4.

Debt

 

Changes to debt during the three months ended March 31, 2015 are as follows:

 

(dollars in millions)		Debt Maturing within One Year				Long-term Debt				Total
Balance at January 1, 2015		$	2,735			$	110,536			$	113,271
Proceeds from borrowings			4,000				2,497				6,497
Repayments of borrowings and capital leases obligations			(5,576	)			–				(5,576	)
Increase in short-term obligations, excluding current maturities			482				–				482
Reclassifications of long-term debt			2,782				(2,782	)			–
Reclassification of long-term debt to Non-current liabilities related to assets held for sale (Note 2)			–				(594	)			(594	)
Other			16				(708	)			(692	)
Balance at March 31, 2015		$	4,439			$	108,949			$	113,388

February Exchange Offers

On February 11, 2015, we announced the commencement of seven separate private offers to exchange (the February Exchange Offers) specified series of outstanding notes and debentures issued by Verizon and GTE Corporation (collectively, the Old Notes) for new Notes to be issued by Verizon (the New Notes) and, in the case of the 6.94% debentures due 2028 of GTE Corporation, cash. The February Exchange Offers have been accounted for as a modification of debt. On March 13, 2015, Verizon issued $2.9 billion aggregate principal amount of 4.272% Notes due 2036 (the 2036 New Notes), $5.0 billion aggregate principal amount of 4.522% Notes due 2048 (the 2048 New Notes) and $5.5 billion aggregate principal amount of 4.672% Notes due 2055 (the 2055 New Notes) in satisfaction of the exchange offer consideration on tendered Old Notes (not including accrued and unpaid interest on the Old Notes). The following tables list the series of Old Notes included in the February Exchange Offers and the principal amount of each such series accepted by Verizon for exchange.

The table below lists the series of Old Notes included in the February Exchange Offer for the 2036 New Notes:

 

(dollars in millions)		Interest Rate				Maturity				Principal Amount Outstanding				Principal Amount Accepted For Exchange
Verizon Communications Inc.			5.15	%			2023			$	11,000			$	2,483

 

The table below lists the series of Old Notes included in the February Exchange Offers for the 2048 New Notes:

 

(dollars in millions)		Interest Rate				Maturity				Principal Amount Outstanding				Principal Amount Accepted For Exchange
Verizon Communications Inc.			6.90	%			2038			$	1,250			$	773
			6.40	%			2038				1,750				884
			6.40	%			2033				4,355				2,159
			6.25	%			2037				750				–
GTE Corporation			6.94	%			2028				800				–
														$	3,816

The table below lists the series of Old Notes included in the February Exchange Offer for the 2055 New Notes:

 

(dollars in millions)		Interest Rate				Maturity				Principal Amount Outstanding				Principal Amount Accepted For Exchange
Verizon Communications Inc.			6.55	%			2043			$	10,670			$	4,084

Term Loan Agreement

During the first quarter of 2015, we entered into a term loan agreement with a major financial institution, pursuant to which we borrowed $6.5 billion for general corporate purposes, including the acquisition of spectrum licenses. Borrowings under the term loan agreement mature in March 2016, with a $4.0 billion mandatory prepayment required in June 2015. The term loan agreement contains certain negative covenants, including a negative pledge covenant, a merger or similar transaction covenant and an accounting changes covenant, affirmative covenants and events of default that are customary for companies maintaining an investment grade credit rating. In addition, the term loan agreement requires us to maintain a leverage ratio (as defined in the term loan agreement) not in excess of 3.50:1.00, until our credit ratings are equal to or higher than A3 and A- at Moody’s Investors Service and Standard & Poor’s Ratings Services, respectively.

During March 2015, we prepaid approximately $5.0 billion of the term loan agreement, which satisfies the mandatory prepayment.

Other Credit Facilities

As of March 31, 2015, the unused borrowing capacity under our $8.0 billion credit facility was approximately $7.9 billion.

Additional Financing Activities (Non-Cash Transaction)

During the first quarter of 2015, we financed, primarily through vendor financing arrangements, the purchase of approximately $0.2 billion of long-lived assets, consisting primarily of network equipment. At March 31, 2015, $0.8 billion of these arrangements, including those entered into in prior years, remained outstanding. These purchases are non-cash financing activities and therefore not reflected within Capital expenditures on our condensed consolidated statements of cash flows.

Guarantees

We guarantee the debentures and first mortgage bonds of our operating telephone company subsidiaries. As of March 31, 2015, $3.1 billion aggregate principal amount of these obligations remained outstanding. Each guarantee will remain in place for the life of the obligation unless terminated pursuant to its terms, including the operating telephone company no longer being a wholly-owned subsidiary of Verizon.

We also guarantee the debt obligations of GTE Corporation that were issued and outstanding prior to July 1, 2003. As of March 31, 2015, $1.4 billion aggregate principal amount of these obligations remain outstanding.