| Debt | Note 7. Debt Outstanding long-term debt obligations as of December 31, 2020 and 2019 are as follows: (dollars in millions) At December 31, Maturities Interest 2020 2019 Verizon Communications < 5 Years 0.85 – 5.51 $ 17,936 $ 19,885 5-10 Years 1.38 – 7.75 35,423 30,038 > 10 Years 1.75 – 8.95 65,019 47,777 < 5 Years Floating (1) 2,917 2,210 5-10 Years Floating (1) 941 1,789 Alltel Corporation 5-10 Years 6.80 38 38 > 10 Years 7.88 58 58 Operating telephone company subsidiaries—debentures < 5 Years 7.88 – 8.00 141 141 5-10 Years 6.00 – 8.38 317 286 > 10 Years 5.13 – 8.75 308 339 GTE LLC < 5 Years 8.75 141 141 5-10 Years 6.94 250 250 Other subsidiaries—asset-backed debt < 5 Years 0.41 – 3.56 9,414 8,116 < 5 Years Floating (1) 1,216 4,277 Finance lease obligations (average rate of 2.5% and 3.2% in 2020 and 2019, respectively) 1,284 1,116 Unamortized discount, net of premium (6,057) (4,480) Unamortized debt issuance costs (604) (492) Total long-term debt, including current maturities 128,742 111,489 Less long-term debt maturing within one year 5,569 10,777 Total long-term debt $ 123,173 $ 100,712 Total long-term debt, including current maturities $ 128,742 $ 111,489 Plus short-term notes payable 320 — Total debt $ 129,062 $ 111,489 (1) The debt obligations bore interest at a floating rate based on the London Interbank Offered Rate (LIBOR) plus an applicable interest margin per annum. Maturities of long-term debt (secured and unsecured) outstanding, including current maturities, excluding unamortized debt issuance costs, at December 31, 2020 are as follows: Years (dollars in millions) 2021 $ 5,227 2022 8,645 2023 7,511 2024 4,286 2025 8,528 Thereafter 93,865 During 2020, we received $31.5 billion of proceeds from long-term borrowings, which included $5.6 billion of proceeds from asset-backed debt transactions. The net proceeds are a result of the liquidity strategy that we pursued at the beginning of the COVID-19 pandemic to maintain a higher cash balance in order to further protect the Company against the economic uncertainties associated with the COVID-19 pandemic and to opportunistically raise cash to finance future obligations at a time when we believed that market conditions were favorable. We used $17.2 billion of cash to repay, redeem and repurchase long-term borrowings and finance lease obligations, including $7.4 billion to prepay and repay asset-backed, long-term borrowings. The net proceeds from the green bond issued in 2020 are expected to be used to fund certain renewable energy projects. During 2019, we received $18.7 billion of proceeds from long-term borrowings, which included $8.6 billion of proceeds from asset-backed debt transactions. The net proceeds were used for general corporate purposes including the repayment of debt and the funding of certain eligible green projects. We used $23.9 billion of cash to repay, redeem and repurchase long-term borrowings and finance lease obligations, including $6.3 billion to prepay and repay asset-backed, long-term borrowings. 2020 Significant Debt Transactions Debt or equity financing may be needed to fund additional investments or development activities, including, for example, to complete our acquisition of Tracfone or to acquire additional wireless spectrum, or to maintain an appropriate capital structure to ensure our financial flexibility. The following tables show the significant transactions involving the senior unsecured debt securities of Verizon and its subsidiaries that occurred during the year ended December 31, 2020. Exchange Offers (dollars in millions) Principal Amount Exchanged Principal Amount Issued Verizon 2.450% - 5.150% notes and floating rate notes, due 2021 - 2024 $ 1,047 $ — Verizon 1.680% notes due 2030 (1) — 1,147 Verizon 5.012% - 6.550% notes, due 2037 - 2049 3,666 — Verizon 2.987% notes due 2056 (1) — 4,500 Total (2) $ 4,713 $ 5,647 (1) The principal amount issued in exchange does not include either an insignificant amount of cash paid in lieu of the issuance of fractional new notes or accrued and unpaid interest paid on the old notes accepted for exchange to the date of exchange. (2) The debt exchange offers above meet the criteria to be accounted for as a modification of debt. As a result, the excess of new notes issued over the notes exchanged of $934 million, and an additional $748 million cash consideration paid were recorded as a discount to Long-term debt in the consolidated balance sheets. The cash payment was recorded in Other, Net within Cash Flows from Financing activities. Repayments, Redemptions and Repurchases (dollars in millions) Principal Repaid/ Redeemed/ Repurchased Amount Paid (1) Verizon 4.950% notes due 2047 $ 1,475 $ 1,475 Verizon 5.143% preferred stock due 2020 1,650 1,650 Verizon floating rate (LIBOR +0.550%) notes due 2020 (2) 1,018 1,018 