporary differences related to investments in certain foreign subsidiaries as such differences are considered indefinitely reinvested.

The amount of unrecognized deferred tax liability does not have a material impact on the financial statements.

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.

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The amount of deposits that reduced our UTB balance was $ 2,361 at December 31, 2023 and $ 1,767 at December 31, 2022.

Current tax assets on our consolidated balance sheet at December 31, 2023 were $ 2,079 .

Accrued interest and penalties included in UTBs were $ 1,785 as of December 31, 2023 and $ 1,930 as of December 31, 2022.

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Deferred ( 832 ) 912 648

( 409 ) 933 937

Current 66 106 ( 66 )

Deferred 38 ( 44 ) 52

104 62 ( 14 )

Total $ 4,225 $ 3,780 $ 5,395

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Goodwill impairment 1

5,210 16 1,702

Other – net ( 177 ) ( 66 ) ( 37 )

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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.

Dollars in millions except per share amounts

8 unchanged sentences

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.

On April 26, 2023, AT&T and State Street Global Advisors Trust Company, as independent fiduciary of the AT&T Pension Benefit Plan (Plan), entered into a commitment agreement with subsidiaries of Athene Holding Ltd.

(Athene) under which AT&T agreed to purchase nonparticipating single premium group annuity contracts that would transfer to Athene $ 8,067 of the Plan’s defined benefit pension obligations related to certain retirees, participants and beneficiaries under the Plan.

The purchase of the group annuity contracts closed on May 3, 2023, covering approximately 96,000 AT&T participants and beneficiaries (Transferred Participants).

Under the group annuity contracts, Athene, through its wholly-owned subsidiaries Athene Annuity and Life Company and Athene Annuity & Life Assurance Company of New York, made an irrevocable commitment, and is solely responsible, to pay the pension benefits of each Transferred Participant beginning with their August 2023 pension payments.

The transaction does not change the amount of pension benefits payable to the Transferred Participants.

The purchase of the group annuity contracts was funded directly by assets of the Plan via the pension trust underlying the Plan and required no cash or asset contributions by AT&T.

We transferred $ 8,067 of pension benefit obligation and related plan assets upon close of the transaction and recognized a pre-tax pension settlement gain of $ 363 .

The funded status of the Plan did not materially change due to this transaction.

This transaction with Athene was considered a settlement for accounting purposes and required us to remeasure our pension plan assets and obligations at quarter-end for the second and third quarters of 2023.

During the third quarter of 2022, we committed to, and reflected in our results, plan changes impacting postretirement health and welfare benefits.

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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.

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

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Benefits paid, including settlements ( 4,863 ) ( 5,854 ) ( 1,186 ) ( 1,292 )

Group annuity contract transfer

( 8,067 ) — — —

Benefit obligation at end of year $ 33,227 $ 42,828 $ 6,693 $ 7,280

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:

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Contributions — — — 120

Group annuity contract transfer

( 7,704 ) — — —

Fair value of plan assets at end of year 30,098 40,874 1,763 2,160

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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 $( 1,017 ), $( 4,789 ) and $( 7,652 ) for the years ended December 31, 2023, 2022 and 2021.

Dollars in millions except per share amounts

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

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Actuarial (gain) loss 1,717 ( 115 ) ( 3,461 ) 181 ( 1,437 ) ( 334 )

Settlement (gain) loss

( 363 ) — — — — —

Net pension and postretirement

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$ 1,041 $ ( 991 ) $ ( 4,885 ) $ ( 2,058 ) $ ( 3,798 ) $ ( 2,767 )

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Other Changes in Benefit Obligations Recognized in Other Comprehensive Income

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Balance at end of year $ 216 $ 316 $ 416 $ 4,523 $ 6,354 $ 6,496

Dollars in millions except per share amounts

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

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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

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 .

For the year ended December 31, 2023, when compared to the year ended December 31, 2022, we decreased our pension discount rate by 0.20 %, resulting in an increase in our pension plan benefit obligation of $ 916 and decreased our postretirement discount rate by 0.20 %, resulting in an increase in our postretirement benefit obligation of $ 110 .

