First-Quarter Consolidated Results

Consolidated revenues of $38.1 billion
Diluted EPS of $0.65 compared to $1.02¹ in the year-ago quarter
Adjusted EPS of $0.77 compared to $0.85¹ in the year-ago quarter
Cash from operations of $5.7 billion
Capital expenditures of $4.7 billion; capital investment² of $6.3 billion
Free cash flow³ of $0.7 billion

Note: AT&T's first-quarter earnings conference call will be webcast at 8:30 a.m. ET on Thursday, April 21, 2022. The webcast and related materials, including financial highlights, will be available on AT&T's Investor Relations website at https://investors.att.com.

AT&T Inc. ((T) reported first-quarter results that showed continued success in customer growth across wireless and fiber.

"Our momentum in growing customer relationships is reaching historical levels," said John Stankey, AT&T CEO. "We had our best first quarter for postpaid phone net adds in more than a decade and our fiber broadband net adds remain consistently strong. Our results, including free cash flow, are in line with our expectations toward delivering on the full-year guidance provided at our recent Analyst Day."

"AT&T has entered a new era, meeting this opportunistic moment from a position of flexibility and strength thanks to our evolving networks, enhanced customer experience, growing 5G and fiber customer base and a much stronger balance sheet. And we continue to make good consistent progress on our journey to becoming America's best broadband provider."

First-Quarter Highlights

Communications

Mobility:
- 691,000 postpaid phone net adds
- 965,000 postpaid net adds
- 113,000 prepaid phone net adds
- Postpaid phone churn of 0.79%
- Revenues up 5.5%; service revenues up 4.8%; equipment revenues up 7.3% year over year
- Operating income of $5.9 billion, down 3.2% year over year; EBITDA⁴ down 1.8%
- Operating income margin of 29.2%; EBITDA service margin⁵ 53.7%

Business Wireline:
- Operating income margin of 15.2%; EBITDAmargin⁴ in the high-30% range

Consumer Wireline:
- 289,000 AT&T Fiber net adds; penetration of 37%, up about 200-basis points
- Broadband revenues up 6.8%, due to fiber revenue growth of 24.7%
- Broadband ARPU growth of 5.9%

WarnerMedia

Total global HBO Max and HBO subscribers⁶ of 76.8 million, up 12.8 million year over year; domestic subscribers⁷ of 48.6 million, up 4.4 million year over year

Consolidated Financial Results

Consolidated revenues for the first quarter totaled $38.1 billion versus $43.9 billion in the year-ago quarter, down 13.3% reflecting the impact of divested businesses, mainly U.S. Video in the third quarter of 2021 and Vrio in the fourth quarter of 2021, as well as lower Business Wireline revenues. These decreases were partially offset by higher Mobility revenues and, to a lesser extent, higher WarnerMedia, Consumer Wireline and Mexico revenues. Excluding impacts of the U.S. Video business and Vrio from the prior-year quarter, revenues were $38.1 billion, up 1.6% compared to $37.5 billion⁸ in the year-ago quarter reflecting revenue growth for standalone AT&T⁹ and WarnerMedia. When further excluding the impacts of WarnerMedia and Xandr from both quarters, standalone AT&T consolidated revenues totaled $29.7 billion¹⁰ compared to $29.0 billion in the year-ago quarter, up 2.5%.

Operating expenses were $32.5 billion versus $36.3 billion in the year-ago quarter. Expenses declined due to the separation of U.S. Video operations, and impacts of Vrio and other divested businesses. These declines were partially offset by higher costs for standalone AT&T, including wireless equipment costs, 3G network shutdown costs, and higher WarnerMedia programming, marketing and selling costs.

Operating income was $5.6 billion versus $7.7 billion in the year-ago quarter reflecting the divestitures. When adjusting for merger amortization costs and other items, adjusted operating income was $7.1 billion¹¹ versus $8.9 billion in the year-ago quarter. Excluding impacts of U.S. Video and Vrio from the prior-year quarter, adjusted operating income totaled $7.1 billion compared to $7.5 billion¹² in the year-ago quarter. When further excluding the impacts of WarnerMedia and Xandr for both quarters, standalone AT&T adjusted operating income totaled $5.8 billion¹³ compared to $5.8 billion in the year-ago quarter.

