Verizon Wireless 2007 Annual Report Download - page 32

Leasing Arrangements
We are the lessor in leveraged and direct financing lease agreements for
commercial aircraft and power generating facilities, which comprise the
majority of the portfolio along with telecommunications equipment, real
estate property and other equipment. These leases have remaining terms
up to 48 years as of December 31, 2007. Minimum lease payments receiv-
able represent unpaid rentals, less principal and interest on third-party
nonrecourse debt relating to leveraged lease transactions. Since we have
no general liability for this debt, which holds a senior security interest in
the leased equipment and rentals, the related principal and interest have
been offset against the minimum lease payments receivable in accor-
dance with generally accepted accounting principles. All recourse debt
isreflectedinourconsolidatedbalancesheets.See“OtherItems”fora
discussion of lease impairment charges.
Guarantees
In connection with the execution of agreements for the sale of businesses
and investments, Verizon ordinarily provides representations and warran-
ties to the purchasers pertaining to a variety of nonfinancial matters, such
as ownership of the securities being sold, as well as financial losses.
As of December 31, 2007, letters of credit totaling $225 million were exe-
cuted in the normal course of business, which support several financing
arrangements and payment obligations to third parties.
Employee Benefit Plan Funded Status and Contributions
We operate numerous qualified and nonqualified pension plans and other
postretirement benefit plans. These plans primarily relate to our domestic
business units. The majority of Verizon’s pension plans are adequately
funded. We contributed $612 million, $451 million and $593 million in
2007, 2006 and 2005, respectively, to our qualified pension plans. We also
contributed $125 million, $117 million and $105 million to our nonquali-
fied pension plans in 2007, 2006 and 2005, respectively.
Based on the funded status of the plans at December 31, 2007,
we anticipate qualified pension trust contributions of $350 million
in 2008. Our estimate of required qualified pension trust contributions
for 2009 is approximately $300 million. Nonqualified pension contribu-
tions are estimated to be approximately $130 million for both 2008 and
2009, respectively.
Contributions to our other postretirement benefit plans generally relate
to payments for benefits on an as-incurred basis since the other postre-
tirement benefit plans do not have funding requirements similar to the
pension plans. We contributed $1,048 million, $1,099 million and $1,040
million to our other postretirement benefit plans in 2007, 2006 and 2005,
respectively. Contributions to our other postretirement benefit plans are
estimated to be approximately $1,580 million in 2008 and $1,770 million
in 2009.
RefertoNote1intheconsolidatedfinancialstatementsforadiscussionof
the adoption of SFAS No. 158, which was effective December 31, 2006.
30
Management’s Discussion and Analysis
ofFinancialConditionandResultsofOperations continued
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, 2007. 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 (see Note 11) $ 30,455 $ 2,518 $ 5,781 $ 6,891 $ 15,265
Capital lease obligations (see Note 10) 312 46 93 71 102
Total long-term debt, including current maturities 30,767 2,564 5,874 6,962 15,367
Interest on long-term debt (see Note 11) 21,116 1,897 3,350 2,622 13,247
Operating leases (see Note 10) 7,001 1,489 2,292 1,253 1,967
Purchase obligations (see Note 20) 844 613 188 33 10
Income Tax Audit Settlements*
(see Note 16) 233 233 – – –
Other long-term liabilities (see Note 15) 4,190 2,020 2,170 – –
Total contractual obligations $ 64,151 $ 8,816 $ 13,874 $ 10,870 $ 30,591
* The $233 million of income tax audit settlements include gross unrecognized tax benefits of $148 million as determined under Financial Accounting Standards Board (FASB) Interpretation
No. 48, Accounting for Uncertainty in Income Taxes (FIN 48) and related gross interest of $85 million. We are not able to make a reliable estimate of when the balance of $2,735 million
of unrecognized tax benefits and related interest and penalties will be settled with the respective taxing authorities until issues or examinations are further developed (see Note 16).