AT&T Wireless 2006 Annual Report Download - page 41

2006 AT&T Annual Report : : 39
in a number of markets. We expect to fund 2007 capital
expenditures for our wireless segment using cash from
operations and incremental borrowings, depending on interest
rate levels and overall market conditions.
The other segment capital expenditures were less than
2.0% of total capital expenditures in 2006. Included in the
other segment are equity investments, which should be self-
funding as they are not direct AT&T operations; as well as
corporate and Sterling operations, which we expect to fund
using cash from operations. We expect to fund any directory
segment capital expenditures using cash from operations.
Cash Used in or Provided by Financing Activities
We plan to fund our 2007 financing activities primarily through
cash from operations. We will continue to examine opportuni-
ties to fund our activities by issuing debt at favorable rates in
order to refinance some of our debt maturities and with cash
from the disposition of certain other non-strategic investments.
We paid dividends of $5,153 in 2006, $4,256 in 2005 and
$4,141 in 2004, reflecting the issuance of additional shares
for the ATTC acquisition and dividend increases. Dividends
declared by our Board of Directors totaled $1.35 per share in
2006, $1.30 per share in 2005 and $1.26 per share in 2004.
In December 2006, our Board of Directors approved a 6.8%
increase in the regular quarterly dividend to $0.355 per share.
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 the
opportunity to continue our historical approach to dividend
growth. All dividends remain subject to approval by our
Board of Directors.
Our Board of Directors has authorized the repurchase of up
to 400 million shares of AT&T common stock; this authoriza-
tion expires at the end of 2008. During 2006, we repurchased
84 million shares at a cost of $2,678. We expect our 2007
share repurchase to total approximately $7,300. We have
repurchased, and intend to continue to repurchase, shares
pursuant to plans that comply with the requirements of
Rule 10b5-1(c) under the Securities Exchange Act of 1934.
In February 2007, we issued approximately $3,200 in long-
term debt, part of the proceeds of which we intend to use
to repurchase shares. We will fund our additional share
repurchases through a combination of cash from operations,
borrowings, dependent upon market conditions, and cash
from the disposition of certain non-strategic investments.
See our “Issuer Equity Repurchases” table for share
repurchase details in the fourth quarter of 2006.
At December 31, 2006, we had $9,733 of debt maturing
within one year, which included $5,214 of commercial paper
borrowings, $4,414 of long-term debt maturities and $105 of
bank borrowings. All of our commercial paper borrowings are
due within 90 days. The availability of bank borrowings is
contingent on the level of cash held by some of our foreign
subsidiaries. We continue to examine our mix of short- and
long-term debt in light of interest rate trends.
During 2006, debt repayments totaled $4,244 and
consisted of:
• $4,040 related to debt repayments with interest rates
ranging from 5.75% to 9.50%, which included $284
associated with unwinding an interest rate foreign
currency swap on our Euro-denominated debt
(see Note 8).
• $148 related to called and put debt with interest rates
ranging from 6.35% to 9.5%.
• $56 related to scheduled principal payments on other
debt and repayments of other borrowings.
In May 2006, we received net proceeds of $1,491 from the
issuance of $1,500 of long-term debt consisting of $900 of
two-year floating rate notes and $600 of 6.80%, 30-year
bonds maturing in 2036.
We received net proceeds of $134 due to the unwinding
of our interest rate foreign currency swap related to the
repayment of our Euro-denominated debt, mentioned
previously. (See Note 8)
In July 2006, we replaced our three-year $6,000 credit
agreement with a five-year $6,000 credit agreement with a
syndicate of investment and commercial banks. The current
agreement will expire in July 2011. The available credit
under this agreement increased by an additional $4,000
when we completed our acquisition of BellSouth. This
incremental available credit is intended to replace BellSouth’s
$3,000 credit facility, which was terminated in January 2007.
We have the right to 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 under the
credit agreement has occurred. We also have the right to
terminate, in whole or in part, amounts committed by the
lenders under this agreement in excess of any outstanding
advances; however, any such terminated commitments may
not be reinstated. Advances under this agreement may be
used for general corporate purposes, including support of
commercial paper borrowings and other short-term borrow-
ings. There is no material adverse change provision governing
the drawdown of advances under this credit agreement.
This agreement contains a negative pledge covenant, which
requires that, if at any time we or a subsidiary pledge assets
or otherwise permits a lien on its properties, advances under
this agreement will be ratably secured, subject to specified
exceptions. We must maintain a debt-to-EBITDA (earnings
before interest, income taxes, depreciation and amortization,
and other modifications described in the agreement) financial
ratio covenant of not more than three-to-one as of the last
day of each fiscal quarter for the four quarters then ended.
We are in compliance with all covenants under the agree-
ment. At December 31, 2006, we had no borrowings out-
standing under this agreement. (See Note 7)