AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 9, 2001
REGISTRATION NO. 333-___________
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
VERIZON COMMUNICATIONS INC. VERIZON GLOBAL FUNDING CORP.
(Exact Name of Registrants as Specified in Their Charters)
Delaware Delaware
(State or other jurisdiction of (State or other jurisdiction of
incorporation or organization) incorporation or organization)
4813 4813
(Primary Standard Industrial (Primary Standard Industrial
Classification Code Number) Classification Code Number)
23-2259884 51-0272912
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
1095 Avenue of the Americas 3900 Washington Street, 2nd Floor
New York, New York 10036 Wilmington, Delaware 19802
(212) 395-2121 (302) 761-4200
(Address, including zip code, and telephone number, including area
code, of Registrants' principal executive offices)
-----------------------------------
Please address a copy of all communications to:
David S. Kauffman Janet M. Garrity
Vice President and Associate General Counsel President and Treasurer
VERIZON COMMUNICATIONS INC. VERIZON GLOBAL FUNDING CORP.
1095 Avenue of the Americas 3900 Washington Street, 2nd Floor
New York, New York 10036 Wilmington, Delaware 19802
(212) 395-6174 (302) 761-4200
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after expiration of the exchange offer described herein.
If the securities being registered on this form are being offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
CALCULATION OF REGISTRATION FEE
=========================================================================================================================
- -------------------------------------------------------------------------------------------------------------------------
Proposed Maximum Proposed Maximum
Title of each Class of Amount to be Offering Aggregate Amount of
Securities to be Registered Registered Price per Unit (1) Offering Price (1) Registration Fee
- -------------------------------------------------------------------------------------------------------------------------
6 3/4% Notes due 2005 $1,000,000,000 100%
- -------------------------------------------------------------------------------------------------------------------------
7 1/4% Notes due 2010 $2,000,000,000 100%
- -------------------------------------------------------------------------------------------------------------------------
7 3/4% Notes due 2030 $2,000,000,000 100%
- -------------------------------------------------------------------------------------------------------------------------
$5,000,000,000 $1,250,000
- -------------------------------------------------------------------------------------------------------------------------
Support Agreement between $5,000,000,000 (2) (3)
Verizon Communications Inc.
and Verizon Global Funding
Corp.
- -------------------------------------------------------------------------------------------------------------------------
(1) Determined pursuant to Rule 457(f) under the Securities Act of 1933, solely
for the purpose of calculating the registration fee.
(2) No separate consideration will be received for the Support Agreement.
(3) Pursuant to Rule 457(n) under the Securities Act of 1933, no registration
fee is payable with respect to the Support Agreement.
-----------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A)
OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
Subject to Completion, dated July 9, 2001
PROSPECTUS
$5,000,000,000 OF NOTES OF
VERIZON GLOBAL FUNDING CORP. [LOGO]
SUPPORTED AS TO PAYMENT OF PRINCIPAL AND INTEREST BY
VERIZON COMMUNICATIONS INC.
OFFER TO EXCHANGE
$1,000,000,000 6 3/4% NOTES DUE 2005 THAT HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "SECURITIES ACT") FOR ANY AND ALL OUTSTANDING 6 3/4%
NOTES DUE 2005
$2,000,000,000 7 1/4% NOTES DUE 2010 THAT HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT FOR ANY AND ALL OUTSTANDING 7 1/4% NOTES DUE 2010
$2,000,000,000 7 3/4% NOTES DUE 2030 THAT HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT FOR ANY AND ALL OUTSTANDING 7 3/4% NOTES DUE 2030
SUMMARY OF THE EXCHANGE OFFER
This prospectus and the accompanying Letter of Transmittal relate to
the proposed offer by Verizon Global Funding Corp. (the "Company" or "Verizon
Global Funding") to exchange up to:
o $1,000,000,000 6 3/4% Notes due 2005 that have been registered under
the Securities Act for any and all outstanding 6 3/4% Notes due 2005
(the "6 3/4% Notes");
o $2,000,000,000 7 1/4% Notes due 2010 that have been registered under
the Securities Act for any and all outstanding 7 1/4% Notes due 2010
(the "7 1/4% Notes"); and
o $2,000,000,000 7 3/4% Notes due 2030 that have been registered under
the Securities Act for any and all outstanding 7 3/4% Notes due 2030
(the "7 3/4% Notes").
The new notes, which are referred to as the "exchange notes," will be
freely transferable. The outstanding notes, which are referred to as the
"restricted notes," have certain transfer restrictions.
The restricted notes are, and the exchange notes will be, unsecured and
unsubordinated obligations of the Company that are supported as to payment of
principal and interest on an unsecured and unsubordinated basis by Verizon
Communications Inc. ("Verizon Communications"), Verizon Global Funding's
corporate parent.
o The exchange offer expires at 5:00 p.m. New York City time on ______, 2001,
unless extended.
o All restricted notes that are tendered and not withdrawn will be exchanged
promptly upon consummation of the exchange offer.
o There should be no United States federal income tax consequences to holders
of restricted notes who exchange restricted notes for exchange notes
pursuant to the exchange offer.
o Holders of restricted notes do not have any appraisal or dissenters' rights
in connection with the exchange offer.
o Restricted notes not exchanged in the exchange offer will remain
outstanding and be entitled to the benefits of the indenture under which
they were issued, but except under limited circumstances will not have
further exchange or registration rights.
o The Company does not intend to apply for listing of the exchange notes on
any securities exchange or to arrange for them to be quoted on any
quotation system.
o Each holder of restricted notes wishing to accept the exchange offer must
deliver the restricted notes to be exchanged, together with the Letter of
Transmittal that accompanies this prospectus and any other required
documentation, to the exchange agent identified in this prospectus.
Alternatively, a holder may effect a tender of restricted notes by
book-entry transfer into the exchange agent's account at the Depository
Trust Company ("DTC"). All deliveries are at the risk of the holder. You
will find detailed instructions concerning delivery in the "Exchange Offer"
section of this prospectus and in the accompanying Letter of Transmittal.
----------------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE EXCHANGE NOTES OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
YOU SHOULD READ THIS ENTIRE PROSPECTUS AND THE ACCOMPANYING LETTER OF
TRANSMITTAL AND RELATED DOCUMENTS AND ANY AMENDMENTS OR SUPPLEMENTS CAREFULLY
BEFORE MAKING YOUR DECISION TO PARTICIPATE IN THE EXCHANGE OFFER.
The date of this prospectus is __________, 2001.
[Inside Front Cover]
YOU SHOULD RELY ONLY ON THE INFORMATION PROVIDED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS. NEITHER THE COMPANY NOR VERIZON COMMUNICATIONS HAS
AUTHORIZED ANYONE ELSE TO PROVIDE YOU WITH DIFFERENT INFORMATION. YOU SHOULD NOT
ASSUME THAT THE INFORMATION IN THIS PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER
THAN THE DATE ON THE FRONT OF THIS PROSPECTUS. NEITHER THE DELIVERY OF THIS
PROSPECTUS OR THE ACCOMPANYING LETTER OF TRANSMITTAL, NOR ANY EXCHANGE MADE
PURSUANT TO THIS PROSPECTUS SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION
THAT THE INFORMATION CONTAINED IN THIS PROSPECTUS IS CORRECT AS OF ANY
SUBSEQUENT DATE.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL TENDERS OF RESTRICTED
NOTES BE ACCEPTED FROM, HOLDERS OF RESTRICTED NOTES IN ANY JURISDICTION IN WHICH
THE EXCHANGE OFFER OR ITS ACCEPTANCE IS UNLAWFUL.
NOTICE TO NEW HAMPSHIRE RESIDENTS
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A
LICENSE HAS BEEN FILED UNDER RSA 421-B WITH THE STATE OF NEW HAMPSHIRE NOR THE
FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE
STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE NEW HAMPSHIRE SECRETARY OF
STATE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT
MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS
AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE NEW HAMPSHIRE SECRETARY
OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR
RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS
UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR
CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.
EACH BROKER-DEALER THAT RECEIVES EXCHANGE NOTES FOR ITS OWN ACCOUNT
PURSUANT TO THE EXCHANGE OFFER MUST ACKNOWLEDGE THAT IT WILL DELIVER A
PROSPECTUS IN CONNECTION WITH ANY RESALE OF SUCH EXCHANGE NOTES. THE LETTER OF
TRANSMITTAL STATES THAT BY SO ACKNOWLEDGING AND BY DELIVERING A PROSPECTUS, A
BROKER-DEALER WILL NOT BE DEEMED TO ADMIT THAT IT IS AN "UNDERWRITER" WITHIN THE
MEANING OF THE SECURITIES ACT. THIS PROSPECTUS, AS IT MAY BE AMENDED OR
SUPPLEMENTED FROM TIME TO TIME, MAY BE USED BY A BROKER-DEALER IN CONNECTION
WITH RESALES OF EXCHANGE NOTES RECEIVED IN EXCHANGE FOR RESTRICTED NOTES WHERE
SUCH RESTRICTED NOTES WERE ACQUIRED BY SUCH BROKER-DEALER AS A RESULT OF
MARKET-MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES. THE COMPANY HAS AGREED
THAT, FOR A PERIOD OF 90 DAYS AFTER THE EXPIRATION DATE (AS DEFINED BELOW), IT
WILL MAKE THIS PROSPECTUS AVAILABLE TO ANY BROKER-DEALER FOR USE IN CONNECTION
WITH ANY SUCH RESALE. SEE "PLAN OF DISTRIBUTION" BELOW.
iii
TABLE OF CONTENTS
Page
----
Where You Can Find More Information...................................... iv
Special Note Regarding Forward-Looking Statements........................ v
Summary.................................................................. 1
Verizon Communications.......................................... 1
Verizon Global Funding.......................................... 2
The Exchange Offer.............................................. 2
Ratios of Earnings to Fixed Charges...................................... 6
Use of Proceeds.......................................................... 6
Exchange Offer........................................................... 7
Description of the Notes and the Support Agreement....................... 20
Book-Entry, Delivery and Form............................................ 32
U.S. Federal Income Tax Consequences..................................... 36
Plan of Distribution..................................................... 41
Legal Matters............................................................ 42
Experts.................................................................. 42
WHERE YOU CAN FIND MORE INFORMATION
Verizon Communications files annual, quarterly and special reports, proxy
statements and other information with the Securities and Exchange Commission.
You may read and copy any of these documents at the Securities and Exchange
Commission's public reference room in Washington, D.C. Please call the
Securities and Exchange Commission at 1-800-SEC-0330 for further information.
Verizon Communications' Securities and Exchange Commission filings are also
available to the public on the Securities and Exchange Commission's web site at
http://www.sec.gov.
In this prospectus, we "incorporate by reference" some information Verizon
Communications files or has filed with the Securities and Exchange Commission,
which means that we disclose important information to you by referring you to
those documents. The information incorporated by reference is considered to be
part of this prospectus, and later information that Verizon Communications files
with the Securities and Exchange Commission will automatically update and
supersede this information. We incorporate by reference the documents listed
below and any future filings made by Verizon Communications with the Securities
and Exchange Commission under Section 13(a), 13(c), 14, or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act") until all of the notes have
been sold:
o Verizon Communications' Annual Report on Form 10-K for the year ended
December 31, 2000;
o Verizon Communications' Quarterly Report on Form 10-Q for the quarter ended
March 31, 2001; and
iv
o Verizon Communications' Current Reports on Form 8-K dated March 28, 2001,
April 25, 2001, May 9, 2001 and June 5, 2001.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address or phone number:
Investor Relations
Verizon Communications Inc.
1095 Avenue of the Americas, 36th Floor
New York, New York 10036
Telephone: (212) 395-1525
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
In this prospectus and in the information incorporated in this prospectus
by reference, we have made forward-looking statements. These statements are
based on our estimates and assumptions and are subject to risks and
uncertainties. Forward-looking statements include the information concerning our
possible or assumed future results of operations. Forward-looking statements
also include those preceded or followed by the words "anticipates," "believes,"
"estimates," "hopes" or similar expressions. For those statements, we claim the
protection of the safe harbor for forward-looking statements contained in the
Private Securities Litigation Reform Act of 1995.
The following important factors, along with those discussed in the
information incorporated by reference, could affect future results and could
cause those results to differ materially from those expressed in the
forward-looking statements:
o materially adverse changes in economic conditions in the markets served by
us or by companies in which we have substantial investments;
o material changes in available technology;
o an adverse change in the ratings afforded our debt securities by nationally
accredited ratings organizations;
o the final outcome of federal, state and local regulatory initiatives and
proceedings, including arbitration proceedings, and judicial review of
those initiatives and proceedings, pertaining to, among other matters, the
terms of interconnection, access charges, universal service, and unbundled
network element and resale rates;
o the extent, timing, success and overall effects of competition from others
in the local telephone and intraLATA toll service markets;
o the timing and profitability of our entry into the in-region long-distance
market;
v
o our ability to combine former Bell Atlantic and GTE operations, satisfy
regulatory conditions and obtain revenue enhancements and cost savings;
o the profitability of our entry into the nationwide broadband access market;
o the ability of Verizon Wireless to combine operations and obtain revenue
enhancements and cost savings;
o our ability to convert our ownership interest in Genuity Inc. into a
controlling interest consistent with regulatory conditions, and Genuity's
ensuing profitability; and
o changes in our accounting assumptions that may be required by regulatory
agencies, including the Securities and Exchange Commission, or that result
from changes in the accounting rules or their application, which could
result in an impact on earnings.
vi
SUMMARY
The following summary contains basic information about Verizon Global
Funding, its parent, Verizon Communications, and this exchange offer. It may not
contain all the information that is important to you in making your investment
decision and the information contained in this summary is qualified in its
entirety by the more detailed information appearing elsewhere in this prospectus
or incorporated by reference in this prospectus. "The Exchange Offer" and the
"Description of the Notes and the Support Agreement" sections of this prospectus
contain more detailed information regarding the terms and conditions of the
exchange offer and the exchange notes. Certain capitalized terms used in this
prospectus summary are defined elsewhere in this prospectus.
