Verizon Wireless 2007 Annual Report Download - page 59

Notes to Consolidated Financial Statements continued
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Telephone and Other Subsidiary Debt
During the fourth quarter of 2007, Verizon redeemed previously guar-
anteed $480 million 7.0% debentures, Series B, issued by Verizon New
England Inc. due 2042 at par plus accrued and unpaid interest to the
redemption dates. During the third quarter of 2007, $150 million Verizon
Pennsylvania Inc. 7.375% notes matured and were repaid. During the
second quarter of 2007, $125 million Verizon New England Inc. 7.65%
notes and the $225 million Verizon South Inc. 6.125% notes matured and
were repaid. During the first quarter of 2007, $150 million GTE Southwest
Inc. 6.23% notes and the $275 million Verizon California Inc. 7.65% notes
matured and were repaid. In addition, we redeemed $500 million of GTE
Corporation 7.90% debentures due February 1, 2027 and $300 million
Verizon South Inc. 7.0% debentures, Series F, due 2041 at par plus accrued
and unpaid interest to the redemption dates. During the first quarter we
recorded pretax charges of $28 million ($18 million after-tax) in connec-
tion with the early extinguishments of debt.
During the second quarter of 2006, we redeemed/prepaid several debt
issuances, including: Verizon North Inc. $200 million 7.625% Series C
debentures due May 15, 2026; Verizon Northwest Inc. $175 million 7.875%
Series B debentures due June 1, 2026; Verizon South Inc. $250 million
7.5% Series D debentures due March 15, 2026; Verizon California Inc. $25
million 9.41% Series W first mortgage bonds due 2014; Verizon California
Inc. $30 million 9.44% Series X first mortgage bonds due 2015; Verizon
Northwest Inc. $3 million 9.67% Series HH first mortgage bonds due 2010
and Contel of the South Inc. $14 million 8.159% Series GG first mortgage
bonds due 2018. The gain/(loss) from these retirements was immaterial.
During the third quarter of 2005, we redeemed Verizon New England Inc.
$250 million 6.875% debentures due October 1, 2023 resulting in a pretax
charge of $10 million ($6 million after-tax) in connection with the early
extinguishment of the debt.
Redemption of Debt Assumed in Merger
On January 17, 2006, Verizon announced offers to purchase two series
of MCI senior notes, MCI $1,983 million aggregate principal amount of
6.688% Senior Notes Due 2009 and MCI $1,699 million aggregate prin-
cipal amount of 7.735% Senior Notes Due 2014, at 101% of their par
value. Due to the change in control of MCI that occurred in connection
with the merger with Verizon on January 6, 2006, Verizon was required
to make this offer to noteholders within 30 days of the closing of the
merger. Noteholders tendered $165 million of the 6.688% Senior Notes.
Separately, Verizon notified noteholders that MCI was exercising its
right to redeem both series of Senior Notes prior to maturity under the
optional redemption procedures provided in the indentures. The 6.688%
Notes were redeemed on March 1, 2006, and the 7.735% Notes were
redeemed on February 16, 2006.
In addition, on January 20, 2006, Verizon announced an offer to repur-
chase MCI $1,983 million aggregate principal amount of 5.908% Senior
Notes Due 2007 at 101% of their par value. On February 21, 2006, $1,804
million of these notes were redeemed by Verizon. Verizon satisfied and
discharged the indenture governing this series of notes shortly after the
close of the offer for those noteholders who did not accept this offer.
We recorded pretax charges of $26 million ($16 million after-tax) during
the first quarter of 2006 resulting from the extinguishment of the debt
assumed in connection with the completion of this merger.
Zero-Coupon Convertible Notes
The previously issued $5.4 billion zero-coupon convertible notes due
2021, which resulted in gross proceeds of approximately $3 billion, were
redeemable at the option of the holders on May 15th in each of the years
2004, 2006, 2011 and 2016. On May 15, 2004, $3,292 million of principal
amount of the notes ($1,984 million after unamortized discount) were
redeemed. On May 15, 2006, we redeemed the remaining $1,375
million accreted principal of the remaining outstanding zero-coupon
convertible principal. The total payment on the date of redemption was
$1,377 million.
Guarantees
Verizon Global Funding had guaranteed 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. Verizon assumed this
guarantee in connection with the 2006 merger of Verizon Global Funding
into Verizon. As of December 31, 2007, $2,450 million principal amount of
these obligations remained outstanding.
Verizon and NYNEX Corporation are the joint and several co-obligors of
the 20-Year 9.55% Debentures due 2010 previously issued by NYNEX on
March 26, 1990. As of December 31, 2007, $70 million principal amount
of this obligation remained outstanding. NYNEX and GTE no longer issue
public debt or file SEC reports.
Debt Covenants
We and our consolidated subsidiaries are in compliance with all of our
debt covenants.
Maturities of Long-Term Debt
Maturities of long-term debt outstanding at December 31, 2007 are
as follows:
Years (dollars in million)
2008 $ 2,564
2009 2,966
2010 2,908
2011 2,671
2012 4,291
Thereafter 15,367