Notes to Consolidated Financial Statements

Note 9

Debt

Changes to debt during 2010 are as follows:

(dollars in millions)

Debt
Maturing
within
One Year

 

Long-term
Debt

 

Total

 

Balance at January 1, 2010

 

$

7,205

 

$

55,051

 

$

62,256

 

Repayments of long-term borrowings and capital lease obligations

 

 

(6,118

)

 

(2,018

)

 

(8,136

)

Decrease in short-term obligations, excluding current maturities

 

 

(1,097

)

 

 

 

(1,097

)

Reclassifications of long-term debt

 

 

7,362

 

 

(7,362

)

 

 

Other

 

 

190

 

 

(419

)

 

(229

)

Balance at December 31, 2010

 

$

7,542

 

$

45,252

 

$

52,794

 

Debt maturing within one year is as follows:

(dollars in millions)

At December 31,

2010

 

2009

 

Long-term debt maturing within one year

$

7,542

 

$

6,105

 

Commercial paper

 

 

 

1,100

 

Total debt maturing within one year

$

7,542

 

$

7,205

 

At December 31, 2010, there was no commercial paper outstanding. The weighted average interest rate for our commercial paper outstanding at December 31, 2009 was 0.7%.

Capital expenditures (primarily acquisition and construction of network assets) are partially financed pending long-term financing through bank loans and the issuance of commercial paper payable within 12 months.

On April 14, 2010, we terminated all commitments under our previous $5.3 billion 364-day credit facility with a syndicate of lenders and entered into a new $6.2 billion three-year credit facility with a group of major financial institutions. As of December 31, 2010, the unused borrowing capacity under the three-year credit facility was approximately $6.1 billion.

Long-Term Debt

Outstanding long-term debt obligations are as follows:

(dollars in millions)

At December 31,

Interest Rates %

Maturities

2010

 

2009

 

Verizon Communications – notes payable and other

4.35 – 5.50

2011 – 2018

$

6,062

 

$

6,196

 

 

5.55 – 6.90

2012 – 2038

 

10,441

 

 

10,386

 

 

7.35 – 8.95

2012 – 2039

 

7,677

 

 

9,671

 

 

Verizon Wireless – notes payable and other

3.75 – 5.55

2011 – 2014

 

7,000

 

 

7,000

 

 

7.38 – 8.88

2011 – 2018

 

5,975

 

 

6,118

 

 

Floating

2011

 

1,250

 

 

6,246

 

 

Verizon Wireless – Alltel assumed notes

6.50 – 7.88

2012 – 2032

 

2,315

 

 

2,334

 

 

Telephone subsidiaries – debentures

4.63 – 7.00

2011 – 2033

 

7,937

 

 

8,797

 

 

7.15 – 7.88

2012 – 2032

 

1,449

 

 

1,449

 

 

8.00 – 8.75

2011 – 2031

 

880

 

 

1,080

 

 

Other subsidiaries – debentures and other

6.84 – 8.75

2018 – 2028

 

1,700

 

 

1,700

 

 

Employee stock ownership plan loans

 

 

 

23

 

 

 

 

 

 

 

 

 

 

Capital lease obligations

(average rates of 6.8% and 6.3%, respectively)

 

 

 

332

 

 

397

 

Unamortized discount, net of premium

 

 

 

(224

)

 

(241

)

Total long-term debt, including current maturities

 

 

 

52,794

 

 

61,156

 

Less long-term debt maturing within one year

 

 

 

7,542

 

 

6,105

 

Total long-term debt

 

 

$

45,252

 

$

55,051

 

Notes Payable and Other

2010

During July 2010, Verizon received approximately $3.1 billion in cash in connection with the completion of the spin-off and merger of Spinco (see Note 3). This special cash payment was subsequently used to redeem $2.0 billion of 7.25% Verizon Communications Notes due December 2010 at a redemption price of 102.7% of the principal amount of the notes, plus accrued and unpaid interest through the date of redemption, as well as other short-term borrowings. In addition, during 2010 Verizon repaid $0.2 billion of floating rate vendor financing debt.

During 2011, $0.5 billion of 5.35% Verizon Communications notes matured and were repaid and Verizon utilized $0.3 billion of a fixed rate vendor financing facility.

