What is the impact of the pension plan actuarial gain on AT&T's reported earnings?

AT&T expects to record a non-cash pre-tax actuarial gain of approximately $2.8 billion for the quarter ended March 31, 2021. This gain is primarily due to an increase in the discount rate used for measuring the pension obligation. Importantly, this gain will be included in AT&T's reported net income but will be excluded from its adjusted earnings, consistent with the company's historical accounting for such gains and losses.

How are AT&T's business segments being reorganized?

AT&T is updating its segment reporting to better align with its strategic and operational structure. Key changes include moving Video and Government Solutions out of the Communications segment into 'Corporate and Other.' The Business Wireline unit will now present revenues as 'service' or 'equipment.' The WarnerMedia segment will be reported as a single integrated unit, with specific disclosures for Basic Networks, Direct-to-Consumer (DTC), and Theatrical/TV Content/Games Licensing.

What is the significance of the changes in Consumer Wireline and WarnerMedia reporting?

The Consumer Wireline segment (formerly Broadband) will have refined cost allocations, particularly regarding shared infrastructure and customer acquisition costs, to accurately reflect its management structure post-separation from Video operations. This will result in an approximate $100 million quarterly reduction in Consumer Wireline operating income and a corresponding increase in Video historical results. For WarnerMedia, the integrated reporting will provide a clearer view of its operational performance, including the direct contribution of its various content and distribution platforms, and will be supplemented with additional HBO subscriber data.

AT&T INC. 8-K SEC Disclosure

Summary

AT&T Inc. has filed an 8-K report on April 9, 2021, detailing significant changes in its financial reporting and segment classifications, effective for the first quarter of 2021. A notable item is the expected recording of a non-cash pre-tax actuarial gain of approximately $2.8 billion related to its pension plan. This gain arises from increased discount rates and will be included in reported results but excluded from adjusted earnings, aligning with the company's historical practice for such items. The company is also updating its segment reporting to better reflect its operational structure and strategic focus. The Communications segment will exclude the Video and Government Solutions businesses, which will be moved to 'Corporate and Other.' Additionally, the Business Wireline revenues will be categorized as 'service' or 'equipment,' and the Consumer Wireline segment (formerly Broadband) will have refined cost allocations to account for its separation from Video operations. The WarnerMedia segment will be presented as a single integrated organization with operating contributions reported at the segment level, detailing revenues and direct costs for Basic Networks, Direct-to-Consumer (DTC), and Theatrical/TV Content/Games Licensing. Enhanced HBO subscriber reporting will also be provided starting in the first quarter of 2021.

Key Highlights

1AT&T anticipates a non-cash pre-tax actuarial gain of approximately $2.8 billion from its pension plan for Q1 2021, primarily due to an increased discount rate.
2This actuarial gain will be included in reported results but excluded from adjusted earnings.
3The Video and Government Solutions businesses will be moved from the Communications segment to 'Corporate and Other.'
4Business Wireline revenues will be reclassified into 'service' and 'equipment' categories.
5The Consumer Wireline segment reporting will be refined to reflect cost allocations following the separation from Video operations.
6WarnerMedia reporting will reflect an integrated organization structure with detailed revenue and cost breakdowns for Basic Networks, Direct-to-Consumer (DTC), and Theatrical/TV Content/Games Licensing.
7Additional HBO subscriber reporting will be provided starting with the Q1 2021 results.

AT&T INC. 8-K Report, Corporate Update (Apr 9, 2021)

Summary

Key Highlights

Frequently Asked Questions