For the year ended December 31, 2022, 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 .

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.

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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.

Dollars in millions except per share amounts

Expected Long-Term Rate of Return In 2024, our expected long-term rate of return is 7.75 % on pension plan assets and 4.00 % on postretirement plan assets, an increase of 0.25 % for pension plan assets and a decrease of 2.50 % for postretirement plan assets.

This update to our asset return assumptions was due to economic forecasts and changes in the asset mix.

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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 .

Based on our assessment of expectations of healthcare industry inflation, our 2024 assumed annual healthcare prescription drug cost trend and medical cost trend for eligible participants will remain at an annual and ultimate trend rate of 4.50 %.

For 2023, our assumed annual healthcare prescription drug cost trend and medical cost trend for eligible participants increased from an annual and ultimate trend rate of 4.25 % to an annual and ultimate trend rate of 4.50 %.

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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.

We made discretionary contributions of $ 120 in December 2022 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.

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Decisions regarding investment policy are made with an understanding of the effect of asset allocation on funded status, future contributions and projected expenses.

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:

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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.

Dollars in millions except per share amounts

Prior to April 2023, the pension trust held preferred equity interests in AT&T Mobility II LLC (Mobility II), the primary holding company for our wireless business.

The preferred equity interests were valued at $ 5,427 as of December 31, 2022.

On December 27, 2022, the pension trust provided written notice of its right to require AT&T to purchase Mobility preferred interests outstanding.

All outstanding Mobility preferred interests were repurchased in April 2023.

(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.

At December 31, 2023, AT&T securities represented less than 1% of assets held by our pension trust.

The VEBA trusts do not hold AT&T securities.

Investment Valuation

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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.

Prior to redemption, the preferred interests in Mobility II were valued by an independent fiduciary using an income approach.

Purchases and sales of securities are recorded as of the trade date.

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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, 2023:

Pension Assets and Liabilities at Fair Value as of December 31, 2022

Pension Assets and Liabilities at Fair Value

Level 1 Level 2

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International equities 1,085 — — 1,085

Preferred interests — — 5,427 5,427

Fixed income securities:

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1 Other 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

Postretirement Assets and Liabilities at Fair Value

Interest bearing cash $ 1,109 $ 3 $ — $ 1,112

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International equities — — 1 1

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 $ 1,110 $ 3 $ 1 $ 1,114

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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, 2021

Pension Assets and Liabilities at Fair Value

Non-interest bearing cash $ 158 $ — $ — $ 158

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1 Other 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

Postretirement Assets and Liabilities at Fair Value

Level 1 Level 2 Level 3 Total

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International equities 233 — 1 234

Fixed income securities:

Corporate bonds and other investments 1 — — 1

Securities lending collateral — 12 — 12

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For the years ended December 31, 2023 and 2022, 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:

The tables below set forth a summary of changes in the fair value of the Level 3 pension assets:

Equities Fixed Income Funds Real Estate and Real Assets Total

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Unrealized gains (losses) 643 — ( 1,270 ) ( 627 )

Transfers in 1 1 20 22

Transfers out — ( 2 ) ( 29 ) ( 31 )

Purchases — — 128 128

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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.

For our supplemental retirement plans, the projected benefit obligation was $ 1,437 and the net supplemental retirement pension cost was $ 87 at and for the year ended December 31, 2023.

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.

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Our discount rates of 4.90 % at December 31, 2023 and 5.10 % at December 31, 2022 were calculated using the same methodologies used in calculating the discount rates for our qualified pension and postretirement benefit plans.

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Deferred compensation expense was $ 101 in 2023, $ 94 in 2022 and $ 171 in 2021.

Dollars in millions except per share amounts

Contributory Savings Plans

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Forfeited ( 3 ) 20.05

Spin-off Adjustment 1

Nonvested at December 31, 2023

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, 2023, there was $ 445 of total unrecognized compensation cost related to nonvested share-based payment arrangements granted.

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Cash received from stock option exercises was $ 1 for 2023, $ 2 for 2022 and $ 11 for 2021.

