What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-02-12 compared with 2024-02-23 · 243 added, 358 removed, 1665 unchanged (27% of the section changed)

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Equipment 22,249 23,136 24,009

Broadcast, programming and operations — — 8,106

Other cost of revenues (exclusive of depreciation

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Foreign Currency:

Translation adjustment (includes $ 0 , $ 0 and $( 2 ) attributable to noncontrolling

interest), net of taxes of $ 143 , $ 90 and $( 44 )

Translation adjustment, net of taxes of $( 175 ), $ 143 and $ 90

( 545 ) 463 346

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Net prior service (cost) credit arising during period, net of taxes of $ 0 , $ 10

32 1,787 ( 34 )

Amortization of net prior service credit included in net income (loss), net of taxes of

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Accounts receivable – net of related allowance for credit loss of $ 375 and $ 499

10,289 11,466

Inventories 2,270 2,177

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Debt maturing within one year $ 5,089 $ 9,477

Note payable to DIRECTV — 130

Accounts payable and accrued liabilities 35,657 35,852

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Additional paid-in capital 109,108 114,519

Retained (deficit) earnings ( 5,015 ) ( 19,415 )

Retained earnings (deficit) 1,871 ( 5,015 )

Treasury stock ( 444,853,148 at December 31, 2024 and 470,685,237 at December 31, 2023, at cost)

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Receivables 123 82 727

Other current assets ( 642 ) ( 674 ) ( 1,288 )

Inventories, prepaid and other current assets ( 383 ) ( 642 ) ( 674 )

Accounts payable and other accrued liabilities ( 810 ) ( 1,764 ) ( 1,109 )

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Other – net ( 2,234 ) ( 2,270 ) ( 3,222 )

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

Net Cash Used in Financing Activities from Continuing Operations

( 24,708 ) ( 15,614 ) ( 59,564 )

Net increase (decrease) in cash and cash equivalents and restricted cash from continuing operations ( 3,427 ) 3,040 ( 50,651 )

Cash flows from Discontinued Operations:

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

Cash used in operating activities

— — ( 3,789 )

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

Cash provided by financing activities

Net increase in cash and cash equivalents and restricted cash from discontinued operations

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

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Preferred stock dividends

Common stock dividends ($ 1.11 per

share in 2023)

( 134 ) ( 205 ) —

Common stock dividends ($ 1.11 , $ 1.11

and $ 1.11 per share in 2024, 2023 and 2022)

( 4,020 ) ( 7,991 ) —

Issuance of treasury stock ( 516 ) ( 379 ) ( 171 )

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Balance at end of year $ 109,108 $ 114,519 $ 123,610

Retained (Deficit) Earnings

Retained Earnings (Deficit)

Balance at beginning of year $ ( 5,015 ) $ ( 19,415 ) $ 42,350

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and $ 1.11 per share in 2024, 2023 and 2022)

respectively)

( 3,991 ) — ( 7,993 )

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Distributions ( 1,330 ) ( 1,085 ) ( 1,352 )

Translation adjustments attributable to

noncontrolling interest, net of taxes

Balance at end of year $ 13,873 $ 14,145 $ 8,957

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(See Notes 6 and 24)

On July 31, 2021, we closed our transaction with TPG Capital (TPG) to form a new company named DIRECTV Entertainment Holdings, LLC (DIRECTV).

With the close of the transaction, we separated and deconsolidated our Video business, comprised of our U.S.

video operations, and began accounting for our investment in DIRECTV under the equity method (see Notes 6, 10 and 19).

All significant intercompany transactions are eliminated in the consolidation process.

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We treat the excess amount as a return of investment and classify it as cash flows from investing activities.

In the event we receive dividends in excess of the carrying amount of the investment, and we have no obligation to provide financial support to the equity method investee, we treat those dividends as returns on investment and classify them as cash flows from operating activities.

The preparation of financial statements in conformity with U.S.

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Certain prior-period amounts have been conformed to the current period’s presentation.

Unless otherwise noted, the information in Notes 1 through 23 and 25 refer only to our continuing operations and do not include discussion of balances or activity of WarnerMedia, Vrio, Xandr and Playdemic, which are part of discontinued operations.

Unless otherwise noted, the information in Notes 1 through 23 refer only to our continuing operations and do not include discussion of balances or activity of WarnerMedia, Vrio, Xandr and Playdemic, which are part of discontinued operations.

Adopted and New Accounting Standards

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.

Segment Reporting In November 2023, the Financial Accounting Standards Board (FASB) issued ASU No.

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

Improvements to Reportable Segment Disclosures” (ASU 2023-07).

Beginning with our 2024 annual reporting, we adopted, through retrospective application, ASU No.

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.

Convertible Instruments Beginning with 2022 interim reporting, we adopted, through retrospective application, ASU No.

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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.

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

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 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).

Dollars in millions except per share amounts

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.

2020-04, “Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (ASU 2020-04, as amended), which provides optional expedients, and allows for certain exceptions to existing GAAP, for contract modifications triggered by the expected market transition of certain benchmark interest rates to alternative reference rates.

ASU 2020-04 applies to contracts, hedging relationships, certain derivatives and other arrangements that reference the London Interbank Offering Rate (LIBOR) or any other rates ending after December 31, 2024.

ASU 2020-04, as amended, became effective immediately.

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

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.

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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.

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

Disaggregation of Income Statement Expenses In November 2024, the FASB issued ASU No.

2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses” (ASU 2024-03), which requires that a public entity disclose the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation and (d) intangible asset amortization included in each relevant expense caption presented on the face of the income statement.

The standard also requires an entity to disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively as well as disclose the total amount of selling expenses and, annually, the entity’s definition of selling expenses.

ASU 2024-03 will be effective for annual periods beginning after December 15, 2026, with either retrospective or prospective application.

The standard allows for early adoption of these requirements;

we are currently evaluating the disclosure impacts of our adoption.

Accounting Policies

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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

Dollars in millions except per share amounts

Certain subsidiaries follow composite group depreciation methodology.

Accordingly, when a portion of their depreciable property, plant and equipment is retired in the ordinary course of business, the gross book value is reclassified to accumulated depreciation, and no gain or loss is recognized on the disposition of these assets.

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The liability for the fair value of an asset retirement obligation is recorded in the period in which it is incurred if a reasonable estimate of fair value can be made.

In periods subsequent to initial measurement, we recognize period-to-period changes in the liability resulting from the passage of time and revisions to either the timing or the amount of the original estimate.

