Verizon Wireless 2008 Annual Report Download - page 72

70
Notes to Consolidated Financial Statements continued
Cash Flow Information
(dollars in millions)
Years Ended December 31, 2008 2007 2006
Cash Paid
Income taxes, net of amounts refunded $ 1,206 $ 2,491 $ 3,299
Interest, net of amounts capitalized 1,664 1,682 2,103
Supplemental Investing and Financing
Transactions
Cash acquired in business combinations 397 17 2,361
Assets acquired in business combinations 2,803 589 18,511
Liabilities assumed in business
combinations 384 154 7,813
Debt assumed in business combinations 1,505 – 6,169
Shares issued to Price to acquire limited
partnership interest in VZ East (Note 8) –– 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 $5,218
million in 2008, $3,953 million in 2007 and $3,232 million in 2006.
NOTE 20
COMMITMENTS AND CONTINGENCIES
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 to the
reserve may also be necessary based upon actual conditions discovered
during the remediation at any of the sites requiring remediation.
In connection with the execution of agreements for the sales of busi-
nesses and investments, Verizon ordinarily provides representations and
warranties to the purchasers pertaining to a variety of nonfinancial mat-
ters, such as ownership of the securities being sold, as well as indemnity
from certain 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, 2008, letters of credit totaling approximately $200
million were executed 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 $737 million.
Of this total amount, $435 million, $162 million, $75 million, $29 million,
$26 million and $10 million are expected to be purchased in 2009, 2010,
2011, 2012, 2013 and thereafter, respectively.
NOTE 19
ADDITIONAL FINANCIAL INFORMATION
The tables that follow provide additional financial information related to
our consolidated financial statements:
Income Statement Information
(dollars in millions)
Years Ended December 31, 2008 2007 2006
Depreciation expense $ 13,182 $ 13,036 $ 13,122
Interest cost incurred 2,566 2,258 2,811
Capitalized interest (747) (429) (462)
Advertising costs 2,754 2,463 2,271
Balance Sheet Information
(dollars in millions)
At December 31, 2008 2007
Accounts Payable and Accrued Liabilities
Accounts payable $ 3,856 $ 4,491
Accrued expenses 2,299 2,400
Accrued vacation, salaries and wages 4,871 4,828
Interest payable 652 473
Accrued taxes 2,136 2,270
$ 13,814 $ 14,462
Other Current Liabilities
Advance billings and customer deposits $ 2,651 $ 2,476
Dividends payable 1,584 1,266
Other 2,864 3,583
$ 7,099 $ 7,325