Verizon Wireless 2008 Annual Report Download - page 29

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 $1,227 million, $1,048 million and $1,099
million to our other postretirement benefit plans in 2008, 2007 and 2006,
respectively. Contributions to our other postretirement benefit plans are
estimated to be approximately $1,770 million in 2009 and $1,890 million
in 2010.
RefertoNote1intheconsolidatedfinancialstatementsforadiscussion
of the adoption of SFAS No. 158, Employers’ Accounting for Defined Benefit
Pension and Other Postretirement Plans—an amendment of FASB Statements
No. 87, 88, 106, and 132(R), which was effective December 31, 2006.
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 42 years as of December 31, 2008. 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
accordance with GAAP. All recourse debt is reflected in our consolidated
balance sheets.
tors as long-term growth opportunities, internal cash requirements and
the expectations of our shareowners. During the third quarter of 2008,
Verizon’s Board of Directors increased the Company’s quarterly dividend
payments 7.0% to $.460 per share from $.430 per share in 2007, with a
goal of moving to an annual dividend increase model. In the third quarter
of 2007, we increased our dividend payments 6.2% to $.430 per share
from $.405 per share in the first two quarters of 2007.
Increase (Decrease) In Cash and Cash Equivalents
Our Cash and cash equivalents at December 31, 2008 totaled $9.8 bil-
lion, an $8.6 billion increase compared to Cash and cash equivalents at
December 31, 2007. Our Cash and cash equivalents at December 31,
2007 totaled $1.2 billion, a $2.1 billion decrease compared to Cash and
cash equivalents at December 31, 2006.
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. We contributed $332 million, $612 million and $451 mil-
lion in 2008, 2007 and 2006, respectively, to our qualified pension plans.
We also contributed $155 million, $125 million and $117 million to our
nonqualified pension plans in 2008, 2007 and 2006, respectively.
Based on the funded status of the plans at December 31, 2008, we antici-
pate making qualified pension trust contributions of $300 million in 2009.
Our estimate of required qualified pension trust contributions for 2010 is
approximately $800 million. The estimated contribution in 2010 is based
on a range of $600 million to $900 million which depends primarily upon
asset returns and interest rates in 2009. Nonqualified pension contribu-
tions are estimated to be approximately $120 million for 2009 and $130
million for 2010, respectively.
27
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, 2008. 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(1) $ 50,075 $ 3,443 $ 10,533 $ 9,854 $ 26,245
Capital lease obligations (see Note 9) 390 63 132 90 105
Total long-term debt, including current maturities 50,465 3,506 10,665 9,944 26,350
Interest on long-term debt(1) 36,426 3,080 5,786 4,430 23,130
Operating leases (see Note 9) 7,302 1,620 2,378 1,309 1,995
Purchase obligations (see Note 20) 737 435 237 55 10
Income tax audit settlements(2) 97 97 – – –
Other long-term liabilities(3) 4,950 2,160 2,790 – –
Total contractual obligations $ 99,977 $ 10,898 $ 21,856 $ 15,738 $ 51,485
(1)Long-termdebtincludesa$4,440millionThree-YearTermFacilityAgreementwhichcurrentlybearsinterestbasedonLIBORplus100basispoints(seeNote10).
(2) Income tax audit settlements includes gross unrecognized tax benefits of $40 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 $57 million. We are not able to make a reliable estimate of when the balance of $2,582 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).
(3) Other long-term liabilities include estimated qualified pension plan contributions of $300 million in 2009 and $800 million in 2010. The estimated contribution in 2010 is based on a range of
$600 million to $900 million which depends primarily upon asset returns and interest rates in 2009 (see Note 15).