Verizon Communications
Verizon Communications is one of the world's leading providers of
communications services. Verizon Communications was formerly known as Bell
Atlantic Corporation. We began doing business as Verizon Communications on June
30, 2000, when Bell Atlantic merged with GTE Corporation in a transaction
accounted for as a pooling-of-interests. Each of Bell Atlantic and GTE was a
leader in the telecommunications and information industries. We are a Fortune 10
company with more than 260,000 employees and approximately $65 billion of annual
revenues. In this section of the prospectus, references to "we" and "us" refer
to Verizon Communications and its consolidated subsidiaries.
Our subsidiaries are, collectively, the largest providers of wireline and
wireless communications in the United States, with nearly 112 million access
line equivalents and more than 27 million wireless customers. Our global
presence extends to over 40 countries in the Americas, Europe, Asia and the
Pacific.
We provide domestic telecommunications wireline services through our
subsidiaries in 31 states and the District of Columbia. These services consist
principally of advanced wireline voice and data services, including voice and
data transport, enhanced and custom calling features, network access, directory
assistance, private lines and public telephones. We also provide customer
premises equipment distribution, data solutions and systems integration, billing
and collections and Internet access services. We currently own about 63 million
access lines in the United States and serve about 33 million households. We also
have approximately 5.2 million long distance customers nationwide. Verizon
Online, our Internet service provider, has about 950,000 subscribers, and we
have approximately 720,000 Digital Subscriber Line customers.
We provide domestic wireless communications services through our 55% owned
subsidiary, Verizon Wireless. Verizon Wireless is the leading wireless
communications provider in the United States in terms of the number of
subscribers and network coverage. Verizon Wireless has the largest customer base
of any U.S. wireless provider, with more than 27 million wireless subscribers,
and offers wireless voice and data services across the most extensive wireless
network in the United States. Approximately
1
240 million people reside in areas of the United States in which Verizon
Wireless has Federal Communications Commission ("FCC") licenses to offer
wireless services. Verizon Wireless provides digital coverage in almost every
major U.S. city. Its broad network coverage, digital technology, widespread
distribution channels and operating and financial strength position it to take
advantage of the growing demand for wireless voice and data services.
We also hold a substantial investment portfolio in wireline and wireless
partnerships and joint ventures in the Americas (including Puerto Rico), Europe,
Asia and the Pacific. These investments represent a mix of mature and start-up
businesses where, in conjunction with local partners and management, we seek to
capitalize on our core competencies and to enhance shareholder returns.
We are the world's largest publisher of telephone directories. Our
directory publishing and electronic commerce operations consist of domestic and
international publishing businesses, including print directories and
Internet-based shopping guides, as well as website creation and other electronic
commerce services. We have publishing and electronic commerce operations in the
United States, Europe, Asia and Latin America and produce approximately 150
million telephone directories annually.
Our principal executive offices are located at 1095 Avenue of the Americas,
New York, New York 10036, and our telephone number is (212) 395-2121.
Verizon Global Funding
Verizon Global Funding was established to provide financing to Verizon
Communications and some of its subsidiaries, other than Verizon Communications'
domestic telephone company subsidiaries. Verizon Global Funding does not engage
in any separate business activities. Verizon Global Funding will raise funds
through the offering of the notes and may lend the net proceeds to Verizon
Communications and/or one or more of its subsidiaries. All of the notes will be
supported as to payment of principal and interest by Verizon Communications, as
described under "Description of the Notes and the Support Agreement."
Verizon Global Funding is a wholly owned, indirect subsidiary of Verizon
Communications and was incorporated in Delaware in November 1983. The principal
executive offices of Verizon Global Funding are located at 3900 Washington
Street, 2nd floor, Wilmington, Delaware 19802, and its telephone number is (302)
761-4200.
The Exchange Offer
Exchange Notes $1,000,000,000 6 3/4% Notes due
2005, $2,000,000,000 7 1/4% Notes due
2010 and $2,000,000,000 7 3/4% Notes
due 2030, all of which have been
registered under the Securities Act.
For more details, see "Exchange Offer--
Terms of the Exchange Offer."
2
The Exchange Offer We are offering to issue the exchange
notes in exchange for a like principal
amount of outstanding restricted notes,
in each case of the same series, that
we issued on December 12, 2000 and
February 7, 2001. We are offering to
issue the exchange notes to satisfy our
obligations contained in the
registration rights agreements we
entered into when we sold the
outstanding restricted notes in
transactions pursuant to Rule 144A and
Regulation S under the Securities Act.
The outstanding restricted notes were
subject to transfer restrictions that
will not apply to the exchange notes so
long as you are acquiring the exchange
notes in the ordinary course of your
business, you are not participating in
a distribution of the exchange notes
and you are not an affiliate of ours.
Maturity Date Each exchange note will mature on the
same date as the restricted note for
which it is being exchanged.
Interest Payment Dates Each exchange note will bear interest
accruing at the same rates and payable
at the same times as the restricted
note for which it is being exchanged.
Support Agreement The exchange notes are supported as to
payment of principal and interest by
Verizon Communications under a Support
Agreement which is more fully described
under the heading "Description of the
Notes and the Support Agreement."
Ranking The notes will be the senior unsecured
obligations of Verizon Global Funding
and will rank equally with all of
Verizon Global Funding's other
unsecured and unsubordinated debt.
Except as described in this prospectus
under the heading "Description of the
Notes and the Support Agreement,"
Verizon Communications' support
obligations will rank equally with all
of its other unsecured and
unsubordinated debt.
Optional Redemption The Company may redeem the exchange
notes at any time or from time to time
at the redemption price described under
the heading "Description of the Notes
and the Support Agreement--Optional
Redemption" plus accrued and unpaid
interest, if any, on the principal
amount being redeemed to the date of
redemption.
3
Certain Covenants The indenture governing the exchange
notes contains covenants that, among
other things, limit Verizon Global
Funding's ability to create liens on
its assets and limits the ability of
each of Verizon Global Funding and
Verizon Communications to merge or
consolidate with another company or to
transfer substantially all of its
assets. For more details, see
"Description of the Notes and the
Support Agreement--Restrictions on
Verizon Global Funding" below.
Use of Proceeds Neither the Company nor Verizon
Communications will receive any
proceeds from the issuance of the
exchange notes.
Denominations and Issuance of
Exchange Notes The exchange notes will be issued in
book-entry form and will be represented
by global certificates deposited with a
custodian for, and registered in the
name of a nominee of, DTC.
Beneficial ownership of the exchange
notes will be shown on, and transfers
will be effected only through, records
maintained by DTC and its direct and
indirect participants and any such
interest may not be exchanged for
certificated exchange notes except in
limited circumstances. See "Book-Entry,
Delivery and Form" below.
Tenders, Expiration Date,
Withdrawal The exchange offer will expire at 5:00
P.M., New York City time, on _______,
2001, unless it is extended. To tender
your outstanding restricted notes you
must follow the detailed procedures
described under the heading "Exchange
Offer--Procedures for Tendering"
including special procedures for
certain beneficial owners and
broker-dealers. If you decide to
exchange your outstanding restricted
notes for exchange notes, you must
acknowledge that you do not intend to
engage in, and have no arrangement
with any person to participate in, a
distribution of the exchange notes. If
you decide to tender your outstanding
notes pursuant to the exchange offer,
you may withdraw them at any time
prior to 5:00 p.m., New York City
time, on the expiration date.
Federal Income Tax Your exchange of outstanding restricted
notes for exchange notes pursuant to
the exchange offer will not be a
taxable event for U.S. federal income
tax purposes. See "U.S. Federal Income
Tax Consequences--Consequences of the
Exchange."
4
Exchange Agent First Union National Bank is the
exchange agent for the exchange offer.
Failure to Exchange Your
Outstanding Restricted Notes
and Trading Market If you fail to exchange your
outstanding restricted notes for
exchange notes in the exchange offer,
your outstanding restricted notes will
continue to be subject to transfer
restrictions and you will not have any
further rights under the registration
rights agreement relating to such
restricted notes, including any right
to require us to register your
outstanding restricted notes or to pay
any additional interest relating to a
registration default. To the extent
that outstanding restricted notes are
tendered and accepted in the exchange
offer, your ability to sell untendered,
and tendered but unaccepted,
outstanding restricted notes could be
adversely affected. There may be no
trading market for the outstanding
restricted notes. There can be no
assurance that an active public market
for the exchange notes will develop or
as to the liquidity of any market that
may develop for the exchange notes, the
ability of holders to sell the exchange
notes, or the price at which holders
would be able to sell the exchange
notes. For more details, see the
sections "Consequences of a Failure to
Exchange Restricted Notes" and "Absence
of a Public Market" under the heading
"Exchange Offer."
5
RATIOS OF EARNINGS TO FIXED CHARGES
The following table shows Verizon Communications' ratio of earnings to
fixed charges for the periods indicated:
Three Months
Ended March 31, Years Ended December 31,
2001 2000 1999 1998 1997
- --------------------------------------------------------------------------------
3.33 4.47 4.98 3.81 3.74
For all periods, the ratios reflect the merger of Bell Atlantic and GTE as
if it occurred as of the beginning of the earliest period presented, in
accordance with pooling-of-interests accounting rules.
For these ratios, "earnings" have been calculated by adding fixed charges
to income before income taxes and extraordinary charges, and "fixed charges"
include interest expense, preferred stock dividend requirements, capitalized
interest and the portion of rent expense representing interest.
The ratio for the three months ended March 31, 2001 includes special items
that resulted in a net pretax loss of $(279) million, and the ratios for the
years ended December 31, 2000, 1999, 1998 and 1997 include net pretax gains
(losses) of $6,116 million, $981 million, $(2,552) million and $(1,803) million,
respectively. Excluding those special items, the ratio for the three months
ended March 31, 2001 would have been 3.58, and the ratios for the years ended
December 31, 2000, 1999, 1998 and 1997 would have been 3.68, 4.68, 4.43 and
4.29, respectively. The 2001 special items relate to Bell Atlantic/GTE
merger-related charges and a change in accounting for derivatives, creating
mark-to-market adjustments. The 2000 and 1999 special items pertain to gains on
sales of assets, net of asset impairments and other charges, Bell Atlantic/GTE
merger-related charges, pension settlements and the gain on the mark-to-market
of exchangeable notes. The 1998 and 1997 special items pertain to asset
impairments and other charges, net of gains on sales of assets, Bell
Atlantic/NYNEX Corporation merger-related charges, pension settlements and
retirement incentive program costs. Sales of assets included wireline and
wireless properties, GTE Government Systems and the gain associated with the
merger of BC TELECOM Inc. and TELUS Corporation. Asset impairments included
costs associated with exiting businesses.
USE OF PROCEEDS
Neither the Company nor Verizon Communications will receive any cash
proceeds from the issuance of the exchange notes. As consideration for the
exchange notes, the Company will receive in exchange an equivalent principal
amount of outstanding restricted notes, the terms of which are identical to the
terms of the exchange notes, except that the exchange notes will be registered
under the Securities
6
Act, freely transferable and issued free of any covenants regarding exchange and
registration rights.
The Company will retire and cancel the restricted notes surrendered in
exchange for the exchange notes. Accordingly, the issuance of the exchange notes
under the exchange offer will not result in any change in the outstanding
aggregate indebtedness of the Company.
EXCHANGE OFFER
REASON FOR THE EXCHANGE OFFER
The Company initially sold the restricted notes in a series of private
offerings. The 6 3/4% Notes, the 7 1/4% Notes and $1,000,000,000 of the 7 3/4%
Notes were sold on December 12, 2000 to Chase Securities Inc., J.P. Morgan
Securities Inc., Morgan Stanley & Co. Incorporated, M.R. Beal & Co., Bear,
Stearns & Co. Inc., Credit Suisse First Boston Corporation, Deutsche Bank
Securities Inc., UBS Warburg LLC and Utendahl Capital Partners, L.P. An
additional $1,000,000,000 of the 7 3/4% Notes were sold on February 2, 2001 to
Chase Securities Inc. and Morgan Stanley & Co. Incorporated. All of such
purchasers are collectively referred to as the "Initial Purchasers." These sales
were all effected pursuant to agreements among the Company, Verizon
Communications as support provider, and the Initial Purchasers. The Initial
Purchasers subsequently resold or were permitted to resell the restricted notes:
- to qualified institutional buyers in accordance with the provisions of
Rule 144A under the Securities Act, and
- outside the United States in accordance with the provisions of
Regulation S under the Securities Act.
In connection with the private offerings of the restricted notes, the
Company, Verizon Communications as support provider, and the Initial Purchasers
in each case entered into a Registration Rights Agreement (collectively, the
"Registration Rights Agreements"), in which the Company agreed, among other
things:
- to file a registration statement relating to an exchange offer for the
restricted notes, with the SEC, on or before July 10, 2001;
- use its reasonable best efforts to cause the exchange offer
registration statement to be declared effective under the Securities
Act on or before September 23, 2001;
- upon the effectiveness of the exchange offer registration statement, to
offer the holders of the restricted notes the opportunity to exchange
their
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restricted notes in the exchange offer for a like principal amount of
exchange notes;
- to keep the exchange offer open for not less than 30 days, or longer,
if required by applicable law, after notice of the exchange offer is
mailed to holders of restricted notes; and
- to use its reasonable best efforts to consummate the exchange offer on
or before October 23, 2001.
