Verizon Wireless 2010 Annual Report Download - page 34

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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 40 years as of December 31, 2010. 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.
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. During 2010, contributions to our qualified
pension plans were not significant. We contributed $0.2 billion and $0.3
billion in 2009 and 2008, respectively, to our qualified pension plans. We
also contributed $0.1 billion, $0.1 billion and $0.2 billion to our nonquali-
fied pension plans in 2010, 2009 and 2008, respectively.
During January 2011, we contributed $0.4 billion to our qualified pen-
sion plans. We do not expect to make additional qualified pension plan
contributions during the remainder of 2011. Nonqualified pension contri-
butions are estimated to be approximately $0.1 billion for 2011.
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
the pension plans. We contributed $1.2 billion, $1.6 billion and $1.2 bil-
lion to our other postretirement benefit plans in 2010, 2009 and 2008,
respectively. Contributions to our other postretirement benefit plans are
estimated to be approximately $1.5 billion in 2011.
Management’sDiscussionandAnalysis
ofFinancialConditionandResultsofOperations – As Adjusted 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, 2010. 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) $ 52,462 $ 7,467 $ 11,703 $ 4,653 $ 28,639
Capital lease obligations (see Note 8) 332 75 114 77 66
Total long-term debt, including current maturities 52,794 7,542 11,817 4,730 28,705
Interest on long-term debt(1) 35,194 3,143 5,375 4,265 22,411
Operating leases (see Note 8) 12,633 1,898 3,191 2,267 5,277
Purchase obligations (see Note 17)(2) 57,277 17,852 36,779 2,132 514
Income tax audit settlements(3) 208 208 – – –
Other long-term liabilities(4) 3,900 2,500 1,400 – –
Total contractual obligations $ 162,006 $ 33,143 $ 58,562 $ 13,394 $ 56,907
(1) Items included in long-term debt with variable coupon rates are described in Note 9 to the consolidated financial statements.
(2) The purchase obligations reflected above are primarily commitments to purchase equipment, software, programming and network services, and marketing activities, which will be used or
sold in the ordinary course of business. These amounts do not represent our entire anticipated purchases in the future, but represent only those items for which we are contractually com-
mitted. We also purchase products and services as needed with no firm commitment. For this reason, the amounts presented in this table alone do not provide a reliable indicator of our
expected future cash outflows or changes in our expected cash position (see Note 17 to the consolidated financial statements).
(3) Income tax audit settlements include gross unrecognized tax benefits of $0.1 billion and related gross interest and penalties of $0.1 billion 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 $3.1 billion 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).
(4) Other long-term liabilities include estimated postretirement benefit and qualified pension plan contributions (see Note 12 to the consolidated financial statements).
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, 2010, letters of credit totaling approximately $0.1
billion were executed in the normal course of business, which support
several financing arrangements and payment obligations to third parties.