FILED PURSUANT TO RULE 424(B)(2)
Filed Pursuant to Rule 424(b)(2)
Registration No. 333-109028
PROSPECTUS SUPPLEMENT
(To Prospectus Dated February 9, 2006)
$4,000,000,000
Verizon Communications Inc.
$500,000,000 5.35% Notes due 2011
$1,250,000,000 5.55% Notes due 2016
$500,000,000 5.85% Notes due 2035
$1,750,000,000 Floating Rate Notes due 2007
We are
offering $500,000,000 of our notes due 2011, $1,250,000,000 of
our notes due 2016, $500,000,000 of our notes due 2035 and
$1,750,000,000 of our floating rate notes due 2007. The notes
due 2011 will bear interest at the rate of 5.35% per year,
the notes due 2016 will bear interest at the rate of
5.55% per year, the notes due 2035 will bear interest at
the rate of 5.85% per year and the floating rate notes due 2007
will bear interest at a rate equal to three-month LIBOR plus
0.130% and will be reset quarterly. Interest on the notes due
2011 and the notes due 2016 is payable on February 15 and
August 15 of each year, beginning on August 15, 2006.
Interest on the notes due 2035 is payable on March 15 and
September 15 of each year, beginning on March 15,
2006. Interest on the floating rate notes due 2007 will be
payable quarterly on February 15, May 15,
August 15 and November 15, beginning on May 15,
2006. The notes due 2011 will mature on February 15, 2011,
the notes due 2016 will mature on February 15, 2016, the
notes due 2035 will mature on September 15, 2035 and the
floating rate notes due 2007 will mature on August 15,
2007. We may redeem the notes due 2011, the notes due 2016 and
the notes due 2035, in whole or in part, at any time prior to
maturity at redemption prices to be determined using the
procedure described in this prospectus supplement. We may redeem
the floating rate notes due 2007, in whole or in part, at any
time on or after August 15, 2006 at a redemption price
equal to 100% of the principal amount being redeemed plus
accrued interest.
The notes due
2035 described in this prospectus supplement constitute a
further issuance of, and will be consolidated, fungible and form
a single series with, our outstanding $1,000,000,000 of notes
due 2035. The notes due 2035 were originally issued by Verizon
Global Funding Corp. on September 13, 2005 and became
obligations of and by us as a result of the merger of Verizon
Global Funding Corp. into us on February 1, 2006. Following
this offering, the total outstanding amount of the notes due
2035 will be $1,500,000,000.
The notes will
be our senior obligations and will rank on a parity with all of
our existing and future unsecured and unsubordinated
indebtedness.
Neither the
Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or
determined if this prospectus supplement or the related
prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.
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Per Floating |
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Per Note |
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Per Note |
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Per Note |
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Rate Note |
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due 2011 |
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Total |
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due 2016 |
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Total |
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due 2035 |
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Total |
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due 2007 |
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Total |
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Public Offering Price(1)
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99.779% |
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$ |
498,895,000 |
(2) |
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99.199% |
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$ |
1,239,987,500 |
(2) |
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93.535% |
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$ |
467,675,000 |
(3) |
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100.00% |
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$ |
1,750,000,000 |
(2) |
Underwriting Discount
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0.350% |
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$ |
1,750,000 |
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0.450% |
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$ |
5,625,000 |
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0.875% |
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$ |
4,375,000 |
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0.150% |
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$ |
2,625,000 |
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Proceeds to Verizon Communications Inc.
(before expenses)(1)
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99.429% |
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$ |
497,145,000 |
(2) |
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98.749% |
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$ |
1,234,362,500 |
(2) |
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92.660% |
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$ |
463,300,000 |
(3) |
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99.850% |
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$ |
1,747,375,000 |
(2) |
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(1) |
Before reimbursement of expenses which the underwriters have
agreed to make to us. See UNDERWRITING. |
(2) |
Plus accrued interest, if any, from February 15, 2006 to
date of delivery. |
(3) |
Plus accrued interest from September 13, 2005 to date of
delivery. |
The underwriters
are severally underwriting the notes being offered. The
underwriters expect to deliver the notes in book-entry form only
through the facilities of The Depository Trust Company,
Clearstream Banking, société anonyme or the
Euroclear System against payment in New York, New York on or
about February 15, 2006.
Joint Book-Running Managers
for Notes due 2011, Notes due 2016 and Notes due 2035
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Morgan Stanley & Co. Incorporated |
Banc of America Securities LLC |
Goldman, Sachs & Co. |
Joint Book-Running Managers
for Floating Rate Notes due 2007
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Morgan Stanley & Co. Incorporated |
HSBC Securities (USA) Inc. |
Merrill Lynch & Co. |
Senior Co-Managers
Lehman
Brothers
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Mitsubishi UFJ
Securities |
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Wachovia Capital
Markets, LLC |
Co-Managers
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The Williams Group, L.P. |
Blaylock & Company Inc. |
Ramirez & Company, Inc. |
February 9, 2006
TABLE OF CONTENTS
Prospectus Supplement
Prospectus
ABOUT THIS PROSPECTUS SUPPLEMENT
You should read this prospectus supplement along with the
prospectus that follows carefully before you invest. Both
documents contain important information you should consider when
making your investment decision. This prospectus supplement
contains information about the specific notes being offered and
the prospectus contains information about our debt securities
generally. This prospectus supplement may add, update or change
information in the prospectus. You should rely only on the
information provided or incorporated by reference in this
prospectus supplement and the prospectus. The information in
this prospectus supplement is accurate as of February 9,
2006. We have not authorized anyone else to provide you with
different information.
RECENT DEVELOPMENTS
Fourth Quarter Results (Unaudited)
On January 26, 2006, we announced our fourth quarter 2005
financial results. For the fourth quarter 2005, we reported
earnings of $1.7 billion, or 59 cents per diluted
share, compared with $3.0 billion, or $1.08 per share,
in the fourth quarter 2004. Reported earnings in the fourth
quarter 2005 include non-recurring net expenses for previously
announced changes to management retirement benefit plans, as
well as severance and relocation costs. The fourth quarter 2004
principally included non-recurring gains from sales of
non-strategic assets and tax benefits. For the year, we reported
earnings of $7.4 billion, or $2.65 per share, in 2005,
compared with $7.8 billion, or $2.79 per share, in
2004.
During the quarter, consolidated operating revenues of
$19.3 billion rose 5.8% from $18.3 billion in the
fourth quarter 2004. Our growth businesses wireless,
broadband, data and long-distance services
contributed 59.6% to fourth-quarter 2005 revenues, compared with
a 54.9% contribution to fourth-quarter 2004 revenues. Annual
consolidated operating revenues were $75.1 billion in 2005,
up 5.4% compared to $71.3 billion in 2004.
Total operating expenses were $15.6 billion in the fourth
quarter 2005 and $60.3 billion for the full year, up 4.8%
and 3.7%, respectively, from the similar periods in 2004.
Wireline total operating revenues were $9.4 billion for the
fourth quarter of 2005 and $37.6 billion for the year, down
1.8% and 1.1% from the similar periods in 2004. Wireline
operating expenses were $8.3 billion for the fourth quarter
and $32.8 billion for the year, up 2.7% and 1.4% from the
similar periods in 2004. Wireless total operating revenues were
$8.7 billion for the fourth quarter of 2005 and
$32.3 billion for the year, up 18.3% and 16.8% from the
similar periods in 2004. Wireless operating expenses were
$6.4 billion for the fourth quarter and $25.0 billion
for the year, up 8.0% and 14.2% from the similar periods in
2004. Information Services total operating revenues were
$0.8 billion in the fourth quarter of 2005 and
$3.5 billion for the year, down 3.4% and 2.7% from the
similar periods in 2004. Information Services operating expenses
were $0.5 billion for the fourth quarter and
$1.8 billion for the year, down 10.5% and 8.0% from the
similar periods in 2004. International total operating revenues
were $0.6 billion for the fourth quarter of 2005 and
$2.2 billion for the year, up 4.2% and 8.9% from the
similar periods of 2004. International operating expenses were
$0.4 billion for the fourth quarter and $1.7 billion
for the year, upon 14.9% and 21.2% from the similar periods of
2004.
S-2
Cash Flows from Operations were $22.0 billion in 2005,
compared with $21.8 billion in 2004. In 2005, net cash used
in investing activities was $18.5 billion, including
$15.3 billion in capital expenditures. Net cash used in
financing activities was $5.0 billion. Our total debt
decreased $0.3 billion compared with year-end 2004, to
$39.0 billion at year-end 2005.
