Verizon Wireless 2011 Annual Report Download - page 43

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In 2010, Verizon Wireless exercised its right to redeem the outstanding
$1.0 billion of aggregate floating rate notes due June 2011 at a redemp-
tion price of 100% of the principal amount of the notes, plus accrued and
unpaid interest through the date of redemption. In addition, during 2010,
Verizon Wireless repaid the remaining $4.0 billion of borrowings that were
outstandingundera$4.4billionThree-YearTermLoanFacilityAgreement
withamaturitydateofSeptember2011(Three-YearTermLoanFacility).As
there were no borrowings outstanding under this facility, it was cancelled.
2009
During 2009, Verizon issued $1.8 billion of 6.35% Notes due 2019 and
$1.0 billion of 7.35% Notes due 2039, resulting in cash proceeds of $2.7
billion, net of discounts and issuance costs, which was used to reduce
our commercial paper borrowings, repay maturing debt and for gen-
eral corporate purposes. In January 2009, Verizon utilized a $0.2 billion
floating rate vendor financing facility. During 2009, we redeemed $0.1
billion of 6.8% Verizon New Jersey Inc. Debentures, $0.3 billion of 6.7%
and $0.2 billion of 5.5% Verizon California Inc. Debentures and $0.2 billion
of 5.875% Verizon New England Inc. Debentures. In April 2009, $0.5 bil-
lion of 7.51% GTE Corporation Debentures matured and were repaid. In
addition, during 2009, $0.5 billion floating rate Notes due 2009 and $0.1
billion of 8.23% Verizon Notes matured and were repaid.
During 2009, Verizon Wireless raised capital to fund the acquisition
of Alltel.
• On January 9, 2009, Verizon Wireless borrowed $12.4 billion under a
$17.0 billion credit facility (Bridge Facility) in order to complete the
acquisition of Alltel and repay a portion of the approximately $24 bil-
lion of Alltel debt assumed. Verizon Wireless used cash generated from
operations and the net proceeds from the sale of the notes in private
placementsissuedinFebruary2009,May2009andJune2009,which
aredescribedbelowtorepaytheborrowingsundertheBridgeFacility.
The Bridge Facility and the commitments under the Bridge Facility
have been terminated.
• InFebruary2009,VerizonWirelessandVerizonWirelessCapitalLLCco-
issued $4.3 billion aggregate principal amount of three and five-year
fixed rate notes in a private placement resulting in cash proceeds of
$4.2 billion, net of discounts and issuance costs.
• In May 2009, Verizon Wireless and Verizon Wireless Capital LLC co-
issued $4.0 billion aggregate principal amount of two-year fixed and
floating rate notes in a private placement resulting in cash proceeds of
approximately $4.0 billion, net of discounts and issuance costs.
• In June 2009, Verizon Wireless issued $1.0 billion aggregate principal
amount of floating rate notes due 2011. As described above, during
2010 these notes were repaid.
• In August 2009, Verizon Wireless repaid $0.4 billion of borrowings that
were outstanding under theThree-Year Term Loan Facility, reducing
the outstanding borrowings under this facility to $4.0 billion as of
December 31, 2009. As described above, during 2010 this facility was
repaid in full.
During November 2009, Verizon Wireless and Verizon Wireless Capital
LLC, completed an exchange offer to exchange the privately placed
notesissuedinNovember2008,andFebruaryandMay2009,fornew
notes with similar terms.
Other, net
The change in Other, net financing activities during 2011 compared to
the prior year was primarily driven by lower distributions to Vodafone,
which owns a 45% noncontrolling interest in Verizon Wireless. The
change in Other, net financing activities during 2010 compared to 2009
was primarily driven by higher distributions to Vodafone.
Cash Flows From Financing Activities
We seek to maintain a mix of fixed and variable rate debt to lower bor-
rowing costs within reasonable risk parameters and to protect against
earnings and cash flow volatility resulting from changes in market condi-
tions. During 2011, 2010 and 2009, net cash used in financing activities
was $5.8 billion, $13.7 billion and $16.0 billion, respectively.
2011
During 2011, proceeds from long-term borrowings totaled $11.1 billion,
which was primarily used to repay outstanding debt, redeem higher
interest bearing debt maturing in the near term and for other general
corporate purposes.
During 2011, $0.5 billion of 5.35% Verizon Communications Notes
matured and were repaid, and we utilized $0.3 billion under fixed rate
vendor financing facilities.
DuringMarch2011,weissued$6.25billionaggregateprincipalamount
of fixed and floating rate notes at varying maturities resulting in cash pro-
ceeds of approximately $6.19 billion, net of discounts and issuance costs.
The net proceeds were used for the repayment of commercial paper and
other general corporate purposes, as well as to redeem $2.0 billion aggre-
gate principal amount of telephone subsidiary debt during April 2011.
The debt obligations of Terremark that were outstanding at the time of
its acquisition by Verizon were repaid during the second quarter of 2011.
During November 2011, we issued $4.6 billion aggregate principal
amount of fixed notes at varying maturities resulting in cash proceeds of
approximately $4.55 billion, net of discounts and issuance costs. During
November 2011, the net proceeds were used to redeem $1.6 billion
aggregate principal amount of Verizon Communications notes and $1.9
billion aggregate principal amount of telephone subsidiary debt. The
remaining net proceeds were used for the repayment of commercial
paperandothergeneralcorporatepurposes.See“OtherItems”regarding
the debt redemption costs incurred in connection with the aforemen-
tioned redemptions.
During December 2011, we repaid $0.9 billion upon maturity for the €0.7
billion of 7.625% Verizon Wireless Notes, and the related cross currency
swapwassettled.DuringMay2011,$4.0billionVerizonWirelesstwo-year
fixed and floating rate notes matured and were repaid.
During January 2012, $1.0 billion of 5.875% Verizon New Jersey Inc.
Debenturesmaturedandwererepaid.DuringFebruary2012,$0.8billion
of 5.25% Verizon Wireless Notes matured and were repaid.
2010
During 2010, Verizon received approximately $3.1 billion in cash in con-
nection with the completion of the spin-off and merger of Spinco (see
“AcquisitionsandDivestitures”).Thisspecialcashpaymentwassubse-
quently used to redeem $2.0 billion of 7.25% Verizon Communications
Notes due December 2010 at a redemption price of 102.7% of the prin-
cipal amount of the notes, plus accrued and unpaid interest through the
date of redemption, as well as other short-term borrowings. During 2010,
$0.3 billion of 6.125% and $0.2 billion of 8.625% Verizon New York Inc.
Debentures, $0.2 billion of 6.375% Verizon North Inc. Debentures and
$0.2 billion of 6.3% Verizon Northwest Inc. Debentures matured and were
repaid. In addition, during 2010 Verizon repaid $0.2 billion of floating rate
vendor financing debt.
ManagEMEnt’s discussiOn and analYsis
OF Financial cOnditiOn and REsults OF OPERatiOns continued