The Company also agreed, in each case, under certain circumstances:
- to use its reasonable best efforts to file a shelf registration
statement relating to the offer and sale of the restricted notes by the
holders of the restricted notes;
- to use its reasonable best efforts to cause such shelf registration
statement to be declared effective; and
- to use its reasonable best efforts to keep such shelf registration
statement effective for two years after the shelf registration
statement becomes effective or until the restricted notes covered by
the shelf registration statement have been sold or cease to be
outstanding.
The exchange offer being made by this prospectus is intended to satisfy the
Company's exchange and registration obligations under each of the Registration
Rights Agreements discussed above. If the Company fails to fulfill such
obligations, holders of outstanding restricted notes are entitled to receive
additional interest at the rate of 0.25% per annum for so long as the Company
fails to fulfill such obligations. The rate for additional interest will not
exceed 0.25% per annum. After the Company has cured all defaults of its
registration and exchange obligations, the accrual of additional interest on the
restricted notes will cease, and the interest rate for each series of restricted
notes will revert to its original rate.
For a more complete understanding of your exchange and registration rights,
please refer to the Registration Rights Agreement relating to the series of
restricted notes which you hold, which is included as an exhibit to the
registration statement relating to the exchange notes.
TRANSFERABILITY OF THE EXCHANGE NOTES
Based on certain no-action letters issued by the staff of the SEC to others
in unrelated transactions, the Company believes that a noteholder may offer for
resale, resell or otherwise transfer any exchange notes without compliance with
the registration and prospectus delivery requirements of the Securities Act,
unless the noteholder
8
- is acquiring the exchange notes other than in the ordinary course of
business;
- is participating, intends to participate or has an arrangement or
understanding with any person to participate, in a distribution of the
exchange notes;
- is an "affiliate" of the Company, as defined in Rule 405 under the
Securities Act; or
- is an Initial Purchaser who acquired restricted notes directly from the
Company in the initial offering to resell pursuant to Rule 144A,
Regulation S or any other available exemption under the Securities Act.
In any of the foregoing circumstances, a noteholder
- will not be able to rely on the interpretations of the staff of the
SEC, in connection with any offer for resale, resale or other transfer
of exchange notes; and
- must comply with the registration and prospectus delivery requirements
of the Securities Act, or have an exemption available, in connection
with any offer for resale, resale or other transfer of the exchange
notes.
The Company is not making this exchange offer to, nor will it accept
surrenders of restricted notes from, holders of restricted notes in any state in
which this exchange offer would not comply with the applicable securities laws
or "blue sky" laws of such state.
Each broker-dealer that receives exchange notes for its own account in
exchange for restricted notes, where such restricted notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such exchange notes. See "Plan of Distribution."
TERMS OF THE EXCHANGE OFFER
The restricted notes were issued in three different series. As of the date
of this prospectus, the aggregate principal amount of the notes in each series
has not been reduced. In the exchange offer, restricted notes of each series
will be exchanged for exchange notes with terms which are otherwise identical to
the terms of the restricted notes for which they are being exchanged, except
that the exchange notes will be registered under the Securities Act, freely
transferable and issued free of any covenants regarding exchange and
registration rights.
9
Upon the terms and subject to the conditions set forth in this prospectus
and in the accompanying Letter of Transmittal, the Company will accept all
restricted notes validly tendered and not withdrawn prior to 5:00 p.m. New York
City time on _________, 2001, the date that the exchange offer expires. This
date and time may be extended. See "Expiration Date; Extensions; Amendments"
below. After authentication of the exchange notes by the trustee under the
indenture governing the notes or an authenticating agent, the Company will issue
and deliver $1,000 principal amount of exchange notes in exchange for each
$1,000 principal amount of outstanding restricted notes accepted in the exchange
offer. Holders may tender some or all of their restricted notes pursuant to the
exchange offer in denominations of $1,000 and integral multiples thereof.
The form and terms of the exchange notes are identical in all material
respects to the form and terms of the outstanding restricted notes, except that:
- the offering of the exchange notes has been registered under the
Securities Act;
- the exchange notes will not be subject to transfer restrictions; and
- the exchange notes will be issued free of any covenants regarding
exchange and registration rights.
The exchange notes will be issued under and entitled to the benefits of the
indenture that governs the restricted notes.
In connection with the issuance of the restricted notes, the Company
arranged for the restricted notes to be issued and transferable in book-entry
form through the facilities of DTC, acting as a depositary. The exchange notes
will also be issuable and transferable in book-entry form through DTC.
This prospectus, together with the accompanying Letter of Transmittal, is
initially being sent to all registered holders of restricted notes as of the
close of business on ______, 2001. The exchange offer for restricted notes is
not conditioned upon any minimum aggregate principal amount being tendered.
However, the exchange offer is subject to certain customary conditions which may
be waived by the Company, and to the terms and provisions of the Registration
Rights Agreements. See "Conditions to the Exchange Offer" below.
The exchange agent is First Union National Bank, which also serves as
trustee under the indenture that governs the notes. The Company will be deemed
to have accepted validly tendered restricted notes when, as and if the Company
has given oral or written notice thereof to the exchange agent. The exchange
agent will act as agent of the tendering holders for the purpose of receiving
exchange notes from the Company and as agent of the Company for the purpose of
delivering exchange notes to such holders. See "Exchange Agent" below.
10
If any tendered restricted notes are not accepted for exchange because of
an invalid tender or the occurrence of certain other events set forth in this
prospectus, certificates for any such unaccepted restricted notes will be
returned, at the Company's cost, to the tendering holder as promptly as
practicable after the expiration of the exchange offer.
Holders who tender restricted notes in the exchange offer will not be
required to pay brokerage commissions or fees or, subject to the instructions in
the Letter of Transmittal, transfer taxes with respect to the exchange of
restricted notes pursuant to the exchange offer. The Company will pay all
charges and expenses, other than certain applicable taxes, in connection with
the exchange offer. See "Solicitation of Tenders; Fees and Expenses" below.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The exchange offer will expire at 5:00 p.m. New York City time on ____,
2001 unless the Company, in its sole discretion, extends the exchange offer. The
Company may extend the exchange offer at any time and from time to time by
giving oral or written notice to the exchange agent and by timely public
announcement.
The Company reserves the right, in its sole discretion, to amend the terms
of the exchange offer in any manner. If any of the conditions set forth below
under "Conditions to the Exchange Offer" has occurred and has not been waived by
the Company, the Company expressly reserves the right, in its sole discretion,
by giving oral or written notice to the exchange agent, to:
- delay acceptance of, or refuse to accept, any restricted notes not
previously accepted;
- extend the exchange offer;
- terminate the exchange offer; or
- amend the exchange offer.
Any such delay in acceptance, extension, termination or amendment will be
followed as promptly as practicable by oral or written notice thereof by the
Company to the registered holders of the restricted notes. If the exchange offer
is amended in a manner determined by the Company to constitute a material
change, the Company will promptly disclose such amendment in a manner reasonably
calculated to inform the holders of such restricted notes, and the Company will
extend the exchange offer to the extent required by law. If the exchange offer
is terminated, federal law requires that the Company promptly either exchange or
return all restricted notes that have been tendered.
11
The Company will have no obligation to publish, advise, or otherwise
communicate any delay in acceptance, extension, termination or amendment of the
exchange offer other than by making a timely press release. The Company may also
publicly communicate these matters in any other appropriate manner of its
choosing.
INTEREST ON THE EXCHANGE NOTES
Interest on the exchange notes will accrue from the last interest payment
date on which interest was paid on the restricted notes surrendered in exchange
therefor. The exchange notes will bear interest at the same rates, and such
interest will be payable on the same dates, as the rates and interest payment
dates relating to the restricted notes surrendered in exchange therefor.
Assuming that the exchange offer is consummated prior to October 23, 2001, as
anticipated, interest on the exchange notes will first become payable beginning
on December 1, 2001.
PROCEDURES FOR TENDERING
Only a holder of record of restricted notes or a DTC participant listed on
a DTC securities position listing with respect to the restricted notes may
tender its restricted notes in the exchange offer.
To tender restricted notes in the exchange offer, registered holders of
certificated restricted notes must complete, sign and date the Letter of
Transmittal, or a facsimile thereof, in accordance with the instructions
contained in this prospectus and in the Letter of Transmittal. The holder should
then mail or otherwise deliver the Letter of Transmittal, or such facsimile,
together with the restricted notes to be exchanged and any other required
documentation, to the exchange agent, at the address set forth in this
prospectus and in the Letter of Transmittal. Holders of restricted notes that
are DTC participants may follow the procedures for book-entry transfer as
provided for below under "Book-Entry Transfer" and in the Letter of Transmittal.
To be effective, a tender must be made prior to the expiration of the
exchange offer.
Any beneficial owner whose restricted notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender restricted notes in the exchange offer should contact such registered
holder promptly and instruct such registered holder to tender on such beneficial
owner's behalf. If a beneficial owner wishes to tender on its own behalf, such
beneficial owner must, prior to completing and executing the Letter of
Transmittal and delivering its restricted notes, either make appropriate
arrangements to register ownership of the restricted notes in its own name or
obtain a properly completed bond power from the registered holder of such
restricted notes. This transfer of record ownership may take considerable time.
Delivery of documents to DTC in accordance with DTC's procedures will NOT
constitute delivery to the exchange agent.
12
The tender by a holder of restricted notes will constitute an agreement
between such holder, the Company and the exchange agent in accordance with the
terms and subject to the conditions set forth herein and in the Letter of
Transmittal. If less than all the restricted notes held by a holder of
restricted notes are tendered, a tendering holder should fill in the amount and
series of restricted notes being tendered in the specified box in the Letter of
Transmittal. The entire amount of restricted notes delivered to the exchange
agent will be deemed to have been tendered unless otherwise indicated.
The Letter of Transmittal includes representations by the tendering holder
to the Company that, among other things:
- any exchange notes received by the tendering holder will be acquired in
the ordinary course of its business;
- the tendering holder has no arrangement or understanding with any
person to participate in the distribution of the exchange notes; and
- the tendering holder is not an "affiliate," as defined in Rule 405
under the Securities Act, of the Company, or, if it is an affiliate,
that it will comply with the registration and prospectus delivery
requirements of the Securities Act to the extent applicable.
A Letter of Transmittal of a broker-dealer that receives exchange notes for
its own account in exchange for restricted notes that were acquired by it as a
result of market-making or other trading activities must also include an
acknowledgment that the broker-dealer will deliver a copy of this prospectus in
connection with the resale of such exchange notes. By so acknowledging and by
delivering a prospectus, such broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act. See "Plan of
Distribution."
The method of delivery of restricted notes and Letters of Transmittal and
all other required documents or transmittal of an Agent's Message, as described
below under "Book-Entry Transfer," to the exchange agent is at the election and
risk of the holders of restricted notes. Instead of delivery by mail, it is
recommended that holders of restricted notes use an overnight or hand delivery
service. In all cases, sufficient time should be allowed to ensure delivery to
the exchange agent prior to the expiration of the exchange offer. No Letters of
Transmittal or restricted notes should be sent to the Company.
Signatures on a Letter of Transmittal or a notice of withdrawal described
in "Withdrawal of Tenders" below must be guaranteed by a member firm of a
registered national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States or an "eligible guarantor institution" within
the meaning of Rule 17Ad-15 under the Exchange Act (each, an "Eligible
Institution"), unless such Letter of Transmittal or notice is being submitted
13
- by a registered holder who has not completed the box entitled "Special
Registration Instructions" or the box entitled "Special Delivery
Instructions" in the Letter of Transmittal; or
- for the account of an Eligible Institution.
If a Letter of Transmittal is signed by a person other than the registered
holder, it must be accompanied by appropriate bond powers which authorize such
person to tender the restricted notes on behalf of the registered holder, in
either case signed as the name of the registered holder or holders appears on
the restricted notes. If a Letter of Transmittal or any restricted notes or bond
powers are signed or endorsed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing, and
unless waived by the Company, submit evidence satisfactory to the Company of
their authority to so act with such Letter of Transmittal.
All questions as to the validity, form, eligibility, acceptance and
withdrawal of the tendered restricted notes will be determined by the Company in
its sole discretion, which determination will be final and binding. The Company
reserves the absolute right to reject restricted notes not properly tendered or
any restricted notes the Company's acceptance of which would, in the opinion of
counsel for the Company, be unlawful. The Company also reserves the absolute
right to waive any irregularities or conditions of tender as to particular
restricted notes. The Company's interpretation of the terms and conditions of
the Exchange Offer, including the instructions in the Letter of Transmittal,
will be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of restricted notes must be cured
within such time as the Company shall determine.
Although the Company intends to notify tendering holders of defects or
irregularities with respect to tenders of restricted notes, neither the Company,
the exchange agent nor any other person will be under any duty or obligation to
do so, and no person will incur any liability for failure to give such
notification. Restricted notes will not be validly tendered until such
irregularities have been cured or waived. Any restricted notes received by the
exchange agent that the Company determines are not properly tendered or the
tender of which is otherwise rejected by the Company will be returned by the
exchange agent to the tendering holder or other person specified in the
appropriate Letter of Transmittal as soon as practicable following the
expiration of the exchange offer.
