Segment Information | NOTE 4. SEGMENT INFORMATION Our segments are comprised of strategic business units that offer products and services to different customer segments over various technology platforms and/or in different geographies that are managed accordingly. We analyze our segments based on segment operating contribution, which consists of operating income, excluding acquisition-related costs and other significant items (as discussed below), and equity in net income (loss) of affiliates for investments managed within each segment. We have three reportable segments: (1) Communications, (2) WarnerMedia and (3) Latin America. We also evaluate segment and business unit performance based on EBITDA and/or EBITDA margin. EBITDA is defined as operating contribution excluding equity in net income (loss) of affiliates and depreciation and amortization. We believe EBITDA to be a relevant and useful measurement to our investors as it is part of our internal management reporting and planning processes and it is an important metric that management uses to evaluate operating performance. EBITDA does not give effect to depreciation and amortization expenses incurred in operating contribution 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 revenues. The Communications segment provides wireless and wireline telecom and broadband services to consumers located in the U.S. and businesses globally. Our business strategies reflect bundled product offerings that cut across product lines and utilize shared assets. This segment contains the following business units: • Mobility provides nationwide wireless service and equipment. • Business Wireline provides advanced IP-based services, as well as traditional voice and data services and related equipment to business customers. • Consumer Wireline provides internet, including broadband fiber, and legacy telephony voice communication services to residential customers. The WarnerMedia segment develops, produces and distributes feature films, television, gaming and other content in various physical and digital formats globally. WarnerMedia content is distributed through basic networks, Direct-to-Consumer (DTC) or theatrical, TV content and games licensing. Segment results also include Xandr advertising and Otter Media Holdings (Otter Media). We disposed of substantially all Otter Media assets in the third quarter of 2021 (see Note 6). On May 17, 2021, we entered into an agreement to combine our WarnerMedia segment, subject to certain exceptions, with a subsidiary of Discovery Inc. (See Note 6) On December 21, 2021, we entered into an agreement to sell the marketplace component of Xandr to Microsoft Corporation (Microsoft) (see Note 6). We applied held-for-sale accounting for Xandr as of December 31, 2021, and continue to present the Xandr results within the WarnerMedia segment consistent with how performance was assessed and resource allocation decision were made through December 31, 2021. The Latin America segment provides wireless services and equipment in Mexico, and prior to the November 2021 disposition of Vrio, video services in Latin America and the Caribbean. We applied held-for-sale accounting to Vrio as of June 30, 2021 and continued to present the Vrio results within the Latin America segment consistent with how performance was assessed and resource allocation decisions were made until the transaction closed. Corporate and Other reconciles our segment results to consolidated operating income and income before income taxes, and includes: • Corporate , which consists of: (1) businesses no longer integral to our operations or which we no longer actively market, (2) corporate support functions, (3) impacts of corporate-wide decisions for which the individual operating segments are not being evaluated, and (4) the reclassification of the amortization