In periods subsequent to initial measurement, we recognize period-to-period changes in the

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liability resulting from the passage of time and revisions to either the timing or the amount of the original estimate.

The increase in the carrying value of the associated long-lived asset is depreciated over the corresponding estimated economic life.

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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.

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” in our consolidated statements of cash flows.

Interest is capitalized until the spectrum is ready for its intended use.

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

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We translate their revenues and expenses using average rates during the year.

The resulting foreign currency translation adjustments are recorded as a separate component of accumulated OCI in our consolidated balance sheets (see Note 3).

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The resulting foreign currency translation adjustments are recorded as a separate component of accumulated OCI on our consolidated balance sheets (see Note 3).

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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10,746 14,192 ( 7,883 )

Loss from discontinued operations, net of tax — ( 181 ) ( 2,297 )

Loss from discontinued operations attributable

to noncontrolling interests

Loss from discontinued operations attributable to common stock

— ( 181 ) ( 2,210 )

Numerator for basic earnings per share 1

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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).

On April 5, 2023, we repurchased all of 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).

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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 (see Note 6).

SEGMENT INFORMATION

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Communications and Latin America.

We also evaluate segment and business unit performance based on EBITDA and/or EBITDA margin, which is defined as operating income excluding depreciation and amortization.

EBITDA is used as part of our management reporting and we believe EBITDA to be a relevant and useful measurement to our investors as it measures the cash generation potential of our business units.

EBITDA does not give effect to depreciation and amortization expenses incurred in operating income nor is it burdened by cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses.

EBITDA margin is EBITDA divided by total revenue.

Our chief operating decision maker (CODM) is our Chief Executive Officer and President.

Our CODM uses operating income to evaluate performance and allocate resources, including capital allocations, when managing the business.

Our CODM manages operations through the review of actual and forecasted “Operations and Support Expenses” information at a segment and business unit level, with Communications and Latin America segments primarily evaluated on a direct cost basis and comprised of equipment, compensation, network and technology, sales, advertising and other costs.

Additionally, business unit expenses within the Communications segment include direct and shared costs.

Direct costs are incurred in support of products and services offered by the business units, such as equipment costs (predominantly wireless devices), network access, rents, leases, sales support, customer provisioning and commission expenses.

Shared costs amongst the business units generally include information technology, network engineering and construction costs, advertising and other general and administrative expense.

Dollars in millions except per share amounts

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.

The Communications segment provides wireless and wireline telecom and broadband services to consumers located in the United States and businesses globally.

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

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• Mobility provides nationwide wireless service and equipment.

• Business Wireline provides advanced ethernet-based fiber services, IP Voice and managed professional services, as well as traditional voice and data services and related equipment to business customers.

• Consumer Wireline provides broadband services, including fiber connections that provide 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.

• Business Wireline provides advanced ethernet-based fiber services, fixed wireless services, IP Voice and managed professional services, as well as legacy voice and data services and related equipment, to business customers.

• Consumer Wireline provides broadband services, including fiber connections that provide multi-gig services, and our fixed wireless access product (AT&T Internet Air or “AIA”) that provides internet services delivered over our 5G wireless network, to residential customers in select locations.

Consumer Wireline also provides legacy telephony voice communication services.

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

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

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

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Other items consist of :

• Video, which includes our former U.S.

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.

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

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

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For the year ended December 31, 2024

Revenues Operations

Expenses EBITDA Depreciation

Expenses Depreciation

Communications

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$ 122,336 $ 82,707 $ 20,580 $ 19,049

Dollars in millions except per share amounts

For the year ended December 31, 2023

Revenues Operations

Expenses EBITDA Depreciation

Expenses Depreciation

Amortization Operating

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

Dollars in millions except per share amounts

For the year ended December 31, 2022

Revenues Operations

Expenses EBITDA Depreciation

Expenses Depreciation

Amortization Operating

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

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

Held-for-sale and other

reclassifications

453 310 143 — 143

Certain significant items — 28,031 76 ( 28,107 )

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

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

$ 120,741 $ 107,307 $ 18,021 $ ( 4,587 )

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:

Dollars in millions except per share amounts

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

For the years ended December 31,

2024 2023 2022

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Corporate ( 2,902 ) ( 2,961 ) ( 2,890 )

Video — — 2,257

Held-for-sale and other reclassifications — — 143

Transaction and other costs ( 123 ) ( 98 ) ( 425 )

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Income (Loss) from Continuing Operations Before Income Taxes $ 16,698 $ 19,848 $ ( 3,094 )

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:

At or for the years ended December 31,

2024 2023 2022

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Total $ 394,795 $ 295 $ 20,263 $ 407,060 $ 1,251 $ 17,853

Dollars in millions except per share amounts

REVENUE RECOGNITION

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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).

Examples of service revenues include wireless, fiber and other advanced connectivity, transitional and legacy voice and data.

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., bytes of data processed) or period of time (e.g., monthly service fees).

Service revenue is recognized when services are provided, based upon either period of time (e.g., monthly service fees) or usage (e.g., bytes of data processed).

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

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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.

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Nonrefundable, upfront service activation and setup fees associated with service arrangements are deferred and recognized over the associated service contract period or customer relationship life.

Dollars in millions except per share amounts

Revenue Categories

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Communications

Mobility Business Wireline Consumer Wireline Latin America Corporate & Other Elim.

Mobility Business Wireline Consumer Wireline Latin America Corporate & Other Total

Wireless service $ 65,373 $ — $ — $ 2,668 $ — $ 68,041

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Total $ 85,255 $ 18,819 $ 13,578 $ 4,232 $ 452 $ 122,336

Dollars in millions except per share amounts

For the year ended December 31, 2023

Communications

Mobility Business Wireline Consumer Wireline Latin America Corporate & Other Elim.

Mobility Business Wireline Consumer Wireline Latin America Corporate & Other Total

Wireless service $ 63,175 $ — $ — $ 2,569 $ — $ 65,744

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Communications

Mobility Business Wireline Consumer Wireline Latin America Corporate & Other Elim.

Mobility Business Wireline Consumer Wireline Latin America Corporate & Other Total

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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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.

These changes in

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accounting estimate decreased “Other cost of revenues” approximately $ 395 , or $ 0.04 per diluted share from continuing operations for the year ended December 31, 2022.

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

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Total deferred customer contract fulfillment costs $ 5,390 $ 6,183

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:

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Current portion in “Advanced billings and customer deposits” 3,981 3,666

Our contract asset balance in 2023 reflects increased promotional equipment sales in our wireless business.

