Verizon Wireless 2006 Annual Report Download - page 76

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NOTE 20
GUARANTEES OF OPERATING SUBSIDIARY DEBT
Verizon has guaranteed the obligations of two wholly-owned operating
subsidiaries: $480 million 7% debentures series B, due 2042 issued
by Verizon New England Inc. and $300 million 7% debentures series F
issued by Verizon South Inc. due 2041. These guarantees are full and
unconditional and would require Verizon to make scheduled payments
immediately if either of the two subsidiaries failed to do so. Both of
these securities were issued in denominations of $25 and were sold
primarily to retail investors and are listed on the New York Stock
Exchange. SEC rules permit us to include condensed consolidating
financial information for these two subsidiaries in our periodic SEC
reports rather than filing separate subsidiary periodic SEC reports.
Below is the condensed consolidating financial information. Verizon
New England and Verizon South are presented in separate columns.
The column labeled Parent represents Verizon’s investments in all of
its subsidiaries under the equity method and the Other column rep-
resents all other subsidiaries of Verizon on a combined basis. The
Adjustments column reflects intercompany eliminations.
(dollars in millions)
Condensed Consolidating Statements of Income Verizon Verizon
Year Ended December 31, 2006 Parent New England South Other Adjustments Total
Operating revenues $– $3,852 $ 858 $ 84,208 $ (774) $ 88,144
Operating expenses 164 3,685 634 71,062 (774) 74,771
Operating Income (Loss) (164) 167 224 13,146 – 13,373
Equity in earnings of unconsolidated
businesses 6,011 14 – (708) (4,544) 773
Other income and (expense), net 1,579 11 14 283 (1,492) 395
Interest expense (1,185) (174) (54) (961) 25 (2,349)
Minority interest –––(4,038) – (4,038)
Income (loss) before provision for
income taxes, discontinued operations and
cumulative effect of accounting change 6,241 18 184 7,722 (6,011) 8,154
Income tax benefit (provision) 33 (19) (68) (2,620) – (2,674)
Income (Loss) Before Discontinued
Operations And Cumulative Effect Of
Accounting Change 6,274 (1) 116 5,102 (6,011) 5,480
Income on discontinued operations,
net of tax (77) – – 836 – 759
Cumulative effect of accounting change,
net of tax –––(42)–(42)
Net Income $ 6,197 $ (1) $ 116 $ 5,896 $ (6,011) $ 6,197
(dollars in millions)
Condensed Consolidating Statements of Income Verizon Verizon
Year Ended December 31, 2005 Parent New England South Other Adjustments Total
Operating revenues $ – $ 3,936 $ 907 $ 65,172 $ (497) $ 69,518
Operating expenses 8 3,628 684 53,114 (497) 56,937
Operating Income (Loss) (8) 308 223 12,058 – 12,581
Equity in earnings of unconsolidated
businesses 6,698 23 – 273 (6,308) 686
Other income and (expense), net 537 (4) 6 180 (408) 311
Interest expense (58) (172) (63) (1,854) 18 (2,129)
Minority interest – – – (3,001) – (3,001)
Income before provision for income taxes
and discontinued operations 7,169 155 166 7,656 (6,698) 8,448
Income tax benefit (provision) 228 (40) (62) (2,547) – (2,421)
Income Before Discontinued Operations 7,397 115 104 5,109 (6,698) 6,027
Income on discontinued operations,
net of tax – – – 1,370 – 1,370
Net Income $7,397 $ 115 $ 104 $ 6,479 $ (6,698) $ 7,397
74
Notes to Consolidated Financial Statements continued