Equity in net income (loss) of affiliates of $0.5 billion includes $0.5 billion from the DIRECTV investment. With adjustment for the proportionate share of intangible amortization, adjusted equity in net income from the DIRECTV investment was $0.9 billion.¹⁴

First-quarter net income attributable to common stock was $4.8 billion, or $0.65 per diluted common share, versus $7.5 billion, or $1.02 per diluted common share, in the year-ago quarter. Adjusting for $0.12, which includes merger-amortization costs (a proportionate share of intangible amortization at the DIRECTV equity method investment), an actuarial gain on benefit plans and other items, earnings per diluted common share was $0.77. This compares to an adjusted earnings per diluted common share of $0.85 in the year-ago quarter.

Cash from operating activities was $5.7 billion, down $4.2 billion year over year, including content spend of $5.1 billion. Capital expenditures were $4.7 billion in the quarter. Capital investment totaled $6.3 billion, which includes $1.6 billion of cash payments for vendor financing. Free cash flow, including $1.3 billion of distributions from DIRECTV classified as investing activities, was $0.7 billion for the quarter compared to $4.2 billion a year ago. Net debt increased by $12.8 billion sequentially, and net debt-to-adjusted EBITDA at the end of the first quarter was 3.42x.¹⁵

When excluding the impacts of WarnerMedia, Vrio and Xandr for both quarters, standalone AT&T cash from operating activities was $7.7 billion¹⁶, down $1.7 billion year over year. Standalone AT&T free cash flow was $2.9 billion¹⁶ for the quarter compared to $3.8 billion a year ago.

Communications Operational Highlights

First-quarter revenues were $28.9 billion, up 2.5% year over year due to increases in Mobility and Consumer Wireline more than offsetting a decline in Business Wireline. Operating contribution was $7.0 billion, down 5.4% year over year, with operating income margin of 24.3%, compared to 26.4% in the year-ago quarter.

Mobility

Revenues were up 5.5% year over year to $20.1 billion due to higher service and equipment revenues. Service revenues were $14.7 billion, up 4.8% year over year, driven by subscriber growth. Equipment revenues were $5.4 billion, up 7.3% year over year, driven by increased sales of higher priced smartphones.
Operating expenses were $14.2 billion, up 9.5% year over year due to higher equipment costs, 3G network shutdown costs, higher bad debt, higher HBO Max bundling costs, higher amortization of customer acquisition costs, elimination of CAFII government credits and higher FirstNet costs.
Operating income was $5.9 billion, down 3.2% year over year. Operating income margin was 29.2%, compared to 31.8% in the year-ago quarter.
EBITDA was $7.9 billion, down 1.8% year over year with EBITDA margin of 39.4%, down from 42.3% a year ago. EBITDA service margin was 53.7%, compared to 57.4% in the year-ago quarter.
Total net adds were 5.5 million including:
- 965,000 postpaid net adds, which excludes impacts of the 3G network shutdown of 900,000 that were reflected as adjustments to the subscriber base consistent with historical practice, with:
  - 691,000 postpaid phone net adds
  - 62,000 postpaid tablet and other branded computing device net adds
  - 212,000 other net adds
- 113,000 prepaid phone net adds
Postpaid churn was 0.94% versus 0.93% in the year-ago quarter.
Postpaid phone churn was 0.79% versus 0.76% in the year-ago quarter.
Prepaid churn was less than 3%, with Cricket substantially lower.
Postpaid phone-only ARPU was $54.00, down 0.2% versus the year-ago quarter, due to the impacts of promotional discount amortization.

Business Wireline

Revenues were $5.6 billion, down 6.7% year over year due to lower demand for legacy voice and data services and a strategic decision to deemphasize non-core services.
Operating expenses were $4.8 billion, down 3.7% year over year due to ongoing operational cost efficiencies and lower amortization of deferred fulfillment costs, partially offset by higher depreciation costs.
Operating income was $0.9 billion, down 20.5% with operating income margin of 15.2%, compared to 17.9% in the year-ago quarter.
EBITDA was $2.2 billion, down 8.5% year over year with EBITDA margin of 38.3%, compared to 39.0% in the year-ago quarter.
AT&T Business serves nearly 2.5 million customers, from the largest global companies and government agencies to small businesses. More than 675,000 U.S. business buildings are lit with fiber from AT&T, enabling high-speed fiber connections to approximately 3 million U.S. business customer locations. Nationwide, more than 9.5 million business customer locations are on or within 1,000 feet of our fiber.¹⁷

Consumer Wireline

Revenues were $3.2 billion, up 2.0% year over year due to gains in broadband more than offsetting declines in legacy voice and data services and other services. Broadband revenues increased 6.8% due to fiber growth of 24.7%, partially offset by non-fiber revenue declines of 5.3%.
Operating expenses were $2.8 billion, up 1.9% year over year largely driven by higher advertising costs and the elimination of CAFII government credits, partially offset by lower amortization of deferred fulfillment costs.
Operating income was $317 million, up 3.3% year over year with operating income margin of 10.0%, compared to 9.9% in the year-ago quarter.
EBITDA was $1.1 billion, up 1.3% year over year with EBITDA margin of 34.3%, compared to 34.5% in the year-ago quarter.
Total broadband gains, excluding DSL, were 5,000, reflecting AT&T Fiber net adds of 289,000, mostly offset by losses in non-fiber services. AT&T Fiber now has the ability to serve 17 million customer locations.