MCI Merger
On January 6, 2006, we announced that we closed the merger
of one of our subsidiaries with MCI, Inc. The merger was
announced on February 14, 2005, and received the required
state, federal and international regulatory approvals by
year-end 2005.
USE OF PROCEEDS
We will use the net proceeds from the sale of the notes to repay
debt and for general corporate purposes. Our subsidiary that is
the successor to MCI, Inc. expects to retire the following
series of debt securities: $1,982,537,000 of its 5.908% Senior
Notes Due 2007, $1,982,537,000 of its 6.688% Senior Notes Due
2009 and $1,699,496,000 of its 7.735% Senior Notes Due 2014. The
proceeds from the sale of the notes may be used to retire a
portion of these debt securities.
DESCRIPTION OF THE NOTES
Principal Amount, Maturity and Interest for Notes due 2011
and Notes due 2016
We are offering $500,000,000 of our 5.35% Notes due 2011
which will mature on February 15, 2011, and $1,250,000,000
of our 5.55% Notes due 2016 which will mature on
February 15, 2016.
We will pay interest on the notes due 2011 at the rate of
5.35% per annum and interest on the notes due 2016 at the
rate of 5.55% per annum on February 15 of each year to
holders of record on the preceding February 1, and on
August 15 of each year to holders of record on the
preceding August 1. If interest or principal on the notes
due 2011 or the notes due 2016 is payable on a Saturday, Sunday
or any other day when banks are not open for business in The
City of New York, we will make the payment on the next business
day, and no interest will accrue as a result of the delay in
payment. The first interest payment date on the notes due 2011
and the notes due 2016 is August 15, 2006. Interest on the
notes due 2011 and the notes due 2016 will accrue from
February 15, 2006, and will accrue on the basis of a
360-day year consisting
of 12 months of 30 days.
Principal Amount, Maturity and Interest for Notes due 2035
We are offering $500,000,000 of our 5.85% Notes due 2035 which
will mature on September 15, 2035.
The notes due 2035 described in this prospectus supplement
constitute a further issuance of, and will be consolidated,
fungible and form a single series with, our outstanding
$1,000,000,000 of notes due 2035. The notes due 2035 were
originally issued by Verizon Global Funding Corp. on
September 13, 2005 and became obligations of and by us as a
result of the merger of Verizon Global Funding Corp. into us on
February 1, 2006. Following this offering, the total
outstanding amount of the notes due 2035 will be $1,500,000,000.
We will pay interest on the notes due 2035 at the rate of 5.85%
per annum on March 15 of each year to holders of record on
the preceding March 1, and on September 15 of each
year to holders of record on the preceding September 1. If
interest or principal on the notes due 2035 is payable on a
Saturday, Sunday or any other day when banks are not open for
business in The City of New York, we will make payment on the
next business day, and no interest will accrue as a result of
the delay in payment. The first interest payment due on the
notes due 2035 is March 15, 2006. Interest on the notes due
2035 will accrue from September 13, 2005 and will accrue on
the basis of a 360-day
year consisting of 12 months of 30 days.
Principal Amount, Maturity and Interest for Floating Rate
Notes due 2007
We are offering $1,750,000,000 of our Floating Rate Notes due
2007 which will mature on August 15, 2007.
We will pay interest on the floating rate notes due 2007 at a
rate per annum equal to three-month LIBOR plus 0.130%. We will
pay interest on the floating rate notes due 2007 quarterly in
arrears on each February 15, May 15, August 15
and November 15, beginning May 15, 2006, each an
interest payment date.
S-3
If any of the quarterly interest payment dates listed above
falls on a day that is not a business day, we will postpone the
interest payment date to the next succeeding business day unless
that business day is in the next succeeding calendar month, in
which case the interest payment date will be the immediately
preceding business day. Interest on the floating rate notes due
2007 will be computed on the basis of a
360-day year and the
actual number of days elapsed.
Interest on the floating rate notes due 2007 will accrue from,
and including, February 15, 2006, to, but excluding, the
first interest payment date and then from, and including, the
immediately preceding interest payment date to which interest
has been paid or duly provided for 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. The amount of accrued interest that we will pay
for any interest period can be calculated by multiplying the
face amount of the floating rate notes due 2007 by an accrued
interest factor. This accrued interest factor is computed by
adding the interest factor calculated for each day from
February 15, 2006, or from the last date we paid interest,
to the date for which accrued interest is being calculated. The
interest factor for each day is computed by dividing the
interest rate applicable to that day by 360. If the maturity
date of the floating rate notes due 2007 falls on a day that is
not a business day, we will pay principal and interest on the
next succeeding business day, but we will consider that payment
as being made on the date that the payment was due. Accordingly,
no interest will accrue on the payment for the period from and
after the maturity date to the date we make the payment on the
next succeeding business day. The interest payable by us on a
floating rate note due 2007 on any interest payment date,
subject to certain exceptions, will be paid to the person in
whose name the floating rate note due 2007 is registered at the
close of business on the fifteenth calendar day, whether or not
a business day, immediately preceding the interest payment date.
However, interest that we pay on the maturity date will be
payable to the person to whom the principal will be payable.
When we use the term business day we mean any day
except a Saturday, a Sunday or a legal holiday in The City of
New York on which banking institutions are authorized or
required by law, regulation or executive order to close;
provided that the day is also a London business day.
London business day means any day on which dealings
in United States dollars are transacted in the London interbank
market.
The interest rate on the floating rate notes due 2007 will be
calculated by the calculation agent appointed by us and will be
equal to LIBOR plus 0.130%, except that the interest rate in
effect for the period from February 15, 2006 to and
including May 15, 2006, the initial reset date, will be
established by us as the rate for deposits in United States
dollars having a maturity of three months commencing
February 15, 2006 that appears on Telerate Page 3750
as of 11:00 a.m., London Time, on February 13, 2006,
plus 0.130%. The calculation agent will reset the interest rate
on each interest payment date, each of which we will refer to as
an interest reset date. The second business day
preceding an interest reset date will be the interest
determination date for that interest reset date. The
interest rate in effect on each day that is not an interest
reset date will be the interest rate determined as of the
interest determination date pertaining to the immediately
preceding interest reset date. The interest rate in effect on
any day that is an interest reset date will be the interest rate
determined as of the interest determination date pertaining to
that interest reset date, except that the interest rate in
effect for the period from and including February 15, 2006
to the initial interest reset date will be the initial interest
rate.
LIBOR will be determined by the calculation agent in
accordance with the following provisions:
(1) With respect to any interest determination date, LIBOR
will be the rate for deposits in United States dollars having a
maturity of three months commencing on the first day of the
applicable interest period that appears on Telerate
Page 3750 as of 11:00 a.m., London time, on that
interest determination date. If no rate appears, then LIBOR, in
respect to that interest determination date, will be determined
in accordance with the provisions described in (2) below.
(2) With respect to an interest determination date on which
no rate appears on Telerate Page 3750, as specified in
(1) above, the calculation agent will request the principal
London offices of each of four major reference banks in the
London interbank market, as selected by the calculation agent,
to provide the calculation agent with its offered quotation for
deposits in United States dollars for
S-4
the period of three months, commencing on the first day of the
applicable interest period, to prime banks in the London
interbank market at approximately 11:00 a.m., London time,
on that interest determination date and in a principal amount
that is representative for a single transaction in United States
dollars in that market at that time. If at least two quotations
are provided, then LIBOR on that interest determination date
will be the arithmetic mean of those quotations. If fewer than
two quotations are provided, then LIBOR on the interest
determination date will be the arithmetic mean of the rates
quoted at approximately 11:00 a.m., in The City of
New York, on the interest determination date by three major
banks in The City of New York selected by the calculation
agent for loans in United States dollars to leading European
banks, having a three-month maturity and in a principal amount
that is representative for a single transaction in United States
dollars in that market at that time; provided, however, that if
the banks selected by the calculation agent are not providing
quotations in the manner described by this sentence, LIBOR
determined as of that interest determination date will be LIBOR
in effect on that interest determination date.
Telerate Page 3750 means the display designated
as Page 3750 on Telerate, Inc., or any
successor service, for the purpose of displaying the London
interbank rates of major banks for United States dollars.
