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| note 22 (page
1 of 2) |
| GUARANTEES OF OPERATING SUBSIDIARY
DEBT |
Verizon has guaranteed
the following two obligations of indirect wholly owned
operating subsidiaries: $480 million 7% debentures series
B, due 2042 issued by Verizon New England Inc. and $300
million 7% debentures series F issued by Verizon South
Inc. due 2041. These guarantees are full and unconditional
and would require Verizon to make scheduled payments
immediately if either of the two subsidiaries failed
to do so. Both of these securities were issued in denominations
of $25 and were sold primarily to retail investors and
are listed on the New York Stock Exchange. SEC rules
permit us to include condensed consolidating financial
information for these two subsidiaries in our periodic
SEC reports rather than filing separate subsidiary periodic
SEC reports.
Below is the condensed consolidating financial information.
Verizon New England and Verizon South are presented
in separate columns. The column labeled Parent represents
Verizon’s investments in all of its subsidiaries under
the equity method and the Other column represents all
other subsidiaries of Verizon on a combined basis. The
Adjustments column reflects intercompany eliminations. |
| Condensed
Consolidating |
|
|
|
Verizon |
|
|
|
|
|
(dollars
in millions |
) |
|
| Statements
of Income |
|
|
|
New |
|
Verizon |
|
|
|
Adjust |
- |
|
|
|
| Year
Ended December 31, 2004 |
|
Parent |
England |
|
South |
|
Other |
ments |
|
Total |
|
|
 |
|
| Operating
revenues |
$ |
– |
|
|
$ |
3,955 |
|
|
$ |
934 |
|
|
$ |
66,756 |
|
|
$ |
(362 |
) |
|
$ |
71,283 |
|
|
| Operating
expenses |
|
260 |
|
|
|
3,664 |
|
|
|
717 |
|
|
|
53,887 |
|
|
|
(362 |
) |
|
|
58,166 |
|
|
|
| Operating
Income (Loss) |
|
(260 |
) |
|
|
291 |
|
|
|
217 |
|
|
|
12,869 |
|
|
|
– |
|
|
|
13,117 |
|
|
Equity
in earnings of
unconsolidated
businesses |
|
7,714 |
|
|
|
59 |
|
|
|
– |
|
|
|
1,438 |
|
|
|
(7,520 |
) |
|
|
1,691 |
|
|
Income
from other
unconsolidated
businesses |
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
75 |
|
|
|
– |
|
|
|
75 |
|
|
| Other
income and (expense), net |
|
171 |
|
|
|
8 |
|
|
|
7 |
|
|
|
38 |
|
|
|
(202 |
) |
|
|
22 |
|
|
| Interest
expense |
|
(20 |
) |
|
|
(165 |
) |
|
|
(63 |
) |
|
|
(2,144 |
) |
|
|
8 |
|
|
|
(2,384 |
) |
|
| Minority
interest |
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(2,409 |
) |
|
|
– |
|
|
|
(2,409 |
) |
|
|
Income
before provision for
income
taxes, discontinued
operations
and cumulative
effect
of accounting change |
|
7,605 |
|
|
|
193 |
|
|
|
161 |
|
|
|
9,867
|
|
|
|
(7,714 |
) |
|
|
10,112 |
|
|
| Income
tax benefit (provision) |
|
229 |
|
|
|
(50 |
) |
|
|
(34 |
) |
|
|
(2,996 |
) |
|
|
– |
|
|
|
(2,851 |
) |
|
|
Income
Before Discontinued
Operations
And Cumulative
Effect
Of Accounting Change |
|
7,834 |
|
|
|
143 |
|
|
|
127 |
|
|
|
6,871 |
|
|
|
(7,714 |
) |
|
|
7,261 |
|
|
Gain
(loss) on discontinued
operations,
net of tax |
|
(3 |
) |
|
|
– |
|
|
|
– |
|
|
|
573 |
|
|
|
– |
|
|
|
570 |
|
|
Cumulative
effect of accounting
change,
net of tax |
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
| Net
Income |
$ |
7,831 |
|
|
$ |
143 |
|
|
$ |
127 |
|
|
$ |
7,444 |
|
|
$ |
(7,714 |
) |
|
$ |
7,831 |
|
|
 |
|
|
| Condensed
Consolidating |
|
|
|
Verizon |
|
|
|
|
|
(dollars
in millions |
) |
|
| Statements
of Income |
|
|
|
New |
|
Verizon |
|
|
|
Adjust |
- |
|
|
|
| Year
Ended December 31, 2003 |
|
Parent |
England |
|
South |
|
Other |
ments |
|
Total |
|
|
|
|
| Operating
revenues |
$ |
– |
|
|
$ |
4,102 |
|
|
$ |
951 |
|
|
$ |
62,692 |
|
|
$ |
(277 |
) |
|
$ |
67,468 |
|
|
| Operating
expenses |
|
562 |
|
|
|
4,148 |
|
|
|
808 |
|
|
|
54,820 |
|
|
|
(277 |