The Company reserves the right in its sole discretion:
- to purchase or make offers for any restricted notes that remain
outstanding subsequent to the expiration of the exchange offer;
- to terminate the exchange offer, as set forth in "Conditions to the
Exchange Offer" below; and
14
- to the extent permitted by applicable law, to purchase restricted notes
during the pendency of the exchange offer in the open market, in
privately negotiated transactions or otherwise.
The terms of any such purchases or offers may differ from the terms of the
exchange offer.
BOOK-ENTRY TRANSFER
The Company understands that the exchange agent will make a request
promptly after the date of this prospectus to establish accounts with respect to
the restricted notes at DTC for the purpose of facilitating the exchange offer.
Any financial institution that is a participant in DTC's system may make
book-entry delivery of restricted notes by causing DTC to transfer such
restricted notes into the Exchange Agent's DTC account in accordance with DTC's
Automated Tender Offer Program procedures for such transfer. The exchange for
tendered restricted notes will only be made after a timely confirmation of a
book-entry transfer of the restricted notes into the exchange agent's account,
and timely receipt by the exchange agent of an Agent's Message.
The term "Agent's Message" means a message, transmitted by DTC to, and
received by, the Exchange Agent and forming part of the confirmation of a
book-entry transfer, which states that DTC has received an express
acknowledgment from a participant tendering restricted notes and that such
participant has received a Letter of Transmittal and agrees to be bound by the
terms of the Letter of Transmittal and the Company may enforce such agreement
against the participant. Delivery of an Agent's Message will also constitute an
acknowledgement from the tendering DTC participant that the representations
contained in the Letter of Transmittal and described under "Procedures for
Tendering" above are true and correct.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their restricted notes and:
- whose restricted notes are not immediately available,
- who cannot deliver their restricted notes, the Letter of Transmittal or
any other required documents to the exchange agent prior to the
expiration of the exchange offer, or
- who cannot complete the procedure for book-entry transfer on a timely
basis,
may effect a tender if:
1. the tender is made through an Eligible Institution;
15
2. prior to the expiration of the exchange offer the exchange agent
receives from such Eligible Institution a properly completed and duly
executed Notice of Guaranteed Delivery by facsimile transmittal,
overnight courier, mail or hand delivery; and
3. certificate(s) representing all tendered restricted notes in proper
form for transfer, together with a properly completed and executed
Letter of Transmittal, or a facsimile thereof and all other documents
required by the Letter of Transmittal, or confirmation of a book-entry
transfer into the exchange agent's account at DTC of restricted notes
delivered electronically, are received by the exchange agent within
three business days after the expiration of the exchange offer.
A Notice of Guaranteed Delivery must state:
- the name and address of the holder;
- if the restricted notes will be tendered by their registered holder,
the certificate number or numbers of such restricted notes;
- the principal amount of such restricted notes tendered;
- that the tender is being made thereby; and
- that the holder guarantees that, within three business days after the
expiration of the exchange offer, a Letter of Transmittal or facsimile
thereof, together with the certificate(s) representing the restricted
notes to be tendered in proper form for transfer and any other
documents required by the Letter of Transmittal, or confirmation of a
book-entry transfer into the exchange agent's account at DTC of
restricted notes delivered electronically, will be deposited by the
Eligible Institution with the exchange agent.
Forms of the Notice of Guaranteed Delivery will be available from the
exchange agent upon request.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of restricted notes may be
withdrawn at any time prior to the expiration of the exchange offer by delivery
of a written or facsimile transmission notice of withdrawal to the exchange
agent at its address set forth in this prospectus.
Any such notice of withdrawal must:
16
- specify the name of the person having deposited the restricted notes to
be withdrawn;
- identify the restricted notes to be withdrawn, including the series,
the principal amount of such restricted notes, and the certificate
number or numbers or, in the case of restricted notes transferred by
book-entry transfer, the name and number of the account at DTC to be
credited;
- be signed by the depositor of the restricted notes in the same manner
as the original signature on the Letter of Transmittal by which such
restricted notes were tendered, including any required signature
guarantee, or be accompanied by documents of transfer sufficient to
permit the registrar to register the transfer of such restricted notes
into the name of the party withdrawing the tender or, in the case of
restricted notes transferred by book-entry transfer, be transmitted by
DTC and received by the exchange agent in the same manner as the
Agent's Message transferring the notes; and
- specify the name in which any such restricted notes are to be
registered, if different from that of the depositor of the restricted
notes.
All questions as to the validity, form and eligibility of such withdrawal
notices will be determined by the Company, whose determination shall be final
and binding on all parties. Any restricted notes so withdrawn will be deemed not
to have been validly tendered for purposes of the exchange offer, and no
exchange notes will be issued with respect thereto unless the restricted notes
so withdrawn are validly retendered. Any restricted notes that have been
tendered but are not accepted for exchange will be returned to the holder
thereof without cost to such holder, or removed from the Exchange Agent's
account at DTC and returned to the accounts at DTC from which they were
tendered, as soon as practicable after withdrawal, rejection of tender or
termination of the exchange offer. Properly withdrawn restricted notes may be
retendered by following one of the procedures described above under "Procedures
for Tendering" at any time prior to the expiration of the exchange offer.
CONDITIONS TO THE EXCHANGE OFFER
The Company will not be required to accept for exchange, or to issue
exchange notes for, any restricted notes, and may terminate or amend the
exchange offer before the acceptance of such restricted notes if, in the
Company's judgment, any of the following conditions has occurred:
- the exchange offer, or the making of any exchange by a holder of
restricted notes, violates applicable law or the applicable
interpretations of the SEC staff;
17
- any action or proceeding shall have been instituted or threatened in
any court or by or before any governmental agency or body with respect
to the exchange offer; or
- there has been adopted or enacted any law, statute, rule or regulation
that can reasonably be expected to impair the ability of the Company to
proceed with the exchange offer.
See "Expiration Date; Extensions; Amendments" above for a discussion of
possible Company actions if any of the foregoing conditions occur.
The foregoing conditions are for the sole benefit of the Company. They may
be asserted by the Company regardless of the circumstances giving rise to any
such condition or may be waived by the Company in whole or in part at any time
and from time to time in its sole discretion. The failure by the Company at any
time to exercise any of the foregoing rights will not be deemed a waiver of any
such right, and each such right will be deemed an ongoing right which may be
asserted at any time and from time to time.
EXCHANGE AGENT
First Union National Bank has been appointed as exchange agent for the
exchange offer. Requests for assistance and requests for additional copies of
this prospectus or of the Letter of Transmittal should be directed to the
exchange agent addressed as follows:
BY MAIL, OVERNIGHT DELIVERY OR HAND DELIVERY:
First Union National Bank
Corporate Trust Reorganization Department
1525 West W.T. Harris Boulevard
Charlotte, North Carolina 28288-1153
Attention: Marsha Rice
BY FACSIMILE TRANSMISSION:
(704) 590-7628
INFORMATION OR CONFIRMATION BY TELEPHONE:
(704) 590-7413
SOLICITATION OF TENDERS; FEES AND EXPENSES
The principal solicitation pursuant to the exchange offer is being made by
the Company by mail and through the facilities of DTC. Additional solicitations
may be
18
made by officers and regular employees of the Company and its affiliates in
person or by telephone, facsimile transmission, electronic communication or
similar methods.
The Company has not retained any dealer-manager in connection with the
exchange offer and will not make any payments to brokers, dealers or other
persons soliciting acceptances of the exchange offer. The Company will, however,
pay the exchange agent reasonable and customary fees for its services and will
reimburse the exchange agent for its reasonable out-of-pocket costs and expenses
incurred in connection with the exchange offer. The Company will indemnify the
exchange agent for all losses and claims incurred by it as a result of the
exchange offer. The Company may also pay brokerage houses and other custodians,
nominees and fiduciaries the reasonable out-of-pocket expenses incurred by them
in forwarding copies of this prospectus, the Letter of Transmittal and related
documents to the beneficial owners of the restricted notes and in handling or
forwarding tenders for exchange.
The Company will pay all expenses incurred in connection with the exchange
offer, including fees and expenses of the trustee, accounting and legal fees,
including the expense of one counsel for the holders of the restricted notes,
and printing costs.
The Company will pay any transfer taxes applicable to the exchange of
restricted notes pursuant to the exchange offer. If, however, a transfer tax is
imposed for any reason other than the exchange of restricted notes pursuant to
the exchange offer, then the amount of any such transfer tax, whether imposed on
the registered holder thereof or any other person, will be payable by the
tendering holder.
ACCOUNTING TREATMENT
The exchange notes will be recorded at the same carrying value as the
restricted notes, as reflected in the Company's accounting records on the date
of the exchange. Accordingly, no gain or loss for accounting purposes will be
recognized by the Company as a result of the consummation of the exchange offer.
The expense of the exchange offer will be amortized by the Company over the term
of the exchange notes.
CONSEQUENCES OF A FAILURE TO EXCHANGE RESTRICTED NOTES
Following consummation of the exchange offer, assuming the Company has
accepted for exchange all validly tendered restricted notes, the Company will
have fulfilled its exchange and registration obligations under the Registration
Rights Agreements.
All untendered restricted notes outstanding after consummation of the
exchange offer will continue to be valid and enforceable debt obligations of the
Company, entitled to the benefit of the support agreement of Verizon
Communications, subject to the restrictions on transfer set forth in the
indenture governing the notes.
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Holders of such restricted notes will only be able to offer for sale, sell
or otherwise transfer untendered restricted notes as follows:
- to the Company, although the Company has no obligation to purchase
untendered restricted notes except if they are called for redemption in
accordance with the provisions of the indenture governing the notes;
- pursuant to a registration statement that has been declared effective
under the Securities Act, although the Company will have no obligation,
and does not intend, to file any such registration statement;
- for so long as the restricted notes are eligible for resale pursuant to
Rule 144A under the Securities Act, to a person reasonably believed to
be a qualified institutional buyer, or QIB, within the meaning of Rule
144A, that purchases for its own account or for the account of a QIB to
whom notice is given that the transfer is being made in reliance on the
exemption from the registration requirements of the Securities Act
provided by Rule 144A;
- pursuant to offers and sales that occur outside the United States to
non-U.S. persons in transactions complying with the provisions of
Regulation S under the Securities Act; or
- pursuant to any other available exemption from the registration
requirements of the Securities Act.
To the extent that restricted notes are tendered and accepted in the
exchange offer, the liquidity of the trading market for untendered restricted
notes could be adversely affected.
ABSENCE OF A PUBLIC MARKET
Although holders of exchange notes who are not "affiliates" of the Company
within the meaning of the Securities Act may resell or otherwise transfer their
exchange notes without compliance with the registration requirements of the
Securities Act, there is no existing market for the exchange notes, and there
can be no assurance as to the liquidity of any markets that may develop for the
exchange notes, the ability of holders of exchange notes to sell their exchange
notes or the prices at which holders would be able to sell their exchange notes.
Future trading prices of the exchange notes will depend on many factors,
including, among other things, prevailing interest rates, Verizon
Communications' operating results and the market for similar securities.
DESCRIPTION OF THE NOTES AND THE SUPPORT AGREEMENT
20
Verizon Global Funding previously issued the restricted notes, and will
issue the exchange notes, under an indenture among Verizon Global Funding,
Verizon Communications and First Union National Bank, as trustee. The indenture
provides for the issuance from time to time of debt securities in an unlimited
dollar amount and an unlimited number of series. As used in this "Description of
the Notes and the Support Agreement," the term "notes" refers to and includes
the restricted notes and the exchange notes. The terms of the restricted notes
and the exchange notes are identical, except that the exchange notes will be
registered under the Securities Act, freely transferable and issued free of any
covenants regarding exchange and registration rights.
Verizon Communications has agreed to make all payments required under the
notes if Verizon Global Funding defaults with respect to those payments under
the indenture, as described under "Description of the Support Agreement."
We have summarized selected provisions of the indenture, the support
agreement and the notes below. This is a summary and it is not complete. It does
not describe all exceptions and qualifications contained in the indenture and
the support agreement or all of the terms of the notes. You should read the
indenture, the support agreement and the notes for provisions that may be
important to you. In the summary below, we have included references to articles
and section numbers of the indenture so that you can easily locate these
provisions. Copies of the indenture are available for review at the corporate
trust office of the trustee and may also be obtained from us upon request.
GENERAL
The Notes
o Verizon Global Funding has previously issued $1,000,000,000 of 6 3/4%
Notes, $2,000,000,000 of 7 1/4% Notes and $2,000,000,000 of 7 3/4%
Notes. Each of the 6 3/4% Notes, the 7 1/4% Notes and the 7 3/4% Notes
were issued as a separate series and the exchange notes being issued
with respect to such notes will be issued as separate series as well.
o We may create and issue additional notes with the same terms as any
series of the notes so that the additional notes will form a single
series with the previously issued notes.
o The 6 3/4% Notes will mature on December 1, 2005, the 7 1/4% Notes will
mature on December 1, 2010 and the 7 3/4% Notes will mature on December
1, 2030.
o The restricted notes were, and the exchange notes will be, denominated
in United States dollars; and Verizon Global Funding will make payments
of principal, interest and any premium on the notes in United States
dollars.
21
o The restricted notes were, and the exchange notes will be, issued in
increments of $1,000.
o Verizon Global Funding may redeem the 6 3/4% Notes, the 7 1/4% Notes
and the 7 3/4% Notes in whole or in part at any time prior to their
stated maturity at the redemption prices to be determined using the
procedure as described below under "Optional Redemption."
o The restricted notes were, and the exchange notes will be, initially
issued in the form of one or more registered global notes and will be
deposited with, or on behalf of, DTC, as depositary, and registered in
the name of DTC's nominee. In each case, the notes will be without
coupons. A description of DTC's procedures with respect to the global
notes is set forth under "Book-Entry, Delivery and Form" below.