WarnerMedia Operational Highlights

Revenues for the first quarter were $8.7 billion, up 2.5% versus the year-ago quarter, driven by higher subscription revenues and higher content and other revenues, partially offset by lower advertising revenues. Subscription revenues were $4.0 billion, up 4.4%, primarily reflecting growth of HBO Max. Content and Other revenues were $3.1 billion, up 3.4%, driven by higher theatrical revenues, higher HBO Max licensing, and partially offset by lower TV licensing. Advertising revenues were $1.7 billion, down 3.0% year over year due to lower linear audiences and tough comparisons to the prior-year political environment, partially offset by higher sports.
Operating expenses totaled $7.4 billion, up 13.0% year over year driven by higher marketing costs as well as higher programming costs and incremental selling costs associated with DIRECTV advertising revenue sharing arrangements.
Operating contribution was $1.3 billion, down 35.7% year over year.
Operating income was $1.3 billion, down 32.7% year over year, as a result of continued investments in HBO Max as well as in the launch of CNN+ at the end of the quarter and incremental advertising revenue sharing costs. Operating income margin was 15.1%, compared to 23.0% in the year-ago quarter.
At the end of the quarter, there were 76.8 million global HBO Max and HBO subscribers. Global HBO Max and HBO subscribers increased 12.8 million year over year and were up 3.0 million sequentially, primarily driven by international as well as domestic retail subscriber gains reflecting strength of the programming slate. At the end of the quarter, there were 48.6 million domestic HBO Max and HBO subscribers versus 44.2 million in the year-ago quarter, up 4.4 million year over year. Domestic subscriber ARPU¹⁸ was $11.24.

Latin America Operational Highlights

Revenues were $690 million, down 49.8% year over year due to the sale of Vrio in the fourth quarter of 2021. Mexico revenues were up 9.4% year over year primarily due to increased growth in service revenues. Service revenues were $490 million, up 11.6% year over year, driven by growth in other services and subscribers. Equipment revenues were $200 million, up 4.2% year over year due to higher sales.

Operating contribution was ($102) million compared to ($173) million in the year-ago quarter. For Mexico, operating loss was ($102) million versus ($134) million in the year-ago quarter. Mexico EBITDA was $59 million compared to $11 million in the year-ago quarter.

Total wireless net adds were 141,000, including 178,000 prepaid net adds, 3,000 postpaid net adds and 40,000 reseller net losses.

¹Diluted EPS for the prior year quarter has been recast due to the adoption of Accounting Standards Update (ASU) No. 2020-06 in the first quarter of 2022 with retrospective application. Adjusted EPS for the prior year quarter has been recast for consistency to include gains on benefit-related and other cost investments. Further information is included in the Discussion and Reconciliation of Non-GAAP Measures included in our Form 8-K dated April 21, 2022.

²Capital investment includes capital expenditures and cash paid for vendor financing ($1.6 billion in 1Q22).

³Free cash flow is a non-GAAP financial measure that is frequently used by investors and credit rating agencies to provide relevant and useful information. Free cash flow is cash from operating activities of $5.7 billion, plus cash distributions from DIRECTV classified as investing activities of $1.3 billion, minus capital expenditures of $4.7 billion and cash paid for vendor financing of $1.6 billion.

⁴EBITDA is operating income before depreciation and amortization. EBITDA margin is operating income before depreciation and amortization, divided by total revenues.

⁵EBITDA service margin is operating income before depreciation and amortization, divided by total service revenues.

⁶Global HBO Max and HBO subscribers consist of domestic and international HBO Max and HBO subscribers, and exclude free trials, basic and Cinemax subscribers.

⁷Domestic HBO Max and HBO subscribers consist of U.S. accounts with access to HBO Max (including wholesale subscribers and subscribers receiving access through bundled services with affiliates that may not have signed in) and HBO accounts, and exclude free trials and Cinemax subscribers.