of prior service credits, which we continue to report with segment operating expenses, to consolidated “Other income (expense) – net.” Costs previously allocated to the Video business that were retained after the transaction, net of reimbursements from DIRECTV under transition service agreements, are reported in Corporate following the transaction through 2022, to maintain comparability of our operating segment results, and while operational plans and continued cost reduction initiatives are implemented. • Video, which consists of our former U.S. video operations that were contributed to DIRECTV on July 31, 2021 and also includes our share of DIRECTV’s earnings as equity in net income of affiliates (see Note 10). • Acquisition-related items, which consists of items associated with the merger and integration of acquired or divested businesses, including amortization of intangible assets. • Certain significant items, which includes (1) employee separation charges associated with voluntary and/or strategic offers, (2) asset impairments and abandonments, and (3) other items for which the segments are not being evaluated. • Eliminations and consolidations , which (1) removes transactions involving dealings between our segments, including channel distribution between WarnerMedia and Video and Vrio prior to separation, and (2) includes adjustments for our reporting of the advertising business. “Interest expense” and “Other income (expense) – net” are managed only on a total company basis and are, accordingly, reflected only in consolidated results. For the year ended December 31, 2021 Revenues Operations EBITDA Depreciation and Amortization Operating Equity in Net Operating Communications Mobility $ 78,254 $ 46,820 $ 31,434 $ 8,122 $ 23,312 $ — $ 23,312 Business Wireline 23,937 14,755 9,182 5,192 3,990 — 3,990 Consumer Wireline 12,539 8,467 4,072 3,095 977 — 977 Total Communications 114,730 70,042 44,688 16,409 28,279 — 28,279 WarnerMedia 35,632 27,737 7,895 656 7,239 38 7,277 Latin America Mexico 2,747 2,652 95 605 (510) — (510) Vrio 2,607 2,302 305 231 74 6 80 Total Latin America 5,354 4,954 400 836 (436) 6 (430) Segment Total 155,716 102,733 52,983 17,901 35,082 $ 44 $ 35,126 Corporate and Other Corporate 1 1,264 4,805 (3,541) 372 (3,913) (32) (3,945) Video 15,513 12,666 2,847 356 2,491 619 3,110 Acquisition-related items — 299 (299) 4,233 (4,532) — (4,532) Certain significant items — 4,961 (4,961) — (4,961) — (4,961) Eliminations and consolidations (3,629) (2,809) (820) — (820) — (820) AT&T Inc. $ 168,864 $ 122,655 $ 46,209 $ 22,862 $ 23,347 $ 631 $ 23,978 1 Includes $2,680 for the reclassification of prior service credit amortization and approximately $200 of retained operation and support costs and $240 of depreciation expense previously allocated to Video, net of reimbursements. For the year ended December 31, 2020 Revenues Operations EBITDA Depreciation Operating Equity in Net Operating Communications Mobility $ 72,564 $ 42,106 $ 30,458 $ 8,086 $ 22,372 $ — $ 22,372 Business Wireline 25,083 15,303 9,780 5,216 4,564 — 4,564 Consumer Wireline 12,318 8,027 4,291 2,914 1,377 — 1,377 Total Communications 109,965 65,436 44,529 16,216 28,313 — 28,313 WarnerMedia 30,442 21,579 8,863 671 8,192 18 8,210 Latin America Mexico 2,562 2,636 (74) 513 (587) — (587) Vrio 3,154 2,800 354 520 (166) 24 (142) Total Latin America 5,716 5,436 280 1,033 (753) 24 (729) Segment Total 146,123 92,451 53,672 17,920 35,752 $ 42 $ 35,794 Corporate and Other Corporate 1 2,207 4,205 (1,998) 310 (2,308) 53 (2,255) Video 28,610 24,174 4,436 2,262 2,174 — 2,174 Acquisition-related items — 468 (468) 8,012 (8,480) — (8,480) Certain significant items — 19,156 (19,156) 14 (19,170) — (19,170) Eliminations and consolidations (5,180) (3,615) (1,565) (2) (1,563) — (1,563) AT&T Inc. $ 171,760 $ 136,839 $ 34,921 $ 28,516 $ 