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2007 AT&T Annual Report
| 49
Interest Rate Risk We issue debt in fixed and floating
rate instruments. Interest rate swaps are used for the purpose
of controlling interest expense by managing the mix of fixed
and floating rate debt. Interest rate forward contracts are
utilized to hedge interest expense related to debt financing.
We do not seek to make a profit from changes in interest
rates. We manage interest rate sensitivity by measuring
potential increases in interest expense that would result from
a probable change in interest rates. When the potential
increase in interest expense exceeds an acceptable amount,
we reduce risk through the issuance of fixed-rate (in lieu of
variable-rate) instruments and the purchase of derivatives.
Issuer Equity Repurchases
On March 4, 2006, our Board of Directors authorized the
repurchase of up to 400 million shares of AT&T common
stock. During the fourth quarter of 2007, we repurchased
37 million shares at a cost of $1,478. Share repurchases
under this plan totaled approximately 351 million shares at
a cost of $13,068. On December 10, 2007, our Board of
Directors authorized a new share repurchase plan of
400 million shares, which replaces our previous share
repurchase authorization. This new authorization represents
approximately 6.6% of AT&T’s shares outstanding at
December 31, 2007 and expires at the end of 2009.
We have repurchased, and intend to continue to repurchase,
a portion of the shares pursuant to plans that comply with
the requirements of Rule 10b5-1(c) under the Securities
Exchange Act of 1934. We will fund our share repurchases
through a combination of cash from operations, borrowings
dependent upon market conditions, and cash from the
disposition of certain non-strategic investments.
Total Number of Maximum Number
Shares Purchased as of Shares that May
Part of Publicly Yet Be Purchased
Total Number of Average Price Announced Plans Under the Plans
Purchase Period Shares Purchased Paid per Share1 or Programs or Programs2
October 1, 2007 – October 31, 2007 11,500,000 $41.94 11,500,000 74,708,783
November 1, 2007 – November 30, 2007 23,500,000 $39.13 23,500,000 51,208,783
December 3, 2007 – December 5, 2007 2,000,000 $37.81 2,000,000 49,208,783
Total 37,000,000 $39.93 37,000,000 49,208,783
1Average Price Paid per Share excludes transaction costs.
2Replaced by new authorization on December 10, 2007.
STOCK PERFORMANCE GRAPH
Comparison of Five-Year Cumulative Total Return
AT&T Inc., S&P 500 Index and S&P 500 Integrated Telecom Index
200
190
180
170
160
150
140
130
120
110
100
90
102
129
100
106
113
106
108
150
173
195
143
162
183
192
12/02 12/03 12/04 12/05 12/06 12/07
S&P 500 Integrated
Telecom Index
AT&T Inc. S&P 500 Index
163
100
The comparison above assumes $100 invested on December 31, 2002, in AT&T common stock, Standard & Poor’s 500 Index
(S&P 500), and Standard & Poor’s 500 Integrated Telecom Index (Telecom Index). Total return equals stock price appreciation plus
reinvestment of dividends on a quarterly basis.