Verizon Wireless 2007 Annual Report Download - page 31

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Other, net investing activities during 2007 primarily include cash proceeds
of approximately $800 million from property sales and sales of select non-
strategic assets, as well as $476 million from the disposition of our interest
in CANTV. Other, net investing activities for 2006 primarily include cash
proceeds of $283 million from property sales. Other, net investing activi-
ties for 2005 primarily include a net investment of $913 million for the
purchase of 43.4 million shares of MCI common stock from eight entities
affiliated with Carlos Slim Helú, offset by cash proceeds of $713 million
from property sales, including a New York City office building, and $349
million of repatriated proceeds from the sales of European investments
in prior years.
In 2007, investing activities of discontinued operations primarily included
gross proceeds of approximately $980 million in connection with the
saleofTELPRI.In2006,investingactivitiesofdiscontinuedoperations
included net pretax cash proceeds of $2,042 million in connection
with the sale of Verizon Dominicana. In 2005, investing activities of
discontinued operations primarily related to capital expenditures related
to discontinued operations.
Cash Flows Used In Financing Activities
In 2007, our total debt was reduced by $5.2 billion, due to the repay-
ment of approximately $1.7 billion of Wireline debt, including the early
repayment of previously guaranteed $300 million 7% debentures issued
by Verizon South Inc. and $480 million 7% debentures issued by Verizon
New England Inc., as well as approximately $1.6 billion of other borrow-
ings. Also, we redeemed $1,580 million principal of our outstanding
floating rate notes, which were called on January 8, 2007, and the $500
million 7.90% debentures issued by GTE Corporation. Partially offsetting
the reduction in total debt were cash proceeds of $3,402 million in con-
nection with fixed and floating rate debt issued during 2007.
Our total debt was reduced by $1,896 million in 2006. We repaid $6,838
million of Wireline debt, including premiums associated with the retire-
ment of $5,665 million of aggregate principal amount of long-term
debt assumed in connection with the MCI merger. The Wireline repay-
ments also included the early retirement/prepayment of $697 million of
long-term debt and $155 million of other long-term debt at maturity.
We repaid approximately $2.5 billion of Domestic Wireless 5.375% fixed
rate notes that matured on December 15, 2006. Also, we redeemed the
$1,375 million accreted principal of our remaining zero-coupon convert-
ible notes and retired $482 million of other corporate long-term debt at
maturity. These repayments were partially offset by our issuance of long-
term debt with a total aggregate principal amount of $4 billion, resulting
in cash proceeds of $3,958 million, net of discounts, issuance costs and
the receipt of cash proceeds related to hedges on the interest rate of an
anticipated financing. In connection with the spin-off of our domestic
print and Internet yellow pages directories business, we received net
cash proceeds of approximately $2 billion and retired debt in the aggre-
gate principal amount of approximately $7 billion.
Cash of $240 million was used to reduce our total debt in 2005. We repaid
$1,533 million of Domestic Wireless, $1,183 million of Wireline and $1,109
million of Verizon corporate long-term debt. The Wireline debt repayment
included the early retirement of $350 million of long-term debt and $806
million of other long-term debt at maturity. This decrease was largely
offset by the issuance by Verizon corporate of long-term debt with a total
principal amount of $1,500 million, resulting in total cash proceeds of
$1,478 million, net of discounts and costs, and an increase in our short-
term borrowings of $2,098 million.
Our ratio of debt to debt combined with shareowners’ equity was 38.1%
at December 31, 2007 compared to 42.8% at December 31, 2006.
As of December 31, 2007, we had no bank borrowings outstanding. We
also had approximately $6.2 billion of unused bank lines of credit (including
a $6 billion three-year committed facility that expires in September 2009
and various other facilities totaling approximately $400 million) and we
had shelf registrations for the issuance of up to $8 billion of unsecured
debt securities. The debt securities of Verizon and our telephone subsid-
iaries continue to be accorded high ratings by primary rating agencies.
In July 2007, S&P revised its outlook to stable from negative and affirmed
its long term rating of A. Other long-term ratings of Verizon are: Moody’s
A3 with stable outlook; and Fitch A+ with stable outlook. The short-term
ratings of Verizon are: Moody’s P-2; S&P A-1; and Fitch F1.
We and our consolidated subsidiaries are in compliance with all of our
debt covenants.
In February 2008, we issued $4,000 million of fixed rate notes with varying
maturities that resulted in cash proceeds of $3,953 million, net of dis-
count and issuance costs.
As in prior years, dividend payments were a significant use of cash flows
from operations. We continuously evaluate the level of our dividend pay-
ments by considering such factors as long-term growth opportunities,
internal cash requirements and the expectations of our shareowners.
During the first half of 2007, Verizon announced quarterly cash dividends
of $.405 per share. During the third quarter of 2007, we increased our
dividend payments 6.2% to $.43 per share from $.405 per share. In the
third and fourth quarters of 2007, Verizon declared a quarterly cash divi-
dend of $.43 per share. In 2006 and 2005, Verizon declared quarterly cash
dividends of $.405 per share.
Common stock has been used from time to time to satisfy some of the
funding requirements of employee and shareowner plans. On March 1,
2007, the Board of Directors determined that no additional common
shares could be purchased under previously authorized share repur-
chase programs and gave authorization to repurchase up to 100 million
common shares terminating no later than the close of business on
February 28, 2010. During 2007, we repurchased $2,843 million of our
common stock. We plan to continue our share buyback program in 2008.
Additionally, we received $1,274 million of cash proceeds from the sale of
common stock, primarily due to the exercise of stock options. On February
7, 2008, the Board of Directors replaced this share buy back program with
a new program for the repurchase of up to 100 million common shares
terminating no later than the close of business on February 28, 2011. The
Board also determined that no additional shares were to be purchased
under the prior program.
Increase (Decrease) In Cash and Cash Equivalents
Our cash and cash equivalents at December 31, 2007 totaled $1,153 mil-
lion, a $2,066 million decrease compared to cash and cash equivalents at
December 31, 2006. Our cash and cash equivalents at December 31, 2006
totaled $3,219 million, a $2,459 million increase compared to cash and
cash equivalents at December 31, 2005 of $760 million.
Management’s Discussion and Analysis
ofFinancialConditionandResultsofOperations continued