⁸Operating Revenues, excluding impacts of the U.S. Video business and Vrio, of $37.5 billion for 1Q21 is calculated as Operating Revenues of $43.9 billion minus Video operating revenues of $6.7 billion and Vrio operating revenues of $0.7 billion, plus WarnerMedia sales for content and advertising of $1.0 billion that are external after close of the U.S. Video and Vrio transactions. Further information is included in our Form 8-K dated April 21, 2022.

⁹Standalone AT&T results for 1Q22 reflects the historical operating results of the company excluding certain businesses (WarnerMedia, Xandr, Playdemic, Vrio, Video and other dispositions included in Corporate and Other). See our Forms 8-K dated April 14, 2022, April 15, 2022, and April 21, 2022, for further discussion and information.

¹⁰Operating Revenues for standalone AT&T of $29.7 billion for 1Q22 is calculated as Operating Revenues of $38.1 billion minus WarnerMedia segment operating revenues of $8.7 billion plus WarnerMedia sales for content of $0.3 billion that are external after close of the transaction. Further information is included in our Forms 8-K dated April 14, 2022, April 15, 2022, and April 21, 2022. Represents AT&T's current best estimate of its unaudited results reflecting the discontinued operations and other dispositions. Actual results could differ from these estimates.

¹¹Adjusted Operating Income is Operating Income adjusted for revenues and costs we consider non-operational in nature, including items arising from asset acquisitions or dispositions. Adjusted Operating Income for 1Q22 of $7.1 billion is calculated as Operating Income of $5.6 billion plus $1.4 billion of adjustments as detailed in the Discussion and Reconciliation of Non-GAAP Measures included in our Form 8-K dated April 21, 2022.

¹²Adjusted Operating Income, excluding impacts of the U.S. Video business and Vrio, of $7.5 billion for 1Q21 is calculated as Adjusted Operating Income of $8.9 billion minus $1.3 billion of adjustments to reflect the impacts of the 2021 Video separation and Vrio sale. Further detail of these adjustments and information is included in our Form 8-K dated April 21, 2022.

¹³Adjusted Operating Income of standalone AT&T of $5.8 billion for 1Q22 is calculated as Adjusted Operating Income of $7.1 billion minus WarnerMedia segment operating income of $1.3 billion. Further detail of these adjustments and information is included in our Forms 8-K dated April 14, 2022, April 15, 2022, and April 21, 2022. Represents AT&T's current best estimate of its unaudited results reflecting the discontinued operations and other dispositions. Actual results could differ from these estimates.

¹⁴Adjusted equity in net income from DIRECTV investment is calculated as equity income from DIRECTV reported in Equity in Net Income (Loss) of Affiliates and excludes AT&T's proportionate share of the noncash depreciation and amortization of fair value accretion from DIRECTV's revaluation of assets and purchase price allocation

¹⁵Net Debt to Adjusted EBITDA ratios are non-GAAP financial measures that are frequently used by investors and credit rating agencies to provide relevant and useful information. Our Net Debt to Adjusted EBITDA ratio is calculated by dividing the Net Debt of $169.0 billion (Total Debt of $207.6 billion at March 31, 2022, less Cash and Cash Equivalents of $38.6 billion) by the sum of the most recent four quarters of Adjusted EBITDA of $49.4 billion ($13.5 billion for June 30, 2021; $13.0 billion for September 30, 2021; $11.3 billion for December 31, 2021; and $11.6 billion for March 31, 2022).

¹⁶Standalone AT&T Cash from Operations of $7.7 billion for 1Q22 is calculated as cash from operations of $5.7 billion minus WarnerMedia and Vrio cash from operations of ($2.0) billion. Standalone AT&T free cash flow of $2.9 billion for 1Q22 is calculated as standalone AT&T cash from operations of $7.7 billion, plus cash distributions from DIRECTV classified as investing activities of $1.3 billion, minus cash paid for vendor financing of $1.6 billion, minus capital expenditures of $4.7 billion, plus WarnerMedia and Vrio capital expenditures of $0.2 billion. Further detail of these adjustments and information is included in our Forms 8-K dated April 21, 2022.

¹⁷The approximately 3 million U.S. business customer locations are included within the 9.5+ million U.S. business customer locations on or within 1,000 feet of our fiber.

¹⁸Domestic subscriber ARPU is defined as domestic HBO Max and HBO subscriber revenues during the period divided by average domestic HBO Max and HBO subscribers during the period, excluding HBO Commercial and other bulk-billed revenues and subscribers during the period.

*About AT&T

We help more than 100 million U.S. families, friends and neighbors connect in meaningful ways every day. From the first phone call 140+ years ago to our 5G wireless and multi-gig internet offerings today, we @ATT innovate to improve lives. For more information about AT&T Inc. ((T), please visit us at about.att.com. Investors can learn more at investors.att.com.

