Telephone
Subsidiaries’ Debt
The telephone subsidiaries’ debentures outstanding at
December 31, 2004 include $250 million that are callable.
The call price is 102.5% of face value, depending upon
the remaining term to maturity of the issue. In addition,
our first mortgage bonds of $176 million are secured
by certain telephone operations assets.
See Note 22 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, 2004, the
remaining zero-coupon convertible notes were classified
as long-term since they are not redeemable at the option
of the holders again until 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 $13,670 million at December 31, 2004. The
carrying value of the available assets reflected in
our consolidated balance sheets was approximately $59.6
billion at December 31, 2004.
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, 2004, $145 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, 2004, $3,475
million principal amount of these obligations remained
outstanding. NYNEX and GTE no longer issue public debt
or file SEC reports. See Note 22 for information on
guarantees of operating subsidiary debt listed on the
New York Stock Exchange.
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, 2004 are $3.6 billion in 2005, $7.2 billion in 2006,
$2.4 billion in 2007, $2.5 billion in 2008, $1.6 billion
in 2009 and $22.0 billion thereafter. These amounts
include the debt, redeemable at the option of the holder,
at the earliest redemption dates. |