Interest
Interest on each exchange note will accrue from, and including, the
immediately preceding interest payment date to which interest has been paid or
duly provided for with respect to such note or the restricted note to which it
relates, to, but excluding, the next interest payment date or the maturity date,
as the case may be. We will refer to each of these periods as an "interest
period."
Interest on the 6 3/4% Notes will accrue at a rate of 6 3/4% per year,
interest on the 7 1/4% Notes will accrue at a rate of 7 1/4% per year, and
interest on the 7 3/4% Notes will accrue at a rate of 7 3/4% per year. Verizon
Global Funding will pay interest on these notes on June 1 to holders of record
on the preceding May 15, and on December 1 to holders of record on the preceding
November 15. Interest on these notes will be computed on the basis of a 360-day
year of twelve 30-day months.
Payment
Verizon Global Funding will make payments on notes in book-entry form
through the trustee to the depositary or its nominee. See "Book-Entry, Delivery
and Form." In the case of notes in certificated form, Verizon Global Funding
will make payment of principal or any premium, at the maturity of each note in
immediately available funds upon presentation of the note at the corporate trust
office of the trustee in the Borough of Manhattan, The City of New York, or at
any other place as Verizon Global Funding may designate. Payment of interest on
notes in certificated form due at maturity will be made to the person to whom
payment of the principal of the note will be made. Payment of interest due on
notes in certificated form other than at maturity will be made at the corporate
trust office of the trustee or, at Verizon Global Funding's option, may be made
by check mailed to the address of the person entitled to receive payment as the
address appears in the security register, except that a holder of $1,000,000 or
more in aggregate principal amount of notes in certificated form may, at Verizon
Global Funding's option, be entitled to receive interest payments on any
interest payment date other than at maturity by wire transfer of
22
immediately available funds if appropriate wire transfer instructions have been
received in writing by the trustee at least 15 days prior to the interest
payment date. Any wire instructions received by the trustee will remain in
effect until revoked by the holder.
If any payment date falls on a day that is not a business day, the payment
will be made on the next business day as if made on the date the payment was
due. In that event, no interest will accrue on the amount payable for the period
from and after the payment date. "Business day" means any day, other than a
Saturday or Sunday, that is neither a legal holiday nor a day on which
commercial banks are authorized or required by law, regulation or executive
order to close in The City of New York.
Paying Agent and Registrar
The trustee will initially act as paying agent and registrar. Verizon
Global Funding may change the paying agent or registrar without prior notice to
the holders of the notes, and Verizon Global Funding may act as paying agent or
registrar.
Sinking Fund
The notes will not be subject to any sinking fund.
RANKING
The notes will be unsecured and unsubordinated obligations of Verizon
Global Funding and will rank equally with all of its other unsecured and
unsubordinated debt. Except as described below under "Description of the Support
Agreement," the obligations under the support agreement will be unsecured and
unsubordinated obligations of Verizon Communications and will rank equally with
all of its other unsecured and unsubordinated debt.
RESTRICTIONS ON VERIZON GLOBAL FUNDING
Liens on assets
If Verizon Global Funding mortgages, pledges or otherwise subjects to any
lien the whole or any part of any property or assets which it now owns or
acquires in the future, then Verizon Global Funding will secure the notes and
any other of its obligations which may then be outstanding and entitled to the
benefits of a covenant similar in effect to this covenant to the same extent and
in the same proportion as the debt or other obligation that is secured by that
mortgage, pledge or other lien. The notes will remain secured for the same
period as the other debt remains secured. Exceptions to this requirement include
the following:
o purchase-money mortgages or liens;
23
o liens on any property or asset that existed at the time when Verizon
Global Funding acquired that property or asset;
o any deposit or pledge to secure public or statutory obligations;
o any deposit or pledge with any governmental agency required to qualify
Verizon Global Funding to conduct its business, or any part of its
business, or to entitle Verizon Global Funding to maintain
self-insurance or to obtain the benefits of any law relating to
workmen's compensation, unemployment insurance, old age pensions or
other social security;
o any deposit or pledge with any court, board, commission or governmental
agency as security related to the proper conduct of any proceeding
before it; or
o any mortgage, pledge or lien on any property or asset of any of Verizon
Global Funding's affiliates, including, without limitation, Verizon
Communications, even if the affiliate may have acquired that property
or asset from Verizon Global Funding.
(section 1004)
Limitation on merger, consolidation and sales of assets
Neither Verizon Global Funding nor Verizon Communications may consolidate
with or merge into any other entity or convey, transfer or lease substantially
all of its properties and assets to any person, and neither Verizon Global
Funding nor Verizon Communications may permit any person to consolidate with or
merge into it or convey, transfer or lease substantially all of its properties
and assets to it, unless:
o in case Verizon Global Funding or Verizon Communications consolidates
or merges into another person or conveys, transfers or leases
substantially all of its properties and assets to another person, the
successor assumes by supplemental indenture the obligations of its
predecessor;
o after giving effect to the transaction, there is no default under the
indenture; and
o if, as a result of any consolidation or merger or conveyance, transfer
or lease described in this covenant, properties or assets of Verizon
Global Funding would become subject to any lien which would not be
permitted by the asset lien restriction described above without equally
and ratably securing the notes as described above, Verizon Global
Funding or such successor person, as the case may be, will take the
steps as are necessary effectively to secure the notes equally and
ratably with, or prior to, all indebtedness secured by those liens as
described above.
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In case Verizon Global Funding or Verizon Communications consolidates or
merges into another person or conveys, transfers or leases substantially all of
its properties and assets to another person, that person will be Verizon Global
Funding's or Verizon Communications' successor, and Verizon Global Funding will
be relieved of all obligations under the notes and the indenture or Verizon
Communications will be relieved of all obligations under the support agreement
and the indenture, as the case may be. (sections 801 and 802)
REGISTRATION OF TRANSFER AND EXCHANGE
Notes in book-entry form may be transferred or exchanged only through a
participating member of DTC. See "Book-Entry, Delivery and Form." Registration
of transfer of notes in certificated form will be made at Verizon Global
Funding's office or agency maintained for that purpose, which will initially be
the corporate trust office of the trustee in the Borough of Manhattan, The City
of New York. Notes are exchangeable without charge, except reimbursement of
taxes, if any.
Registration of transfer
Holders of notes may present their securities for registration of transfer
at the office of one or more security registrars designated and maintained by
Verizon Global Funding. (section 305)
The registrar and the trustee may require a holder, among other things, to
furnish appropriate endorsements and transfer documents, and Verizon Global
Funding may require a holder to pay any taxes and fees required by law or
permitted by the indenture.
Verizon Global Funding will not be required to register the transfer of, or
exchange, notes under the following conditions:
o Verizon Global Funding will not be required to register the transfer
of, or exchange, any notes during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of
redemption of notes selected for redemption and ending at the close of
business on the day of mailing of the relevant notice of redemption.
o Verizon Global Funding will not be required to register the transfer
of, or exchange, any notes selected for redemption, in whole or in
part, except the unredeemed portion of any notes being redeemed in
part.
(section 305)
Exchange
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Verizon Global Funding may at any time exchange notes issued as one or more
global notes for an equal principal amount of notes of the same series in
certificated form. In this case Verizon Global Funding will deliver to the
holders new notes in certificated form in the same aggregate principal amount as
the global securities being exchanged. (section 305)
Notwithstanding the above, Verizon Global Funding will not be required to
exchange any note if, as a result of the exchange, it would or would reasonably
be likely to suffer adverse consequences under any United States law or
regulation. (section 305)
GLOBAL NOTES
Verizon Global Funding will register the global notes in the name of the
depositary for the global notes or the nominee of the depositary, and the global
notes will be delivered by the trustee to the depositary for credit to the
accounts of the holders of beneficial interests in the notes.
Neither Verizon Global Funding nor the trustee, any paying agent or the
security registrar will have any responsibility or liability for any aspect of
the records relating to, or payments made on account of, beneficial ownership
interests in a global note or for maintaining, supervising or reviewing any
records relating to these beneficial ownership interests. See "Book-Entry,
Delivery and Form."
DEFEASANCE
The indenture permits us to discharge or "defease" certain of our
obligations on any series of notes at any time. Provided that we satisfy the
requirements contained in the indenture regarding defeasance, we may defease the
notes of any series by depositing with the trustee sufficient cash or government
securities to pay all sums due on that series. (sections 402-404)
PAYMENTS OF UNCLAIMED MONEYS
Money deposited with the trustee or any paying agent for the payment of
principal, interest or any premium on any note that remains unclaimed for two
years will be repaid to Verizon Global Funding at its request, unless the law
requires otherwise. If this happens and you want to claim this money, you must
look to Verizon Global Funding and not to the trustee or paying agent. (section
409)
EVENTS OF DEFAULT, NOTICES, AND WAIVER
Events of default
An "event of default" regarding the notes of a series is any one of the
following events:
26
o failure to pay interest on a note of a series, including any additional
interest required to be paid as described below under "Exchange
Offer--Reason for the Exchange Offer," for 90 days after payment is
due;
o failure to pay principal or any premium on any note of a series when
due by declaration, when called for redemption or otherwise;
o failure to perform, or breach of, any covenant or warranty in the notes
of a series or in the indenture and applicable to the notes of that
series or in the board resolutions under which the notes of that series
are issued by Verizon Global Funding or Verizon Communications for 90
days after notice to Verizon Global Funding and Verizon Communications
by the trustee or by holders of at least 25% in principal amount of the
outstanding notes of that series; and
o certain events of bankruptcy, insolvency and reorganization of Verizon
Global Funding or Verizon Communications.
(section 501)
If an event of default applicable to the notes of a series occurs and is
continuing, either the trustee or the holders of at least 25% in principal
amount of the outstanding notes of that series may declare the principal of all
the notes of that series, together with any accrued interest on the notes of
that series, to be immediately due and payable by notice in writing to Verizon
Global Funding and Verizon Communications. If it is the holders of notes who
give notice of that declaration of acceleration to Verizon Global Funding and
Verizon Communications, then they must also give notice to the trustee. (section
502)
In order for holders of notes of a series to initiate proceedings for a
remedy under the indenture, the holders of 25% in principal amount of the
outstanding notes of that series must first give notice to Verizon Global
Funding and Verizon Communications as provided above, must request that the
trustee initiate a proceeding in its own name and must offer the trustee a
reasonable indemnity against costs and liabilities. If the trustee still refuses
for 60 days to initiate the proceeding, and no inconsistent direction has been
given to the trustee by holders of a majority of the outstanding notes of that
series, the holders may initiate a proceeding as long as they do not adversely
affect the rights of any other holders. (section 507)
The holders of a majority in principal amount of the outstanding notes of a
series may rescind a declaration of acceleration relating to that series if
Verizon Global Funding or Verizon Communications has paid or deposited with the
trustee a sum sufficient to pay the amounts set forth in the applicable
provisions of the indenture and all events of default relating to that series,
besides the failure to pay principal due solely because of the declaration of
acceleration, have been cured or waived. (section 502)
27
If Verizon Global Funding defaults on the payment of any installment of
interest with respect to a series of notes and fails to cure the default within
90 days, or if Verizon Global Funding defaults on the payment of principal with
respect to a series of notes when it becomes due, then the trustee may require
Verizon Global Funding to pay all amounts due to the trustee with respect to
such series, with interest on the overdue principal, interest or any premium
payments, in addition to the expenses of collection. (section 503)
Notices
The trustee is required to give notice to holders of the notes of a series
of a default with respect to that series, which remains uncured or has not been
waived, that is known to the trustee, within 90 days after the default has
occurred. In the event of a default described in the third bullet point under
"Events of Default," the trustee shall not give notice to the holders of notes
of that series until at least 60 days after the occurrence of such default. The
trustee may withhold the notice if and so long as the board of directors, the
executive committee or a trust committee of directors and/or responsible
officers of the trustee in good faith determine that the withholding of notice
is in the interest of the holders, except that the trustee may not withhold the
notice in the case of a default in the payment of principal, interest or any
premium on any of the notes. (section 602)
Waiver
The holders of a majority in principal amount of the outstanding notes of a
series may waive any past default or event of default relating to the series
except a default in the payment of principal, interest or premium on the notes
or a default relating to a covenant or provision that cannot be modified or
amended without the consent of each affected holder. (section 513)
RIGHTS AND DUTIES OF THE TRUSTEE
The holders of a majority in principal amount of outstanding notes of a
series may direct the time, method and place of conducting any proceeding for
any remedy available to the trustee with respect to that series or exercising
any trust or other power conferred on the trustee with respect to that series.
The trustee may decline to follow that direction if it would involve the trustee
in personal liability or would be illegal. (section 512) During a default, the
trustee is required to exercise the standard of care and skill that a prudent
man would exercise under the circumstances in the conduct of his own affairs.