Form
The notes will only be issued in book-entry form, which means
that the notes will be represented by four or more permanent
global certificates registered in the name of The Depository
Trust Company, New York, New York, commonly known as DTC, or its
nominee. You may hold interests in the notes directly through
DTC, Clearstream Banking, société anonyme,
commonly known as Clearstream, or the Euroclear System, commonly
known as Euroclear, if you are a participant in any of these
clearing systems, or indirectly through organizations which are
participants in those systems. Links have been established among
DTC, Clearstream and Euroclear to facilitate the issuance of the
notes and cross-market transfers of the notes associated with
secondary market trading. DTC is linked indirectly to
Clearstream and Euroclear through the depositary accounts of
their respective U.S. depositaries. Beneficial interests in
the notes due 2011, the notes due 2016 and the floating rate
notes due 2007 may be held in denominations of $5,000 and
integral multiples of $1,000 in excess of $5,000. Notes of these
series in book-entry form that can be exchanged for definitive
notes of the applicable series under the circumstances described
in the accompanying prospectus under the caption CLEARING
AND SETTLEMENT will be exchanged only for definitive notes
of the applicable series issued in denominations of $5,000 and
multiples of $1,000 in excess of $5,000. Beneficial interests in
the notes due 2035 may be held in integral multiples of $1,000
and, if exchanged for definitive notes under the circumstances
described under the caption CLEARING AND SETTLEMENT,
will be exchanged for definitive notes due 2035 issued in
integral multiples of $1,000.
Redemption of Notes due 2011, Notes due 2016 and Notes due
2035
We have the option to redeem any of the notes due 2011, the
notes due 2016 or the notes due 2035 on not less than 30 nor
more than 60 days notice, in whole or from time to
time in part, at a redemption price equal to the greater of:
(1) 100% of the principal amount of the notes being
redeemed, or
(2) the sum of the present values of the remaining
scheduled payments of principal and interest on the notes, as
the case may be, 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 20 basis points for the notes
due 2011, the Treasury Rate plus 25 basis points for the notes
due 2016 and the Treasury Rate plus 30 basis points for the
notes due 2035, plus, in each case, accrued and unpaid interest
on the principal amount being redeemed to the date of redemption.
The Treasury Rate will be determined on the third
business day preceding the redemption date and 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 published by the
Board of Governors of the Federal Reserve System designated as
Statistical Release H.15(519) or any successor
publication which is published weekly by the Board of
S-5
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 Treasury Rate will be
interpolated or extrapolated from those 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 the
redemption date.
Comparable Treasury Issue means the United States
Treasury security selected by the Independent Investment Banker
as having a maturity comparable to the remaining term, referred
to as the Remaining Life, of the notes due 2011, the notes due
2016 or the notes due 2035, as the case may be, 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 the notes due 2011, the notes due 2016 or
notes due 2035, as the case may be.
Independent Investment Banker means an independent
investment banking or commercial banking institution of national
standing appointed by us.
Comparable Treasury Price means (1) the average
of three Reference Treasury Dealer Quotations for that
redemption date, or (2) if the Independent Investment
Banker is unable to obtain three Reference Treasury Dealer
Quotations, the average of all quotations obtained.
Reference Treasury Dealer means (1) any
independent investment banking or commercial banking institution
of national standing and their respective successors appointed
by us, provided, however, that if any of the foregoing shall
cease to be a primary U.S. Government securities dealer in
The City of New York, referred to as a Primary Treasury Dealer,
we shall substitute therefor another Primary Treasury Dealer,
and (2) any other Primary Treasury Dealer selected by the
Independent Investment Banker and approved in writing by us.
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 3:30 p.m., New York City time, on the third business day
preceding the redemption date.
Redemption of Floating Rate Notes due 2007
We have the option to redeem any of the floating rate notes due
2007 at any time on or after August 15, 2006 following not
less than 30 nor more than 60 days notice, in whole
or from time to time in part, at a redemption price equal to
100% of the principal amount of the floating rate notes due 2007
being redeemed plus accrued and unpaid interest on the principal
amount being redeemed to the date of redemption.
Additional Information
See DESCRIPTION OF THE DEBT SECURITIES in the
accompanying prospectus for additional important information
about the notes. That information includes:
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additional information about the terms of the notes; |
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general information about the indenture and the trustee; |
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a description of certain restrictions; and |
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a description of events of default under the indenture. |
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain U.S. federal income
tax considerations relevant to the purchase, ownership and
disposition of the notes under current law (which is subject to
change, possibly on a retroactive basis). The summary applies
only to holders who are beneficial owners of the notes who
purchase the notes in the original offering at the initial
offering prices indicated in this prospectus
S-6
supplement and own the notes as capital assets. The summary does
not purport to be a complete analysis of all the potential
U.S. federal income tax consequences relating to the
purchase, ownership and disposition of the notes and does not
address the U.S. federal income tax consequences to holders
that are subject to special treatment, including:
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dealers in securities or currencies; |
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insurance companies; |
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financial institutions or financial services
institutions; |
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thrifts; |
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tax-exempt entities; |
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regulated investment companies; |
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real estate investment trusts; |
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brokers or dealers; |
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persons who hold notes as part of a straddle, hedge, conversion
transaction, or other integrated investment; |
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traders in securities that elect to use a
mark-to-market method
of accounting; |
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persons subject to alternative minimum tax; |
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U.S. Holders (as defined below) that have a
functional currency other than the United States
dollar; |
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certain expatriates or former long-term residents of the United
States; or |
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partnerships or pass-through entities or investors in
partnerships or pass-through entities that hold the notes. |
This summary does not address the effect of any U.S. state
or local income or other tax laws, any U.S. federal estate
and gift tax laws, any foreign tax laws, or any tax treaties.
For purposes of the following discussion,
U.S. Holder means a beneficial owner of the
notes who is for U.S. federal income tax purposes:
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an individual citizen or resident of the United States; |
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a corporation organized in or under the laws of the United
States or any state thereof or the District of Columbia; |
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an estate the income of which is subject to U.S. federal
income taxation regardless of its source; or |
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a trust if a court within the United States is able to exercise
primary supervision over the administration of the trust and one
or more United States persons have the authority to control all
substantial decisions of the trust or the trust otherwise has a
valid election in effect to be treated as a U.S. person. |
For purposes of the following discussion,
Non-U.S. Holder
means any beneficial owner of the notes that is not a
U.S. Holder.
Circular 230 Disclosure
TO ENSURE COMPLIANCE WITH INTERNAL REVENUE SERVICE CIRCULAR 230,
HOLDERS ARE HEREBY NOTIFIED THAT: (A) ANY DISCUSSION OF
FEDERAL TAX ISSUES IN THIS PROSPECTUS SUPPLEMENT IS NOT INTENDED
OR WRITTEN BY US TO BE RELIED UPON, AND CANNOT BE RELIED UPON BY
HOLDERS FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE
IMPOSED ON HOLDERS UNDER THE UNITED STATES INTERNAL REVENUE CODE
OF 1986; (B) SUCH DISCUSSION IS WRITTEN IN CONNECTION WITH
THE PROMOTION OR MARKETING OF THE TRANSACTIONS OR MATTERS
ADDRESSED HEREIN; AND (C) HOLDERS SHOULD SEEK ADVICE BASED
ON THEIR PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX
ADVISOR.
U.S. Holders
Taxation of Interest. We intend to treat the floating
rate notes due 2007 as variable rate debt instruments under the
Treasury Regulations applicable to original issue discount, and
the interest payable on the floating rate notes due 2007 as
qualified stated interest. Accordingly, interest
payable on the notes generally will be included in the
U.S. Holders gross income as ordinary income in
accordance with the holders regular method of tax
accounting.
Sale, Exchange, Redemption or Other Taxable Disposition.
Upon a sale, exchange or other taxable disposition of the notes,
the U.S. Holder will recognize gain or loss equal to the
difference, if any, between the amount realized and the
holders
S-7
adjusted tax basis in the notes. The amount of any proceeds
attributable to accrued but unpaid interest will not be taken
into account in computing the holders gain or loss.
Instead, that portion will be recognized as ordinary income to
the extent that the holder has not previously included the
accrued interest in income.
Gain or loss recognized generally will be treated as a capital
gain or loss and generally will be treated as a long-term
capital gain or loss if, at the time of the sale or exchange,
the holder has held the notes for more than one year.