Verizon 4.600% notes due 2021 920 949 Verizon 3.125% notes due 2022 1,256 1,314 Verizon 3.450% notes due 2021 566 575 Open market repurchases of various Verizon notes 121 143 Verizon 2.375% notes due 2022 (3) € 935 1,199 Verizon 0.500% notes due 2022 (4) € 454 517 Total $ 8,840 (1) Represents amount paid to repay, redeem or repurchase, excluding interest or dividend. (2) The three-month LIBOR. (3) Principal and premium amount repaid was €980 million. U.S. dollar amount paid includes cash settlement from derivatives entered into in connection with the transaction. See Note 9 for information on cross currency swaps. (4) Principal and premium amount repaid was €463 million. U.S. dollar amount paid includes cash settlement from derivatives entered into in connection with the transaction. See Note 9 for information on cross currency swaps. Issuances (dollars in millions) Principal Amount Issued Net Proceeds (1) Verizon 3.600% notes due 2060 $ 2,385 $ 2,369 Verizon 3.000% notes due 2027 750 747 Verizon 3.150% notes due 2030 1,500 1,489 Verizon 4.000% notes due 2050 1,250 1,241 Verizon 1.500% notes due 2030 (2) 1,000 995 Verizon 3.000% notes due 2060 1,123 1,115 Verizon 0.850% notes due 2025 2,000 1,994 Verizon 1.750% notes due 2031 2,250 2,231 Verizon 2.650% notes due 2040 3,000 2,979 Verizon 2.875% notes due 2050 2,750 2,722 Verizon 3.000% notes due 2060 2,000 1,967 Verizon 2.500% notes due 2030 (3) C$ 1,000 705 Verizon 3.625% notes due 2050 (3) C$ 300 209 Verizon 1.300% notes due 2033 (3) € 1,350 1,464 Verizon 1.850% notes due 2040 (3) € 800 869 Verizon 1.125% notes due 2028 (3) £ 600 766 Verizon 1.875% notes due 2038 (3) £ 600 765 Total $ 24,627 (1) Net proceeds were net of discount and issuance costs. (2) An amount equal to the net proceeds from this green bond is expected to be used to fund, in whole or in part, certain renewable energy projects, including new and existing investments made by us during the period from July 1, 2020 through the maturity date of the green bond. (3) See Note 9 for information on derivative transactions related to the issuances. Short-Term Borrowings and Commercial Paper Program As of December 31, 2020, we had no short-term borrowings or commercial paper outstanding. In April 2020, we issued $3.5 billion in commercial paper, of which $2.5 billion was repaid during the three months ended June 30, 2020 and the remaining $1.0 billion was repaid during the three months ended September 30, 2020. These transactions were recorded within Other, net cash flow from financing in our consolidated statements of cash flows. Asset-Backed Debt As of December 31, 2020, the carrying value of our asset-backed debt was $10.6 billion. Our asset-backed debt includes Asset-Backed Notes (ABS Notes) issued to third-party investors (Investors) and loans (ABS Financing Facilities) received from banks and their conduit facilities (collectively, the Banks). Our consolidated asset-backed debt bankruptcy remote legal entities (each, an ABS Entity or collectively, the ABS Entities) issue the debt or are otherwise party to the transaction documentation in connection with our asset-backed debt transactions. Under the terms of our asset-backed debt, Cellco and certain other affiliates of Verizon (collectively, the Originators) transfer device payment plan agreement receivables to one of the ABS Entities, which in turn transfers such receivables to another ABS Entity that issues the debt. Verizon entities retain the equity interests in the ABS Entities, which represent the rights to all funds not needed to make required payments on the asset-backed debt and other related payments and expenses. Our asset-backed debt is secured by the transferred device payment plan agreement receivables and future collections on such receivables. The device payment plan agreement receivables transferred to the ABS Entities and related assets, consisting primarily of restricted cash, will only be available for payment of asset-backed debt and expenses related thereto, payments to the Originators in respect of additional transfers of device payment plan agreement receivables, and other obligations arising from our asset-backed debt transactions, and will not be available to pay other obligations or claims of Verizon’s creditors until the associated asset-backed debt and other obligations are satisfied. The Investors or Banks, as applicable, which hold our asset-backed debt have legal recourse to the assets securing the debt, but do not have any recourse to Verizon with respect to the payment of principal and interest on the debt. Under a parent support agreement, Verizon has agreed to guarantee certain of the payment obligations of Cellco and the Originators to the ABS Entities. Cash collections on the device payment plan agreement receivables collateralizing our asset-backed debt