Our beginning of period contract liabilities recorded as customer contract revenue during 2024 was $ 3,666 .

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Remaining performance obligations represent services we are required to provide to customers under bundled or discounted arrangements, which are satisfied as services are provided over the contract term.

In determining the transaction price allocated, we do not include non-recurring charges and estimates for usage, nor do we consider arrangements with an original expected duration of less than one year, which are primarily prepaid wireless and residential internet agreements.

In determining the transaction price allocated,

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we do not include non-recurring charges and estimates for usage, nor do we consider arrangements with an original expected duration of less than one year, which are primarily prepaid wireless and residential internet agreements.

Remaining performance obligations associated with business contracts reflect recurring charges billed, adjusted to reflect estimates for sales incentives and revenue adjustments.

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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.

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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.

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 2021, $ 98 in 2022 and $ 109 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.

Interest is capitalized until the spectrum is ready for its intended use.

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

In connection with the transaction, we contributed our U.S.

Video business unit to DIRECTV for $ 4,250 of junior preferred units, an additional distribution preference of $ 4,200 and a 70 % economic interest in common units (collectively “equity considerations”).

TPG contributed approximately $ 1,800 in cash to DIRECTV for $ 1,800 of senior preferred units and a 30 % economic interest in common units.

See Note 10 for additional information on our accounting for our investment in DIRECTV.

Upon close of the transaction in the third quarter of 2021, we received approximately $ 7,170 in cash from DIRECTV ($ 7,600 , net of $ 430 cash on hand) and transferred $ 195 of DIRECTV debt.

Approximately $ 1,800 of the cash received is reported as cash received from financing activities in our consolidated statement of cash flows, as it 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.

Dispositions Reflected as Discontinued Operations

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Xandr was reflected in our historical financial statements as discontinued operations.

Vrio On November 15, 2021, we completed the sale of our Latin America video operations, Vrio, to Grupo Werthein and recorded a note receivable of $ 610 to be paid over four years , of which $ 300 is in the form of seller financing and the remainder is related to working capital adjustments.

In the second quarter of 2021, we classified the Vrio disposal group as held-for-sale and reported the disposal group at fair value less cost to sell, which resulted in a noncash, pre-tax impairment charge of $ 4,555 , including approximately $ 2,100 related to accumulated foreign currency translation adjustments and $ 2,500 related to property, plant and equipment and intangible assets.

Approximately $ 80 of the impairment was attributable to noncontrolling interest.

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.

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.

PROPERTY, PLANT AND EQUIPMENT

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

At December 31, 2023

Operating Leases Finance

At December 31, 2024 Operating Leases Finance

2025 $ 4,789 $ 293

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Imputed interest

( 4,551 ) ( 442 )

Total $ 20,924 $ 1,416

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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.

During the third quarter of 2024, we updated the long-term strategic plan of our Business Wireline reporting unit.

The updated plans reflected lower long-term projected future cash flows associated with the industry-wide secular decline, including a faster-than-previously anticipated decline of legacy services.

We identified this as an impairment indicator and performed an interim quantitative goodwill impairment test of our Business Wireline reporting unit.

The interim impairment test methodology was consistent with our approach for annual impairment testing (see Note 1), using similar models updated with our current view of key inputs and assumptions.

We concluded that the calculated fair value of the Business Wireline reporting unit was lower than the book value, resulting in a goodwill impairment.

As a result, in the third quarter of 2024, we recorded a noncash goodwill impairment charge of $ 4,422 in our consolidated statements of income, which represented the entirety of Business Wireline reporting unit goodwill.

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 the entire $ 826 in our Mexico reporting unit.

The decline in fair values was primarily due to changes in the macroeconomic environment, namely increased weighted-average cost of capital.

Also, inflation pressure and lower projected cash flows driven by secular declines, predominantly at Business Wireline, impacted the fair values.

A combination of discounted cash flow and market multiple approaches was used to determine the fair values.

In the Communications segment, if all other assumptions were to remain unchanged, we expect the impairment charge would 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:

Mobility, Business Wireline and Consumer Wireline.

The reporting unit is deemed to be the operating segment for Latin America.

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

1 Dispositions

Changes to our goodwill in 2024 resulted from the noncash impairment discussed above.

Changes to our goodwill in 2023 resulted from goodwill attributed to assets contributed to the formation of strategic joint ventures.

Our Communications segment has three reporting units:

Mobility, Consumer Wireline and Business Wireline.

Business Wireline goodwill was fully impaired in the third quarter of 2024.

The reporting unit is deemed to be the operating segment for Latin America and its goodwill was fully impaired in 2022.

At December 31, 2024, accumulated goodwill impairments totaled $ 29,234 .

The following table sets forth the changes in the carrying amounts of goodwill for the Communications segment:

1 Impairment Balance at

31 Balance at

1 Impairments Dispositions,

1 Dispositions

and other Balance at

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

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

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

Latin America — — — 816 ( 826 ) 10 —

Accumulated Impairments ( 23,986 ) ( 4,422 ) ( 28,408 ) ( 23,986 ) — ( 23,986 )

Total $ 67,854 $ ( 4,422 ) $ 63,432 $ 67,895 $ ( 41 ) $ 67,854

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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).

Indefinite-lived wireless licenses increased in 2024 primarily due to compensable relocation and incentive payments and $ 199 of capitalized interest.

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)

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

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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, 2023, primarily included our interests in DIRECTV, Gigapower and SKY Mexico.

Our investments in equity affiliates at December 31, 2024, primarily included our interests in DIRECTV and Gigapower.

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

DIRECTV is considered a variable interest entity for accounting purposes.

As DIRECTV is jointly governed by a board with representation from both AT&T and TPG, with TPG having tie-breaking authority on certain key decisions, most significantly the appointment and removal of the CEO, we have concluded that we are not the primary beneficiary of DIRECTV.

As DIRECTV is jointly governed by a board with representation from both AT&T and TPG Capital (TPG), with TPG having tie-breaking authority on certain key decisions, most significantly the appointment and removal of the CEO, we have concluded that we are not the primary beneficiary of DIRECTV.

The initial fair value of the equity considerations at the date of acquisition was $ 6,852 , which was determined using a discounted cash flow model reflecting distribution rights and preference of the individual instruments.

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

• Preferred units with distribution rights of $ 1,800 held by TPG, which were fully distributed in 2021.

