Verizon Wireless 2014 Annual Report Download - page 29

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2013
During 2013, our net cash provided by nancing activities of $26.5 bil-
lion was primarily driven by proceeds from long-term borrowings of $49.2
billion to fund the Wireless Transaction. This source of cash was partially
oset by:
• $8.2billionusedforrepaymentsof long-term borrowingsandcapital
lease obligations;
• $5.9billionusedfordividendpayments;and
• $3.2billionusedforaspecialdistributiontoanoncontrollinginterest.
Proceeds from and Repayments of Long-Term Borrowings
As of December 31, 2013, our total debt increased to $93.6 billion as
compared to $52.0 billion at December 31, 2012 primarily as a result
of additional debt issued to nance the Wireless Transaction. Since the
substantial majority of our total debt portfolio consists of fixed rate
indebtedness, changes in interest rates do not have a material eect on
our interest payments. See Note 8 to the consolidated nancial state-
ments for additional details regarding our debt activity.
Dividends
During the third quarter of 2013, the Board increased our quarterly divi-
dend payment 2.9% to $.53 per share from $.515 per share in the same
period of 2012. As in prior periods, dividend payments were a signicant
use of capital resources.
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.
Other, net
The change in Other, net financing 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.
2012
During 2012, our net cash used in nancing activities of $21.3 billion was
primarily driven by:
• $8.3billionusedforaspecialdistributiontoanoncontrollinginterest;
• $6.4billionusedforrepaymentsof long-term borrowingsandcapital
lease obligations; and
• $5.2billionusedfordividendpayments.
These uses of cash were partially oset by proceeds from long-term bor-
rowings of $4.5 billion.
Proceeds from and Repayments of Long-Term Borrowings
As of December 31, 2012, our total debt decreased to $52.0 billion as
compared to $55.2 billion at December 31, 2011 primarily as a result of
the repayment of long-term borrowings. Since the substantial majority
of our total debt portfolio consists of xed rate indebtedness, changes in
interest rates do not have a material eect on our interest payments.
See“OtherItems”foradditionalinformationrelatedto the earlydebt
redemption costs incurred in 2012.
Other, net
The change in Other, net nancing activities during 2012 compared to
2011 was primarily driven by higher distributions to Vodafone, and higher
earlydebtredemptioncosts(see“OtherItems”).
Cash Flows Provided by (Used In) Financing Activities
We seek to maintain a mix of xed and variable rate debt to lower bor-
rowing costs within reasonable risk parameters and to protect against
earnings and cash ow volatility resulting from changes in market con-
ditions. During 2014, 2013 and 2012, net cash provided by (used in)
nancing activities was $(57.7) billion, $26.5 billion and $(21.3) billion,
respectively.
2014
During 2014, our net cash used in nancing activities of $57.7 billion was
primarily driven by:
• $58.9billionusedtopartiallyfundtheWirelessTransaction(seeNote2
to the consolidated nancial statements);
• $17.7billionusedforrepaymentsoflong-termborrowingsandcapital
lease obligations; and
• $7.8billionusedfordividendpayments.
These uses of cash were partially oset by proceeds from long-term bor-
rowings of $31.0 billion.
Proceeds from and Repayments of Long-Term Borrowings
As of December 31, 2014, our total debt increased to $113.3 billion as
compared to $93.6 billion at December 31, 2013 primarily as a result
of additional debt issued to finance the Wireless Transaction. Since
the substantial majority of our total debt portfolio consists of xed rate
indebtedness, changes in interest rates do not have a material eect on
our interest payments. Throughout 2014, we accessed the capital mar-
kets to optimize the maturity schedule of our debt portfolio and take
advantage of lower interest rates, thereby reducing our eective interest
rate to 4.9% from 5.2% in 2013. See Note 8 to the consolidated nancial
statements for additional details regarding our debt activity.
At December 31, 2014, approximately $9.6 billion or 8.5% of the aggre-
gate principal amount of our total debt portfolio consisted of foreign
denominated debt, primarily the Euro and British Pound Sterling. We
have entered into cross currency swaps in order to x our future interest
and principal payments in U.S. dollars and mitigate the impact of
foreign currency transaction gains or losses.  See“Market Risk” for
additional information.
See“OtherItems”foradditionalinformationrelatedtotheearlydebt
redemption costs incurred in 2014.
Dividends
The Verizon Board of Directors assesses the level of our dividend pay-
ments on a periodic basis taking into account such factors as long-term
growth opportunities, internal cash requirements and the expectations
of our shareowners. During the third quarter of 2014, the Board increased
our quarterly dividend payment 3.8% to $.55 per share from $.53 per
share in the same period of 2013. This is the eighth consecutive year that
Verizon’sBoardofDirectorshasapprovedaquarterlydividendincrease.
As in prior periods, dividend payments were a signicant use of capital
resources. During 2014, we paid $7.8 billion in dividends compared
to $5.9 billion in 2013. The increase is primarily due to the issuance of
approximately 1.27 billion additional shares of common stock as a result
of the Wireless Transaction.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS continued