Verizon Wireless 2007 Annual Report Download - page 72

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Several state and federal regulatory proceedings may require our tele-
phone operations to pay penalties or to refund to customers a portion
of the revenues collected in the current and prior periods. There are also
various legal actions pending to which we are a party and claims which,
if asserted, may lead to other legal actions. We have established reserves
for specific liabilities in connection with regulatory and legal actions,
including environmental matters, that we currently deem to be probable
and estimable. We do not expect that the ultimate resolution of pending
regulatory and legal matters in future periods, including the Hicksville
matter described below, will have a material effect on our financial con-
dition, but it could have a material effect on our results of operations for
a given reporting period.
During 2003, under a government-approved plan, remediation com-
menced at the site of a former Sylvania facility in Hicksville, New York
that processed nuclear fuel rods in the 1950s and 1960s. Remediation
beyond original expectations proved to be necessary and a reassessment
of the anticipated remediation costs was conducted. A reassessment of
costs related to remediation efforts at several other former facilities was
also undertaken. In September 2005, the Army Corps of Engineers (ACE)
accepted the Hicksville site into the Formerly Utilized Sites Remedial
Action Program. This may result in the ACE performing some or all of the
remediation effort for the Hicksville site with a corresponding decrease
in costs to Verizon. To the extent that the ACE assumes responsibility for
remedial work at the Hicksville site, an adjustment to a reserve previously
established for the remediation may be necessary. Adjustments may also
be necessary based upon actual conditions discovered during the reme-
diation at any of the sites requiring remediation.
In connection with the execution of agreements for the sales 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.
Subsequent to the sale of Verizon Information Services Canada in 2004,
we continue to provide a guarantee to publish directories, which was
issued when the directory business was purchased in 2001 and had a
30-year term (before extensions). The preexisting guarantee continues,
without modification, despite the subsequent sale of Verizon Information
Services Canada and the spin-off of our domestic print and Internet
yellow pages directories business. The possible financial impact of the
guarantee, which is not expected to be adverse, cannot be reasonably
estimated since a variety of the potential outcomes available under the
guarantee result in costs and revenues or benefits that may offset each
other. In addition, performance under the guarantee is not likely.
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.
We have several commitments primarily to purchase network services,
equipment and software from a variety of suppliers totaling $844 million.
Of this total amount, $613 million, $137 million, $51 million, $28 million,
$5 million and $10 million are expected to be purchased in 2008, 2009,
2010, 2011, 2012 and thereafter, respectively.
NOTE 20
COMMITMENTS AND CONTINGENCIES
Notes to Consolidated Financial Statements continued
Cash Flow Information
(dollars in millions)
Years Ended December 31, 2007 2006 2005
Cash Paid
Income taxes, net of amounts refunded $ 2,491 $ 3,299 $ 4,189
Interest, net of amounts capitalized 1,682 2,103 2,025
Supplemental Investing and Financing
Transactions
Cash acquired in business combinations 17 2,361 –
Assets acquired in business combinations 589 18,511 635
Liabilities assumed in business
combinations 154 7,813 35
Debt assumed in business combinations –6,169 9
Shares issued to Price to acquire limited
partnership interest in VZ East (Note 7) –1,007 –
Other, net cash provided by operating activities – continuing operations
primarily included the add back of the minority interest’s share of Verizon
Wireless earnings, net of dividends paid to minority partners, of $3,953
million in 2007, $3,232 million in 2006 and $1,720 million in 2005.