Dollars in millions except per share amounts

• Preferred units with distribution rights of $ 1,800 held by TPG, which have been fully distributed.

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

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

The initial fair value of the equity considerations on July 31, 2021 was $ 6,852 , which was determined using a discounted cash flow model reflecting distribution rights and preference of the individual instruments.

On September 29, 2024, we agreed to sell our interest in DIRECTV to TPG for approximately $ 7,600 in cash payments through 2029, inclusive of third-quarter and fourth-quarter 2024 combined distributions of $ 1,695 .

In addition to quarterly distributions through 2025, including payout of common catch-up units, this consideration includes notes payable to AT&T of approximately

Dollars in millions except per share amounts

$ 2,550 and a dividend of $ 1,150 .

The transaction is expected to close in mid-2025, pending customary closing conditions.

We expect a gain on sale, whose amount will be dependent on the timing of close.

Beginning in third-quarter 2024, our investment in DIRECTV was reduced to zero on our consolidated balance sheet, resulting from aggregate cash receipts exceeding our initial investment balance plus our cumulative equity in DIRECTV earnings.

As we are not committed, implicitly or explicitly, to provide financial or other support to DIRECTV, we record cash distributions received in excess of our share of DIRECTV’s earnings in “Equity in net income of affiliates” in the consolidated statements of income and as cash provided by operations in the consolidated statements of cash flows.

During 2024, 2023 and 2022, we recognized $ 2,027 , $ 1,666 and $ 1,808 of equity in net income of affiliates and received total distributions of $ 2,955 , $ 3,715 and $ 4,457 , respectively, from DIRECTV.

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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 Gigapower, SKY Mexico and certain sports-related programming investments, at December 31, or for the year then ended:

Gigapower 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 hold a 50 % interest in this joint venture, which provides a fiber network in select areas to internet service providers and other businesses across the U.S.

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

SKY Mexico In June 2024, we sold our 41.3 % interest in SKY Mexico, 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 Gigapower, SKY Mexico (prior to disposition) and certain sports-related programming investments, at December 31, or for the year then ended:

2024 2023 2022

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Noncurrent liabilities 7,389 8,193

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

1 Does not include Gigapower for periods prior to May 2023.

2 Does not include SKY Mexico after disposition in June 2024.

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

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8.75 % 2024 – 2097 3,565 3,639

Credit agreement borrowings — 2,500

Fair value of interest rate swaps recorded in debt 6 7

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Total $ 5,089 $ 9,477

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.

The weighted average interest rate on our outstanding short-term borrowings, comprised solely of commercial paper, was approximately 6.0 % as of December 31, 2023.

Dollars in millions except per share amounts

Financing Activities

During 2023, we received net proceeds of $ 10,004 on the issuance of $ 10,061 in long-term debt and proceeds of $ 750 on the issuance of credit agreement borrowings in various markets, with an average weighted maturity of approximately 6.3 years and a weighted average interest rate of 5.2 %.

We repaid $ 12,458 of long-term debt and credit agreement borrowings with a weighted average interest rate of 5.3 %.

During 2024, we repaid $ 10,112 of long-term debt and credit agreement borrowings with a weighted average interest rate of 4.1 %.

Our debt activity during 2024 primarily consisted of the following:

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Net commercial paper borrowings $ 428 $ 262 $ ( 2,686 ) $ — $ ( 1,996 )

Issuance of notes and debentures:

$ ( 2,300 ) $ ( 1,615 ) $ — $ ( 2,575 ) $ ( 6,490 )

( 2,181 ) ( 32 ) — — ( 2,213 )

Other 1,050 — — 371 1,421

Debt issuances

$ 4,116 $ 6,267 $ — $ 371 $ 10,754

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

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

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

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

— — ( 450 ) — ( 450 )

2025 Term Loan

CAD notes — ( 442 ) — — ( 442 )

— — — ( 467 ) ( 467 )

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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

Revolving Credit Agreement

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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 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;

The Revolving Credit Agreement provides that we have the right to terminate, in whole or in part, amounts committed by the lenders under the credit agreement in excess of any outstanding advances;

however, any such terminated commitments may not be reinstated.

Dollars in millions except per share amounts

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

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There have been no changes in the methodologies used since December 31, 2023.

Dollars in millions except per share amounts

Long-Term Debt and Other Financial Instruments

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Following is the fair value leveling for investment securities that are measured at fair value and derivatives as of December 31, 2024 and December 31, 2023.

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.

Derivatives designated as hedging instruments are reflected as “Prepaid and other current assets,”

Dollars in millions except per share amounts

“Other Assets,” “Accounts payable and accrued liabilities,” and “Other noncurrent liabilities” on our consolidated balance sheets.

December 31, 2024

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Liability Derivatives

Interest rate swaps — ( 2 ) — ( 2 )

Cross-currency swaps — ( 4,163 ) — ( 4,163 )

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Liability Derivatives

Interest rate swaps — ( 2 ) — ( 2 )

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

Foreign exchange contracts — ( 23 ) — ( 23 )

Investment Securities

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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

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.

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five or more years:

Our cash equivalents (money market securities), short-term investments (certificate and time deposits) and nonrefundable customer deposits are recorded at amortized cost, and the respective carrying amounts approximate fair values.

Short-term investments and nonrefundable customer deposits are recorded in “Prepaid and other current assets” and our investment securities are recorded in “Other Assets” on the consolidated balance sheets.

Our cash equivalents (money market securities) and short-term investments (certificate and time deposits) are recorded at amortized cost, and the respective carrying amounts approximate fair values.

Short-term investments are recorded in “Prepaid and other current assets” and our investment securities are recorded in “Other Assets” on the consolidated balance sheets.

Derivative Financial Instruments

We enter into derivative transactions to manage certain market risks, primarily interest rate risk and foreign currency exchange risk.

This includes the use of interest rate swaps, interest rate locks, foreign exchange forward contracts and combined interest rate foreign exchange contracts (cross-currency swaps).

This includes the use of interest rate swaps, interest rate locks, foreign exchange forward contracts and combined interest

Dollars in millions except per share amounts

rate foreign exchange contracts (cross-currency swaps).

We do not use derivatives for trading or speculative purposes.

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The amount remaining in accumulated other comprehensive loss related to cash flow hedges on the de-designation date was $ 1,857 .

The amount will be reclassified to earnings when the hedged item is recognized in earnings or

Dollars in millions except per share amounts

when it becomes probable that the forecasted transactions will not occur.

The amount will be reclassified to earnings when the hedged item is recognized in earnings or when it becomes probable that the forecasted transactions will not occur.