Non-corporate taxpayers are subject to a reduced tax rate on
their long-term capital gains. All taxpayers are subject to
certain limitations on the deductibility of their capital losses.
Non-U.S. Holders
U.S. Federal Withholding Tax. U.S. federal
withholding tax will not apply to any payment made to a
Non-U.S. Holder of
principal or interest on the notes, provided that:
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the holder does not own 10% or more of the total combined voting
power of all classes of our voting stock for U.S. federal
income tax purposes; |
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the holder is not a controlled foreign corporation that is
related to us through stock ownership; and |
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the holder (a) provides a properly executed Internal
Revenue Service, referred to as the IRS, Form W-8BEN (or a
suitable substitute form), and certifies, under penalties of
perjury, that it is not a U.S. person or (b) holds the
notes through a qualified intermediary or withholding foreign
partnership that has entered into a withholding agreement with
the IRS or through a clearing organization or other financial
institution and, in each case, certain certification
requirements are satisfied. |
Interest payments that are effectively connected with the
conduct of a trade or business by a
Non-U.S. Holder
within the United States are not subject to the
U.S. federal withholding tax, but instead are subject to
U.S. federal income tax, as described below.
If a
Non-U.S. Holder
cannot satisfy the requirements described above, payments of
interest will be subject to the 30% U.S. federal
withholding tax subject to reduction under any applicable tax
treaty.
United States Federal Income Tax. If a
Non-U.S. Holder is
engaged in a trade or business in the United States and interest
on the notes is effectively connected with the conduct of that
trade or business, the holder will be subject to
U.S. federal income tax (but not withholding tax) on that
interest on a net income basis in the same manner as if it were
a U.S. person. In addition, in certain circumstances, if
the
Non-U.S. Holder is
a foreign corporation, it may be subject to a 30% (or, if a tax
treaty applies, a lower rate as provided) branch profits tax.
Any gain or income realized by a
Non-U.S. Holder on
the disposition of the notes will generally not be subject to
U.S. federal income tax unless:
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the gain or income is effectively connected with its conduct of
a trade or business in the United States; or |
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the holder is an individual who is present in the United States
for 183 days or more in the taxable year of the disposition
and certain other conditions are met. |
Information Reporting and Backup Withholding
Information reporting to the IRS may be required with respect to
payments of principal or interest on the notes and payments of
proceeds of the disposition of the notes to holders other than
corporations and other exempt recipients. A backup
withholding tax may apply to those payments that are subject to
information reporting if the holder fails to provide certain
required documentation to the payor.
Non-U.S. Holders
may be required to comply with certification procedures to
establish that they are not U.S. Holders in order to avoid
information reporting and backup withholding. Holders should
consult their tax advisors about the procedures for obtaining an
exemption from backup withholding. Amounts withheld under the
backup withholding rules will be refunded or allowed as a credit
against a holders U.S. federal income tax liabilities
if the required information is furnished to the IRS.
S-8
UNDERWRITING
Morgan Stanley & Co. Incorporated is acting as joint
book-running manager of the offering of all four series of the
notes. In addition, Banc of America Securities LLC and Goldman,
Sachs & Co. are acting as joint book-running managers
for the notes due 2011, the notes due 2016 and the notes due
2035 and HSBC Securities (USA) Inc. and Merrill Lynch, Pierce,
Fenner & Smith Incorporated are acting as joint
book-running managers for the floating rate notes due 2007.
Subject to the terms and conditions stated in the purchase
agreement dated the date of this prospectus supplement, each
underwriter named below has agreed to purchase, and we have
agreed to sell to that underwriter, the principal amount of
notes due 2011, notes due 2016, notes due 2035 and floating rate
notes due 2007 set forth opposite the underwriters name:
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Principal | |
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Principal | |
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Principal | |
|
Principal | |
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Amount of | |
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Amount of | |
|
Amount of | |
|
Amount of | |
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Floating Rate | |
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Notes due | |
|
Notes due | |
|
Notes due | |
|
Notes due | |
Underwriters |
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2011 | |
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2016 | |
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2035 | |
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2007 | |
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Morgan Stanley & Co. Incorporated
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$ |
110,000,000 |
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$ |
275,000,000 |
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$ |
110,000,000 |
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$ |
428,750,000 |
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HSBC Securities (USA) Inc.
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20,625,000 |
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51,562,500 |
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21,250,000 |
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437,500,000 |
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Merrill Lynch, Pierce, Fenner & Smith Incorporated
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20,625,000 |
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51,562,500 |
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21,250,000 |
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437,500,000 |
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Banc of America Securities LLC
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110,000,000 |
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275,000,000 |
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110,000,000 |
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35,000,000 |
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Goldman, Sachs & Co.
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110,000,000 |
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275,000,000 |
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110,000,000 |
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35,000,000 |
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Lehman Brothers Inc.
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16,250,000 |
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40,625,000 |
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18,750,000 |
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43,750,000 |
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Mitsubishi UFJ Securities International plc
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16,250,000 |
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40,625,000 |
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18,750,000 |
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43,750,000 |
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Wachovia Capital Markets, LLC
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16,250,000 |
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40,625,000 |
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18,750,000 |
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43,750,000 |
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Credit Suisse Securities (USA) LLC
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16,250,000 |
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40,625,000 |
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18,750,000 |
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43,750,000 |
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UBS Securities LLC
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16,250,000 |
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40,625,000 |
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0 |
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43,750,000 |
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RBC Dain Rauscher Inc.
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16,250,000 |
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40,625,000 |
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18,750,000 |
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43,750,000 |
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Greenwich Capital Markets, Inc.
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16,250,000 |
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40,625,000 |
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18,750,000 |
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43,750,000 |
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The Williams Group, L.P.
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5,000,000 |
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12,500,000 |
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5,000,000 |
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35,000,000 |
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Blaylock & Company Inc.
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5,000,000 |
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12,500,000 |
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5,000,000 |
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0 |
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Samuel A. Ramirez & Company, Inc.
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5,000,000 |
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12,500,000 |
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5,000,000 |
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35,000,000 |
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Total
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$ |
500,000,000 |
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$ |
1,250,000,000 |
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$ |
500,000,000 |
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$ |
1,750,000,000 |
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The underwriting agreement provides that the obligations of the
underwriters to purchase the notes included in this offering are
subject to approval of legal matters by counsel and to other
conditions. The underwriters are obligated to purchase all the
notes if they purchase any of the notes.
The underwriters propose to offer some of the notes due 2011,
the notes due 2016, the notes due 2035 and the floating rate
notes due 2007 directly to the public at the public offering
prices set forth on the cover page of this prospectus supplement
and some of the notes to dealers at the public offering prices
less a concession not to exceed 0.175% of the principal amount
of the notes due 2011, 0.225% of the principal amount of the
notes due 2016, 0.4375% of the principal amount of the notes due
2035 and 0.075% of the principal amount of the floating rate
notes due 2007. The underwriters may allow, and dealers may
reallow, a concession not to exceed 0.0875% of the principal
amount of the notes due 2011, 0.1125% of the principal amount of
the notes due 2016, 0.21875% of the principal amount of the
notes due 2035 and 0.0375% of the principal amount of the
floating rate notes due 2007 on sales to other dealers. After
the initial offering of the notes to the public, the joint
book-running managers may change the public offering prices and
concessions.
The following table shows the underwriting discounts and
commissions that we are to pay to the underwriters in connection
with this offering (expressed as a percentage of the principal
amount of the notes due 2011, the notes due 2016, the notes due
2035 and the floating rate notes due 2007).
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Paid by Verizon | |
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Communications | |
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notes due 2011
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.350% |
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notes due 2016
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.450% |
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notes due 2035
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.875% |
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floating rate notes due 2007
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.150% |
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The underwriters have agreed to reimburse $625,000 of our
expenses in connection with this offering.
The notes due 2011, the notes due 2016 and the floating rate
notes due 2007 are a new issue of securities with no established
trading market. The notes due 2035 constitute a further issuance
of, and will be consolidated, fungible and form a single series
with, our outstanding $1,000,000,000 of 5.85% notes due 2035.
The underwriters have advised us that they intend to make a
market in the notes of each series but are not obligated to do
so and may discontinue market making at any time without notice.
No assurance can be given that the trading market for the notes
will be liquid.