(section 601) The trustee is not obligated to exercise any of its rights or
powers under the indenture at the request or direction of any of the holders of
notes unless those holders have offered to the trustee reasonable security or
indemnity. (section 603)
The trustee is entitled, in the absence of bad faith on its part, to rely
on an officer's certificate of Verizon Global Funding or Verizon Communications
before taking action under the indenture. (section 603)
SUPPLEMENTAL INDENTURES
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Supplemental indentures not requiring consent of holders
We may, without the consent of any holder of the notes, enter into
supplemental indentures for specified purposes, including to cure any ambiguity
or inconsistency in the indenture or in the notes or make any other provisions
with respect to matters or questions arising under the indenture or the support
agreement, as long as the interests of the holders of the notes are not
adversely affected in any material respect. (section 901)
Supplemental indentures requiring consent of holders
With the consent of the holders of more than a majority in principal amount
of the outstanding notes of a series, the indenture permits Verizon Global
Funding, Verizon Communications and the trustee to supplement or modify in any
way the terms of the indenture with respect to that series or the rights of the
holders of the notes of that series. However, without the consent of each holder
of all of the notes affected by that modification, Verizon Global Funding,
Verizon Communications and the trustee may not:
o reduce the principal of or premium on or change the stated final
maturity of any note;
o reduce the rate of or change the time for payment of interest on any
note;
o reduce or alter the method of computation of any amount payable upon
redemption, repayment or purchase of any note by Verizon Global Funding
(or the time when the redemption, repayment or purchase may be made);
o make the principal or interest on any note payable in a currency other
than that stated in the note or change the place of payment;
o impair the right of any holder of notes to sue for payment of the
principal, interest or premium on a note that would be due and payable
at the maturity of that note or upon redemption;
o modify any provisions of the support agreement except as described
under "Supplemental indentures not requiring consent of holders" above;
or
o reduce the percentage of principal amount of the outstanding notes of a
series required to supplement the indenture or to waive any of its
provisions.
(section 902)
OPTIONAL REDEMPTION
The notes of each series will be redeemable as a whole or in part, at the
option of Verizon Global Funding at any time, at a redemption price equal to the
greater of (1) 100% of their principal amount or (2) the sum of the present
values of the remaining scheduled
29
payments of principal and interest thereon discounted to the date of redemption
on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day
months) at the Treasury Rate plus 25 basis points for the 6 3/4% Notes, 30 basis
points for the 7 1/4% Notes or 35 basis points for the 7 3/4% Notes, plus, in
each case, accrued and unpaid interest on the principal amount being redeemed to
the redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term ("Remaining Life") of the series of notes to be redeemed that
would be utilized, at the time of selection and in accordance with customary
financial practice, in pricing new issues of corporate debt securities of
comparable maturity to the remaining term of such notes.
"Comparable Treasury Price" means (1) the average of five Reference
Treasury Dealer Quotations for such redemption date, after excluding the highest
and lowest Reference Treasury Dealer Quotations, or (2) if the Independent
Investment Banker obtains fewer than five Reference Treasury Dealer Quotations,
the average of all such quotations.
"Independent Investment Banker" means Chase Securities Inc., J.P. Morgan
Securities Inc. or Morgan Stanley & Co. Incorporated or, if such firms are
unwilling or unable to select the Comparable Treasury Issue, an independent
investment banking institution of national standing appointed by the Trustee.
"Reference Treasury Dealer" means (1) Chase Securities Inc., J.P. Morgan
Securities Inc. and Morgan Stanley & Co. Incorporated and their respective
successors, provided, however, that if any of the foregoing ceases to be a
primary U.S. Government securities dealer in New York City (a "Primary Treasury
Dealer"), Verizon Global Funding will substitute another Primary Treasury Dealer
and (2) any other Primary Treasury Dealer selected by the Independent Investment
Banker after consultation with Verizon Global Funding.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Independent Investment Banker, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Independent Investment Banker at 5:00
p.m., New York City time, on the third business day preceding the redemption
date.
"Treasury Rate" means, with respect to any redemption date, (1) the yield,
under the heading which represents the average for the immediately preceding
week, appearing in the most recently published statistical release designated
"H.15(519)" or any successor publication which is published weekly by the Board
of Governors of the Federal Reserve System and which establishes yields on
actively traded United States Treasury securities adjusted to constant maturity
under the caption "Treasury Constant Maturities," for the maturity corresponding
to the Comparable Treasury Issue (if no maturity is within three months before
or after the Remaining Life, yields for the two published maturities most
closely corresponding to the Comparable Treasury Issue will be determined and
the
30
Treasury Rate will be interpolated or extrapolated from the yields on a straight
line basis, rounding to the nearest month) or (2) if that release (or any
successor release) is not published during the week preceding the calculation
date or does not contain those yields, the rate per annum equal to the
semi-annual equivalent yield to maturity of the Comparable Treasury Issue,
calculated using a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for
that redemption date. The Treasury Rate will be calculated on the third Business
Day preceding the redemption date.
Generally, Verizon Global Funding must send a notice of redemption to the
holders of the series of notes to be redeemed at least 30 days but not more than
60 days prior to the redemption date. (section 1104) If less than all the notes
of a series are being redeemed, the trustee will select the notes to be redeemed
using a method it considers fair. (section 1103) After the redemption date,
holders of redeemed notes will have no rights with respect to the notes except
the right to receive the redemption price and any unpaid interest to the
redemption date. (section 1106)
DESCRIPTION OF THE SUPPORT AGREEMENT
Under a support agreement, dated as of October 31, 2000, Verizon
Communications has agreed to:
o own directly or indirectly all of Verizon Global Funding's voting
capital stock issued and outstanding at any time;
o make sure that Verizon Global Funding maintains at all times a positive
tangible net worth, as determined in accordance with generally accepted
accounting principles;
o provide Verizon Global Funding with any funds it needs to make any
timely payment of principal, interest or any premium on the notes, if
it cannot obtain funds from other sources on commercially reasonable
terms.
Verizon Global Funding and Verizon Communications cannot terminate the
support agreement until all of the debt supported by the support agreement
(including the notes) has been paid in full. Verizon Global Funding and Verizon
Communications cannot amend the support agreement in any way that adversely
affects your rights unless you consent in writing.
If Verizon Global Funding fails or refuses to take timely action to enforce
Verizon Global Funding's rights under the support agreement or if Verizon Global
Funding defaults in the timely payment of principal, interest or any premium,
you have the right to proceed directly against Verizon Communications to enforce
the rights under the support agreement or to obtain payment of the defaulted
principal, interest or premium owed to you. However, in no event will you have
recourse to or against the stock or assets of Verizon Services Corp., Telecom
Corporation of New Zealand Limited or any operating telephone company
31
which may from time to time be owned directly or indirectly by Verizon
Communications. Except for the exclusion of this stock and assets from recourse,
Verizon Communications' obligations under the support agreement rank equally
with its other unsecured and unsubordinated debt.
As of March 31, 2001, Verizon Communications' net assets not subject to the
exclusion described in the preceding paragraph had a book value of approximately
$66.7 billion. Verizon Communications is a holding company, and therefore, its
right and the right of its creditors (including the holders of the notes), to
realize upon the assets of any subsidiary of Verizon Communications, whether
following any liquidation or reorganization of that subsidiary, or otherwise, is
subject to prior claims of creditors of each such subsidiary, except to the
extent that claims of Verizon Communications itself as a creditor of a
subsidiary may be recognized.
CONCERNING THE TRUSTEE
Verizon Global Funding, Verizon Communications and their affiliates
maintain banking relationships in the ordinary course of business with First
Union National Bank, the trustee under the indenture. The trustee is acting as
the exchange agent for the exchange offer. The trustee also serves as trustee or
paying agent for various debt issues by Verizon Global Funding and other
affiliates of Verizon Communications.
BOOK-ENTRY, DELIVERY AND FORM
THE GLOBAL NOTES
The restricted notes are represented by one or more permanent global
certificates in definitive, fully registered form without interest coupons.
Except as described under "Certificated Notes," the exchange notes initially
will be represented by one or more permanent global certificates in definitive,
fully registered form and
- will be deposited with, or on behalf of, DTC, and registered in the
name of Cede & Co., as DTC's nominee, or
- will remain in the custody of the trustee pursuant to a FAST Balance
Certificate Agreement between DTC and the trustee.
DEPOSITARY PROCEDURES
The descriptions of the operations and procedures of DTC, Euroclear and
Clearstream described below are provided solely as a matter of convenience.
These operations and procedures are solely within the control of these
respective settlement systems and are subject to change by them from time to
time. Neither Verizon Global Funding nor Verizon Communications take any
responsibility for these operations or
32
procedures, and investors are urged to contact the relevant system or its
participants directly to discuss these matters.
DTC has advised Verizon Global Funding that it is:
o a limited purpose trust company organized under the laws of the State
of New York;
o a "banking organization" within the meaning of the New York Banking
Law;
o a member of the Federal Reserve System;
o a "clearing corporation" within the meaning of the Uniform Commercial
Code, as amended; and
o a "clearing agency" registered under Section 17A of the Securities
Exchange Act of 1934.
DTC has advised Verizon Global Funding that it was created to hold
securities for its participants and to facilitate the clearance and settlement
of securities transactions between its participants through electronic
book-entry changes to the accounts of its participants, which eliminates the
need for physical transfer and delivery of certificates. DTC's participants
include securities brokers and dealers, banks and trust companies, clearing
corporations and certain other organizations. Indirect access to DTC's system is
also available to other entities such as banks, brokers, dealers and trust
companies; these indirect participants clear through or maintain a custodial
relationship with a participant in DTC, either directly or indirectly. Investors
who are not DTC participants may beneficially own securities held by or on
behalf of DTC only through participants or indirect participants in DTC.
DTC has also advised Verizon Global Funding that pursuant to procedures
established by DTC:
o upon deposit of each global note representing exchange notes, DTC will
credit the accounts of participants in DTC with an interest in such
global note; and
o ownership of the exchange notes will be shown on, and the transfer of
ownership of the exchange notes will be effected only through, records
maintained by DTC, with respect to the interests of participants in
DTC, and the records of participants and indirect participants in DTC,
with respect to the interests of persons other than participants in
DTC.
The laws of some jurisdictions may require that certain purchasers of
securities take physical delivery of the securities in definitive form.
Accordingly, the ability to transfer
33
interests in the exchange notes represented by a global note to these persons
may be limited. In addition, because DTC can act only on behalf of its
participants, who in turn act on behalf of persons who hold interests through
participants, the ability of a person having an interest in exchange notes
represented by a global note to pledge or transfer that interest to persons or
entities that do not participate in DTC's system, or to otherwise take actions
in respect of that interest, may be affected by the lack of a physical
definitive security in respect of the interest.
So long as DTC or its nominee is the registered owner of a global note, DTC
or the nominee, as the case may be, will be considered the sole owner or holder
of the notes represented by the global note for all purposes under the
indenture. Except as provided below, owners of beneficial interests in a global
note:
o will not be entitled to have exchange notes represented by the global
note registered in their names;
o will not receive or be entitled to receive physical delivery of
certificated exchange notes; and
o will not be considered the owners or holders of exchange notes under
the indenture for any purpose, including with respect to the giving of
any direction, instruction or approval to the trustee under the
indenture.
Accordingly, each holder owning a beneficial interest in a global note must
rely on the procedures of DTC and, if the holder is not a participant or an
indirect participant in DTC, on the procedures of the DTC participant through
which the holder owns its interest, to exercise any rights of a holder of
exchange notes under the indenture or the global note. Verizon Global Funding
understands that under existing industry practice, if it requests any action of
holders of exchange notes, or a holder that is an owner of a beneficial interest
in a global note desires to take any action that DTC, as the holder of the
global note, is entitled to take, then DTC would authorize its participants to
take the action and the participants would authorize holders owning through
participants to take the action or would otherwise act upon the instruction of
such holders. Neither Verizon Global Funding nor the trustee will have any
responsibility or liability for any aspect of the records relating to, or
payments made on account of, exchange notes by DTC, or for maintaining,
supervising or reviewing any records of DTC relating to the exchange notes.
Payments with respect to the principal of, and premium, if any, additional
interest, if any, and interest on, any exchange notes represented by a global
note registered in the name of DTC or its nominee on the applicable record date
will be payable by the trustee to or at the direction of DTC or its nominee in
its capacity as the registered holder of the global note representing those
exchange notes under the indenture. Under the terms of the indenture, Verizon
Global Funding and the trustee may treat the persons in whose names the exchange
notes, including the global notes, are registered as the owners of the exchange
notes for the purpose of receiving payment on the exchange notes and for any and
all other purposes whatsoever. Accordingly, none of Verizon Global Funding,
Verizon
34
Communications nor the trustee has or will have any responsibility or liability
for any aspect of DTC's records or any records of any participant or indirect
participant in DTC relating to, or payments (including principal, premium, if
any, additional interest, if any, and interest) made on account of, any
beneficial interest in a global note of any series, or for maintaining,
supervising or reviewing any of DTC's records or the records of any participant
or indirect participant in DTC relating to the ownership of any such beneficial
interest. Payments by the participants and the indirect participants in DTC to
the owners of beneficial interests in a global note will be governed by standing
instructions and customary industry practice and will be the responsibility of
the participants or the indirect participants and DTC.
Transfers between participants in DTC will be effected in accordance with
DTC's procedures, and will be settled in same-day funds. Transfers between
participants in Euroclear or Clearstream will be effected in the ordinary way in
accordance with their respective rules and operating procedures.
Subject to compliance with any transfer restrictions that may be applicable
to any of the notes, cross-market transfers between the participants in DTC, on
the one hand, and Euroclear or Clearstream participants, on the other hand, will
be effected through DTC in accordance with DTC's rules on behalf of Euroclear or
Clearstream, as the case may be, by its respective depositary. These
cross-market transactions, however, will require delivery of instructions to
Euroclear or Clearstream, as the case may be, by the counterparty in that system
in accordance with the rules and procedures and within the established
deadlines, Brussels time, of that system. If the transaction meets its
settlement requirements, Euroclear or Clearstream, as the case may be, will
deliver instructions to its respective depositary to take action to effect final
settlement on its behalf by delivering or receiving interests in the relevant
global notes in DTC, and making or receiving payment in accordance with normal
procedures for same-day funds settlement applicable to DTC. Euroclear
participants and Clearstream participants may not deliver instructions directly
to the depositaries for Euroclear or Clearstream.