The election of fair value hedge designation for cross-currency swaps does not have an impact on our financial results.

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We do not offset the fair value of collateral, whether the right to reclaim cash collateral (a receivable) or the obligation to return cash collateral (a payable) exists, against the fair value of the derivative instruments.

Dollars in millions except per share amounts

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

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Cross-currency swaps 34,884 38,006

Foreign exchange contracts — 617

Total $ 34,884 $ 39,756

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Gain (loss) recognized in accumulated OCI

Dollars in millions except per share amounts

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

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The inputs to these models are considered Level 3.

Dollars in millions except per share amounts

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

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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

Dollars in millions except per share amounts

earnings to be indefinitely reinvested.

We consider other types of unremitted foreign 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.

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We update our UTBs at each financial statement date to reflect the impacts of audit settlements and other resolutions of audit issues, the expiration of statutes of limitation, developments in tax law and ongoing discussions with taxing authorities.

Dollars in millions except per share amounts

A reconciliation of the change in our UTB balance from January 1 to December 31 for 2024 and 2023 is as follows:

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The amount of deposits that reduced our UTB balance was $ 2,282 at December 31, 2024 and $ 2,361 at December 31, 2023.

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

Current tax assets on our consolidated balance sheets were $ 2,236 at December 31, 2024 and $ 2,079 at December 31, 2023.

Accrued interest and penalties included in UTBs were $ 2,223 as of December 31, 2024 and $ 1,785 as of December 31, 2023.

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All audit periods prior to 2006 are closed for federal examination purposes, and we have effectively resolved all outstanding audit issues for years through 2010 with the IRS Appeals Division.

Those years will be closed as the final paperwork is processed in the coming months.

While we do not expect material changes, we are generally unable to estimate the range of impacts on the balance of the remaining uncertain tax positions or the impact on the effective tax rate from the resolution of these issues until each year is closed;

and it is possible that the amount of unrecognized benefit with respect to our uncertain tax positions could increase or decrease within the next 12 months.

it is possible that the amount of unrecognized benefit with respect to our uncertain tax positions could increase or decrease within the next 12 months.

Dollars in millions except per share amounts

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Deferred ( 28 ) 38 ( 44 )

104 62 ( 14 )

Total $ 4,445 $ 4,225 $ 3,780

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State and local income taxes – net of federal income tax benefit 478 345 795

CARES Act federal NOL carryback — — ( 471 )

Tax on foreign investments 3 102 43

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1 Goodwill impairments are not deductible for tax purposes.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was enacted, which allows for a Net Operating Loss (NOL) generated in 2020 to be carried back to a year with a federal rate of 35%.

During 2021, we recorded a $ 471 tax benefit for the rate impact of the 2020 NOL carryback adjusted for the domestic manufacturing deduction limitation in the carryback year and applicable unrecognized tax benefits.

Dollars in millions except per share amounts

PENSION AND POSTRETIREMENT BENEFITS

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Most employees can elect to receive their pension benefits in either a lump sum payment or an annuity.

Dollars in millions except per share amounts

Pension programs covering U.S.

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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.

This plan change aligns our benefit plans to market level.

Obligations and Funded Status

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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.

Dollars in millions except per share amounts

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

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Benefit obligation at end of year $ 30,944 $ 33,227 $ 6,339 $ 6,693

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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Should actual experience differ from actuarial assumptions, the projected pension benefit obligation and net pension cost and accumulated postretirement benefit obligation and postretirement benefit cost would be affected in future years.

Discount Rate Our assumed weighted-average discount rates for both pension and postretirement benefits of 5.00 %, at December 31, 2023, reflect the hypothetical rate at which the projected benefit obligation could be effectively settled or paid out to participants.

We determined our discount rate based on a range of factors, including a yield curve composed of the rates of return on several hundred high-quality, fixed income corporate bonds available at the measurement date and corresponding to the related expected durations of future cash outflows.

Discount Rate Our assumed weighted-average discount rates for pension and postretirement benefits of 5.70 % and 5.60 % respectively, at December 31, 2024, reflect the hypothetical rate at which the projected benefit obligation could be effectively settled or paid out to participants.

We determined our discount rates based on a range of factors, including a yield curve composed of the rates of return on several hundred high-quality, fixed income corporate bonds available at the measurement date and corresponding to the related expected durations of future cash outflows.

These bonds had an average rating of at least Aa3 or AA- by the nationally recognized statistical rating organizations, denominated in U.S.

dollars, and generally not callable, convertible or index linked.

For the year ended December 31, 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 .

For the year ended December 31, 2024, when compared to the year ended December 31, 2023, we increased our pension discount rate by 0.70 %, resulting in a decrease in our pension plan benefit obligation of $ 1,994 , and increased our postretirement discount rate by 0.60 %, resulting in a decrease in our postretirement benefit obligation of $ 317 .

For the year ended December 31, 2023, 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 .

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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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.

Expected Long-Term Rate of Return In 2025, our expected long-term rate of return is 7.75 % on pension plan assets and 4.00 % on postretirement plan assets.

Our long-term rates of return reflect the average rate of earnings expected on the funds invested, or to be invested, to provide for the benefits included in the projected benefit obligations.

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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 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 %.

This change in assumption increased our obligation by $ 19 .

Based on our assessment of expectations of healthcare industry inflation, our 2025 assumed annual healthcare prescription drug cost trend and medical cost trend for eligible participants will increase to 8.25 %, grading down to an ultimate trend rate of 4.25 % in 2032.

This change in initial and ultimate assumptions increased our obligation by $ 144 .

For 2024, our assumed annual healthcare prescription drug cost trend and medical cost trend for eligible participants remained at an annual and ultimate trend rate of 4.50 %.

Plan assets consist primarily of private and public equity, government and corporate bonds, and real assets (real estate and natural resources).

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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 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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Private equity 11 % - 21 % 19 20 — % - 6 % 1 1

Preferred interests — % - — % — 13 — % - — % — —

Other — % - 3 % 1 — 68 % - 78 % 72 63

Total 100 % 100 % 100 % 100 %

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.

All outstanding Mobility preferred interests were repurchased in April 2023.

The preferred equity interests were repurchased in April 2023.

(See Note 16)

Dollars in millions except per share amounts

At December 31, 2024, AT&T securities represented less than 1% of assets held by our pension trust.

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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.

