AT&T Wireless 2007 Annual Report Download - page 70

Notes to Consolidated Financial Statements (continued)
Dollars in millions except per share amounts
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| 2007 AT&T Annual Report
During 2007, we received net proceeds of $11,367 from
the issuance of $11,499 in long-term debt. Debt proceeds
were used for general corporate purposes, and parts of the
proceeds were used for repurchases of our common stock.
Long-term debt issuances consisted of:
• $2,000 of 6.3% global notes due in 2038.
• $2,000 of 6.5% global notes due in 2037.
• €1.25 billion of 4.375% notes due in 2013 (equivalent
to U.S. $1,641 when issued).
• $1,500 of floating-rate notes due in 2010.
• $1,200 of 6.375% retail notes due in 2056.
• £600 million of 5.5% notes due in 2027 (equivalent
to U.S. $1,158 when issued).
• $1,000 of 4.95% notes due in 2013.
• $500 of 5.625% notes due in 2016.
• $500 of zero-coupon puttable notes due in 2022.
In February 2008, we received net proceeds of $3,972 from
the issuance of $4,000 in long-term debt. The long-term debt
issued consisted of the following:
• $2,500 of 5.5% global notes due in 2018.
• $750 of 4.95% global notes due in 2013.
• $750 of 6.3% global notes due in 2038.
Debt maturing within one year consists of the following
at December 31:
2007 2006
Commercial paper $1,859 $5,214
Current maturities of long-term debt 4,939 4,414
Bank borrowings1 62 105
Total $6,860 $9,733
1
Primarily represents borrowings, the availability of which is contingent on the level of
cash held by some of our foreign subsidiaries.
The weighted-average interest rate on commercial paper debt at
December 31, 2007 and 2006 was 4.2% and 5.3%, respectively.
Credit Facility We have a five-year $10,000 credit
agreement with a syndicate of investment and commercial
banks, which we have the right to increase up to an
additional $2,000, provided no event of default under the
credit agreement has occurred. The current agreement will
expire in July 2011. 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 com-
mercial paper borrowings and other short-term borrowings.
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 comply with all covenants under
the agreement. We had no borrowings outstanding under
committed lines of credit as of December 31, 2007 or 2006.
Defaults under the agreement, which would permit the
lenders to accelerate required payment, include nonpayment
of principal or interest beyond any applicable grace period;
failure by AT&T or any subsidiary to pay when due other debt
above a threshold amount that results in acceleration of that
debt (commonly referred to as “cross-acceleration”) or
commencement by a creditor of enforcement proceedings
within a specified period after a money judgment above a
threshold amount has become final; acquisition by any person
of beneficial ownership of more than 50% of AT&T common
shares or a change of more than a majority of AT&T’s directors
in any 24-month period other than as elected by the
remaining directors (commonly referred to as a “change-
of-control”); material breaches of representations in the
agreement; failure to comply with the negative pledge or
debt-to-EBITDA ratio covenants described above; failure to
comply with other covenants for a specified period after
notice; failure by AT&T or certain affiliates to make certain
minimum funding payments under Employee Retirement
Income Security Act of 1974, as amended (ERISA); and
specified events of bankruptcy or insolvency.
NOTE 9. FINANCIAL INSTRUMENTS
The carrying amounts and estimated fair values of our long-
term debt, including current maturities, and other financial
instruments, are summarized as follows at December 31:
2007 2006
Carrying Fair Carrying Fair
Amount Value Amount Value
Notes and debentures $61,993 $62,544 $54,266 $54,566
Commercial paper 1,859 1,859 5,214 5,214
Bank borrowings 62 62 105 105
Available-for-sale
equity securities 2,735 2,735 2,731 2,731
EchoStar note receivable 491 489 478 467
The fair values of our notes and debentures were estimated
based on quoted market prices, where available, or on the
net present value method of expected future cash flows
using current interest rates. The carrying value of debt with
an original maturity of less than one year approximates
market value.
The fair value of our EchoStar note receivable was
estimated based on a valuation. The carrying amount of this
note was based on the present value of cash and interest
payments, which will be accreted on the note up to the face
value of $500 on a straight-line basis through August 2008.
Our available-for-sale equity securities are carried at fair
value, and realized gains and losses on these equity securities
were included in “Other income (expense) – net” in the
consolidated statements of income. The fair value of our
available-for-sale equity securities was principally determined
based on quoted market prices, and the carrying amount
of the remaining securities approximates fair value.
Our short-term investments, other short-term and long-
term held-to-maturity investments and customer deposits
are recorded at amortized cost, and the carrying amounts
approximate fair values. We held other short-term marketable
securities of $1 at December 31, 2007 compared to $477
at December 31, 2006.