AT&T products and services are provided or offered by subsidiaries and affiliates of AT&T Inc. under the AT&T brand and not by AT&T Inc. Additional information is available at about.att.com. © 2022 AT&T Intellectual Property. All rights reserved. AT&T, the Globe logo and other marks are trademarks and service marks of AT&T Intellectual Property and/or AT&T affiliated companies.

Cautionary Language Concerning Forward-Looking Statements

Information set forth in this news release contains financial estimates and other forward-looking statements that are subject to risks and uncertainties, and actual results might differ materially. A discussion of factors that may affect future results is contained in AT&T's filings with the Securities and Exchange Commission. AT&T disclaims any obligation to update and revise statements contained in this news release based on new information or otherwise. This news release may contain certain non-GAAP financial measures. Reconciliations between the non-GAAP financial measures and the GAAP financial measures are available on the company's website at https://investors.att.com.

Discussion and Reconciliation of Non-GAAP Measures

We believe the following measures are relevant and useful information to investors as they are part of AT&T's internal management reporting and planning processes and are important metrics that management uses to evaluate the operating performance of AT&T and its segments. Management also uses these measures as a method of comparing performance with that of many of our competitors. These measures should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with U.S. generally accepted accounting principles (GAAP).

Free Cash Flow

Free cash flow is defined as cash from operations and cash distributions from DIRECTV classified as investing activities minus capital expenditures and cash paid for vendor financing (classified as financing activities). Free cash flow after dividends is defined as cash from operations and cash distributions from DIRECTV, minus capital expenditures, cash paid for vendor financing and dividends on common and preferred shares. Free cash flow dividend payout ratio is defined as the percentage of dividends paid on common and preferred shares to free cash flow. We believe these metrics provide useful information to our investors because management views free cash flow as an important indicator of how much cash is generated by routine business operations, including capital expenditures and vendor financing, and from our continued economic interest in the U.S. video operations as part of our DIRECTV equity method investment, and makes decisions based on it. Management also views free cash flow as a measure of cash available to pay debt and return cash to shareowners.

Free Cash Flow and Free Cash Flow Dividend Payout Ratio
Dollars in millions
	First Quarter
	2022			2021
Net cash provided by operating activities¹	$	5,732		$	9,927
Add: Distributions from DIRECTV classified as investing activities		1,315			—
Less: Capital expenditures		(4,748	)		(4,033	)
Less: Cash paid for vendor financing		(1,566	)		(1,690	)
Free Cash Flow		733			4,204

Less: Dividends paid		(3,749	)		(3,741	)
Free Cash Flow after Dividends	$	(3,016	)	$	463
Free Cash Flow Dividend Payout Ratio		511.5	%		89.0	%

¹	Includes distributions from DIRECTV of $522 in the first quarter of 2022.

Cash Paid for Capital Investment

In connection with capital improvements, we negotiate with some of our vendors to obtain favorable payment terms of 120 days or more, referred to as vendor financing, which are excluded from capital expenditures and reported in accordance with GAAP as financing activities. We present an additional view of cash paid for capital investment to provide investors with a comprehensive view of cash used to invest in our networks, product developments and support systems.

Cash Paid for Capital Investment
Dollars in millions
	First Quarter
	2022			2021
Capital Expenditures	$	(4,748	)	$	(4,033	)
Cash paid for vendor financing		(1,566	)		(1,690	)
Cash paid for Capital Investment	$	(6,314	)	$	(5,723	)

EBITDA

Our calculation of EBITDA, as presented, may differ from similarly titled measures reported by other companies. For AT&T, EBITDA excludes other income (expense) – net, and equity in net income (loss) of affiliates, as these do not reflect the operating results of our subscriber base or operations that are not under our control. Equity in net income (loss) of affiliates represents the proportionate share of the net income (loss) of affiliates in which we exercise significant influence, but do not control. Because we do not control these entities, management excludes these results when evaluating the performance of our primary operations. EBITDA also excludes interest expense and the provision for income taxes. Excluding these items eliminates the expenses associated with our capital and tax structures. Finally, EBITDA excludes depreciation and amortization in order to eliminate the impact of capital investments. EBITDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. EBITDA is not presented as an alternative measure of operating results or cash flows from operations, as determined in accordance with GAAP.

EBITDA service margin is calculated as EBITDA divided by service revenues.

When discussing our segment, business unit and supplemental results, EBITDA excludes equity in net income (loss) of affiliates, and depreciation and amortization from operating contribution.

