4.

Debt

 

Changes to debt during the three months ended March 31, 2016 are as follows:

 

(dollars in millions)		Debt Maturing within One Year				Long-term Debt				Total
Balance at January 1, 2016		$	6,489			$	103,240			$	109,729
Repayments of long-term borrowings and capital leases obligations			(376	)			–				(376	)
Decrease in short-term obligations, excluding current maturities			(40	)			–				(40	)
Reclassifications of long-term debt			81				(81	)			–
Other			111				456				567
Balance at March 31, 2016		$	6,265			$	103,615			$	109,880

April Tender Offers

On March 4, 2016, we announced the commencement of three concurrent, but separate, tender offers (the April Tender Offers) to purchase for cash (1) any and all of the series of notes listed below in the Group 1 Any and All Offer, (2) any and all of the series of notes listed below in the Group 2 Any and All Offer and (3) up to $5.5 billion aggregate purchase price, excluding accrued and unpaid interest and any fees or commissions, of the series of notes listed below in the Group 3 Offer.

The April Tender Offers for each series of notes were conditioned upon the closing of the sale of our local exchange business and related landline activities in California, Florida and Texas to Frontier and the receipt of at least $9.5 billion of the purchase price cash at closing (the Sale Condition). The Sale Condition was satisfied and the April Tender Offers were settled on April 4, 2016, resulting in the notes listed below being repurchased and cancelled for $10.2 billion, inclusive of accrued interest of $0.1 billion.

The table below lists the series of notes included in the Group 1 Any and All Offer:

 

(dollars in millions, except for Purchase Price)		Interest Rate				Maturity				Principal Amount Outstanding				Purchase Price (1)				Principal Amount Purchased
Verizon Communications Inc.			2.50	%			2016			$	2,182			$	1,007.60			$	1,272
			2.00	%			2016				1,250				1,007.20				731
			6.35	%			2019				1,750				1,133.32				970
																		$	2,973

 

(1)	Per $1,000 principal amount of notes tendered and not withdrawn prior to early expiration.

The table below lists the series of notes included in the Group 2 Any and All Offer:

 

(dollars in millions, except for Purchase Price)		Interest Rate				Maturity				Principal Amount Outstanding				Purchase Price (1)				Principal Amount Purchased
Verizon Delaware LLC			8.375	%			2019			$	15			$	1,182.11			$	15
			8.625	%			2031				15				1,365.39				5
Verizon Maryland LLC			8.00	%			2029				50				1,301.32				22
			8.30	%			2031				100				1,347.26				76
			5.125	%			2033				350				1,012.50				171
Verizon New England Inc.			7.875	%			2029				349				1,261.63				176
Verizon New Jersey Inc.			8.00	%			2022				200				1,238.65				54
			7.85	%			2029				149				1,311.32				63
Verizon New York Inc.			6.50	%			2028				100				1,151.71				28
			7.375	%			2032				500				1,201.92				256
Verizon Pennsylvania LLC			6.00	%			2028				125				1,110.47				57
			8.35	%			2030				175				1,324.10				127
			8.75	%			2031				125				1,356.47				72
Verizon Virginia LLC			7.875	%			2022				100				1,227.79				43
			8.375	%			2029				100				1,319.78				81
																		$	1,246

 

(1)	Per $1,000 principal amount of notes tendered and not withdrawn prior to early expiration.

The table below lists the series of notes included in the Group 3 Offer:

 

(dollars in millions, except for Purchase Price)		Interest Rate				Maturity				Principal Amount Outstanding				Purchase Price (1)				Principal Amount Purchased
Verizon Communications Inc.			8.95	%			2039			$	353			$	1,506.50			$	63
			7.75	%			2032				251				1,315.19				33
			7.35	%			2039				480				1,293.50				68
			7.75	%			2030				1,206				1,377.92				276
			6.55	%			2043				6,585				1,291.74				2,340
			6.40	%			2033				2,196				1,220.28				466
			6.90	%			2038				477				1,243.29				92
			6.25	%			2037				750				1,167.66				114
			6.40	%			2038				866				1,176.52				116
			5.85	%			2035				1,500				1,144.68				250
			6.00	%			2041				1,000				1,164.56				–
			5.15	%			2023				8,517				1,152.83				–
Alltel Corporation			7.875	%			2032				452				1,322.92				115
			6.80	%			2029				235				1,252.93				47
GTE Corporation			6.94	%			2028				800				1,261.35				237
			8.75	%			2021				300				1,307.34				93
																		$	4,310

 

(1)	Per $1,000 principal amount of notes

 

April Early Debt Redemption

On April 8, 2016, we redeemed in whole the following series of outstanding notes which were called for redemption on April 5, 2016 (collectively, April Early Debt Redemption): $0.9 billion aggregate principal amount of Verizon Communications 2.50% Notes due 2016 at 100.8% of the principal amount of such notes, $0.5 billion aggregate principal amount of Verizon Communications 2.00% Notes due 2016 at 100.8% of the principal amount of such notes, and $0.8 billion aggregate principal amount of Verizon Communications 6.35% Notes due 2019 at 113.5% of the principal amount of such notes. These notes were repurchased and cancelled for $2.3 billion, inclusive of an immaterial amount of accrued interest.

During the second quarter of 2016, we expect to record a net pre-tax loss on early debt redemption of $1.8 billion in connection with the April Tender Offers and the April Early Debt Redemption.

Credit Facility

As of March 31, 2016, the unused borrowing capacity under our $8.0 billion credit facility was approximately $7.9 billion.

Additional Financing Activities (Non-Cash Transaction)

During the three months ended March 31, 2016, we financed, primarily through vendor financing arrangements, the purchase of approximately $0.1 billion of long-lived assets, consisting primarily of network equipment. At March 31, 2016, $1.0 billion relating to vendor financing 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 statement of cash flows.

Guarantees

We guarantee the debentures and first mortgage bonds of our operating telephone company subsidiaries. As of March 31, 2016, $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.

As a result of the closing of the Frontier transaction, as of April 1, 2016, GTE Southwest Inc., Verizon California Inc. and Verizon Florida LLC are no longer wholly-owned subsidiaries of Verizon, and the guarantees of $0.6 billion aggregate principal amount of debentures and first mortgage bonds of those entities have terminated pursuant to their terms. In addition, in connection with the Group 2 Any and All Offer, as of April 4, 2016, approximately $1.2 billion aggregate principal amount of debentures of our operating telephone company subsidiaries were repurchased and retired. Accordingly, as of April 4, 2016, guarantees remain in place with respect to approximately $1.2 billion aggregate principal amount of outstanding telephone company subsidiary debentures.

We also guarantee the debt obligations of GTE Corporation that were issued and outstanding prior to July 1, 2003. As of March 31, 2016, $1.4 billion aggregate principal amount of these obligations were outstanding. In connection with the Group 3 Offer, as of April 4, 2016, approximately $0.3 billion aggregate principal amount of debt obligations of GTE Corporation were repurchased and retired. Accordingly, as of April 4, 2016, guarantees remain in place with respect to approximately $1.1 billion aggregate principal amount of GTE Corporation debt obligations.