2009

During 2009, Verizon issued $1.8 billion of 6.35% notes due 2019 and $1.0 billion of 7.35% Notes due 2039, resulting in cash proceeds of $2.7 billion, net of discounts and issuance costs, which was used to reduce our commercial paper borrowings, repay maturing debt and for general corporate purposes. In January 2009, Verizon utilized a $0.2 billion floating rate vendor financing facility. In addition, during 2009 $0.5 billion of floating rate Notes due 2009 and $0.1 billion of 8.23% Verizon Notes matured and were repaid.

Verizon Wireless – Notes Payable and Other

Verizon Wireless Capital LLC, a wholly owned subsidiary of Verizon Wireless, is a limited liability company formed under the laws of Delaware on December 7, 2001 as a special purpose finance subsidiary to facilitate the offering of debt securities of Verizon Wireless by acting as co-issuer. Other than the financing activities as a co-issuer of Verizon Wireless indebtedness, Verizon Wireless Capital LLC has no material assets, operations or revenues. Verizon Wireless is jointly and severally liable with Verizon Wireless Capital LLC for co-issued notes, as indicated below.

2010

On June 28, 2010, Verizon Wireless exercised its right to redeem the outstanding $1.0 billion of aggregate floating rate notes due June 2011 at a redemption price of 100% of the principal amount of the notes, plus accrued and unpaid interest through the date of redemption. In addition, during 2010, Verizon Wireless repaid the remaining $4.0 billion of borrowings that were outstanding under a $4.4 billion Three-Year Term Loan Facility Agreement with a maturity date of September 2011 (Three-Year Term Loan Facility). No borrowings remain outstanding under this facility as of December 31, 2010 and this facility has been cancelled.

2009

During November 2009, Verizon Wireless and Verizon Wireless Capital LLC completed an exchange offer to exchange privately placed notes issued in November 2008, and February and May 2009 for new notes with similar terms.

In June 2009, Verizon Wireless issued $1.0 billion aggregate principal amount of floating rate notes due 2011.

In May 2009, Verizon Wireless and Verizon Wireless Capital LLC co-issued $4.0 billion aggregate principal amount of two-year fixed and floating rate notes in a private placement resulting in cash proceeds of approximately $4.0 billion, net of discounts and issuance costs. In February 2009, Verizon Wireless and Verizon Wireless Capital LLC co-issued $4.3 billion aggregate principal amount of three and five-year fixed rate notes in a private placement resulting in cash proceeds of $4.2 billion, net of discounts and issuance costs.

In August 2009, Verizon Wireless repaid $0.4 billion of borrowings that were outstanding under the Three-Year Term Loan Facility, reducing the outstanding borrowings under this facility to $4.0 billion as of December 31, 2009.

Telephone and Other Subsidiary Debt

During 2010, $0.3 billion of 6.125% and $0.2 billion of 8.625% Verizon New York Inc. Debentures, $0.2 billion of 6.375% Verizon North Inc. Debentures and $0.2 billion of 6.3% Verizon Northwest Inc. Debentures matured and were repaid. During 2009, we redeemed $0.1 billion of 6.8% Verizon New Jersey Inc. Debentures, $0.3 billion of 6.7% Debentures and $0.2 billion of 5.5% Verizon California Inc. Debentures and $0.2 billion of 5.875% Verizon New England Inc. Debentures. In April 2009, we redeemed $0.5 billion of 7.51% GTE Corporation Debentures.

Guarantees

We guarantee the debt obligations of GTE Corporation (but not the debt of its subsidiary or affiliate companies) that were issued and outstanding prior to July 1, 2003. As of December 31, 2010, $1.7 billion principal amount of these obligations remain outstanding.

Debt Covenants

We and our consolidated subsidiaries are in compliance with all debt covenants.

Maturities of Long-Term Debt

Maturities of long-term debt outstanding at December 31, 2010 are as follows:

Years

(dollars in millions)

2011

 

$

7,542

2012

 

 

5,902

2013

 

 

5,915

2014

 

 

3,529

2015

 

 

1,201

Thereafter

 

 

28,705