AT&T Wireless 2009 Annual Report Download - page 53

AT&T 09 AR 51
Total capital increased $2,665 in 2009 compared to a decrease
of $8,121 in 2008. The 2009 total capital increase was due
to increased retained earnings and an increase in other
comprehensive income, partially offset by a $2,910 decrease
in debt, all factors which lowered the debt ratio in 2009.
The primary factor contributing to the increase in our 2008
debt ratio was the $16,677 increase in accumulated other
comprehensive loss that reflected a decrease in retirement
plans funded status and an increase in debt of $10,876
related to our financing activities. Our stockholders’ equity
balance was down $19,020 primarily due to the decrease in
retirement plan funded status.
CO N TR ACTUA L O BL IGATIONS,
CO M MI TMENTS AN D CONT I NGENCI E S
Current accounting standards require us to disclose our
material obligations and commitments to making future
payments under contracts, such as debt and lease
agreements, and under contingent commitments, such as debt
guarantees. We occasionally enter into third-party debt
guarantees, but they are not, nor are they reasonably likely
to become, material. We disclose our contractual long-term
debt repayment obligations in Note 8 and our operating lease
payments in Note 5. Our contractual obligations do not
include expected pension and postretirement payments as we
maintain pension funds and Voluntary Employee Beneficiary
Association trusts to fully or partially fund these benefits
(see Note 11). In the ordinary course of business, we routinely
enter into commercial commitments for various aspects of
our operations, such as plant additions and office supplies.
However, we do not believe that the commitments will have a
material effect on our financial condition, results of operations
or cash flows.
Our contractual obligations as of December 31, 2009, are
in the following table. The purchase obligations that follow
are those for which we have guaranteed funds and will be
funded with cash provided by operations or through
incremental borrowings. The minimum commitment for certain
obligations is based on termination penalties that could be
paid to exit the contract. Since termination penalties would
not be paid every year, such penalties are excluded from the
table. Other long-term liabilities were included in the table
based on the year of required payment or an estimate of the
year of payment. Such estimate of payment is based on a
review of past trends for these items, as well as a forecast
of future activities. Certain items were excluded from the
following table as the year of payment is unknown and could
not be reliably estimated since past trends were not deemed
to be an indicator of future payment.
investment and commercial banks. In June 2009, one of the
participating banks, Lehman Brothers Bank, Inc., which had
declared bankruptcy, terminated its lending commitment of
$535 and withdrew from the agreement. As a result of this
termination, the outstanding commitments under the agree-
ment were reduced from a total of $10,000 to $9,465.
We still have the right to increase commitments up to an
additional $2,535 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 commercial
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 pledges
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. At December 31, 2009, we had no borrowings
outstanding under this agreement.
During 2009, the following other financing activities
occurred:
 • Wereceived$483relatedtoderivativecollateral;$261
was a return of collateral we posted to derivative
counterparties in 2008 and $222 was collateral we
collected from counterparties in 2009.
 • Wepaid$275tominorityinterestholders.
 • Wereceivedproceedsof$28fromtheissuanceof
treasury shares related to the settlement of share-based
awards.
We plan to fund our 2010 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, and the
repayment of debt.
Other
Our total capital consists of debt (long-term debt and debt
maturing within one year) and stockholders’ equity. Our
capital structure does not include debt issued by our inter-
national equity investees. Our debt ratio was 41.3%, 43.7%
and 35.6% at December 31, 2009, 2008 and 2007. The debt
ratio is affected by the same factors that affect total capital.