In connection with this offering, the joint book-running
managers, on behalf of the underwriters, may purchase and sell
notes in the open market. These transactions may include
over-allotment, syndicate covering transactions and stabilizing
transac-
S-9
tions. Over-allotment involves syndicate sales of the notes in
excess of the principal amount of notes to be purchased by the
underwriters in the offering, which creates a syndicate short
position. Syndicate covering transactions involve purchase of
the notes in the open market after the distribution has been
completed in order to cover syndicate short positions.
Stabilizing transactions consist of certain bids or purchases of
notes made for the purpose of preventing or retarding a decline
in the market price of the notes while the offering is in
progress.
The joint book-running managers, on behalf of the underwriters,
also may impose a penalty bid. Penalty bids permit the
underwriters to reclaim a selling concession from a syndicate
member when the joint book-running managers, in covering
syndicate short positions or making stabilizing purchasers,
repurchases notes originally sold by that syndicate member.
Any of these activities may have the effect of preventing or
retarding a decline in the market price of the notes. They may
also cause the price of the notes to be higher than the price
that otherwise would exist in the open market in the absence of
these transactions. The underwriters may conduct these
transactions in the
over-the-counter market
or otherwise. If the underwriters commence any of these
transactions, they may discontinue them at any time.
In relation to each Member State of the European Economic Area
which has implemented the Prospectus Directive (each, a
Relevant Member State), each underwriter has
represented and agreed that, with effect from and including the
date on which the Prospectus Directive is implemented in that
Relevant Member State (the Relevant Implementation
Date), it has not made and will not make an offer of notes
to the public in that Relevant Member State prior to the
publication of a prospectus in relation to the notes which has
been approved by the competent authority in that Relevant Member
State or, where appropriate, approved in another Relevant Member
State and notified to the competent authority in that Relevant
Member State, all in accordance with the Prospectus Directive,
except that it may, with effect from and including the Relevant
Implementation Date, make an offer of the notes to the public in
that Relevant Member State at any time:
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to legal entities which are authorized or regulated to operate
in the financial markets or, if not so authorized or regulated,
whose corporate purpose is solely to invest in securities; |
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to any legal entity which has two or more of (i) an average
of at least 250 employees during the last financial year;
(ii) a total balance sheet of more than
euro 43,000,000 and (iii) an annual net turnover of
more than euro 50,000,000, as shown in its last annual or
consolidated accounts; |
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to investors with the minimum total consideration per investor
of euro 50,000; or |
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in any other circumstances which do not require the publication
by the issuer of a prospectus pursuant to Article 3 of the
Prospectus Directive. |
For the purposes of this provision, the expression an
offer of the notes to the public in relation to any
notes in any Relevant Member State means the communication in
any form and by any means of sufficient information on the terms
of the offer and the notes to be offered so as to enable an
investor to decide to purchase or subscribe the notes, as the
same may be varied in that Relevant Member State by any measure
implementing the Prospectus Directive in that Relevant Member
State and the expression Prospectus Directive means Directive
2003/71/ EC and includes any relevant implementing measure in
each Relevant Member State.
Each underwriter has represented and agreed that:
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(i) it is a person whose ordinary activities involve it in
acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of its business and
(ii) it has not offered or sold and will not offer or sell
the notes other than to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their
businesses or who it is reasonable to expect will acquire, hold,
manage or dispose of investments (as principal or agent) for the
purposes of their businesses where the issue of the notes would
otherwise constitute a contravention of Section 19 of the
Financial Services and Markets Act (the FSMA) by the
issuer; |
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it has only communicated or caused to be communicated and will
only communicate or cause to be communicated an invitation or
inducement to engage in investment activity (within the meaning
of Section 21 of the FSMA) received by it in connection
with the issue or sale of the notes in circumstances in |
S-10
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which Section 21(1) of the FSMA does not apply to the
issuer; and |
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it has complied and will comply with all applicable provisions
of the FSMA with respect to anything done by it in relation to
the notes in, from or otherwise involving the United Kingdom. |
We estimate that our total expenses for this offering will be
approximately $990,000.
Certain of the underwriters have performed investment banking or
advisory services for us from time to time for which they have
received customary fees and expenses. The underwriters may, from
time to time, engage in transactions with and perform services
for us in the ordinary course of their business. In addition,
certain underwriters or their affiliates may provide credit to
us as lenders.
A prospectus in electronic format may be made available on the
websites maintained by one or more of the underwriters.
Mitsubishi UFJ Securities International plc is not a
U.S. registered broker-dealer and, therefore, to the extent
that it intends to effect any sales of the notes in the United
States, it will do so through one or more U.S. registered
broker-dealers as permitted by NASD regulations.
We have agreed to indemnify the underwriters against certain
liabilities, including liabilities under the Securities Act of
1933, as amended, or to contribute to payments the underwriters
may be required to make because of any of these liabilities.
S-11
PROSPECTUS
$8,500,000,000
Common Stock
Preferred Stock
Debt Securities
Verizon Communications Inc.
Verizon Communications Inc. intends to offer at one or more
times common stock, preferred stock and debt securities, with a
total offering price not to exceed $8,500,000,000. To the extent
provided in the applicable prospectus supplement, the preferred
stock and the debt securities may be convertible into, or
exchangeable for, shares of any class or classes of stock, or
securities or property, of Verizon Communications Inc. We will
provide the specific terms of these securities in supplements to
this prospectus. You should read this prospectus and the
supplements carefully before you invest.
The common stock of Verizon Communications Inc. is listed on
the New York, Philadelphia, Boston, Chicago and Pacific Stock
Exchanges under the symbol VZ.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
February 9, 2006
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we
filed with the SEC utilizing a shelf registration process. Under
this shelf process, we may, from time to time, sell any
combination of the common stock, preferred stock or debt
securities described in this prospectus in one or more offerings
with a total offering price not to exceed $8,500,000,000. This
prospectus provides you with a general description of the
securities. Each time we sell securities, we will provide a
prospectus supplement and, in some cases, a pricing supplement,
that will contain specific information about the terms of that
offering. The prospectus supplement or pricing supplement may
also add, update or change information in this prospectus. The
information in this prospectus is accurate as of the date of
this prospectus. Please carefully read both this prospectus, any
prospectus supplement and any pricing supplement together with
additional information described under the heading WHERE
YOU CAN FIND MORE INFORMATION. Unless otherwise specified
in this prospectus, the terms we, us,
our and Verizon Communications refer to
Verizon Communications Inc.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements
and other information with the SEC. You may read and copy any of
these documents at the SECs public reference room at 100F
Street, N.W., Washington, D.C. 20549. Please call the SEC
at 1-800-SEC-0330 for
further information on the operation of the public reference
room. Our SEC filings are also available to the public on the
SECs web site at http://www.sec.gov.
The SEC allows us to incorporate by reference the information we
file with them, which means that we can 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 information that we file later with the
SEC will automatically update and supersede this information. We
incorporate by reference the following documents we have filed
with the SEC and the future filings we make with the SEC under
Section 13(a), 13(c), 14, or 15(d) of the Securities
Exchange Act of 1934 (excluding any information furnished
pursuant to Item 2.02 or Item 7.01 on any Current
Report on
Form 8-K) until we
or any underwriters sell all of the securities:
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our Annual Report on
Form 10-K for the
year ended December 31, 2004; |
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our Quarterly Reports on
Form 10-Q for the
quarters ended March 31, 2005, June 30, 2005 and
September 30, 2005; and |
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our Current Reports on
Form 8-K filed
January 12, 2005, January 21, 2005, January 28,
2005, February 17, 2005, February 22, 2005,
March 2, 2005, March 4, 2005, March 7, 2005,
March 9, 2005, March 24, 2005, March 29, 2005,
April 1, 2005, April 4, 2005, April 11, 2005,
April 28, 2005, May 2, 2005, August 18, 2005,
September 2, 2005, September 12, 2005,
September 28, 2005, October 6, 2005, October 21,
2005, October 27, 2005 (excluding information furnished
pursuant to Item 2.02 and Exhibit 99 thereto),
November 21, 2005, December 2, 2005, December 5,
2005, December 6, 2005, December 16, 2005,
December 21, 2005, January 6, 2006, January 9,
2006, January 12, 2006, January 17, 2006,
January 20, 2006, January 24, 2006, January 27,
2006, February 2, 2006 (excluding information furnished
pursuant to Item 7.01) and February 9, 2006. |
You may request a copy of these filings, at no cost, by writing
or telephoning us at the following address or phone number:
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Investor Relations
Verizon Communications Inc.