securities are required at certain specified times to be placed into segregated accounts. Deposits to the segregated accounts are considered restricted cash and are included in Prepaid expenses and other, and Other assets in our consolidated balance sheets. Proceeds from our asset-backed debt transactions are reflected in Cash flows from financing activities in our consolidated statements of cash flows. The asset-backed debt issued and the assets securing this debt are included in our consolidated balance sheets. As mentioned above, holders of our asset-backed debt do not have any recourse to Verizon with respect to the payment of principal and interest on the debt. However, if an early amortization of our asset-backed debt occurs, including as a result of increased customer delinquencies or losses relating to the COVID-19 pandemic, all collections on the securitized device payment plan agreement receivables would be used to pay principal and interest on the asset-backed debt, and our financing cash flow requirements would increase for the twelve months immediately following an early amortization event. ABS Notes During the year ended December 31, 2020, we completed the following ABS Notes transactions: (dollars in millions) Interest Rates % Expected Weighted-average Life to Maturity (in years) Principal Amount Issued January 2020 A-1a Senior class notes 1.850 2.46 $ 1,326 A-1b Senior floating rate class notes LIBOR + 0.270 (1) 2.46 100 B Junior class notes 1.980 3.18 98 C Junior class notes 2.060 3.36 76 January 2020 total 1,600 August 2020 A Senior class notes 0.470 2.48 1,426 B Junior class notes 0.680 3.18 98 C Junior class notes 0.830 3.36 76 August 2020 total 1,600 November 2020 A Senior class notes 0.410 2.45 1,069 B Junior class notes 0.670 3.19 74 C Junior class notes 0.770 3.37 57 November 2020 total 1,200 Total $ 4,400 (1) The one-month LIBOR at December 31, 2020 was 0.144%. Under the terms of each series of ABS Notes, there is a two ABS Financing Facility In May 2020, we amended and restated our outstanding ABS financing facility originally entered into in 2016, and previously amended and restated in 2019, with a number of financial institutions (ABS Financing Facility). Under the terms of the ABS Financing Facility, the financial institutions make advances under asset-backed loans backed by device payment plan agreement receivables of both consumer and business customers. One loan agreement is outstanding in connection with the ABS Financing Facility, and such loan agreement was amended and restated in May 2020. The loan agreement has a final maturity date in May 2024 and bears interest at floating rates. There is a one year revolving period until May 2021, which may be extended with the approval of the financial institutions. Under the loan agreement, we have the right to prepay all or a portion of the advances at any time without penalty, but in certain cases, with breakage costs. Subject to certain conditions, we may also remove receivables from the ABS Entity. During 2020, we borrowed $1.3 billion and prepaid $4.0 billion under the loan agreement. The aggregate outstanding balance under the ABS Financing Facility was $500 million as of December 31, 2020. Variable Interest Entities The ABS Entities meet the definition of a VIE for which we have determined that we are the primary beneficiary as we have both the power to direct the activities of the entity that most significantly impact the entity’s performance and the obligation to absorb losses or the right to receive benefits of the entity. Therefore, the assets, liabilities and activities of the ABS Entities are consolidated in our financial results and are included in amounts presented on the face of our consolidated balance sheets. The assets and liabilities related to our asset-backed debt arrangements included in our consolidated balance sheets were as follows: At December 31, At December 31, (dollars in millions) 2020 2019 Assets Accounts receivable, net $ 9,257 $ 10,525 Prepaid expenses and other 1,128 1,180 Other assets 2,950 3,856 Liabilities Accounts payable and accrued liabilities 8 11 Debt maturing within one year 4,191 5,578 Long-term debt 6,413 6,791 See Note 8 for additional information on device payment plan agreement receivables used to secure asset-backed debt. Long-Term Credit Facilities At December 31, 2020 (dollars in millions) Maturities Facility Capacity Unused Capacity Principal Amount Outstanding Verizon revolving credit facility (1) 2024 $ 9,500 $ 9,392 N/A Various export credit facilities (2) 2022-2028 7,500 1,000 $ 4,882 Total $ 17,000 $ 10,392 $ 4,882 N/A - not applicable (1) The revolving credit facility does not require us to comply with financial covenants or maintain specified credit ratings, and it permits us to borrow even if our business has incurred a material adverse change. The revolving credit facility provides for the issuance of letters of credit. (2) During 2020 and 2019, we drew down $1.0 billion and $1.5 billion from these facilities, respectively. These credit facilities are used to finance equipment-related purchases. Borrowings under certain of these facilities amortize semi-annually in equal installments up to the applicable maturity dates. Maturities reflect maturity dates of principal amounts outstanding. Any amounts borrowed under these facilities and subsequently repaid cannot be reborrowed. 