STOCKHOLDERS’ EQUITY

STOCKHOLDERS’ AND MEZZANINE 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.

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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.

In March 2014, our Board of Directors approved an authorization program to repurchase 300 million shares of common stock, of which approximately 144 million remain outstanding at December 31, 2023.

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.

During 2023, there were no shares repurchased and during 2022, we repurchased approximately 34 million shares totaling $ 662 under the March 2014 authorization.

Dividend Declarations In December 2023 and December 2022, 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.

In December 2023 and December 2022, AT&T declared a quarterly common dividend of $ 0.2775 per share of common stock.

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.

Mobility II Preferred Interests

In 2018, we issued 320 million Series A Cumulative Perpetual Preferred Membership Interests in Mobility II (Mobility preferred interests), which paid cash distributions of 7 % per annum, subject to declaration.

So long as the distributions were declared and paid, the terms of the Mobility preferred interests did not impose any limitations on cash movements between

Dollars in millions except per share amounts

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.

affiliates, or our ability to declare a dividend on or repurchase AT&T shares.

All outstanding Mobility preferred interests were repurchased as of April 2023, leaving no amounts outstanding at December 31, 2023.

Prior to repurchase, a holder of the Mobility preferred interests could put the interests to Mobility II, or Mobility II could have redeemed the interests upon a change in control of Mobility II or on or after September 9, 2022, with either option only allowed to be exercised during certain periods.

The price at which a put option or a redemption option could be exercised was 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 was to 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 was Mobility II required to deliver more than 250 million shares of AT&T common stock to settle put and redemption options.

O n 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 terms of the instruments limited the amount we were required to redeem in any 12-month period to approximately 107 million shares, or $ 2,670 .

With the certainty of redemption, the 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,” representing the amount required to be redeemed within one year, and $ 2,670 recorded in “Other noncurrent liabilities.” The liabilities associated with the Mobility preferred interests were 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

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

In April 2023, we accepted the December 2022 put option notice from the AT&T pension trust and repurchased the remaining 213 million Mobility preferred interest for a purchase price, including accrued and unpaid distributions, of $ 5,414 .

Tower Holdings Preferred Interests

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 %.

The September series (Tower Class A-1) of the preferred interests totals $ 1,500 and pays an initial preferred distribution of 5.0 %, and the December series (Tower 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 .

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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 Tower preferred interests are included in “Noncontrolling interest” on the consolidated balance sheets.

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.

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

Telco LLC Preferred Interests

In September 2020, we issued $ 2,000 nonconvertible cumulative preferred interests (Telco Class A-1) out of a newly created limited liability company (Telco LLC) that was formed to hold telecommunication-related assets.

In April 2023, we expanded our September 2020 transaction and issued an additional $ 5,250 of nonconvertible cumulative preferred interests (Telco Class A-2 and A-3).

As of December 31, 2023, cumulative preferred interests in our Telco LLC totaled $ 7,250 (collectively the “Telco preferred interests”).

Members’ equity in Telco LLC consist of (1) member’s interests, which are held by a consolidated subsidiary of AT&T, (2) Telco Class A-1 preferred interests, which pay an initial preferred distribution of 4.25 % annually, subject to declaration, and subject to reset every seven years , and (3) Telco Class A-2 and A-3 preferred interest which pay an initial preferred distribution

Dollars in millions except per share amounts

cash movements between affiliates, or our ability to declare a dividend on or repurchase AT&T shares.

of 6.85 % annually, subject to declaration, and subject to reset on November 1, 2027 and every seven years thereafter.

Failure to pay distributions on the Telco preferred interests would not limit 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 Telco preferred interests are included in “Noncontrolling interest” on the consolidated balance sheets.

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.

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.

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.

Mobility II Redeemable Noncontrolling Interests

In June 2023, we issued two million Series B Cumulative Perpetual Preferred Membership Interests in Mobility II LLC (Mobility noncontrolling interests), which pay cash distributions of 6.8 % per annum, subject to declaration.