One Verizon Way
Basking Ridge, NJ 07920
Telephone: (212) 395-1525 |
2
You should rely only on the information incorporated by
reference or provided in this prospectus, any supplement or any
pricing supplement. We have not authorized anyone else to
provide you with different information.
VERIZON COMMUNICATIONS
We are a Dow 30 company, and a leader in delivering
broadband and other communication innovations to wireline and
wireless customers. We operate Americas most reliable
wireless network, serving 51.3 million customers
nationwide; one of the most expansive wholly-owned global IP
networks; and one of the nations premier wireline
networks, serving home, business and wholesale customers. Based
in New York, we have a diverse workforce of approximately
250,000 and generate annual consolidated operating revenues of
approximately $90 billion.
Our principal executive offices are located at 140 West
Street, New York, New York 10007, and our telephone number
is (212) 395-2121.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table shows our ratios of earnings to fixed
charges for the periods indicated:
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Nine Months Ended September 30, |
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Year Ended December 31, | |
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2005 |
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2004 | |
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2003 | |
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2002 | |
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2001 | |
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2000 | |
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5.71
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4.62 |
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2.51 |
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3.42 |
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1.64 |
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4.58 |
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For these ratios, earnings have been calculated by
adding fixed charges to income before provision for income
taxes, discontinued operations, extraordinary items and
cumulative effect of accounting change, and before minority
interests and income (loss) of equity investees. Fixed
charges include interest expense, preferred stock dividend
requirements of consolidated subsidiaries, capitalized interest
and the portion of rent expense representing interest.
Since we had no preferred stock outstanding during any of the
periods presented, the ratios of earnings to fixed charges and
the ratios of earnings to combined fixed charges and preferred
dividends are the same.
USE OF PROCEEDS
Unless otherwise provided in the applicable prospectus
supplement, we will use the net proceeds from the sale of the
securities for repaying debt, making capital investments,
funding working capital requirements or other general corporate
purposes.
DESCRIPTION OF CAPITAL STOCK
Authorized Capital Stock
Our certificate of incorporation provides authority to issue up
to 4,500,000,000 shares of stock of all classes, of which
4,250,000,000 are shares of common stock, $0.10 par value
per share, and 250,000,000 are shares of preferred stock,
$0.10 par value per share.
Common Stock
Subject to any preferential rights of the preferred stock,
holders of shares of our common stock are entitled to receive
dividends on that stock out of assets legally available for
distribution when, as and if authorized and declared by the
board of directors and to share ratably in assets legally
available for distribution to our shareholders in the event of
our liquidation, dissolution or winding-up. We may not pay any
dividend or make any distribution of assets on shares of common
stock until cumulative dividends on shares of preferred stock
then outstanding, if any, having dividend or distribution rights
senior to the common stock have been paid.
Holders of common stock are entitled to one vote per share on
all matters voted on generally by the shareholders, including
the election of directors. In addition, the holders of common
stock possess all voting power except as otherwise required by
law or except as provided for by any series of preferred stock.
Our certificate of incorporation does not provide for cumulative
voting for the election of directors.
Preferred Stock
Our board of directors is authorized at any time to provide for
the issuance of all or any shares of its preferred stock in one
or more classes or series, and to fix for each class or series
voting powers, full or limited, or no voting powers, and
distinctive designations, preferences and relative,
participating, optional or other special rights and any
qualifications, limitations or restrictions, as shall be stated
and expressed in the resolution or resolutions
3
adopted by the board of directors providing for the issuance of
the preferred stock and to the fullest extent as may be
permitted by Delaware law. This authority includes, but is not
limited to, the authority to provide that any class or series be:
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subject to redemption at a specified time or times and at a
specified price or prices; |
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entitled to receive dividends (which may be cumulative or
non-cumulative) at rates, on conditions, and at times, and
payable in preference to, or in relation to, the dividends
payable on any other class or classes or any other series; |
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entitled to rights upon the dissolution of, or upon any
distribution of our assets; or |
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convertible into, or exchangeable for, shares of any class or
classes of our stock, or our other securities or property, at a
specified price or prices or at specified rates of exchange and
with any adjustments. |
As of the date of this prospectus, no shares of preferred stock
are outstanding.
Preemptive Rights
No holder of any shares of any class of our stock has any
preemptive or preferential right to acquire or subscribe for any
unissued shares of any class of stock or any authorized
securities convertible into or carrying any right, option or
warrant to subscribe for or acquire shares of any class of stock.
Transfer Agent and Registrar
The principal transfer agent and registrar for our common stock
is Computershare Investor Services.
DESCRIPTION OF THE DEBT SECURITIES
General
We will issue debt securities under an indenture between us, as
successor in interest to Verizon Global Funding Corp., and
Wachovia Bank, National Association, formerly known as First
Union National Bank, as trustee, dated as of December 1,
2000, as amended. To the extent provided in the applicable
prospectus supplement, the debt securities may be convertible
into, or exchangeable for, shares of any class or classes of our
stock, or our other securities or property.
We have summarized material provisions of the indenture and the
debt securities below. This summary does not describe all
exceptions and qualifications contained in the indenture or the
debt securities. In the summary below, we have included
references to article and section numbers of the indenture so
that you can easily locate these provisions.
The debt securities will be unsecured and will rank equally with
all of our senior unsecured debt. The indenture does not limit
the amount of debt securities that may be issued and each series
of debt securities may differ as to its terms.
A supplement to the indenture, board resolution or
officers certificate will designate the specific terms
relating to any new series of debt securities.
(SECTION 301) These terms will be described in a prospectus
supplement and, in some cases, a pricing supplement, and will
include the following:
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title of the series; |
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total principal amount of the series; |
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maturity date or dates; |
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interest rate and interest payment dates; |
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any redemption dates, prices, obligations and restrictions; |
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any provisions permitting the debt securities to be convertible
into, or exchangeable for, shares of any class or classes of our
stock, or our other securities or property, at a specified price
or prices or at specified rates of exchange and with any
adjustments; and |
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any other terms of the series. |
Form and Exchange
The debt securities will normally be denominated in
U.S. dollars, in which case we will pay principal, interest
and any premium in U.S. dollars. We may, however,
denominate any series of debt securities in another currency or
composite currency. In those cases, payment of principal,
interest and any premium would be in that currency or composite
currency and not U.S. dollars.
Book-Entry Only Form
The debt securities will normally be issued in book-entry only
form, which means that they will be represented by one or more
permanent global certificates registered in the name of The
Depository Trust Company, New York, New York, which
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we refer to as DTC, or its nominee. We will refer to
this form here and in the prospectus supplement as
book-entry only.
In the event that debt securities are issued in book-entry only
form, DTC would keep a computerized record of its participants
(for example, your broker) whose clients have purchased the
securities. The participant would then keep a record of its
clients who purchased the securities. A global security may not
be transferred, except that DTC, its nominees and their
successors may transfer an entire global security to one another.
In the case of book-entry only we will wire principal and
interest payments to DTCs nominee. We and the trustee will
treat DTCs nominee as the owner of the global securities
for all purposes. Accordingly, neither we nor the trustee will
have any direct responsibility or liability to pay amounts due
on the securities to owners of beneficial interests in the
global securities.
Under book-entry only, we will not issue certificates to
individual holders of the debt securities. Beneficial interests
in global securities will be shown on, and transfers of global
securities will be made only through, records maintained by DTC
and its participants. Debt securities represented by a global
security would be exchangeable for debt securities certificates
with the same terms in authorized denominations only if:
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DTC notifies us that it is unwilling or unable to continue as
depository; |
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DTC ceases to be a clearing agency registered under applicable
law and a successor depository is not appointed by us within
90 days; or |
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We instruct the trustee that the global security is exchangeable
for debt securities certificates. |
Certificated Form
Alternatively, we may issue the debt securities in certificated
form registered in the name of the debt security holder. Under
these circumstances, holders may receive certificates
representing the debt securities. Debt securities in
certificated form will be exchangeable without charge except for
reimbursement of taxes, if any. We will refer to this form in
the prospectus supplement as certificated.
