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T AT&T

Filed: 9 Sep 21, 4:31pm

Quarterly Pro Forma Financial Information
Supplemental Unaudited Quarterly Pro Forma Financial Information1
Dollars in millions
Unaudited
Operating Revenues3/31/206/30/209/30/2012/31/2020203/31/216/30/21
Reported AT&T Operating Revenues$42,779 $40,950 $42,340 $45,691 $171,760 $43,939 $44,045 
Less: Video (A1)(7,407)(7,021)(7,014)(7,168)(28,610)(6,725)(6,639)
Add: WarnerMedia sales to Video (A2)755 666 551 487 2,459 524 508 
Add: WarnerMedia sales of DIRECTV advertising inventory (A3)413 294 408 603 1,718 388 410 
Add: Other eliminations64 55 65 84 268 61 58 
Pro Forma Operating Revenues$36,604 $34,944 $36,350 $39,697 $147,595 $38,187 $38,382 
Reported Revenue Growth Rate Y/Y2.7 %7.6 %
Pro Forma Revenue Growth Rate Y/Y4.3 %9.8 %



Operations and Support Expenses3/31/206/30/209/30/2012/31/2020203/31/216/30/21
Reported AT&T Operations and Support Expenses$28,071$30,133$29,178$49,457$136,839$30,469$35,015
Adjustments (B1)476 (3,295)(151)(16,655)(19,625)(94)(4,555)
Adjusted Operations and Support Expenses28,547 26,838 29,027 32,802 117,214 30,375 30,460 
Less: Video (A1)(6,020)(5,809)(5,887)(6,458)(24,174)(5,660)(5,275)
Add: WarnerMedia sales to Video (A2)755 666 551 487 2,459 524 508 
Add: WarnerMedia sales of DIRECTV advertising inventory (A3)39 38 38 38 153 39 38 
Add: WarnerMedia/DIRECTV 70% revenue share (A3)289 206 286 422 1,203 271 287 
Add: Other eliminations64 55 65 84 268 61 58 
Pro Forma Adjusted Operations and Support Expenses$23,674$21,994$24,080$27,375$97,123$25,610$26,076
Reported Operations and Support Expense Growth Rate Y/Y8.5 %16.2 %
Adjusted Operations and Support Expense Growth Rate Y/Y6.4 %13.5 %
Pro Forma Adjusted Operations and Support Expense Growth Rate Y/Y8.2 %18.6 %
Depreciation and Amortization Expense3/31/206/30/209/30/2012/31/2020203/31/216/30/21
Reported AT&T Depreciation and Amortization Expense$7,222$7,285$7,030$6,979$28,516$5,809$5,761
Adjustments (B1)(2,056)(2,145)(1,921)(1,904)(8,026)(1,131)(1,069)
Adjusted Depreciation and Amortization Expense5,166 5,140 5,109 5,075 20,490 4,678 4,692 
Less: Video Depreciation (A1)(591)(593)(557)(521)(2,262)(164)(148)
Add: Other consolidation— — — — 
Pro Forma Adjusted Depreciation and Amortization Expense$4,575$4,548$4,552$4,555$18,230$4,514$4,544
Reported Depreciation and Amortization Expense Growth Rate Y/Y-19.6 %-20.9 %
Adjusted Depreciation and Amortization Expense Growth Rate Y/Y-9.4 %-8.7 %
Pro Forma Adjusted Depreciation and Amortization Expense Growth Rate Y/Y-1.3 %-0.1 %



Operating Income3/31/206/30/209/30/2012/31/2020203/31/216/30/21
Reported AT&T Operating Income (Loss)$7,486 $3,532 $6,132 $(10,745)$6,405 $7,661 $3,269 
Adjustments (B1)1,580 5,440 2,072 18,559 27,651 1,225 5,624 
Adjusted Operating Income9,066 8,972 8,204 7,814 34,056 8,886 8,893 
Less: Video (A1)(796)(619)(570)(189)(2,174)(901)(1,216)
Add: WarnerMedia sales to Video (A2)— — — — — — — 
Add: WarnerMedia sales of DIRECTV advertising inventory (A3)374 255 370 564 1,563 349 372 
Add: WarnerMedia/DIRECTV 70% revenue share (A3)(289)(206)(286)(422)(1,203)(271)(287)
Add: Other eliminations— — — — — — — 
Pro Forma Adjusted Operating Income$8,355 $8,402 $7,718 $7,767 $32,242 $8,063 $7,762 
Reported Operating Income Growth Rate Y/Y2.3 %-7.4 %
Adjusted Operating Income Growth Rate Y/Y-2.0 %-0.9 %
Pro Forma Adjusted Operating Income Growth Rate Y/Y-3.5 %-7.6 %
Reported Operating Income Margin17.5 %8.6 %14.5 %-23.5 %3.7 %17.4 %7.4 %
Adjusted Operating Income Margin21.2 %21.9 %19.4 %17.1 %19.8 %20.2 %20.2 %
Pro Forma Adjusted Operating Income Margin22.8 %24.0 %21.2 %19.6 %21.8 %21.1 %20.2 %