Because of time zone differences, the securities account of a Euroclear or
Clearstream participant purchasing an interest in a global note from a
participant in DTC will be credited, and any crediting will be reported to the
relevant Euroclear or Clearstream participant, during the securities settlement
processing day, which must be a business day for Euroclear and Clearstream,
immediately following the settlement date of DTC. Cash received in Euroclear or
Clearstream as a result of sales of interest in a global note by or through a
Euroclear or Clearstream participant to a participant in DTC will be received
with value on the settlement date of DTC but will be available in the relevant
Euroclear or Clearstream cash account only as of the business day for Euroclear
or Clearstream following DTC's settlement date.
Although DTC, Euroclear and Clearstream have agreed to the above procedures
to facilitate transfers of interests in the global notes among participants in
DTC, Euroclear and Clearstream, they are under no obligation to perform or to
continue to perform the procedures, and the procedures may be discontinued at
any time. None of Verizon Global
35
Funding, Verizon Communications nor the trustee will have any responsibility for
the performance by DTC, Euroclear or Clearstream or their respective
participants or indirect participants of their respective obligations under the
rules and procedures governing their operations.
Certificated Notes
If:
o DTC notifies Verizon Global Funding that it is at any time unwilling or
unable to continue as a depositary or DTC ceases to be registered as a
clearing agency under the Securities Exchange Act of 1934 and a
successor depositary is not appointed within 90 days; or
o Verizon Global Funding executes and delivers to the trustee a company
order to the effect that the global notes will be exchangeable,
the global notes will be exchangeable for notes in certificated form with the
same terms and of an equal aggregate principal amount with respect to each
series, in increments of $1,000. The certificated notes will be registered in
such names as DTC instructs the trustee. Verizon Global Funding expects that
instructions may be based upon directions received by DTC from participants with
respect to ownership of beneficial interests in global notes. Upon the issuance
of certificated notes, the trustee is required to register the certificated
notes in the names instructed by DTC and cause the certificated notes to be
delivered to the registered holders.
None of Verizon Global Funding, Verizon Communications nor the trustee will
be liable for any delay by DTC or any participant or indirect participant in DTC
in identifying the beneficial owners of the related notes, and each of those
persons may conclusively rely on, and will be protected in relying on,
instructions from DTC for all purposes, including with respect to the
registration and delivery, and the respective principal amounts, of the notes to
be issued.
U.S. FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain U.S. federal income tax
consequences of the acquisition, ownership and disposition of exchange notes as
of the date hereof. Except where noted, this summary deals only with exchange
notes that are acquired in connection with this exchange offer and held as
capital assets and does not deal with special situations. In addition, it does
not represent a detailed description of the U.S. federal income tax consequences
applicable to you if you are subject to special treatment under the U.S. federal
income tax laws, including if you are one of the following:
36
o a dealer in securities or currencies,
o a financial institution,
o an insurance company,
o a tax exempt organization,
o a person holding the exchange notes as part of a hedging,
integrated or conversion transaction, constructive sale or
straddle,
o a trader in securities that has elected the mark-to-market
method of accounting for your securities,
o a person liable for alternative minimum tax,
o or a U.S. person whose "functional currency" is not the U.S.
dollar.
If a partnership holds the exchange notes, the tax treatment of a
partner will generally depend upon the status of the partner and the activities
of the partnership. If you are a partner of a partnership holding the exchange
notes, you should consult your tax advisors.
The discussion below is based upon the provisions of the Internal
Revenue Code of 1986, as amended, and regulations, rulings and judicial
decisions as of the date of this prospectus. Those authorities may be changed,
perhaps retroactively, so as to result in U.S. federal income tax consequences
different from those discussed below.
IF YOU ARE CONSIDERING THE ACQUISITION OF EXCHANGE NOTES, YOU SHOULD
CONSULT YOUR OWN TAX ADVISORS CONCERNING THE FEDERAL INCOME TAX CONSEQUENCES TO
YOU AND ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY OTHER TAXING JURISDICTION
.
CONSEQUENCES OF THE EXCHANGE
The exchange of restricted notes for exchange notes pursuant to the
exchange offer will not constitute a taxable event to holders. Consequently, no
gain or loss will be recognized by a holder upon receipt of an exchange note,
the holding period of the exchange note will include the holding period of the
restricted note and the basis of the exchange note will be the same as the basis
of the restricted note immediately before the exchange.
37
IN ANY EVENT, PERSONS CONSIDERING THE EXCHANGE OF RESTRICTED NOTES FOR
EXCHANGE NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE UNITED
STATES FEDERAL INCOME TAX CONSEQUENCES IN LIGHT OF THEIR PARTICULAR SITUATIONS
AS WELL AS ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY OTHER TAXING
JURISDICTION.
CONSEQUENCES TO U.S. HOLDERS
The following is a summary of certain U.S. federal tax consequences
that will apply to you if you are a U.S. holder of exchange notes.
Certain consequences to "non-U.S. holders" of exchange notes, who are
beneficial owners of exchange notes and who are not U.S. holders, are described
under "Consequences to Non-U.S. Holders" below.
"U.S. holder" means a beneficial owner of an exchange note that is:
o a citizen or resident of the United States,
o a corporation or partnership created or organized in or under
the laws of the United States or any political subdivision of
the U.S.,
o an estate the income of which is subject to U.S. federal
income taxation regardless of its source, or
o a trust that (1) is subject to the supervision of a court
within the United States and the control of one or more U.S.
persons or (2) has a valid election in effect under applicable
U.S. Treasury regulations to be treated as a U.S. person.
Payments of Interest
Except as set forth below, interest on an exchange note will generally
be taxable to you as ordinary income from domestic sources at the time it is
paid or accrued in accordance with your method of accounting for tax purposes.
Amortizable Bond Premium
If you purchased a restricted note for an amount in excess of the sum
of all amounts payable on the note after the purchase date other than stated
interest, you will be considered to have purchased the note at a "premium". You
generally may elect to amortize the premium over the remaining term of the
exchange note on a constant yield method as an offset to interest when
includible in income under your regular accounting method. If you do not elect
to amortize bond premium, that premium will decrease the gain or increase the
loss you would otherwise recognize on disposition of the exchange note. Your
election to amortize premium on a constant yield method will also apply to all
debt obligations held or subsequently acquired by you on or after the first day
of the first taxable year to which the election applies. You may not revoke the
election without the consent of the Internal Revenue Service. You should consult
your own tax advisor before making this election.
38
Market Discount
If you purchased a restricted note for an amount that is less than its
stated redemption price at maturity, the amount will be treated as "market
discount" for U.S. federal income tax purposes, unless that difference is less
than a specified de minimis amount. Under the market discount rules, you will be
required to treat any payment, other than stated interest, on, or any gain on
the sale, exchange, retirement or other disposition of an exchange note as
ordinary income to the extent of the market discount that you have not
previously included in income and are treated as having accrued on the exchange
note at the time of its payment or disposition. In addition, you may be required
to defer, until the maturity of the exchange note or its earlier disposition in
a taxable transaction, the deduction of all or a portion of the interest expense
on any indebtedness attributable to the exchange note.
Any market discount will be considered to accrue ratably during the
period from the date of acquisition to the maturity date of the exchange note,
unless you elect to accrue on a constant yield interest method. You may elect to
include market discount in income currently as it accrues, on either a ratable
or constant yield interest method, in which case the rule described above
regarding deferral of interest deductions will not apply. Your election to
include market discount in income currently, once made, applies to all market
discount obligations acquired by you on or after the first taxable year to which
your election applies and may not be revoked without the consent of the Internal
Revenue Service. You should consult your own tax advisor before making this
election.
Sale, Exchange and Retirement of Exchange Notes
Upon the sale, exchange, retirement or other disposition of an exchange
note, you will recognize gain or loss equal to the difference between the amount
you realize upon the sale, exchange, retirement or other disposition (less an
amount equal to any accrued stated interest that you did not previously include
in income, which will be taxable as such) and the adjusted tax basis of the
exchange note. Except as described above with respect to market discount, that
gain or loss will be capital gain or loss. Capital gains of individuals derived
in respect of capital assets held for more than one year are eligible for
reduced rates of taxation. The deductibility of capital losses is subject to
limitations.
CONSEQUENCES TO NON-U.S. HOLDERS
The following is a summary of certain U.S. federal income tax
consequences that will apply to you if you are a non-U.S. holder of exchange
notes. This summary does not represent a detailed description of the federal
income tax consequences to you in light of your particular circumstances. In
addition, it does not deal with non-U.S. holders that are subject to special
treatment under the U.S. federal income tax laws (including if you are a
controlled foreign corporation, passive foreign investment company or foreign
personal holding company or a corporation that accumulates earnings to avoid
federal income tax or in certain circumstances, a U.S. expatriate).
39
U.S. Federal Withholding Tax
The 30% U.S. federal withholding tax will not apply to any payment of
principal or interest on the exchange notes provided that:
o you do not actually, or constructively, own 10% or more of the
total combined voting power of all classes of our voting stock
within the meaning of the Internal Revenue Code and applicable
U.S. Treasury regulations,
o you are not a controlled foreign corporation that is related
to us through stock ownership,
o you are not a bank whose receipt of interest on the exchange
notes is described in section 881(c)(3)(A) of the Internal
Revenue Code, and,
o (a) you provide your name and address on an Internal Revenue
Service Form W-8BEN (or other applicable form), and certify,
under penalty of perjury, that you are not a U.S. person or
(b) you hold the exchange notes through certain foreign
intermediaries or certain foreign partnerships, and you
satisfy the certification requirements of applicable U.S.
Treasury regulations. Special certification rules apply to
certain non-U.S. holders that are entities rather than
individuals.
If you cannot satisfy the requirements described above, payments of
interest made to you will be subject to the 30% U.S. federal withholding tax,
unless you provide us with a properly executed (1) Internal Revenue Service Form
W-8BEN (or other applicable form) claiming an exemption from, or reduction in,
withholding under the benefit of an applicable tax treaty or (2) Internal
Revenue Service Form W-8ECI (or successor form) stating that interest paid on an
exchange note is not subject to withholding tax because it is effectively
connected with your conduct of a trade or business in the United States.
The 30% U.S. federal withholding tax will not generally apply to any
gain that you realize on the sale, exchange, retirement or other disposition of
the exchange notes.
U.S. Federal Estate Tax
Your estate will not be subject to U.S. federal estate tax on exchange
notes beneficially owned by you at the time of your death, provided that you are
not a U.S. citizen or resident (as specially defined for U.S. federal estate tax
purposes) and (1) you do not own 10% or more of the total combined voting power
of all classes of our voting stock (within the meaning of the Internal Revenue
Code and the U.S. Treasury regulations) and (2) interest on the exchange note
would not have been, if received at the time of your death, effectively
connected with the conduct by you of a trade or business in the United States.
U.S. Federal Income Tax
If you are engaged in a trade or business in the United States and
interest on the exchange notes is effectively connected with the conduct of that
trade or business, you will be subject to U.S. federal income tax on that
interest on a net income basis in the same manner as if you were a U.S. person
as defined under the Internal Revenue Code, although that interest income will
be exempt from the 30% U.S. federal withholding tax. In addition, if you are a
foreign corporation, you may be subject to a branch profits tax equal to 30% (or
lower applicable treaty rate) of your earnings and profits for the taxable year,
subject to certain adjustments.
40
Any gain realized on the disposition of an exchange note generally will
not be subject to U.S. federal income tax unless
o the gain is effectively connected with the conduct of a trade
or business in the United States by you, or
o you are an individual who is present in the United States for
183 days or more in the taxable year of that disposition, and
other conditions are met.
INFORMATION REPORTING AND BACKUP WITHHOLDING
U.S. Holders
In general, information reporting requirements will apply to certain
payments of principal, interest and premium paid on exchange notes and to the
proceeds of sale of an exchange note made to you, unless you are an exempt
recipient, such as a corporation. A backup withholding tax will apply to those
payments if you fail to provide a taxpayer identification number, a
certification of exempt status, or fail to report in full dividend and interest
income.
Non-U.S. Holders
In general, you will not be subject to backup withholding and
information reporting with respect to payments that we make to you provided that
we do not have actual knowledge that you are a U.S. person and we have received
from you the statement described above under "Consequences to Non-U.S.
Holders-U.S. Federal Withholding Tax."
In addition, you will not be subject to backup withholding or
information reporting with respect to the proceeds of the sale of an exchange
note within the United States or conducted through U.S.-related financial
intermediaries, if the payor receives the statement described above and does not
have actual knowledge that you are a U.S. person, as defined under the Internal
Revenue Code, or you otherwise establish an exemption.
Any amounts withheld under the backup withholding rules will be allowed
as a refund or a credit against your U.S. federal income tax liability provided
the required information is furnished to the Internal Revenue Service.
41
PLAN OF DISTRIBUTION
Each broker-dealer that receives exchange notes for its own account
pursuant to the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of such exchange notes. This
prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of exchange notes or market-making
activities or other trading activities. The Company has agreed that, for a
period of 90 days after the Expiration Date, it will make this prospectus, as
amended or supplemented, available to any broker-dealer for use in connection
with any such resale. In addition, until _________, 2001, all dealers effecting
transactions in the exchange notes may be required to deliver a prospectus.
