Telephone
Subsidiaries’ Debt
Our first mortgage bonds of $172 million are secured by certain
telephone operations assets.
See Note 21 for additional information about guarantees of
operating subsidiary debt.
Zero-Coupon Convertible Notes
In May 2001, Verizon Global Funding Corp. (Verizon Global
Funding) issued approximately $5.4 billion in principal amount
at maturity of zero-coupon convertible notes due 2021, resulting
in gross proceeds of approximately $3 billion. The notes are
convertible into shares of our common stock at an initial
price of $69.50 per share if the closing price of Verizon
common stock on the New York Stock Exchange exceeds specified
levels or in other specified circumstances. The conversion
price increases by at least 3% a year. The initial conversion
price represents a 25% premium over the May 8, 2001 closing
price of $55.60 per share. The zero-coupon convertible notes
are callable by Verizon Global Funding on or after May 15,
2006. In addition, the notes are redeemable at the option
of the holders on May 15th in each of the years 2004, 2006,
2011 and 2016. On May 15, 2004, $3,292 million of principal
amount of the notes ($1,984 million after unamortized discount)
were redeemed by Verizon Global Funding. As of December 31,
2005, the remaining zero-coupon convertible notes were classified
as debt maturing within one year since they are redeemable
at the option of the holders on May 15, 2006.
Support Agreements
All of Verizon Global Funding’s debt has the benefit
of Support Agreements between us and Verizon Global Funding,
which give holders of Verizon Global Funding debt the right
to proceed directly against us for payment of interest, premium
(if any) and principal outstanding should Verizon Global Funding
fail to pay. The holders of Verizon Global Funding debt do
not have recourse to the stock or assets of most of our telephone
operations; however, they do have recourse to dividends paid
to us by any of our consolidated subsidiaries as well as assets
not covered by the exclusion. Verizon Global Funding’s
long-term debt, including current portion, aggregated $14,152
million at December 31, 2005. The carrying value of the available
assets reflected in our consolidated balance sheets was approximately
$63.9 billion at December 31, 2005.
Verizon and NYNEX Corporation are the joint and several co-obligors
of the 20-Year 9.55% Debentures due 2010 previously issued
by NYNEX on March 26, 1990. As of December 31, 2005, $113
million principal amount of this obligation remained outstanding.
In addition, Verizon Global Funding has guaranteed the debt
obligations of GTE Corporation (but not the debt of its subsidiary
or affiliate companies) that were issued and outstanding prior
to July 1, 2003. As of December 31, 2005, $3,400 million principal
amount of these obligations remained outstanding. NYNEX and
GTE no longer issue public debt or file SEC reports. See Note
21 for information on guarantees of operating subsidiary debt
listed on the New York Stock Exchange.
On February 1, 2006, Verizon announced the merger of Verizon
Global Funding into Verizon.
Debt Covenants
We and our consolidated subsidiaries are in compliance with
all of our debt covenants.
Maturities of Long-Term Debt
Maturities of long-term debt outstanding at December 31, 2005
are $4.9 billion in 2006, $4.7 billion in 2007, $2.5 billion
in 2008, $1.7 billion in 2009, $2.8 billion in 2010 and $20.2
billion thereafter. These amounts include the debt, redeemable
at the option of the holder, at the earliest redemption dates. |