) |
|
|
60,061 |
|
|
|
| Operating
Income (Loss) |
|
(562 |
) |
|
|
(46 |
) |
|
|
143 |
|
|
|
7,872 |
|
|
|
– |
|
|
|
7,407 |
|
|
Equity
in earnings (loss) of
unconsolidated
businesses |
|
3,176 |
|
|
|
(42 |
) |
|
|
– |
|
|
|
1,272 |
|
|
|
(3,128 |
) |
|
|
1,278 |
|
|
Income
(loss) from other
unconsolidated
businesses |
|
(10 |
) |
|
|
– |
|
|
|
– |
|
|
|
341 |
|
|
|
– |
|
|
|
331 |
|
|
| Other
income and (expense), net |
|
75 |
|
|
|
(1 |
) |
|
|
2 |
|
|
|
(3 |
) |
|
|
(36 |
) |
|
|
37 |
|
|
| Interest
expense |
|
(78 |
) |
|
|
(160 |
) |
|
|
(64 |
) |
|
|
(2,483 |
) |
|
|
(12 |
) |
|
|
(2,797 |
) |
|
| Minority
interest |
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(1,583 |
) |
|
|
– |
|
|
|
(1,583 |
) |
|
|
Income
(loss) before provision for
income
taxes, discontinued
operations
and cumulative effect
of
accounting change |
|
2,601 |
|
|
|
(249 |
)
|
|
|
81 |
|
|
|
5,416 |
|
|
|
(3,176 |
) |
|
|
4,673 |
|
|
| Income
tax benefit (provision) |
|
476 |
|
|
|
82 |
|
|
|
(32 |
) |
|
|
(1,739 |
) |
|
|
— |
|
|
|
(1,213 |
) |
|
|
Income
(Loss) Before
Discontinued
Operations
And Cumulative
Effect Of
Accounting
Change |
|
3,077 |
|
|
|
(167 |
) |
|
|
49 |
|
|
|
3,677 |
|
|
|
(3,176 |
) |
|
|
3,460 |
|
|
Loss
on discontinued operations,
net
of tax |
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(886 |
) |
|
|
– |
|
|
|
(886 |
) |
|
Cumulative
effect of accounting
change,
net of tax |
|
– |
|
|
|
369 |
|
|
|
47 |
|
|
|
87 |
|
|
|
– |
|
|
|
503 |
|
|
|
| Net
Income |
$ |
3,077 |
|
|
$ |
202 |
|
|
$ |
96 |
|
|
$ |
2,878 |
|
|
$ |
(3,176 |
) |
|
$ |
3,077 |
|
|
|
|
|
| Condensed
Consolidating |
|
|
|
Verizon |
|
|
|
|
|
(dollars
in millions |
) |
|
| Statements
of Income |
|
|
|
New |
|
Verizon |
|
|
|
Adjust |
- |
|
|
|
| Year
Ended December 31, 2002 |
|
Parent |
England |
|
South |
|
Other |
ments |
|
Total |
|
|
|
|
| Operating
revenues |
$ |
– |
|
|
$ |
4,365 |
|
|
$ |
1,350 |
|
|
$ |
61,585 |
|
|
$ |
(244 |
) |
|
$ |
67,056 |
|
|
| Operating
expenses |
|
385 |
|
|
|
3,826 |
|
|
|
(753 |
) |
|
|
48,965 |
|
|
|
(244 |
) |
|
|
52,179 |
|
|
|
| Operating
Income (Loss) |
|
(385 |
) |
|
|
539 |
|
|
|
2,103 |
|
|
|
12,620 |
|
|
|
– |
|
|
|
14,877 |
|
|
Equity
in earnings (loss) of
unconsolidated
businesses |
|
4,054 |
|
|
|
29 |
|
|
|
– |
|
|
|
(1,621 |
) |
|
|
(4,009 |
) |
|
|
(1,547 |
) |
|
Loss
from other
unconsolidated
businesses |
|
(100 |
) |
|
|
– |
|
|
|
– |
|
|
|
(2,757 |
) |
|
|
– |
|
|
|
(2,857 |
) |
|
| Other
income and (expense), net |
|
62 |
|
|
|
(33 |
) |
|
|
16 |
|
|
|
169 |
|
|
|
(23 |
) |
|
|
191 |
|
|
| Interest
expense |
|
(53 |
) |
|
|
(164 |
) |
|
|
(74 |
) |
|
|
(2,817 |
) |
|
|
(22 |
) |
|
|
(3,130 |
) |
|
| Minority
interest |
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(1,404 |
) |
|
|
– |
|
|
|
(1,404 |
) |
|
|
Income
before provision for
income
taxes, discontinued
operations
and cumulative
effect
of accounting change |
|
3,578 |
|
|
|
371 |
|
|
|
2,045 |
|
|
|
4,190 |
|
|
|
(4,054 |
) |
|
|
6,130 |
|
|
| Income
tax benefit (provision) |
|
501 |
|
|
|
(138 |
) |
|
|
(794 |
) |
|
|
(1,108 |
) |
|
|
– |
|
|
|
(1,539 |
) |
|
|
Income
Before Discontinued
Operations
And Cumulative
Effect
Of Accounting Change |
|
4,079 |
|
|
|
233 |
|
|
|
1,251
|
|
|
|
3,082 |
|
|
|
(4,054 |
) |
|
|
4,591 |
|
|
Loss
on discontinued operations,
net
of tax |
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(16 |
) |
|
|
– |
|
|
|
(16 |
) |
|
Cumulative
effect of accounting
change,
net of tax |
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
(496 |
) |
|
|
– |
|
|
|
(496 |
) |
|
|
| Net
Income |
$ |
4,079 |
|
|
$ |
233 |
|
|
$ |
1,251 |
|
|
$ |
2,570 |
|
|
$ |
(4,054 |
) |
|
$ |
4,079 |
|
|
|
|
| For
continuation of Note 22, see next page. |
|
|
|
|