So long as the distributions are declared and paid, the terms of the Mobility noncontrolling interests will not impose any limitations on cash movements between affiliates, or our ability to declare a dividend on or repurchase AT&T shares.

The Mobility noncontrolling interests are required to be initially recorded at fair value less issuance costs and will accrete to redemption value of $ 2,000 through “Net Income Attributable to Noncontrolling Interest.” The Mobility noncontrolling interests are considered Level 3 under the Fair Value Measurement and Disclosures framework (see Note 12) and included in “Redeemable Noncontrolling Interest” on the consolidated balance sheets.

A holder of the Mobility noncontrolling interests may put the interests to Mobility II on or after the earliest of certain events or each June 15 and December 15, beginning on June 15, 2028.

Mobility II may redeem the interests on each March 15 and September 15, beginning on March 15, 2028.

The price at which a put option or a redemption option can be exercised is the sum of (a) $ 1,000 per Mobility noncontrolling interest plus (b) any accrued and unpaid distributions.

The redemption price must be paid in cash.

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.

The most significant of these programs consists of receivables arising from equipment installment plans, which are sold for cash and beneficial interests, such as deferred purchase price, when applicable.

Under the terms of our agreement for this program, we continue to service the transferred receivables on behalf of the financial institutions.

1 unchanged sentence

2023 2022 2021

Net cash received (paid) from equipment installment receivables 1

Net cash received from equipment installment receivables 1

$ 648 $ 1,875 $ 1,000

Net cash received (paid) from other programs 2

824 620 ( 295 )

Total net cash impact to cash flows from operating activities $ 1,472 $ 2,495 $ 705

1 Net cash from initial sales of $ 11,129 , $ 9,740 and $ 6,089 for the years ended December 31, 2022, 2021 and 2020, respectively.

1 Cash from initial sales of $ 10,980 , $ 11,129 and $ 9,740 for the years ended December 31, 2023, 2022 and 2021, respectively.

2 Certain transferred receivables are guaranteed by a subsidiary that holds additional receivables in the amount of $ 924 at December 31, 2023, which are pledged as collateral and represent our maximum exposure to loss.

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.

In the event cash is received on the beneficial interests, those receipts are classified as cash flows from investing activities, when applicable.

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

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Cash proceeds received, net of remittances 1

1 Represents amounts to which financial institutions remain entitled, excluding the deferred purchase price.

Dollars in millions except per share amounts

1 Represents amounts to which financial institutions remain entitled, excluding the beneficial interests.

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.

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.

3 unchanged sentences

Gross receivables sold 1

$ 11,104 $ 11,510 $ 10,793

Net receivables sold 2

1 unchanged sentence

Cash proceeds received 10,980 11,129 9,740

Deferred purchase price recorded 245 1,080 1,021

Beneficial interests recorded

Guarantee obligation recorded 932 703 434

1 Receivables net of promotion credits.

2 Receivables 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.

Beneficial interests 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:

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 12).

The following table presents the previously transferred equipment installment receivables, which we repurchased in exchange for the associated beneficial interests:

2023 2022 2021

Fair value of repurchased receivables $ 2,997 $ 3,314 $ 1,424

Carrying value of deferred purchase price 3,335 1,334 1,235

Carrying value of beneficial interests

3,013 3,335 1,334

Gain (loss) on repurchases 1

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1 These 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.

At December 31, 2023 and December 31, 2022, our beneficial interests were $ 2,270 and $ 2,318 , respectively, of which $ 1,296 and $ 1,278 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, 2023 and December 31, 2022 was $ 385 and $ 419 , respectively, of which $ 111 and $ 73 are included in “Accounts payable and accrued liabilities” on our consolidated balance sheets, with the remainder

Dollars in millions except per share amounts

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.

TOWER TRANSACTION

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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 sublease space on the towers from Crown Castle for an initial term of ten years , as renewed, at current market rates, subject to further 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.

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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

Dollars in millions except per share amounts

We continue to include the tower assets in “Property, Plant and Equipment – Net” on our consolidated balance sheets and depreciate them accordingly.

At December 31, 2023 and 2022, the tower assets had a balance of $ 647 and $ 686 , respectively.

