Verizon Wireless 2009 Annual Report Download - page 33

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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, 2009. 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) $ 60,759 $ 6,026 $ 15,400 $ 9,282 $ 30,051
Capital lease obligations (see Note 8) 397 79 130 99 89
Total long-term debt, including current maturities 61,156 6,105 15,530 9,381 30,140
Interest on long-term debt(1) 39,444 3,607 6,231 4,784 24,822
Operating leases (see Note 8) 12,326 1,971 3,128 2,092 5,135
Purchase obligations (see Note 17) 9,925 3,415 4,233 1,887 390
Income tax audit settlements(2) 370 370 – – –
Other long-term liabilities(3) 3,185 1,985 1,200 – –
Total contractual obligations $ 126,406 $ 17,453 $ 30,322 $ 18,144 $ 60,487
(1) Items included in long-term debt with variable coupon rates are described in Note 9 to the consolidated financial statements.
(2) Income tax audit settlements include gross unrecognized tax benefits of $220 million and related gross interest and penalties of $150 million as determined under the accounting standard
relating to the uncertainty in income taxes. We are not able to make a reliable estimate of when the unrecognized tax benefits balance of $3,180 million and related interest and penalties
will be settled with the respective taxing authorities until issues or examinations are further developed (see Note 13 to the consolidated financial statements).
(3) Other long-term liabilities include estimated postretirement benefit and qualified pension plan contributions.
Management’s Discussion and Analysis
of Financial Condition and Results of Operations continued
the pension plans. We contributed $1.6 billion, $1.2 billion and $1.0 bil-
lion to our other postretirement benefit plans in 2009, 2008 and 2007,
respectively. Contributions to our other postretirement benefit plans are
estimated to be approximately $1.9 billion in 2010.
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 41 years as of December 31, 2009. In addition, we lease space on
certain of our cell towers to other wireless carriers. Minimum lease pay-
ments receivable 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 prin-
cipal and interest have been offset against the minimum lease payments
receivable in accordance with generally accepted accounting principles.
All recourse debt is reflected in our consolidated balance sheets.
Increase (Decrease) In Cash and Cash Equivalents
Our Cash and cash equivalents at December 31, 2009 totaled $2.0 bil-
lion, a $7.8 billion decrease compared to Cash and cash equivalents at
December 31, 2008 for the reasons discussed above. Our Cash and cash
equivalents at December 31, 2008 totaled $9.8 billion, an $8.6 billion
increase compared to Cash and cash equivalents at December 31, 2007
for the reasons discussed above.
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 $0.2 billion, $0.3 billion and
$0.6 billion in 2009, 2008 and 2007, respectively, to our qualified pension
plans. We also contributed $0.1 billion, $0.2 billion and $0.1 billion to our
nonqualified pension plans in 2009, 2008 and 2007, respectively.
We do not expect to have any material required qualified pension plan
contributions in 2010. Nonqualified pension contributions are estimated
to be approximately $0.1 billion for 2010.
Contributions to our other postretirement benefit plans generally relate
to payments for benefits on an as-incurred basis since the other post-
retirement benefit plans do not have funding requirements similar to
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, 2009, letters of credit totaling approximately $117
million were executed in the normal course of business, which support
several financing arrangements and payment obligations to third parties.