6,405 $ 95 $ 6,500 1 Includes $2,442 for the reclassification of prior service credit amortization. For the year ended December 31, 2019 Revenues Operations EBITDA Depreciation Operating Equity in Net Operating Communications Mobility $ 71,056 $ 40,681 $ 30,375 $ 8,054 $ 22,321 $ — $ 22,321 Business Wireline 25,901 15,839 10,062 4,925 5,137 — 5,137 Consumer Wireline 13,012 7,775 5,237 2,880 2,357 — 2,357 Total Communications 109,969 64,295 45,674 15,859 29,815 — 29,815 WarnerMedia 35,259 24,172 11,087 589 10,498 161 10,659 Latin America Mexico 2,869 3,085 (216) 502 (718) — (718) Vrio 4,094 3,378 716 660 56 27 83 Total Latin America 6,963 6,463 500 1,162 (662) 27 (635) Segment Total 152,191 94,930 57,261 17,610 39,651 $ 188 $ 39,839 Corporate and Other Corporate 1 2,203 3,509 (1,306) 645 (1,951) (182) (2,133) Video 32,124 27,275 4,849 2,461 2,388 — 2,388 Acquisition-related items (72) 960 (1,032) 7,460 (8,492) — (8,492) Certain significant items — 2,082 (2,082) 43 (2,125) — (2,125) Eliminations and consolidations (5,253) (3,735) (1,518) (2) (1,516) — (1,516) AT&T Inc. $ 181,193 $ 125,021 $ 56,172 $ 28,217 $ 27,955 $ 6 $ 27,961 1 Includes $1,934 for the reclassification of prior service credit amortization. The following table is a reconciliation of operating income (loss) to “Income (Loss) Before Income Taxes” reported in our consolidated statements of income: 2021 2020 2019 Communications $ 28,279 $ 28,313 $ 29,815 WarnerMedia 7,277 8,210 10,659 Latin America (430) (729) (635) Segment Contribution 35,126 35,794 39,839 Reconciling Items: Corporate and Other (3,913) (2,308) (1,951) Video 2,491 2,174 2,388 Merger costs (299) (468) (1,032) Amortization of intangibles acquired (4,233) (8,012) (7,460) Asset impairments and abandonments (4,904) (18,880) (1,458) Gain on spectrum transaction 1 — 900 — Employee separation charges and benefit-related losses (57) (1,177) (624) Other noncash charges (credits), net — (13) (43) Segment equity in net income of affiliates (44) (42) (188) Eliminations and consolidations (820) (1,563) (1,516) AT&T Operating Income 23,347 6,405 27,955 Interest Expense 6,884 7,925 8,422 Equity in net income of affiliates 631 95 6 Other income (expense) – net 9,853 (1,431) (1,071) Income (Loss) Before Income Taxes $ 26,947 $ (2,856) $ 18,468 1 Included as a reduction of “Selling, general and administrative expenses” in the consolidated statements of income. The following table sets forth revenues earned from customers, and property, plant and equipment located in different geographic areas: 2021 2020 2019 Revenues Net Property, Plant & Equipment Revenues Net Property, Plant & Equipment Revenues Net Property, United States $ 151,631 $ 120,924 $ 155,899 $ 121,208 $ 161,689 $ 122,567 Europe 6,079 1,106 5,387 1,152 6,536 1,854 Mexico 3,043 3,462 2,862 3,530 3,198 3,648 Brazil 1,486 20 1,807 694 2,797 1,057 All other Latin America 3,118 115 2,679 485 3,219 544 Asia/Pacific Rim 2,637 240 2,322 203 2,793 390 Other 870 37 804 43 961 68 Total $ 168,864 $ 125,904 $ 171,760 $ 127,315 $ 181,193 $ 130,128 The following tables present intersegment revenues, assets, investments in equity affiliates and capital expenditures by segment: Intersegment Reconciliation 2021 2020 2019 Intersegment revenues Communications $ 11 $ 11 $ 26 WarnerMedia 2,573 3,183 3,318 Latin America — — — Total Intersegment Revenues 2,584 3,194 3,344 Consolidations 1,045 1,986 1,909 Eliminations and consolidations $ 3,629 $ 5,180 $ 5,253 At or for the years ended December 31, 2021 2020 Assets Investments in Capital Assets Investments in Capital Communications $ 494,063 $ — $ 14,860 $ 506,102 $ — $ 14,107 WarnerMedia 154,369 1,122 764 148,037 1,123 699 Latin America 8,874 — 580 15,811 590 708 Corporate and eliminations (105,684) 6,152 323 (144,189) 67 161 Total $ 551,622 $ 7,274 $ 16,527 $ 525,761 $ 1,780 $ 15,675 |