Verizon Wireless 2009 Annual Report Download - page 75

Notes to Consolidated Financial Statements continued
73
NOTE 17
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 made. Adjustments to the reserve
may also be made based upon actual conditions discovered during the
remediation at this or any other site 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, 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.
We have several commitments primarily to purchase programming and
network services, equipment and software from a variety of suppliers
totaling $9,925 million. Of this total amount, we expect to purchase
$3,415 million in 2010, $4,233 million in 2011 through 2012, $1,887
million in 2013 through 2014 and $390 million thereafter. The commit-
ments to purchase programming services are with television networks
and broadcast stations. The amounts included for such commitments are
based on several factors, including the number of subscribers receiving
the programming. Since most of these programming commitments have
no minimum volume requirement, we estimated our obligation based
on subscribers at December 31, 2009, at applicable pricing stipulated in
the contracts that were in effect as of December 31, 2009.