These measures are used by management as a gauge of our success in acquiring, retaining and servicing subscribers because we believe these measures reflect AT&T's ability to generate and grow subscriber revenues while providing a high level of customer service in a cost-effective manner. Management also uses these measures as a method of comparing operating performance with that of many of its competitors. The financial and operating metrics which affect EBITDA include the key revenue and expense drivers for which management is responsible and upon which we evaluate performance.

We believe EBITDA Service Margin (EBITDA as a percentage of service revenues) to be a more relevant measure than EBITDA Margin (EBITDA as a percentage of total revenue) for our Mobility business unit operating margin. We also use wireless service revenues to calculate margin to facilitate comparison, both internally and externally with our wireless competitors, as they calculate their margins using wireless service revenues as well.

There are material limitations to using these non-GAAP financial measures. EBITDA, EBITDA margin and EBITDA service margin, as we have defined them, may not be comparable to similarly titled measures reported by other companies. Furthermore, these performance measures do not take into account certain significant items, including depreciation and amortization, interest expense, tax expense and equity in net income (loss) of affiliates. For market comparability, management analyzes performance measures that are similar in nature to EBITDA as we present it, and considering the economic effect of the excluded expense items independently as well as in connection with its analysis of net income as calculated in accordance with GAAP. EBITDA, EBITDA margin and EBITDA service margin should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP.

EBITDA, EBITDA Margin and EBITDA Service Margin
Dollars in millions
	First Quarter
	2022			2021
Net Income	$	5,164		$	7,942
Additions:
Income Tax Expense		1,443			2,122
Interest Expense		1,722			1,870
Equity in Net (Income) Loss of Affiliates		(501	)		(52	)
Other (Income) Expense - Net		(2,187	)		(4,221	)
Depreciation and amortization		5,539			5,809
EBITDA		11,180			13,470
Merger and other costs		364			37
Employee separation costs and benefit-related (gain) loss		94			24
Adjusted EBITDA ¹	$	11,638		$	13,531

¹	See page 5 for additional discussion and reconciliation of adjusted items.

Segment and Business Unit EBITDA, EBITDA Margin and EBITDA Service Margin
Dollars in millions
	First Quarter
	2022			2021
Communications Segment
Operating Contribution	$	7,029		$	7,431
Additions:
Depreciation and amortization		4,124			4,054
EBITDA		11,153			11,485

Total Operating Revenues		28,876			28,178

Operating Income Margin		24.3	%		26.4	%
EBITDA Margin		38.6	%		40.8	%
*Mobility*
Operating Contribution	$	5,853		$	6,044
Additions:
Depreciation and amortization		2,059			2,014
EBITDA		7,912			8,058

Total Operating Revenues		20,075			19,034
Service Revenues		14,724			14,048

Operating Income Margin		29.2	%		31.8	%
EBITDA Margin		39.4	%		42.3	%
EBITDA Service Margin		53.7	%		57.4	%
*Business Wireline*
Operating Contribution	$	859		$	1,080
Additions:
Depreciation and amortization		1,299			1,278
EBITDA		2,158			2,358

Total Operating Revenues		5,640			6,046

Operating Income Margin		15.2	%		17.9	%
EBITDA Margin		38.3	%		39.0	%
*Consumer Wireline*
Operating Contribution	$	317		$	307
Additions:
Depreciation and amortization		766			762
EBITDA		1,083			1,069

Total Operating Revenues		3,161			3,098

Operating Income Margin		10.0	%		9.9	%
EBITDA Margin		34.3	%		34.5	%

Segment and Business Unit EBITDA, EBITDA Margin and EBITDA Service Margin
Dollars in millions
	First Quarter
	2022			2021
WarnerMedia Segment
Operating Contribution	$	1,306		$	2,030
Additions:
Equity in Net (Income) of Affiliates		13			(70	)
Depreciation and amortization		127			163
EBITDA		1,446			2,123

Total Operating Revenues		8,741			8,526

Operating Income Margin		15.1	%		23.0	%
EBITDA Margin		16.5	%		24.9	%

Segment and Business Unit EBITDA, EBITDA Margin and EBITDA Service Margin
Dollars in millions
	First Quarter
	2022			2021
Latin America Segment
Operating Contribution	$	(102	)	$	(173	)
Additions:
Equity in Net (Income) of Affiliates		—			4
Depreciation and amortization		161			262
EBITDA		59			93