2021 Credit Agreement Delayed Draw Term Loan Credit Agreement On February 24, 2021 (the Effective Date), Verizon entered into a $25.0 billion Delayed Draw Term Loan Credit Agreement (the Credit Agreement) with two financial institutions, which includes initial commitments of $12.5 billion from each of these parties. The Credit Agreement provides Verizon with the ability to borrow up to $25.0 billion for general corporate purposes, including any potential acquisition of spectrum. The loans under the Credit Agreement are available during the period (the Availability Period) beginning on the Effective Date and ending on the earlier of (i) May 28, 2021, and (ii) the receipt by the two financial institutions of written notice by Verizon of its election to terminate commitments pursuant to the Credit Agreement. The availability of the loans under the Credit Agreement, which have not yet been funded, is subject to the satisfaction (or waiver) of the conditions that certain representations of Verizon are accurate in all material respects and the absence of certain event of default. The loans under the Credit Agreement are to be made in a single borrowing on the funding date and will mature and be payable in full on the date that is 364 days after the funding date unless extended pursuant to the terms of the Credit Agreement. The two financial institutions may syndicate their commitments under the Credit Agreement, subject to the terms of the Credit Agreement. Interest Rate and Fees The loans under the Credit Agreement will bear interest at a rate equal to, at the option of Verizon, (i) the base rate (defined as the greater of the rate last quoted by the Wall Street Journal as the "prime rate", the federal funds rate plus 0.500%, and one-month LIBOR plus 1.000%, subject to a floor of 1.000%) or (ii) LIBOR, in each case plus a margin to be determined by reference to Verizon’s credit ratings and ranging from 0.000% to 0.125% in the case of base rate loans and 0.625% to 1.125% in the case of LIBOR loans. Additional margin of 0.125% is added to the loan on December 31, 2021. Verizon will pay a commitment fee on the daily actual unused commitment of each lender starting on the date that is 60 days after the Effective Date through the last day of the Availability Period. This fee accrues at a rate determined by reference to Verizon’s credit ratings and ranges from 0.070% to 0.125% per annum. Prepayments The Credit Agreement requires Verizon to reduce unused commitments and prepay the loans with 100% of the net cash proceeds received from issuances or sales of equity and incurrences of borrowed money indebtedness, subject to certain exceptions. Covenants and Events of Default The Credit Agreement contains certain negative covenants, including a negative pledge covenant, a merger or similar transaction covenant and an accounting changes covenant, and affirmative covenants and events of default that are customary for companies maintaining an investment grade credit rating. An event of default may result in the inability to borrow in certain circumstances or the acceleration of any outstanding loan under the Credit Agreement, as applicable. Non-Cash Transactions During the years ended December 31, 2020, 2019 and 2018, we financed, primarily through vendor financing arrangements, the purchase of approximately $1.7 billion, $563 million, and $1.1 billion, respectively, of long-lived assets consisting primarily of network equipment. As of December 31, 2020 and 2019, $1.6 billion and $1.1 billion, respectively, relating to these financing arrangements, including those entered into in prior years and liabilities assumed through acquisitions, remained outstanding. These purchases are non-cash financing activities and therefore are not reflected within Capital expenditures in our consolidated statements of cash flows. Guarantees We guarantee the debentures of our operating telephone company subsidiaries. As of December 31, 2020, $765 million 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 LLC as successor in interest to GTE Corporation that were issued and outstanding prior to July 1, 2003. As of December 31, 2020, $391 million aggregate principal amount of these obligations remain outstanding. Debt Covenants |