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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 .

We account for our investment in DIRECTV under the equity method and record our share of DIRECTV earnings as equity in net income of affiliates, with DIRECTV considered a related party.

(See Note 10)

At December 31, 2023, our investment in DIRECTV was $ 877 .

The following table sets forth o ur share of DIRECTV’s earnings included in equity in net income of affiliates and cash distributions received from DIRECTV as of December 31:

2023 2022 2021

DIRECTV’s earnings included in equity in net income of affiliates

$ 1,666 $ 1,808 $ 619

Distributions classified as operating activities

$ 1,666 $ 1,808 $ 619

Distributions classified as investing activities

2,049 2,649 1,323

Cash distributions received from DIRECTV

$ 3,715 $ 4,457 $ 1,942

In 2021, 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 was in the form of a note payable to DIRECTV.

For the years ended December 31, 2023 and 2022, cash payments to DIRECTV on the note totaled $ 130 and $ 1,211 , respectively and were classified as financing activities in our consolidated statement of cash flows.

As of December 31, 2023 the notes to DIRECTV have been repaid.

We 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 customer receivables.

For the years ended December 31, 2023, 2022 and 2021, we billed DIRECTV approximately $ 730 , $ 1,260 and $ 550 for these costs, which were recorded as a reduction to the operations and support expenses incurred.

At December 31, 2023, we had accounts receivable from DIRECTV of $ 280 and accounts payable to DIRECTV of $ 30 .

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.

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

Dollars in millions except per share amounts

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.

Under the 25 -year agreement, FirstNet provides 20 MHz of valuable telecommunications spectrum and success-based payments of $ 6,500 to support network buildout, which has been substantially completed.

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.

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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;

On January 30, 2024, FirstNet agreed to reinvest up to $ 6,300 in the network over the next 10 years, subject to authorization.

During 2023, we submitted $ 195 in sustainability payments, with future payments under the agreement of $ 561 for 2024, $ 420 for 2025;

$ 896 for 2026, $ 1,566 for 2027, $ 1,658 for 2028;

and $ 11,909 thereafter.

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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.

Dollars in millions except per share amounts

As of December 31, 2023, we have collected $ 6,404 of the $ 6,500 for the completion of certain tasks.

CONTINGENT LIABILITIES

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

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 by 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.

Our outstanding payment obligations are included in “Accounts payable and accrued liabilities” on our consolidated balance sheets and are reported as operating or investing (when capitalizable) activities in our statements of cash flows when paid.

Dollars in millions except per share amounts

The following table presents the change in the supplier financing obligation for the year ended December 31:

Confirmed obligations outstanding at the beginning of year

Invoices received

Invoices paid

Confirmed obligations outstanding at the end of year

Direct Supplier Financing

We also have arrangements with suppliers of handset inventory that allow us to extend the stated payment terms by up to 90 days at an additional cost to us (variable rate extension fee).

Direct supplier financing outstanding is included in “Accounts payable and accrued liabilities” on our consolidated balance sheets and is reported as operating activities in our statements of cash flows when paid.

The following table presents the change in the direct supplier financing obligation for the years ended December 31:

Obligations outstanding at the beginning of year

$ 5,486 $ 4,551

Invoices extended

17,376 16,570

Invoices paid

( 17,420 ) ( 15,635 )

Obligations outstanding at the end of year

$ 5,442 $ 5,486

Vendor Financing

In connection with capital improvements and the acquisition of other productive assets, we negotiate favorable payment terms of 120 days or more (referred to as vendor financing), which are reported as financing activities in our statements of cash flows when paid.

The following table presents the change in the vendor financing obligation for the years ended December 31:

Obligations outstanding at the beginning of year

$ 5,607 $ 4,487

( 5,742 ) ( 4,697 )

Obligations outstanding at the end of year 1

$ 2,516 $ 5,607

1 Total vendor financing payables at December 31, 2023 at December 31, 2022 were approximately $ 2,833 and $ 6,147 , respectively, of which $ 1,975 and $ 4,592 are included in “Accounts payable and accrued liabilities.”

