AT&T Wireless 2014 Annual Report Download - page 33

AT&T INC. | 31
cannot reinstate any such terminated commitments.
At December 31, 2014, we had no advances outstanding
under either agreement and were in compliance with all
covenants under each agreement.
Advances under both agreements would bear interest, at
AT&T’s option, either:
• at a variable annual rate equal to (1) the highest of:
(a) the base (or prime) rate of the bank affiliate of
Citibank, N.A. which is serving as administrative agent
under the Agreement, (b) 0.50% per annum above the
Federal funds rate, and (c) the LIBOR applicable to
U.S. dollars for a period of one month plus 1.00% per
annum, plus (2) an applicable margin, as set forth in
the Agreement (Applicable Margin; each such advance,
a Base Rate Advance); or
• at a rate equal to: (i) the LIBOR for a period of one,
two, three or six months, as applicable, plus (ii) the
Applicable Margin (each such advance, a Eurodollar
Rate Advance).
The Applicable Margin for a Eurodollar Rate Advance under
both agreements will equal 0.565%, 0.680%, or 0.910% per
annum, depending on AT&T’s credit rating. The Applicable
Margin for a Base Rate Advance under both agreements
will be 0%.
Under each agreement, AT&T will pay a facility fee of
0.060%, 0.070% or 0.090% per annum, depending on
AT&T’s credit rating, of the amount of lender commitments.
Both agreements contain covenants that are customary for
an issuer with an investment grade senior debt credit
rating. Among other covenants, both agreements provide
that AT&T will maintain, as of the last day of each fiscal
quarter, a debt-to-EBITDA (earnings before interest,
income taxes, depreciation and amortization, and other
modifications described in the agreements) ratio of not
more than 3-to-1, for the four quarters then ended.
Events of default under both agreements are customary
for facilities of this nature and result in the acceleration
or permit the lenders to accelerate, as applicable, required
repayment and would increase the Applicable Margin by
2.00% per annum.
The obligations of the lenders under the December 2017
Facility to provide advances will terminate on
December 11, 2017, unless prior to that date either:
(i) AT&T, and if applicable, a Co-Borrower, 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 two one-year periods beyond the December 11, 2017,
termination date, under certain circumstances. We also 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 same
Since the first quarter of 2012, we have bought back shares
of AT&T common stock under three previous 300 million
share repurchase authorizations approved by our Board of
Directors in 2010, 2012 and 2013 (see Note 14 for details).
In March 2014, our Board of Directors approved a fourth
authorization to repurchase 300 million shares of our
common stock, which, along with the 2013 authorization,
has no expiration date. During 2012, we completed the
2010 authorization and repurchased 371 million shares
for $12,752 under the 2010 and 2012 authorizations.
During 2013, we completed the 2012 authorization and
repurchased 366 million shares for $13,028 under the 2012
and 2013 authorizations. During 2014, we repurchased
approximately 48 million shares for $1,617 under the 2013
authorization. At the end of 2014, we had approximately
415 million shares remaining from the 2013 and 2014
authorizations. Upon completing our acquisition of DIRECTV,
our priority will be to use free cash flow (operating cash
flows less construction and capital expenditures) after
dividends to pay down debt.
The emphasis of our 2015 financing activities will be the
issuance of debt, in part to fund our business acquisitions,
the payment of dividends, subject to approval by our Board
of Directors, the repayment of debt and share repurchases.
We plan to fund our financing uses of cash through a
combination of cash from operations, debt issuances and
asset sales. The timing and mix of debt issuance will be
guided by credit market conditions and interest rate trends.
Credit Facilities
We have a $5,000 revolving credit agreement with a
syndicate of banks that expires in December 2018 (the
“December 2018 Facility”) and a $3,000 revolving credit
agreement with a syndicate of banks that expires in
December 2017 (the “December 2017 Facility”). In addition,
on January 21, 2015, AT&T entered into a $9,155 credit
agreement (the “Syndicated Credit Agreement”) containing
(i) a $6,286 term loan facility (the “Tranche A Facility”) and
(ii) a $2,869 term loan facility (the “Tranche B Facility”), with
certain investment and commercial banks and Mizuho Bank,
Ltd. (“Mizuho”), as administrative agent. On that date, AT&T
also entered into a $2,000 18-month credit agreement (the
“18-Month Credit Agreement”) with Mizuho as initial lender
and agent.
Revolving Credit Agreements
In the event advances are made under either the
December 2018 Facility or the December 2017 Facility,
those advances would be used for general corporate
purposes. 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