EBITDA3/31/206/30/209/30/2012/31/2020203/31/216/30/21
Reported AT&T Net Income (Loss)$4,963 $1,563 $3,168 $(13,515)$(3,821)$7,942 $1,874 
Additions:
Income Tax Expense (Benefit)1,302 935 766 (2,038)965 2,122 751 
Interest Expense2,018 2,041 1,972 1,894 7,925 1,870 1,684 
Equity in Net Income (Loss) of Affiliates10 (5)(106)(95)(52)(41)
Other (Income) Expense - net(803)(1,017)231 3,020 1,431 (4,221)(999)
Depreciation and amortization7,222 7,285 7,030 6,979 28,516 5,809 5,761 
EBITDA14,708 10,817 13,162 (3,766)34,921 13,470 9,030 
Adjustments (B1)(476)3,295 151 16,655 19,625 94 4,555 
Adjusted EBITDA14,232 14,112 13,313 12,889 54,546 13,564 13,585 
Less: Video (A1)(1,387)(1,212)(1,127)(710)(4,436)(1,065)(1,364)
Add: WarnerMedia sales to Video (A2)— — — — — — — 
Add: WarnerMedia sales of DIRECTV advertising inventory (A3)374 256 370 565 1,565 349 372 
Add: WarnerMedia/DIRECTV 70% revenue share (A3)(289)(206)(286)(422)(1,203)(271)(287)
Add: Other eliminations— — — — — — — 
Pro Forma Adjusted EBITDA$12,930 $12,950 $12,270 $12,322 $50,472 $12,577 $12,306 
Adjusted EBITDA Growth Rate Y/Y-4.7 %-3.7 %
Pro Forma Adjusted EBITDA Growth Rate Y/Y-2.7 %-5.0 %
Adjusted EBITDA Margin33.3 %34.5 %31.4 %28.2 %31.8 %30.9 %30.8 %
Pro Forma Adjusted EBITDA Margin35.3 %37.1 %33.8 %31.0 %34.2 %32.9 %32.1 %
1 After the transaction,AT&T expects to retain incurred operations and support costs in the range of ~$500M per quarter and depreciation costs for network infrastructure that provides both U-verse video and broadband services of ~$150M per quarter, of which approximately 50% will be received from DIRECTV through transition service agreements and commercial arrangements. These pro formas do not include the impacts of accounting for the NFL SUNDAY TICKET, per the Contribution Agreement.



NOTES
(A) Notes to Pro Forma Adjustments
(A1) Video business results as reported in AT&T's consolidated financial results; quarter ended 2021 exclude retained depreciation on assets supporting U-verse products
(A2) Intercompany transactions between WarnerMedia and Video that are external following the close of the transaction
(A3) DIRECTV's advertising inventory sold by WarnerMedia (Xandr business) pursuant to commercial agreement, with WarnerMedia recording all the advertising revenues and an expense for DIRECTV's 70% revenue share
(B1) Non-GAAP Adjustments2:
3/31/206/30/209/30/2012/31/2020203/31/216/30/21
Merger Costs$182 $211 $38 $37 $468 $37 $— 
Employee separation costs and benefit-related (gain) loss119 765 40 253 1,177 57 — 
Impairments123 2,319 73 16,365 18,880 — 4,555 
Gain on spectrum transaction(900)— — — (900)— — 
Adjustments to Operations and Support Expenses/ EBITDA(476)3,295 151 16,655 19,625 94 4,555 
Amortization of intangibles2,056 2,145 1,921 1,890 8,012 1,131 1,069 
Impairments— — — 14 14 — — 
Adjustments to Operating Income$1,580 $5,440 $2,072 $18,559 $27,651 $1,225 $5,624 
2 As reported in AT&T's Forms 8-K filed April 22, 2020, July 23, 2020, October 22, 2020, January 27, 2021, April 22, 2021 and July 22, 2021.