Verizon Wireless 2012 Annual Report Download - page 42

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We also guarantee the debt obligations of GTE Corporation that were
issuedandoutstandingpriortoJuly1,2003.AsofDecember31,2012,
$1.7 billion principal amount of these obligations remain outstanding
(see Note 8 to the consolidated financial statements).
As of December 31, 2012 letters of credit totaling approximately $0.1 bil-
lion, which were executed in the normal course of business and support
several financing arrangements and payment obligations to third parties,
were outstanding (see Note 16 to the consolidated financial statements).
Guarantees
In connection with the execution of agreements for the sale 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 financial
losses (see Note 16 to the consolidated financial statements).
We guarantee the debentures and first mortgage bonds of our operating
telephone company subsidiaries. As of December 31, 2012, $4.3 billion
principal amount of these obligations remain outstanding. Each guar-
antee will remain in place for the life of the obligation unless terminated
pursuant to its terms, including the operating telephone company no
longer being a wholly-owned subsidiary of Verizon.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 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, 2012. 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) $ 51,189 $ 3,805 $ 8,906 $ 5,417 $ 33,061
Capital lease obligations(2) 298 64 91 71 72
Total long-term debt, including current maturities 51,487 3,869 8,997 5,488 33,133
Interest on long-term debt(1) 32,761 2,780 4,818 4,321 20,842
Operating leases(2) 11,841 2,038 3,412 2,272 4,119
Purchase obligations (3) 41,768 29,645 7,503 4,162 458
Income tax audit settlements(4) 52 – 52 – –
Other long-term liabilities(5) 3,921 1,663 2,258 – –
Total contractual obligations $ 141,830 $ 39,995 $ 27,040 $ 16,243 $ 58,552
(1) Items included in long-term debt with variable coupon rates are described in Note 8 to the consolidated financial statements.
(2) See Note 7 to the consolidated financial statements.
(3) The purchase obligations reflected above are primarily commitments to purchase handsets and peripherals, 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 that are the subject
ofcontractualobligations.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 16 to the consolidated financial statements).
(4) We are not able to make a reliable estimate of when the unrecognized tax benefits balance of $2.9 billion and related interest and penalties will be settled with the respective taxing authorities
until issues or examinations are further developed (see Note 12 to the consolidated financial statements).
(5) Other long-term liabilities include estimated postretirement benefit and qualified pension plan contributions (see Note 11 to the consolidated financial statements).