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

Dollars in millions except per share amounts

Fair Value Measurements

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

Dollars in millions except per share amounts

The following tables set forth by level, within the fair value hierarchy, the pension and postretirement assets and liabilities at fair value as of December 31, 2024:

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Domestic equities 1 — — 1

International equities — — 1 1

Total plan net assets at fair value $ 817 $ 6 $ — $ 823

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International equities 1,085 — — 1,085

Preferred interests — — 5,427 5,427

Fixed income securities:

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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

Assets held at net asset value practical expedient

Commingled funds 13

Private equity funds 8

Real estate funds 11

Commingled funds

Total assets held at net asset value practical expedient 643

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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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For our supplemental retirement plans, the projected benefit obligation was $ 1,305 and the net supplemental retirement pension cost was $ 18 at and for the year ended December 31, 2024.

The projected benefit obligation was $ 1,544 and the net supplemental retirement pension credit was $ 234 at and for the year ended December 31, 2022.

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

We use the same significant assumptions for the composite rate of compensation increase in determining our projected benefit obligation and the net pension and postemployment benefit cost.

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SHARE-BASED PAYMENTS

Under our various plans, senior and other management employees and nonemployee directors have received nonvested stock and stock units.

The shares will vest over a period of one to four years in accordance with the terms of those plans.

We grant performance stock units, which are nonvested stock units, based upon our stock price at the date of grant and award them in the form of AT&T common stock and cash at the end of a three -year period, subject to the achievement of certain performance goals.

Under our various share-based payment plans, senior and other management employees and nonemployee directors have received performance stock units and other nonvested stock units.

As of December 31, 2024, we were authorized to issue up to approximately 84 million shares of common stock (including shares that may be issued upon exercise of outstanding options or upon vesting of performance stock units or other nonvested stock units) pursuant to these various plans:

• Performance stock units, which are nonvested stock units, which are valued based upon the market price of our common stock at the date of grant and performance expectations.

These distribute in the form of AT&T common stock and cash at the end of a three -year period, subject to the achievement of certain performance goals.

We treat the cash-settled portion of these awards as a liability.

Effective with the 2021 plan year, for the majority of employees, performance shares were replaced with restricted stock units that do not have any performance conditions.

These new restricted stock units vest ratably over a three-year period.

We grant forfeitable restricted stock and stock units, which are valued at the market price of our common stock at the date of grant and predominantly vest over a three - to five -year period.

We also grant other nonvested stock units and award them in cash at the end of a three -year period, subject to the achievement of certain market-based conditions.

As of December 31, 2023, we were authorized to issue up to approximately 123 million shares of common stock (in addition to shares that may be issued upon exercise of outstanding options or upon vesting of performance stock units or other nonvested stock units) to officers, employees and directors pursuant to these various plans.

• Restricted stock and restricted stock units are valued at the market price of our common stock at the date of grant and do not have any performance conditions.

Restricted stock predominantly vests over a three - to ten -year period and restricted stock units predominantly vest over a three -year period.

We account for our share-based payment arrangements based on the fair value of the awards on their respective grant date, which may affect our ability to fully realize the value shown on our consolidated balance sheets of deferred tax assets associated with compensation expense.

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However, to the extent we generate excess tax benefits (i.e., those additional tax benefits in excess of the deferred taxes associated with compensation expense previously recognized) the potential future impact on income would be reduced.

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

Our consolidated statements of income include the share-based compensation cost recognized for the plans described above as “Selling, general and administrative” expense.

Those expenses, as well as the associated tax benefits, are reflected in the table below:

2024 2023 2022

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Restricted stock and stock units 378 400 350

Other nonvested stock units — — —

Stock options — — —

Total $ 505 $ 479 $ 518

Income tax benefit $ 123 $ 118 $ 127

Dollars in millions except per share amounts

A summary of the status of our nonvested stock units as of December 31, 2024, and changes during the year then ended is presented as follows (shares in millions):

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Nonvested at December 31, 2024

As of December 31, 2023, there was $ 445 of total unrecognized compensation cost related to nonvested share-based payment arrangements granted.

Dollars in millions except per share amounts

As of December 31, 2024, there was $ 666 of total unrecognized compensation cost related to nonvested share-based payment arrangements outstanding.

That cost is expected to be recognized over a weighted-average period of 2.21 years.

The total fair value of shares vested during the year was $ 452 for 2024, compared to $ 592 for 2023 and $ 783 for 2022.

It is our intent to satisfy share option exercises using our treasury stock.

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

STOCKHOLDERS’ AND MEZZANINE EQUITY

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20 thousand shares outstanding at December 31, 2024 and December 31, 2023, with a € 100,000 per share liquidation preference, and an initial rate of 2.875 %, subject to reset after May 1, 2025.

On January 31, 2025, we issued a call notice for the Series B cumulative preferred shares, with a redemption date of March 3, 2025.

70 thousand shares outstanding at December 31, 2024 and December 31, 2023, with a $ 25,000 per share liquidation preference, and a dividend rate of 4.75 %.

1 unchanged sentence

The preferred shares are optionally redeemable by AT&T at the liquidation price on or after five years from the issuance date, or upon certain other contingent events.

Stock Repurchase Program From time to time, we repurchase shares of common stock for distribution through our employee benefit plans or in connection with certain acquisitions.

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.

Stock Repurchase Program From time to time, we repurchase shares of common stock.

Over the past few years, these repurchases have generally been for distribution through our employee benefit plans or in connection with certain acquisitions.

In December 2024, the Board approved an authorization to repurchase up to $ 10,000 of common stock and terminated the March 2014 authorization.

To implement repurchase authorizations, we have 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 2023, there were no shares repurchased and during 2022, we repurchased approximately 34 million shares totaling $ 662 under the March 2014 authorization.

During 2024, we repurchased approximately 36 thousand shares totaling $ 1 and during 2023, there were no shares repurchased under the March 2014 authorization.

Dividend Declarations In December 2024 and December 2023, AT&T declared a quarterly preferred dividend of $ 36 .

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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

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

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 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.

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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 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 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).

Dollars in millions except per share amounts

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 Note 12).

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 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 .

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 interests for a purchase price, including accrued and unpaid distributions, of $ 5,414 .

Tower Holdings Preferred Interests

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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 “2019 Tower preferred interests”).

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 %.

The 2019 Tower preferred interests were subject to reset in December 2024 and included a September series (Tower Class A-1) totaling $ 1,500 that paid an initial preferred distribution of 5.0 %, and a December series (Tower Class A-2) totaling $ 4,500 that paid an initial preferred distribution of 4.75 %.

