Verizon Wireless 2013 Annual Report Download - page 28

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In November2012, theBoard ofRepresentativesofVerizonWireless
declared a distribution to its owners, which was paid in the fourth quarter
of 2012 in proportion to their partnership interests on the payment date,
in the aggregate amount of $8.5 billion. As a result, Vodafone received a
cash payment of $3.8 billion and the remainder of the distribution was
received by Verizon.
InJuly2011,theBoardofRepresentativesofVerizonWirelessdeclared
a distribution to its owners, which was paid in the rst quarter of 2012
in proportion to their partnership interests on the payment date, in
the aggregate amount of $10 billion. As a result, Vodafone received a
cash payment of $4.5 billion and the remainder of the distribution was
received by Verizon.
Other, net
The change in Other, net nancing activities during 2013 compared to
2012 was primarily driven by higher distributions to Vodafone, which
owned a 45% noncontrolling interest in Verizon Wireless as of December
31, 2013. The change in Other, net nancing activities during 2012 com-
pared to 2011 was primarily driven by higher distributions to Vodafone,
andhigherearlydebtredemptioncosts(see“OtherItems”).
Dividends
TheVerizonBoardofDirectorsdeterminestheappropriatenessofthe
level of our dividend payments on a periodic basis by considering such
factors as long-term growth opportunities, internal cash requirements
and the expectations of our shareowners. During the third quarter of
2013,theBoardincreasedourquarterlydividendpayment2.9%to$.53
per share from $.515 per share in the same period of 2012. This is the
seventhconsecutiveyearthatVerizon’sBoardofDirectorshasapproved
aquarterlydividendincrease.Duringthethirdquarterof2012,theBoard
increased our quarterly dividend payment 3.0% to $.515 per share from
$.50 per share in the same period of 2011. During the third quarter of
2011,theBoardincreasedourquarterlydividendpayment2.6%to$.50
per share from $.4875 per share in the same period of 2010.
During 2013, we paid $5.9 billion in dividends compared to $5.2 billion
in 2012 and $5.6 billion in 2011. As in prior periods, dividend payments
were a signicant use of capital resources. While the dividends declared
per common share increased in 2012 compared to 2011, the total
amount of cash dividends paid decreased during 2012 compared to the
prior year as a portion of the dividends was satised through the issuance
ofcommonsharesfromTreasurystock(see“CommonStock”).
Credit Facilities
On August 13, 2013, we amended our $6.2 billion credit facility with a
group of major nancial institutions to extend the maturity date to August
12, 2017. As of December 31, 2013, the unused borrowing capacity under
this credit facility was approximately $6.1 billion. The credit facility does
not require us to comply with nancial covenants or maintain speci-
ed credit ratings, and it permits us to borrow even if our business has
incurred a material adverse change. We use the credit facility to support
the issuance of commercial paper, for the issuance of letters of credit and
for general corporate purposes.
During October 2013, we entered into a $2.0 billion 364-day revolving
credit agreement with a group of major nancial institutions. Although
eective as of October 2013, we could not draw on this revolving credit
agreement prior to the completion of the Wireless Transaction. We may
use borrowings under the 364-day credit agreement for general corpo-
rate purposes. The 364-day revolving credit agreement contains certain
negative covenants, including a negative pledge covenant, a merger or
similar transaction covenant and an accounting changes covenant, ar-
mative covenants and events of default that are customary for companies
maintaining an investment grade credit rating. In addition, this agreement
requires us to maintain a leverage ratio (as dened in the agreement) not
in excess of 3.50:1.00, until our credit ratings reach a certain level.
On November 2, 2012, we announced the commencement of a tender
offer (the Tender Offer) to purchase for cash any and all of the out-
standing $1.25 billion aggregate principal amount of 8.95% Verizon
Communications Notes due 2039. In the Tender Oer that was com-
pleted November 9, 2012, $0.9 billion aggregate principal amount of the
notes was purchased and $0.35 billion principal amount of the notes
remained outstanding. Any accrued and unpaid interest on the principal
purchased was paid to the date of purchase.
During November 2012, we issued $4.5 billion aggregate principal
amount of xed rate notes at varying maturities resulting in cash pro-
ceeds of approximately $4.47 billion, net of discounts and issuance costs.
The net proceeds were used for general corporate purposes, for the
Tender Oer, and to redeem $0.7 billion of $2.0 billion of 8.75% Verizon
Communications Notes due 2018, $1.0 billion of 4.625% Verizon Virginia
LLC Debentures, Series A due 2013 and $0.75 billion of 4.35% Verizon
Communications Notes due 2013.
In addition, during 2012, various xed rate notes totaling approximately
$0.2 billion were repaid and any accrued and unpaid interest was paid to
the date of payment.
See“OtherItems”regardingtheearlydebtredemptioncostsincurredin
connection with the aforementioned repurchases and redemptions.
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 xed rate
vendor nancing facilities.
DuringMarch2011,weissued$6.25billionaggregateprincipalamount
of xed and oating 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 xed rate notes at varying maturities resulting in cash pro-
ceeds of approximately $4.55 billion, net of discounts and issuance costs.
During November 2011, the net proceeds were used to redeem $1.6 bil-
lion 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 early debt redemption costs incurred in connection with the afore-
mentioned 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
xed and oating rate notes matured and were repaid.
Special Distributions
InMay2013,theBoardofRepresentativesofVerizonWirelessdeclared
a distribution to its owners, which was paid in the second quarter of
2013 in proportion to their partnership interests on the payment date,
in the aggregate amount of $7.0 billion. As a result, Vodafone received a
cash payment of $3.15 billion and the remainder of the distribution was
received by Verizon.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS continued