Redemption Provisions, Sinking Fund and Defeasance
We may redeem some or all of the debt securities at our option
subject to the conditions stated in the prospectus supplement
relating to that series of debt securities. If a series of debt
securities is subject to a sinking fund, the prospectus
supplement will describe those terms. (ARTICLES ELEVEN and
TWELVE)
The indenture permits us to discharge or defease certain of our
obligations on any series of debt securities at any time. We may
defease by depositing with the trustee sufficient cash or
government securities to pay all sums due on that series of debt
securities. (ARTICLE FOUR)
Liens on Assets
The debt securities will not be secured. However, if at any time
we incur other debt or obligations secured by a mortgage or
pledge on any of our property, the indenture requires us to
secure the debt securities equally with our other debt or
obligations for as long as the other debt or obligations remain
secured. Exceptions to this requirement include the following:
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purchase-money mortgages or liens; |
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liens on any property or asset that existed at the time when we
acquired that property or asset; |
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any deposit or pledge to secure public or statutory obligations; |
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any deposit or pledge with any governmental agency required to
qualify us to conduct any part of our business, to entitle us to
maintain self-insurance or to obtain the benefits of any law
relating to workmens compensation, unemployment insurance,
old age pensions or other social security; |
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any deposit or pledge with any court, board, commission or
governmental agency as security for the proper conduct of any
proceeding before it; or |
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any mortgage, pledge or lien on any property or asset of any of
our affiliates, even if the affiliate acquired that property or
asset from us. (SECTION 1004) |
We may issue or assume an unlimited amount of debt under the
indenture. As a result, the indenture does not prevent us from
significantly increasing
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our unsecured debt levels, which may negatively affect the
resale of the debt securities. (SECTION 301)
Changes to the Indenture
The indenture may be changed with the consent of holders owning
more than 50% of the principal amount of the outstanding debt
securities of each series affected by the change. However, we
may not change your principal or interest payment terms or the
percentage required to change other terms of the indenture,
without your consent, as well as the consent of others similarly
affected. (SECTION 902)
We may enter into supplemental indentures for other specified
purposes, including the creation of any new series of debt
securities without the consent of any holder of debt securities.
(SECTION 901)
Consolidation, Merger or Sale
The indenture provides that we may not merge with another
company or sell, transfer or lease all or substantially all of
our property to another company unless:
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the successor corporation expressly assumes: |
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payment of principal, interest and any premium on the debt
securities; and |
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performance and observance of all covenants, and conditions in
the indenture; |
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after giving effect to the transaction, there is no default
under the indenture; or |
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if as a result of the transaction, our property would become
subject to a lien that would not be permitted by the asset lien
restriction, we secure the debt securities equally and ratably
with, or prior to, all indebtedness secured by that lien.
(ARTICLE EIGHT) |
Events of Default
An event of default means, for any series of debt securities,
any of the following:
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failure to pay interest on that series of debt securities for
90 days after payment is due; |
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failure to pay principal or any premium on that series of debt
securities when due; |
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failure to perform any other covenant relating to that series of
debt securities for 90 days after notice to us; and |
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certain events of bankruptcy, insolvency and reorganization. |
An event of default for a particular series of debt securities
does not necessarily impact any other series of debt securities
issued under the indenture. (SECTION 501)
If an event of default for any series of debt securities occurs
and continues, the trustee or the holders of at least 25% of the
principal amount of the debt securities of the series may
declare the entire principal of all the debt securities of that
series to be due and payable immediately. If this happens,
subject to certain conditions, the holders of a majority of the
principal amount of the debt securities of that series can
rescind the declaration if there has been deposited with the
trustee a sum sufficient to pay all matured installments of
interest, principal and any premium. (SECTION 502)
The holders of more than 50% of the principal amount of any
series of the debt securities, may, on behalf of the holders of
all of the debt securities of that series, control any
proceedings resulting from an event of default or waive any past
default except a default in the payment of principal, interest
or any premium. (SECTION 512) We are required to file an
annual certificate with the trustee stating whether we are in
compliance with all of the conditions and covenants under the
indenture. (SECTION 704)
Concerning the Trustee
Within 90 days after a default occurs, the trustee must
notify the holders of the debt securities of the series of all
defaults known to the trustee if we have not remedied them
(default is defined for this purpose to include the events of
default specified above absent any grace periods or notice). If
a default described in the third bullet point under Events
of Default occurs, the trustee will not give notice to the
holders of the series until at least 60 days after the
occurrence of that default. The trustee may withhold notice to
the holders of the debt securities of any default (except in the
payment of principal, interest or any premium) if it in good
faith believes that withholding this notice is in the interest
of the holders. (SECTION 602)
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Prior to an event of default, the trustee is required to perform
only the specific duties stated in the indenture, and after an
event of default, must exercise the same degree of care as a
prudent individual would exercise in the conduct of his or her
own affairs. (SECTION 601) The trustee is not required to
take any action permitted by the indenture at the request of
holders of the debt securities, unless those holders protect the
trustee against costs, expense and liabilities.
(SECTION 603) The trustee is not required to spend its own
funds or become financially liable when performing its duties if
it reasonably believes that it will not be adequately protected
financially. (SECTION 601)
Wachovia Bank, National Association, the trustee, and its
affiliates have commercial banking relationships with us and
some of our affiliates and serves as trustee or paying agent
under indentures relating to debt securities issued by us and
some of our affiliates.
CLEARING AND SETTLEMENT
The following discussion pertains to debt securities that are
issued in book-entry only form.
The Clearing Systems
In the event that the debt securities are issued in book-entry
only form, the debt securities may be settled through DTC. In
the event that the prospectus supplement to this prospectus so
provides, debt securities in book-entry only form may also be
settled through accounts maintained at Clearstream Banking,
société anonyme, Luxembourg, commonly known as
Clearstream, or the Euroclear System, commonly known as
Euroclear. In this case, links will be established among DTC,
Clearstream and Euroclear to facilitate the issuance of the debt
securities and cross-market transfers of the debt securities
associated with secondary market trading. DTC is linked
indirectly to Clearstream and Euroclear through the depositary
accounts of their respective U.S. depositaries.
The clearing systems have advised us as follows:
DTC
DTC is a limited-purpose trust company organized under the New
York Banking Law, a banking organization within the meaning of
the New York Banking Law, a member of the United States Federal
Reserve System, a clearing corporation within the meaning of the
New York Uniform Commercial Code and a clearing agency
registered under Section 17A of the Securities Exchange Act
of 1934. DTC holds securities that its participants, known as
DTC participants, deposit with DTC. DTC also facilitates the
settlement among DTC participants of securities transactions,
such as transfers and pledges, in deposited securities through
computerized records for DTC participants accounts. This
eliminates the need to exchange certificates. DTC participants
include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations.
DTCs book-entry system is also used by other organizations
such as securities brokers and dealers, banks and trust
companies that work through a DTC participant. The rules that
apply to DTC and its participants are on file with the SEC.
DTC is owned by a number of its DTC participants and by the New
York Stock Exchange, Inc., The American Stock Exchange, Inc. and
the National Association of Securities Dealers, Inc.
Upon receipt of any payment of principal or interest, DTC will
credit DTC participants accounts on the payment date
according to their respective holdings of beneficial interests
in the global securities as shown on DTCs records. In
addition, it is DTCs current practice to assign any
consenting or voting rights to DTC participants whose accounts
are credited with securities on a record date, by using an
omnibus proxy. Payments by DTC participants to owners of
beneficial interests in the global securities, and voting by DTC
participants, will be governed by the customary practices
between the DTC participants and owners of beneficial interests,
as is the case with securities held for the account of customers
registered in street name. However, these payments will be the
responsibility of the DTC participants and not of DTC, the
trustee, or Verizon Communications.
Clearstream
Clearstream is incorporated under the laws of Luxembourg as a
professional depositary. Clearstream holds securities for its
participating organizations, known as Clearstream participants,
and facilitates the clearance and settlement of securities
transactions between Clearstream participants through electronic
book-entry changes in accounts of Clearstream participants,
eliminating the need for
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physical movement of certificates. Clearstream provides to
Clearstream participants, among other things, services for
safekeeping, administration, clearance and settlement of
internationally traded securities and securities lending and
borrowing. Clearstream interfaces with domestic markets in
several countries. As a professional depositary, Clearstream is
subject to regulation by the Luxembourg Monetary Institute.
Clearstream participants are recognized financial institutions
around the world, including underwriters, securities brokers and
dealers, banks, trust companies, clearing corporations and
certain other organizations and may include the underwriters.
Indirect access to Clearstream is also available to others, such
as banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a Clearstream
participant either directly or indirectly.