Total Operating Revenues		690			1,374

Operating Income Margin		-14.8	%		-12.3	%
EBITDA Margin		8.6	%		6.8	%
*Mexico*
Operating Contribution	$	(102	)	$	(134	)
Additions:
Equity in Net (Income) Loss of Affiliates		—			—
Depreciation and amortization		161			145
EBITDA		59			11

Total Operating Revenues		690			631

Operating Income Margin		-14.8	%		-21.2	%
EBITDA Margin		8.6	%		1.7	%

Adjusting Items

Adjusting items include revenues and costs we consider non-operational in nature, including items arising from asset acquisitions or dispositions. We also adjust for net actuarial gains or losses associated with our pension and postemployment benefit plans due to the often-significant impact on our results (we immediately recognize this gain or loss in the income statement, pursuant to our accounting policy for the recognition of actuarial gains and losses). Consequently, our adjusted results reflect an expected return on plan assets rather than the actual return on plan assets, as included in the GAAP measure of income. Prior periods have been recast for consistency to include gains on benefit-related and other cost investments.

The tax impact of adjusting items is calculated using the effective tax rate during the quarter except for adjustments that, given their magnitude, can drive a change in the effective tax rate, in these cases we use the actual tax expense or combined marginal rate of approximately 25%.

Adjusting Items
Dollars in millions
	First Quarter
	2022			2021
Operating Expenses
Transaction and other costs	$	364		$	37
Employee separation costs and benefit-related (gain) loss		94			24
Adjustments to Operations and Support Expenses		458			61
Amortization of intangible assets		971			1,131
Adjustments to Operating Expenses		1,429			1,192
Other
DIRECTV intangible amortization (proportionate share)		416			—
Benefit-related (gain) loss, transaction financing costs and other		169			(119	)
Actuarial (gain) loss		(1,053	)		(2,844	)
Adjustments to Income Before Income Taxes		961			(1,771	)
Tax impact of adjustments		171			(490	)
Tax-related items		—			118
Adjustments to Net Income	$	790		$	(1,399	)

Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBITDA service margin and Adjusted diluted EPS are non-GAAP financial measures calculated by excluding from operating revenues, operating expenses and income tax expense, certain significant items that are non-operational or non-recurring in nature, including dispositions and merger integration and transaction costs, actuarial gains and losses, significant abandonments and impairment, severance and other material gains and losses. Management believes that these measures provide relevant and useful information to investors and other users of our financial data in evaluating the effectiveness of our operations and underlying business trends.

Adjusted Operating Revenues, Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBITDA service margin and Adjusted diluted EPS should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP. AT&T's calculation of Adjusted items, as presented, may differ from similarly titled measures reported by other companies.

Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, and Adjusted EBITDA Margin
Dollars in millions
	First Quarter
	2022			2021
Operating Income	$	5,641		$	7,661
Adjustments to Operating Expenses		1,429			1,192
Adjusted Operating Income		7,070			8,853

EBITDA		11,180			13,470
Adjustments to Operations and Support Expenses		458			61
Adjusted EBITDA		11,638			13,531

Total Operating Revenues		38,105			43,939

Operating Income Margin		14.8	%		17.4	%
Adjusted Operating Income Margin		18.6	%		20.1	%
Adjusted EBITDA Margin		30.5	%		30.8	%

Adjusted Diluted EPS
	First Quarter
	2022			2021
Diluted Earnings Per Share (EPS)	$	0.65		$	1.02
Amortization of intangible assets		0.10			0.12
Transaction costs		0.04			0.01
DIRECTV intangible amortization (proportionate share)		0.04			—
Actuarial (gain) loss ¹		(0.11	)		(0.29	)
Benefit-related (gain) loss, employee separation costs and other ²		0.05			0.01
Tax-related items		—			(0.02	)
Adjusted EPS	$	0.77		$	0.85
Year-over-year growth - Adjusted		-9.4	%
Weighted Average Common Shares Outstanding with Dilution (000,000)		7,556			7,482

Includes adjustments for actuarial gains or losses associated with our pension benefit plan, which we immediately recognize in the income statement, pursuant to our accounting policy for the recognition of actuarial gains/losses. We recorded total net actuarial gain of $1.1 billion in the first quarter of 2022. As a result, adjusted EPS reflects an expected return on plan assets of $0.9 billion (based on an average expected return on plan assets of 6.75% for our pension trust), rather than the actual return on plan assets of $(3.6) billion (actual pension return of -5.2%), included in the GAAP measure of income.

