AT&T Uverse 2010 Annual Report Download - page 52

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
Dollars in millions except per share amounts
50 AT&T Inc.
In December 2010, our Board of Directors approved a
program to repurchase up to 300 million shares
(approximately 5%) of our common stock; the program
does not have an expiration date.
We plan to fund our 2011 financing activities through a
combination of cash from operations and debt issuances.
The timing and mix of debt issuance will be guided by credit
market conditions and interest rate trends. The emphasis of
our financing activities will be the payment of dividends,
subject to approval by our Board of Directors, the repayment
of debt, and potential share repurchases.
Credit Facilities In December 2010, we replaced our
five-year, $9,465 revolving credit facility with two new
revolving credit facilities with a syndicate of banks – a
four-year, $5,000 agreement and a $3,000, 364-day
agreement. In the event advances are made under either
agreement, those advances would be used for general
corporate purposes, which could include repayment of
maturing commercial paper. Advances are not conditioned
on the absence of a material adverse change. All advances
must be repaid no later than the date on which lenders
are no longer obligated to make any advances under each
agreement. Under each agreement, we can terminate, in
whole or in part, amounts committed by the lenders in excess
of any outstanding advances; however, we cannot reinstate
any such terminated commitments. At December 31, 2010,
we had no advances outstanding under either agreement and
were in compliance with all covenants under each agreement.
The Four-Year Agreement
We can request the lenders to further increase their
commitments (i.e., raise the available credit) up to an
additional $2,000 provided no event of default has occurred.
The obligations of the lenders to provide advances will
terminate on December 20, 2014, unless prior to that date
either: (i) we reduce to $0 the commitments of the lenders, or
(ii) certain events of default occur. We and lenders representing
more than 50% of the facility amount may agree to extend
their commitments for an additional one year beyond the
December 20, 2014, termination date (with a potential
one-year further renewal), under certain circumstances.
Advances would bear interest, at our option, either:
 •atanannualrateequalto(1)thehighestof(a)thebase
(or prime) rate of a designated bank, (b) 0.50% per
annum above the Federal funds rate, and (c) the British
Bankers Association Interest Settlement Rate applicable
to Dollars for a period of one month plus 1.00%, plus
(2) a rate based on AT&T’s credit default swap mid-rate
spread and subject to a floor or cap as set forth in the
Agreement (Applicable Margin) minus 1.00% provided
such total exceeds zero; or
Cash Used in or Provided by Financing Activities
We paid dividends of $9,916 in 2010, $9,670 in 2009, and
$9,507 in 2008, reflecting dividend rate increases. In
December 2010, our Board of Directors approved a 2.4%
increase in the quarterly dividend from $0.42 to $0.43 per
share. This follows a 2.4% dividend increase approved by
AT&T’s Board in December 2009. Dividends declared by our
Board of Directors totaled $1.69 per share in 2010, $1.65 per
share in 2009 and $1.61 per share in 2008. Our dividend
policy considers both the expectations and requirements of
stockholders, internal requirements of AT&T and long-term
growth opportunities. It is our intent to provide the financial
flexibility to allow our Board of Directors to consider dividend
growth and to recommend an increase in dividends to be paid
in future periods. All dividends remain subject to approval by
our Board of Directors.
During 2010, we received net proceeds of $2,235 from the
issuance of $2,250 of 2.50% global notes due in 2015.
Debt proceeds were used for general corporate purposes.
We also received proceeds of $1,620 from the net issuance
of commercial paper and other short-term bank borrowings.
During 2010, debt repayments totaled $9,294 and consisted of:
 •$5,668inrepaymentsoflong-termdebtwitha
weighted-average interest rate of 2.86%.
 •$3,000intheearlyredemptionoftheNewCingular
Wireless Services, Inc. 7.875% notes originally due on
March 1, 2011.
 •$594relatedtotheprivateexchangewecompletedon
September 2, 2010, whereby holders exchanged $1,362
of New Cingular Wireless Services, Inc. 8.75% senior
notes due 2031 and $1,537 of AT&T Corp. (ATTC) 8.00%
senior notes due 2031 for $3,500 of new 5.35% AT&T Inc.
global notes due 2040 plus a cash payment.
 •$32inrepaymentsofcapitalizedleases.
At December 31, 2010, we had $7,196 of debt maturing
within one year, which included $5,544 of long-term debt
maturities, $1,625 of commercial paper and $27 of other
borrowings. Debt maturing within one year includes $1,000
of annual put reset securities issued by BellSouth that may
be put each April until maturity in 2021.
During 2010, the following other financing activities occurred:
 •Wepaidout$278relatedtoderivativecollateral;$197
was our returning collateral to counterparties, which
were funds they had posted to us in 2009 (see Note 9).
 •Wepaid$266tominorityinterestholders.
 •Wereceivedproceedsof$50fromtheissuanceof
treasury shares related to the settlement of share-
based awards.