Distributions with respect to debt securities held beneficially
through Clearstream will be credited to cash accounts of
Clearstream participants in accordance with its rules and
procedures, to the extent received by the U.S. depositary
for Clearstream.
Euroclear
Euroclear was created in 1968 to hold securities for its
participants, known as Euroclear participants, and to clear and
settle transactions between Euroclear participants and between
Euroclear participants and participants of certain other
securities intermediaries through simultaneous electronic
book-entry delivery against payment, eliminating the need for
physical movement of certificates and any risk from lack of
simultaneous transfers of securities and cash. Euroclear is
owned by Euroclear Clearance System Public Limited Company and
operated through a license agreement by Euroclear Bank S.A./
N.V., known as the Euroclear operator. The Euroclear operator
provides Euroclear participants, among other things, with
safekeeping, administration, clearance and settlement,
securities lending and borrowing and related services. Euroclear
participants include banks (including central banks), securities
brokers and dealers and other professional financial
intermediaries and may include the underwriters.
Indirect access to Euroclear is also available to others that
clear through or maintain a custodial relationship with a
Euroclear participant, either directly or indirectly.
The Euroclear operator is regulated and examined by the Belgian
Banking and Finance Commission.
Securities clearance accounts and cash accounts with the
Euroclear Operator are governed by the Terms and Conditions
Governing Use of Euroclear and the related Operating Procedures
of the Euroclear System, and applicable Belgian law,
collectively referred to as the terms and conditions. The terms
and conditions govern transfers of securities and cash within
Euroclear, withdrawals of securities and cash from Euroclear,
and receipts of payments with respect to securities in
Euroclear. All securities in Euroclear are held on a fungible
basis without attribution of specific certificates to specific
securities clearance accounts. The Euroclear operator acts under
the terms and conditions only on behalf of Euroclear
participants, and has no record of or relationship with persons
holding through Euroclear participants.
Distributions with respect to debt securities held beneficially
through Euroclear will be credited to the cash accounts of
Euroclear participants in accordance with the terms and
conditions, to the extent received by the U.S. depositary
for Euroclear.
Global Clearance and Settlement Procedures
Initial settlement for the debt securities will be made in
same-day funds. Secondary market trading between DTC
participants will occur in the ordinary way in accordance with
DTC rules and will be settled in same-day funds using DTCs
Same-Day Funds Settlement System. In the event that the
prospectus supplement to this prospectus provides that the debt
securities may also be settled through Clearstream and
Euroclear, secondary market trading between Clearstream
participants and/or Euroclear participants will occur in the
ordinary way in accordance with the applicable rules and
operating procedures of Clearstream and Euroclear and will be
settled using the procedures applicable to conventional
eurobonds in same-day funds.
Cross-market transfers between persons holding directly or
indirectly through DTC participants, on the one hand, and
directly or indirectly through Clearstream or Euroclear
participants, on the other, will be effected in DTC in
accordance with DTC rules on behalf of the European
international clearing system by its U.S. depositary;
however, these cross-market transactions will require delivery
of instructions to the European international clear-
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ing system by the counterparty in that system in accordance with
its rules and procedures and within its established deadlines
(European time). The European international clearing system
will, if a transaction meets its settlement requirements,
deliver instructions to its U.S. depositary to take action
to effect final settlement on its behalf by delivering or
receiving debt securities in DTC, and making or receiving
payment in accordance with normal procedures for settlement in
DTC. Clearstream participants and Euroclear participants may not
deliver instructions directly to their respective
U.S. depositary.
Because of time-zone differences, credits of debt securities
received in Clearstream or Euroclear as a result of a
transaction with a DTC participant will be made during
subsequent securities settlement processing and dated the
business day following the DTC settlement date. The credits or
any transactions in the debt securities settled during this
processing will be reported to the Clearstream or Euroclear
participants on the same business day. Cash received in
Clearstream or Euroclear as a result of sales of the debt
securities by or through a Clearstream participant or a
Euroclear participant to a DTC participant will be received with
value on the DTC settlement date but will be available in the
Clearstream or Euroclear cash account only as of the business
day following settlement in DTC.
Although DTC, Clearstream and Euroclear are expected to follow
these procedures in order to facilitate transfers of the debt
securities among participants of DTC, Clearstream and Euroclear,
they will be under no obligation to perform or continue to
perform these procedures and these procedures may be changed or
discontinued at any time.
EXPERTS
The consolidated financial statements of Verizon Communications
incorporated by reference in Verizon Communications Annual
Report (Form 10-K)
for the year ended December 31, 2004 (including the
schedule appearing therein), and Verizon Communications
managements assessment of the effectiveness of internal
control over financial reporting as of December 31, 2004
incorporated by reference therein, have been audited by
Ernst & Young LLP, independent registered public
accounting firm, as set forth in their reports thereon
incorporated by reference therein, and incorporated herein by
reference. Such consolidated financial statements and
managements assessment have been incorporated herein by
reference in reliance upon such reports given on the authority
of such firm as experts in accounting and auditing.
LEGAL MATTERS
William P. Barr, Executive Vice President and General Counsel of
Verizon Communications, will issue an opinion about the validity
of the common stock, the preferred stock and the debt
securities. As of December 31, 2005, Mr. Barr
beneficially owned approximately 13,447 shares of Verizon
Communications common stock and had options to purchase an
aggregate of 1,435,700 shares of Verizon Communications
common stock within the next 60 days.
Milbank, Tweed, Hadley & McCloy LLP of New York, New
York will issue an opinion on certain legal matters for the
agents or underwriters. Milbank, Tweed, Hadley & McCloy
LLP from time to time represents Verizon Communications and its
affiliates in connection with matters unrelated to the offering
of the securities.
PLAN OF DISTRIBUTION
We may sell any of the securities:
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through underwriters or dealers; |
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through agents; or |
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directly to one or more purchasers. |
The prospectus supplement or pricing supplement will include:
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the initial public offering price; |
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the names of any underwriters, dealers or agents; |
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the purchase price of the securities; |
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our proceeds from the sale of the securities; |
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any underwriting discounts or agency fees and other
underwriters or agents compensation; |
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any discounts or concessions allowed or reallowed or paid to
dealers; and |
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any option by the underwriters to purchase additional securities. |
If underwriters are used in the sale, they will buy the
securities for their own account. The underwrit-
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ers may then resell the securities in one or more transactions,
at any time or times, at a fixed public offering price or at
varying prices.
This prospectus should not be considered an offer of the
securities in states where prohibited by law.
If there is a default by one or more of the underwriters
affecting 10% or less of the total number of shares of capital
stock or principal amount of debt securities offered, the
non-defaulting underwriters must purchase the securities agreed
to be purchased by the defaulting underwriters. If the default
affects more than 10% of the total number of shares of capital
stock or principal amount of the debt securities, we may, at our
opinion, sell less than all the securities offered.
Underwriters and agents that participate in the distribution of
the securities may be underwriters as defined in the Securities
Act of 1933. Any discounts or commission that we pay them and
any profit that they receive from the resale of the securities
by them may be treated as underwriting discounts and commissions
under the Securities Act of 1933. We may have agreements with
underwriters, dealers and agents to indemnify them against
certain civil liabilities, including liabilities under the
Securities Act of 1933, or to contribute with respect to
payments which they may be required to make.
Underwriters and agents may be customers of us or our
affiliates, may engage in transactions with us or our affiliates
or perform services for us or our affiliates in the ordinary
course of business.
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$4,000,000,000
Verizon Communications Inc.
$500,000,000 5.35% Notes due 2011
$1,250,000,000 5.55% Notes due 2016
$500,000,000 5.85% Notes due 2035
$1,750,000,000 Floating Rate Notes due 2007
PROSPECTUS SUPPLEMENT
February 9, 2006
Joint Book-Running Managers
for Notes due 2011, Notes due 2016 and Notes due 2035
Morgan Stanley & Co. Incorporated
Banc of America Securities LLC
Goldman, Sachs & Co.
Joint Book-Running Managers
for Floating Rate Notes due 2007
Morgan Stanley & Co. Incorporated
HSBC Securities (USA) Inc.
Merrill Lynch & Co.
Senior Co-Managers
Lehman Brothers
Mitsubishi Securities
Wachovia Capital Markets, LLC
Credit Suisse
UBS Investment Bank
RBC Dain Rauscher Inc.
RBS Greenwich Capital
Co-Managers
The Williams Group, L.P.
Blaylock & Company Inc.
Ramirez & Company, Inc.