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Employee Benefit Plan Funded Status and Contributions
Employer Contributions
We operate numerous qualified and nonqualified pension plans and
other postretirement benefit plans. These plans primarily relate to our
domestic business units. During 2015 and 2014, contributions to our
qualified pension plans were $0.7billion and $1.5billion, respectively.
During 2013, contributions to our qualified pension plans were not
material. We also contributed $0.1billion, $0.1billion and $0.1billion to
our nonqualified pension plans in 2015, 2014 and 2013, respectively.
In an effort to reduce the risk of our portfolio strategy and better
align assets with liabilities, we have adopted a liability driven pension
strategy that seeks to better match cash flows from investments
with projected benefit payments. We expect that the strategy will
reduce the likelihood that assets will decline at a time when liabilities
increase (referred to as liability hedging), with the goal to reduce the
risk of underfunding to the plan and its participants and beneficia-
ries, however, we also expect the strategy to result in lower asset
returns. Based on this strategy and the funded status of the plans at
December31, 2015, we expect the minimum required qualified pension
plan contribution in 2016 to be $0.6billion. Nonqualified pension contri-
butions are estimated to be approximately $0.1billion in 2016.
Contributions to our other postretirement benefit plans generally
relate to payments for benefits on an as- incurred basis since the other
postretirement benefit plans do not have funding requirements similar
to the pension plans. We contributed $0.9billion, $0.7billion and
$1.4billion to our other postretirement benefit plans in 2015, 2014 and
2013, respectively. Contributions to our other postretirement benefit
plans are estimated to be approximately $0.9billion in 2016.
Leasing Arrangements
See Note6 to the consolidated financial statements for a discussion of leasing arrangements.
Off Balance Sheet Arrangements and ContractualObligations
Contractual Obligations and Commercial Commitments
The following table provides a summary of our contractual obligations and commercial commitments at December31, 2015. Additional detail
about these items is included in the notes to the consolidated financial statements.
(dollars in millions)
Payments Due By Period
Contractual Obligations Total
Less than
1 year 1–3 years 3–5 years
More than
5 years
Long-term debt(1) $ 109,073 $ 6,054 $ 10,843 $ 14,381 $ 77,795
Capital lease obligations(2) 957 271 424 124 138
Total long-term debt, including current maturities 110,030 6,325 11,267 14,505 77,933
Interest on long-term debt(1) 88,562 5,058 9,731 8,880 64,893
Operating leases(2) 18,213 2,744 4,697 3,475 7,297
Purchase obligations(3) 21,934 8,440 9,166 2,278 2,050
Other long-term liabilities(4) 2,402 1,462 940 – –
Finance obligations(5) 2,625 261 538 560 1,266
Total contractual obligations $ 243,766 $ 24,290 $ 36,339 $ 29,698 $ 153,439
(1) Items included in long-term debt with variable coupon rates are described in Note7 to the consolidated financial statements.
(2) See Note6 to the consolidated financial statements.
(3) The purchase obligations reflected above are primarily commitments to purchase programming and network services, equipment, software, handsets and peripherals, and marketing
activities, which will be used or sold in the ordinary course of business. These amounts do not represent our entire anticipated purchases in the future, but represent only those items
that are the subject of contractual obligations. We also purchase products and services as needed with no firm commitment. For this reason, the amounts presented in this table alone
do not provide a reliable indicator of our expected future cash outflows or changes in our expected cash position (see Note16 to the consolidated financial statements).
(4) Other long-term liabilities include estimated postretirement benefit and qualified pension plan contributions (see Note11 to the consolidated financial statements).
(5) Represents future minimum payments under the sublease arrangement for our tower transaction (see Note2 to the consolidated financial statements).
We are not able to make a reliable estimate of when the unrecognized tax benefits balance of $1.6billion and related interest and penalties
will be settled with the respective taxing authorities until issues or examinations are further developed (see Note12 to the consolidated
financialstatements).
30 Verizon Communications Inc. and Subsidiaries
Management’s Discussion and Analysis ofFinancialCondition and Results of Operations continued