In August 2024, we amended the 2019 Tower preferred interests, effective November 2024, to reset the rate and restructure the membership interests whereby all of the 2019 Tower preferred interests are now designated Fixed Rate Class A Limited Membership Interests (Tower Fixed Rate Interests).

A portion of the Tower Fixed Rate Interests will move to Floating Rate Class A Limited Membership Interests (Tower Floating Rate Interests) each year over a five-year period.

The Tower Fixed Rate Interests pay a preferred distribution of 5.90 %, and the Tower Floating Rate Interests, which could equal $ 525 by 2028 if not called prior, pay a preferred distribution equal to the Secured Overnight Financing Rate (SOFR) plus 250 basis points, as defined in the agreement.

Distributions are paid quarterly, subject to declaration, and reset every five years .

Any failure to declare or pay distributions on the Tower preferred interests would not impose any limitation on cash movements between affiliates, or our ability to declare a dividend on or repurchase AT&T shares.

We can call the Tower preferred interests at the issue price beginning five years from the issuance date or upon the receipt of proceeds from the sale of the underlying assets.

Any failure to declare or pay distributions on the Tower Fixed Rate Interests or Tower Floating Rate Interests (collectively, the “Tower preferred interests”) would not impose any limitation on cash movements between affiliates, or our ability to declare a dividend on or repurchase AT&T shares.

We can call the Tower preferred interests at the issue price beginning in November 2029, and we can call the Tower Floating Rate Interests at any time.

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

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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

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

As of December 31, 2024 and 2023, cumulative preferred interests in our Telco LLC totaled $ 7,250 (collectively the “Telco preferred interests”).

Members’ equity in Telco LLC consists of (1) members’ 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 interests, which pay an initial preferred distribution 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.

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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.

If notice is given, all other holders of equal or more subordinate classes of

Dollars in millions except per share amounts

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 October 2024, we entered into an agreement to issue in the first quarter of 2025 an additional $ 2,250 of nonconvertible cumulative preferred interests in Telco LLC (Telco Class A-4).

The Telco Class A-4 interests will pay an initial preferred distribution of 5.94 % annually, subject to declaration, and subject to reset on November 1, 2028, and every four years thereafter.

The Telco Class A-4 interests can be called at issue price beginning on November 1, 2028, and are subject to the same redemption and liquidation rights as the Telco Class A-1, A-2 and A-3 interests.

Upon the expected issuance in the first quarter of 2025, we intend to use the Telco Class A-4 proceeds to fund the redemption of preferred equity securities.

Mobility II Redeemable Noncontrolling Interests

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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 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.

The most significant of these programs are discussed in detail below and generally consist of (1) receivables arising from equipment installment plans, which are sold for cash and beneficial interests, such as deferred purchase price, when applicable, and (2) revolving trade receivables, which are sold for cash.

Under the terms of our agreements for these programs, we continue to service the transferred receivables on behalf of the financial institutions.

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

2024 2023 2022

Net cash received from equipment installment receivables 1

Net cash received (paid) from equipment installment receivables program 1

$ ( 1,358 ) $ 648 $ 1,875

Net cash received (paid) from revolving receivables program 1,147 1,456 —

Net cash received (paid) from other programs — ( 632 ) 620

824 620 ( 295 )

Total net cash impact to cash flows from operating activities 2

$ ( 211 ) $ 1,472 $ 2,495

1 Cash from initial sales of $ 10,587 , $ 10,980 and $ 11,129 for the years ended December 31, 2024, 2023 and 2022, 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.

2 Net of facility fees.

The sales of receivables did not have a material impact on our consolidated statements of income or to “Total Assets” reported on our consolidated balance sheets.

2 unchanged sentences

Dollars in millions except per share amounts

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

Our equipment installment and revolving receivables programs are discussed in detail below.

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

Equipment Installment Revolving Equipment Installment Revolving

Gross receivables:

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Cash proceeds received, net of remittances 1

8,243 2,770 9,361 1,500

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

Equipment Installment Receivables Program

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

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1 Receivables net of promotion credits.

2 Receivables net of allowance, imputed interest and equipment trade-in right guarantees.

Beneficial interests and guarantee obligation are initially recorded at estimated fair value and subsequently adjusted for changes in present value of expected cash flows.

2 Receivables net of allowance and other reserves.

Beneficial interests, when applicable, and guarantee obligations are initially recorded at estimated fair value and subsequently adjusted for changes in present value of expected cash flows.

The estimation of their fair values is based on remaining installment payments expected to be collected and the expected timing and value of device trade-ins.

1 unchanged sentence

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).

Dollars in millions except per share amounts

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

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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, 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.

At December 31, 2024 and December 31, 2023, our beneficial interests were $ 3,185 and $ 2,270 , respectively, of which $ 1,906 and $ 1,296 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, 2024 and December 31, 2023 was $ 301 and $ 385 , respectively, of which $ 150 and $ 111 are included in “Accounts payable and accrued liabilities” on our consolidated balance sheets, with the remainder in “Other noncurrent liabilities.” Our maximum exposure to loss as a result of selling these equipment installment receivables is limited to the total amount of our beneficial interests and guarantee obligation.

Revolving Receivables Program

During 2024, we expanded our revolving agreement to transfer up to $ 2,770 of certain receivables through our bankruptcy-remote subsidiaries to various financial institutions on a recurring basis in exchange for cash equal to the gross receivables transferred.

This agreement is subject to renewal on an annual basis and the transfer limit may be expanded or reduced from time to time.

As customers pay their balances, we transfer additional receivables into the program, resulting in our gross receivables sold exceeding net cash flow impacts (e.g., collect and reinvest).

The transferred receivables are fully guaranteed by our bankruptcy-remote subsidiaries, which hold additional receivables in the amount of $ 553 that are pledged as collateral under this agreement.

The transfers are recorded at fair value of the proceeds received and obligations assumed less derecognized receivables.

Our maximum exposure to loss related to these receivables transferred is limited to the derecognized amount outstanding.

The following table sets forth a summary of the revolving receivables sold:

2024 2023 2022

Gross receivables sold/cash proceeds received 1

$ 21,632 $ 8,882 $ —

Total collections under revolving agreement 20,362 7,382 —

Net cash proceeds received $ 1,270 $ 1,500 $ —

Net receivables sold 2

$ 21,039 $ 8,679 $ —

1 Includes initial sales of receivables of $ 1,270 , $ 1,500 and $ 0 for the years ended December 31, 2024, 2023 and 2022, respectively.