The Company will not receive any proceeds from any sale of exchange notes
by broker-dealers. Exchange notes received by broker-dealers for their own
account pursuant to the exchange offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the exchange notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or at negotiated prices. Any such
resale may be made directly to purchasers or to or through brokers or dealers
who may receive compensation in the form of commissions or concessions from any
such broker-dealer or the purchasers of any such exchange notes. Any
broker-dealer that resells exchange notes that were received by it for its own
account pursuant to the exchange offer and any broker or dealer that
participates in a distribution of such exchange notes may be deemed to be an
"underwriter" within the meaning of the Securities Act, and any profit on any
such resale of exchange notes and any commission or concessions received by any
such persons may be deemed to be underwriting compensation under the Securities
Act. The Letter of Transmittal states that, by acknowledging that it will
deliver and by delivering a prospectus, a broker-dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.
For a period of 90 days after the Expiration Date, the Company will
promptly send additional copies of this prospectus, and any amendment or
supplement to this prospectus, to any broker-dealer that requests such documents
in the Letter of Transmittal.
The Company has agreed to pay all expenses incident to the exchange offer,
including the expense of one counsel for the holders of the restricted notes,
other than commissions or concessions of any broker-dealers and will indemnify
the holders of the restricted notes, including any broker-dealers, against
certain liabilities, including liabilities under the Securities Act.
42
LEGAL MATTERS
The validity of the notes as supported by the support agreement have been
passed upon for Verizon Global Funding and Verizon Communications by William P.
Barr, Executive Vice President and General Counsel of Verizon Communications. As
of April 30, 2001, Mr. Barr beneficially owned approximately 11,825 shares of
Verizon Communications common stock and had options to purchase an aggregate of
994,800 shares of Verizon Communications common stock.
EXPERTS
The consolidated financial statements and financial statement schedule of
Verizon Communications Inc. as of December 31, 2000 and for the year then ended,
included in Verizon Communications' Annual Report on Form 10-K filed on March
23, 2001, and incorporated by reference in this prospectus, have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report which is
also included therein and incorporated by reference herein. Such consolidated
financial statements are incorporated by reference herein in reliance upon such
report given on the authority of such firm as experts in accounting and
auditing.
The consolidated financial statements and financial statement schedule of
Verizon Communications Inc. as of December 31, 1999 and for the two years in the
period ended December 31, 1999, included in Verizon Communications' Annual
Report on Form 10-K filed on March 23, 2001, and incorporated by reference in
this prospectus, have been audited by PricewaterhouseCoopers LLP, independent
accountants, other than the financial statements of GTE Corporation (a wholly
owned subsidiary of Verizon Communications) which were audited by Arthur
Andersen LLP, independent public accountants, as set forth in their reports
which are also included therein and incorporated by reference herein. Such
consolidated financial statements are incorporated by reference herein in
reliance upon such report given on the authority of such firm as experts in
accounting and auditing.
43
$5,000,000,000 OF NOTES OF
VERIZON GLOBAL FUNDING CORP.
SUPPORTED AS TO PAYMENT OF PRINCIPAL AND INTEREST BY
VERIZON COMMUNICATIONS INC.
OFFER TO EXCHANGE
$1,000,000,000 6 3/4% NOTES DUE 2005 THAT HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT FOR ANY AND ALL OUTSTANDING 6 3/4% NOTES DUE 2005
$2,000,000,000 7 1/4% NOTES DUE 2010 THAT HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT FOR ANY AND ALL OUTSTANDING 7 1/4% NOTES DUE 2010
$2,000,000,000 7 3/4% NOTES DUE 2030 THAT HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT FOR ANY AND ALL OUTSTANDING 7 3/4% NOTES DUE 2030
[LOGO]
---------------------
PROSPECTUS
---------------------
JULY , 2001
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law ("DGCL") permits a
corporation to indemnify any of its directors or officers who was or is a party
or is threatened to be made a party to any third party proceeding by reason of
the fact that such person is or was a director or officer of the corporation,
against expenses (including attorney's fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in connection with
such action or proceeding, if such person acted in good faith and in a manner
such person reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal action or proceeding, had no
reason to believe that such person's conduct was unlawful. In a derivative
action, i.e., one by or in the right of the corporation, the corporation is
permitted to indemnify directors and officers against expenses (including
attorney's fees) actually and reasonably incurred by them in connection with the
defense or settlement of an action or suit if they acted in good faith and in a
manner that they reasonably believed to be in or not opposed to the best
interests of the corporation, except that no indemnification shall be made if
such person shall have been adjudged liable to the corporation, unless and only
to the extent that the court in which the action or suit was brought shall
determine upon application that the defendant directors or officers are fairly
and reasonably entitled to indemnity for such expenses despite such adjudication
of liability.
Article 7 of the Verizon Communications Restated Certificate of
Incorporation, and Article 8 of the Verizon Global Funding Restated Certificate
of Incorporation, makes mandatory the indemnification expressly authorized under
the DGCL, except that the Verizon Communications Restated Certificate of
Incorporation only provides for indemnification in derivative actions, suits or
proceedings initiated by a director or officer if the initiation of such action,
suit or proceeding was authorized by the Board of Directors.
Pursuant to Section 7.8 of the Amended and Restated Agreement and Plan of
Merger dated as of April 21, 1996 by and between NYNEX Corporation ("NYNEX") and
Bell Atlantic Corporation ("Bell Atlantic"), Bell Atlantic agreed for a period
of six years following the effective time of the merger to (a) cause NYNEX to
maintain in effect the provisions regarding indemnification of officers and
directors contained in the NYNEX Certificate of Incorporation and Bylaws and the
certificates of incorporation and bylaws of each of its subsidiaries or in
director, officer or employee indemnification agreements of NYNEX and its
subsidiaries, (b) maintain in effect and cause NYNEX to maintain in effect
current policies of directors' and officers' liability insurance and fiduciary
liability insurance with respect to claims arising prior to the effective time
of the merger, and (c) indemnify, and cause NYNEX to indemnify, the directors
and officers of Bell Atlantic and NYNEX, respectively, to the fullest extent
permitted under their respective certificates of incorporation and bylaws and
applicable law. In addition, Bell Atlantic agreed to unconditionally and
irrevocably guarantee for the benefit of such directors, officers and employees
the obligations of NYNEX under its indemnification arrangements.
Pursuant to Section 7.8 of the Amended and Restated Agreement and Plan of
Merger dated as of July 27, 1998, by and among GTE Corporation ("GTE"), Bell
Atlantic, and a wholly
II-1
owned subsidiary of Bell Atlantic, Bell Atlantic agreed for a period of six
years following the effective time of the merger to (a) cause GTE to maintain in
effect the provisions regarding indemnification of officers and directors
contained in the GTE charter and bylaws and the charters and bylaws of each of
its subsidiaries or in director, officer or employee indemnification agreements
of GTE and its subsidiaries, (b) maintain in effect and cause GTE to maintain in
effect current policies of directors' and officers' liability insurance and
fiduciary liability insurance with respect to claims arising prior to the
Effective Time, and (c) indemnify, and cause GTE to indemnify, the directors and
officers of Bell Atlantic and GTE, respectively, to the fullest extent permitted
under their respective charters and bylaws and applicable law. In addition, Bell
Atlantic agreed to unconditionally and irrevocably guarantee for the benefit of
such directors, officers and employees the obligations of GTE under its
indemnification arrangements.
Verizon Communications has succeeded to the obligations of Bell Atlantic
described in the two immediately preceding paragraphs.
The Certificate of Incorporation of each of Verizon Communications and
Verizon Global Funding limits the personal liability of directors to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director to the fullest extent permitted by the Delaware General
Corporation Law.
The directors and officers of Verizon Communications and Verizon Global
Funding are insured against certain liabilities, including certain liabilities
arising under the Securities Act, which might be incurred by them in such
capacities and against which they cannot be indemnified by Verizon.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
See Exhibit Index on Page E-1
ITEM 22. UNDERTAKINGS
The undersigned registrants hereby undertake:
(a) to respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11, or 13 of
this form, within one business day of receipt of such request, and to
send the incorporated documents by first class mail or other equally
prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through
the date of responding to the request;
(b) to supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved
therein, that was not the subject of and included in the registration
statement when it became effective; and
(c) that, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to
Section 13(a) or 15(d) of
II-2
the Securities Exchange Act of 1934 that is incorporated by reference
in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, Verizon
Communications Inc. has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of New
York, State of New York, on the 9th day July, 2001.
VERIZON COMMUNICATIONS INC.
By: /s/ Frederic V. Salerno
-----------------------
(Senior Executive Vice President and
Chief Financial Officer/Strategy and
Business Development)
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
SIGNATURE TITLE DATE
*
- ------------------------------------ Director July 9, 2001
James R. Barker
*
- ------------------------------------ Director July 9, 2001
Edward H. Budd
*
- ------------------------------------ Director July 9, 2001
Richard L. Carrion
*
- ------------------------------------ Director July 9, 2001
Robert F. Daniell
*
- ------------------------------------ Director July 9, 2001
Helene L. Kaplan
*
- ------------------------------------ Director, Chairman and Co-Chief July 9, 2001
Charles R. Lee Executive Officer (co-principal
executive officer)
*
- ------------------------------------ Director July 9, 2001
Sandra O. Moose
*
- ------------------------------------ Director July 9, 2001
Joseph Neubauer
*
- ------------------------------------ Director July 9, 2001
Thomas H. O'Brien
*
- ------------------------------------ Director July 9, 2001
Russell E. Palmer
*
- ------------------------------------ Director July 9, 2001
Hugh B. Price
II-4
*
- ------------------------------------ Director, President and Co-Chief July 9, 2001
Ivan G. Seidenberg Executive Officer (co-principal
executive officer)
*
- ------------------------------------ Director July 9, 2001
Walter V. Shipley
*
- ------------------------------------ Director July 9, 2001
John W. Snow
*
- ------------------------------------ Director July 9, 2001
John R. Stafford
*
- ------------------------------------ Director July 9, 2001
Robert D. Storey
* Senior Vice President and
- ------------------------------------ Controller (principal accounting July 9, 2001
Lawrence R. Whitman officer)
* By /s/ Frederic V. Salerno
-----------------------
Individually and as attorney-in-fact
(principal financial officer)
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, Verizon
Global Funding Corp. has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Wilmington, State of Delaware, on the 9th day of July, 2001.
VERIZON GLOBAL FUNDING CORP.
By: /s/ Janet M. Garrity
--------------------
Janet M. Garrity
(President and Treasurer)
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
SIGNATURE TITLE DATE
* Chief Financial Officer July 9, 2001
- ------------------------------------ (principal financial officer and
Robert S. Fitzmire principal accounting officer)
Director, President and Treasurer July 9, 2001
* (principal executive officer)
- ------------------------------------
Janet M. Garrity
*
- ------------------------------------ Director July 9, 2001
William F. Heitmann
*
- ------------------------------------ Director July 9, 2001
David S. Kauffman
* By /s/ Janet M. Garrity
--------------------
Janet M. Garrity
Individually and as attorney-in-fact
II-6
EXHIBIT
NO. DESCRIPTION
- -------- ------------------------------------------------------------
3.1 Certificate of Incorporation of Verizon Global Funding Corp.*
3.2 Certificate of Incorporation of Verizon Communications Inc., as
amended (previously filed as an Exhibit to Verizon
Communication Inc.'s Annual Report on Form 10-K for the year
ended December 31, 2000)
3.3 By-laws of Verizon Global Funding Corp.*
3.4 By-laws of Verizon Communications Inc. (previously filed as an
Exhibit to Verizon Communication Inc.'s Annual Report on Form
10-K for the year ended December 31, 2000)
4.1 Indenture among Verizon Global Funding Corp., Verizon
Communications Inc. and First Union National Bank, as Trustee,
dated as of December 1, 2000*
4.2 Form of 6 3/4% Notes*
4.3 Form of 7 1/4% Notes*
4.4 Form of 7 3/4% Notes*
4.5 Exchange and Registration Rights Agreement, dated December 12,
2000 by and among Verizon Global Funding Corp., Verizon
Communications Inc., Chase Securities Inc., J.P. Morgan & Co.,
Morgan Stanley Dean Witter, M.R. Beal & Co., Bear, Stearns &
Co. Inc., Credit Suisse First Boston, Deutsche Banc Alex.
Brown, UBS Warburg LLC and Utendahl Capital Partners, L.P.*
4.6 Exchange and Registration Rights Agreement, dated February 7,
2001 by and among Verizon Global Funding Corp., Verizon
Communications Inc., J.P. Morgan & Co. and Morgan Stanley Dean
Witter*
5 Opinion and Consent of William P. Barr, Esq.*
12 Statement of Verizon Communications Inc. Consolidated
Computation of Ratio of Earnings to Fixed Charges (previously
filed as an Exhibit to Verizon Communication Inc.'s Annual
Report on Form 10-K for the year ended December 31, 2000 and
as an Exhibit to Verizon Communication Inc.'s Current Report on
Form 8-K dated May 9, 2001)
23.1 Consent of Ernst & Young LLP*
23.2 Consent of PricewaterhouseCoopers*
23.3 Consent of Arthur Andersen LLP*
23.4 Consent of William P. Barr, Esq. (contained in opinion filed as
Exhibit 5)
24.1 Powers of Attorney of Verizon Global Funding Corp.*
24.2 Powers of Attorney of Verizon Communications Inc.*
25 Statement of Eligibility of Trustee on Form T-1*
99.1 Form of Letter of Transmittal*
99.2 Form of Notice of Guaranteed Delivery*
* Filed herewith.