ADDITIONAL FINANCIAL INFORMATION

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Total accounts payable and accrued liabilities $ 35,852 $ 42,644

1 Reported as noncontrolling interest in 2021.

(See Note 16)

Dollars in millions except per share amounts

Consolidated Statements of Income 2023 2022 2021

Advertising expense $ 2,576 $ 2,462 $ 2,732

Interest income

$ 303 $ 143 $ 119

Interest expense incurred $ 7,578 $ 7,402 $ 7,670

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Cash and cash equivalents and restricted cash $ 6,833 $ 3,793 $ 21,316 $ 9,870

Dollars in millions except per share amounts

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

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Income taxes, net of refunds 1

1,599 592 252

1 Total cash income taxes paid, net of refunds, by AT&T was $ 1,599 , $ 696 and $ 700 for 2023, 2022 and 2021, respectively.

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Interest during construction - spectrum 1

695 1,120 781

Total Acquisitions, net of cash acquired $ 2,942 $ 10,200 $ 25,453

1 Total capitalized interest was $ 874 , $ 1,294 and $ 954 for 2023, 2022 and 2021, 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, 2024, we employed approximately 149,900 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.

After expiration of the collective bargaining agreements, work stoppages or labor disruptions may occur in the absence of new contracts or other agreements being reached.

The main contracts set to expire in 2024 include the following:

• A contract covering approximately 5,000 Mobility employees in Arkansas, Kansas, Missouri, Oklahoma and Texas is set to expire in February.

• A wireline contract covering approximately 8,500 employees in California and Nevada is set to expire in April.

• Three wireline contracts covering approximately 15,000 employees in the southeastern United States are set to expire in August.

Dollars in millions except per share amounts

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Asset abandonments and impairments 1

— 4,691 3,193

Depreciation and amortization — 1,172 5,010

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Other income (expense) — net 2

( 87 ) 466 ( 343 )

Total other income (expense) — ( 245 ) 326

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1 2021 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.

The implied fair value of the Vrio business was estimated using both the discounted cash flow as well as market multiple approaches, which 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:

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

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.

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WarnerMedia cash transfer to Discovery was approximately $ 2,660 .

Dollars in millions except per share amounts

QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

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Total Operating Revenues $ 30,139 $ 29,917 $ 30,350 $ 32,022 $ 122,428

Operating Income (Loss) 5,537 4,956 6,012 ( 21,092 ) ( 4,587 )

Net Income (Loss) from

Operating Income

6,002 6,406 5,782 5,271 23,461

Net Income from

Continuing Operations

4,453 4,762 3,826 2,582 15,623

Net Income (Loss) from Continuing

Net Income from Continuing

Operations Attributable to Common Stock

4,176 4,437 3,444 2,135 14,192

Basic Earnings (Loss) Per Share

Basic Earnings Per Share

Attributable to Common Stock from

1 unchanged sentence

$ 0.58 $ 0.61 $ 0.48 $ 0.30 $ 1.97

Diluted Earnings (Loss) Per Share

Diluted Earnings Per Share

Attributable to Common Stock from

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1 Includes actuarial gains and losses on pension and postretirement benefit plans (Note 14).

2 Includes goodwill impairments (Note 9) and an asset abandonment charge (Note 7).

2 Quarterly 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.

Dollars in millions except per share amounts

2022 Calendar Quarter

Total Operating Revenues $ 29,712 $ 29,643 $ 30,043 $ 31,343 $ 120,741

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

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 Per Share

Attributable to Common Stock

from Continuing Operations 2

Basic Earnings (Loss) Per Share

Attributable to Common Stock from

Continuing Operations 3

$ 0.66 $ 0.60 $ 0.82 $ ( 3.20 ) $ ( 1.10 )

Diluted Earnings Per Share

Diluted Earnings (Loss) Per Share

Attributable to Common Stock from

2 unchanged sentences

1 Includes actuarial gains and losses on pension and postretirement benefit plans (Note 14).

2 Includes goodwill impairments (Note 9) and an asset abandonment charge (Note 7).

3 Quarterly 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.

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data