2 Receivables net of allowance and other reserves.

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 , as renewed, at current market rates, subject to further optional renewals in the future.

We are subleasing space on the towers from Crown Castle over an estimated original term of 20 years, 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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Our depreciation expense for these assets was $ 39 for each of 2024, 2023 and 2022.

Dollars in millions except per share amounts

Payments made to Crown Castle under this arrangement were $ 269 for 2024.

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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.

On September 29, 2024, we agreed to sell our interest in DIRECTV to TPG.

(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:

The following table sets forth our share of DIRECTV’s earnings included in “Equity in net income of affiliates” and cash distributions received from DIRECTV:

2024 2023 2022

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$ 2,955 $ 3,715 $ 4,457

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.

For the years ended December 31, 2024, 2023 and 2022 , we billed DIRECTV approximately $ 536 , $ 730 and $ 1,260 under commercial arrangements and transition service agreements, which were recorded as a reduction to the operations and support expenses incurred.

At December 31, 2024, we had accounts receivable from DIRECTV of $ 256 and accounts payable to DIRECTV of $ 17 .

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.

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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.

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.

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

During 2024, we submitted $ 561 in sustainability payments, with future payments under the agreement of $ 420 for 2025, $ 896 for 2026, $ 1,566 for 2027, $ 1,658 for 2028, $ 1,474 for 2029 and $ 10,435 thereafter.

Amounts paid to FirstNet, which are not expected to be returned to AT&T to be reinvested into our network, will be expensed in the period paid.

In the event FirstNet does not reinvest any funds to construct, operate, improve and maintain this network, our maximum exposure to loss is the total amount of the sustainability payments, which would be reflected in higher expense.

The $ 6,500 of initial funding from FirstNet is contingent on the achievement of six operating capability milestones and certain first responder subscriber adoption targets.

These milestones are based on coverage objectives of the first responder network during the construction period, which is expected to be over five years , and subscriber adoption targets.

Funding payments received from FirstNet are reflected as a reduction from the costs capitalized in the construction of the network and, as appropriate, a reduction of associated operating expenses.

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

CONTINGENT LIABILITIES

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In our opinion, although the outcomes of these proceedings are uncertain, they should not have a material adverse effect on our financial position, results of operations or cash flows.

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

We have contractual obligations to purchase certain goods or services from various other parties.

Our purchase obligations are expected to be approximately $ 9,916 in 2025, $ 10,982 in total for 2026 and 2027, $ 5,495 in total for 2028 and 2029 and $ 1,604 in total for years thereafter.

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

Dollars in millions except per share amounts

SUPPLIER AND VENDOR FINANCING PROGRAMS

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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.

The discounted price paid to participating suppliers is based on a variable rate that is indexed to the overnight borrowing rate.

We agree to pay the financial institution the stated amount generally within 90 days of receipt of the invoice.

1 unchanged sentence

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:

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

Confirmed obligations outstanding at the beginning of year

$ 2,844 $ 2,869

Invoices received

15,510 12,496

Invoices paid

( 15,856 ) ( 12,521 )

Confirmed obligations outstanding at the end of year

$ 2,498 $ 2,844

Direct Supplier Financing

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$ 1,424 $ 2,516

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.”

1 Total vendor financing payables at December 31, 2024 and 2023 were $ 1,448 and $ 2,833 , respectively, of which $ 749 and $ 1,975 are included in “Accounts payable and accrued liabilities.”

2 Includes software licensing arrangements with payment terms of two to five years totaling approximately $ 850 and $ 630 at December 31, 2024 and 2023, respectively.

Dollars in millions except per share amounts

ADDITIONAL FINANCIAL INFORMATION

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Current portion of employee benefit obligation 570 631

Current portion of Mobility preferred interests

Accrued interest 2,020 2,187

2 unchanged sentences

Total accounts payable and accrued liabilities $ 35,657 $ 35,852

Dollars in millions except per share amounts

Consolidated Statements of Income 2024 2023 2022

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Total interest expense $ 6,759 $ 6,704 $ 6,108

1 Included in “Acquisitions, net of cash acquired” on our consolidated statements of cash flows.

1 Included in “Acquisitions, net of cash acquired” in our consolidated statements of cash flows.

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

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Cash and cash equivalents and restricted cash $ 3,406 $ 6,833 $ 3,793 $ 21,316

Dollars in millions except per share amounts

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

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1 Total capitalized interest was $ 361 , $ 874 and $ 1,294 for 2024, 2023 and 2022, respectively.

Labor Contracts As of January 31, 2024, we employed approximately 149,900 persons.

Labor Contracts As of December 31, 2024, we employed approximately 140,990 persons.

Approximately 43 % 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 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

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

The main contract set to expire in 2025 covers approximately 9,000 employees in Arkansas, Kansas, Missouri, Oklahoma and Texas and is set to expire in April.

DISCONTINUED OPERATIONS

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

2023 2022 2021

Revenues $ — $ — $ 9,454

2 unchanged sentences

Selling, general and administrative — — 2,791

Asset abandonments and impairments 1

Depreciation and amortization — — 1,172

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Net loss from discontinued operations $ — $ — $ ( 181 )

1 2021 includes $ 4,555 impairment resulting from our assessment of the recoverability of Vrio’s net assets.

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.

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 .

QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

The following tables represent our quarterly financial results:

2023 Calendar Quarter

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

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 from Continuing

Operations Attributable to Common Stock

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

Basic Earnings Per Share

Attributable to Common Stock from

Continuing Operations 2

$ 0.58 $ 0.61 $ 0.48 $ 0.30 $ 1.97

Diluted Earnings Per Share

Attributable to Common Stock from

Continuing Operations 2

$ 0.57 $ 0.61 $ 0.48 $ 0.30 $ 1.97

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

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 (Loss)

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

Net Income (Loss) from

Continuing Operations

5,149 4,751 6,346 ( 23,120 ) ( 6,874 )

Net Income (Loss) from Continuing

Operations Attributable to Common Stock

4,747 4,319 5,924 ( 23,536 ) ( 8,546 )

Basic Earnings (Loss) Per Share

Attributable to Common Stock from

Continuing Operations 3

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

Diluted Earnings (Loss) Per Share

Attributable to Common Stock from

Continuing Operations 3

$ 0.65 $ 0.59 $ 0.79 $ ( 3.20 ) $ ( 1.10 )

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.

Dollars in millions except per share amounts

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

1 unchanged sentence

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