As of January 1, 2022, we adopted, through retrospective application, Accounting Standards Update (ASU) No. 2020-06, which requires that instruments which may be settled in cash or stock to be presumed settled in stock in calculating diluted EPS. While our intent is to settle the Mobility II preferred interests in cash, the ability to settle this instrument in AT&T shares will result in additional dilutive impact, the magnitude of which is influenced by the fair value of the Mobility II preferred interests and the average AT&T common stock price during the reporting period, which could vary from period-to-period. For these reasons, we have excluded the impact of ASU 2020-06 from our adjusted EPS calculation. The per share impact of ASU 2020-06 was to decrease reported diluted EPS $0.02 and $0.01 for the quarters ended March 31, 2022 and 2021, respectively.

Net Debt to Adjusted EBITDA

Net Debt to EBITDA ratios are non-GAAP financial measures frequently used by investors and credit rating agencies and management believes these measures provide relevant and useful information to investors and other users of our financial data. Our Net Debt to Adjusted EBITDA ratio is calculated by dividing the Net Debt by the sum of the most recent four quarters Adjusted EBITDA. Net Debt is calculated by subtracting cash and cash equivalents and certificates of deposit and time deposits that are greater than 90 days, from the sum of debt maturing within one year and long-term debt.

Net Debt to Adjusted EBITDA - 2022

Dollars in millions

Three Months Ended

June 30,

Sept. 30

Dec. 31,

March 31,

Four Quarters

2021 ¹

2022

Adjusted EBITDA

13,514

13,015

11,282

11,638

49,449

End-of-period current debt

27,333

End-of-period long-term debt

180,225

Total End-of-Period Debt

207,558

Less: Cash and Cash Equivalents

38,565

Net Debt Balance

168,993

Annualized Net Debt to Adjusted EBITDA Ratio ²

3.42

¹	As reported in AT&T's Form 8-K furnished April 15, 2022.
²	Annualized Net Debt to Adjusted EBITDA Ratio of 3.59 when adjusted to remove the impacts for Video and Vrio EBITDA of $1,735, $624 and $47 in the second, third and fourth quarters of 2021, respectively. Additional information on Video and Vrio can be found in exhibit 99.4.

Net Debt to Adjusted EBITDA - 2021
Dollars in millions
	Three Months Ended
	June 30,		Sept. 30		Dec. 31,		March 31,		Four Quarters
	2020 ¹		2020 ¹		2020 ¹		2021¹
Adjusted EBITDA	$	14,112	$	13,313	$	12,889	$	13,531	$	53,845
End-of-period current debt										19,505
End-of-period long-term debt										160,694
Total End-of-Period Debt										180,199
Less: Cash and Cash Equivalents										11,342
Net Debt Balance										168,857
Annualized Net Debt to Adjusted EBITDA Ratio										3.14

¹	As reported in AT&T's Form 8-K furnished April 15, 2022.

Supplemental Operational Measures

We provide a supplemental discussion of our business solutions operations that is calculated by combining our Mobility and Business Wireline operating units, and then adjusting to remove non-business operations. The following table presents a reconciliation of our supplemental Business Solutions results.


Supplemental Operational Measures
	First Quarter
	March 31, 2022									March 31, 2021
	Mobility		Business Wireline		Adjustments¹			Business Solutions		Mobility		Business Wireline		Adjustments¹			Business Solutions
Operating Revenues
Wireless service	$	14,724	$	—	$	(12,590	)	$	2,134	$	14,048	$	—	$	(12,079	)	$	1,969
Wireline service		—		5,478		—			5,478		—		5,872		—			5,872
Wireless equipment		5,351		—		(4,452	)		899		4,986		—		(4,196	)		790
Wireline equipment		—		162		—			162		—		174		—			174
Total Operating Revenues		20,075		5,640		(17,042	)		8,673		19,034		6,046		(16,275	)		8,805

Operating Expenses
Operations and support		12,163		3,482		(10,037	)		5,608		10,976		3,688		(9,145	)		5,519
EBITDA		7,912		2,158		(7,005	)		3,065		8,058		2,358		(7,130	)		3,286
Depreciation and amortization		2,059		1,299		(1,698	)		1,660		2,014		1,278		(1,678	)		1,614
Total Operating Expenses		14,222		4,781		(11,735	)		7,268		12,990		4,966		(10,823	)		7,133
Operating Income		5,853		859		(5,307	)		1,405		6,044		1,080		(5,452	)		1,672
Equity in Net Income (Loss) of Affiliates		—		—		—			—		—		—		—			—
Operating Contribution	$	5,853	$	859	$	(5,307	)	$	1,405	$	6,044	$	1,080	$	(5,452	)	$	1,672

¹	Non-business wireless reported in the Communication segment under the Mobility business unit.
	Results have been recast to conform to the current period's classification.

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