Management’s Discussion and Analysis of Financial Condition and Results of Operations continued Verizon may continue to acquire debt securities issued by Verizon and its affiliates in the future through open market purchases, privately negotiated transactions, tender offers, exchange offers, or otherwise, upon such terms and at such prices as Verizon may from time to time determine for cash or other consideration. Other, net Other, net financing activities during 2017 includes early debt redemption costs, see “Special Items” for additional information, as well as cash paid on debt exchanges and derivative related transactions. Dividends The Verizon Board of Directors assesses the level of our dividend payments on a periodic basis taking into account such factors as long-term growth opportunities, internal cash requirements and the expectations of our shareholders. During the third quarter of 2017, the Board increased our quarterly dividend payment 2.2% to $0.5900 from $0.5775 per share in the prior period. This is the eleventh consecutive year that Verizon’s Board of Directors has approved a quarterly dividend increase. As in prior periods, dividend payments were a significant use of capital resources. During 2017, we paid $9.5 billion in dividends. 2016 During 2016, our net cash used in financing activities of $13.4 billion was primarily driven by: $19.2 billion used for repayments of long-term borrowings and capital lease obligations and $9.3 billion used for dividend payments. These uses of cash were partially offset by proceeds from long-term borrowings of $18.0 billion, which included $5.0 billion of proceeds from our asset-backed debt transactions. Proceeds from and Repayments of Long-Term Borrowings At December 31, 2016, our total debt decreased to $108.1 billion as compared to $109.7 billion at December 31, 2015. Our effective interest rate was 4.8% and 4.9% during the years ended December 31, 2016 and 2015, respectively. The substantial majority of our total debt portfolio consisted of fixed rate indebtedness, therefore, changes in interest rates did not have a material effect on our interest payments. See also “Market Risk” and Note 6 to the consolidated financial statements for additional details. At December 31, 2016, approximately $11.6 billion or 10.7% of the aggregate principal amount of our total debt portfolio consisted of foreign denominated debt, primarily the Euro and British Pound Sterling. We have entered into cross currency swaps on a majority of our foreign denominated debt in order to fix our future interest and principal payments in U.S. dollars and mitigate the impact of foreign currency transaction gains or losses. See “Market Risk” for additional information. Other, net Other, net financing activities during 2016, includes early debt redemption costs of $1.8 billion. See “Special Items” for additional information related to the early debt redemption costs incurred during the year ended December 31, 2016. Dividends During the third quarter of 2016, the Board increased our quarterly dividend payment 2.2% to $0.5775 from $0.565 per share in the prior period. As in prior periods, dividend payments were a significant use of capital resources. During 2016, we paid $9.3 billion in dividends. 2015 During 2015, our net cash used in financing activities of $15.1 billion was primarily driven by: $9.3 billion used for repayments of long-term borrowings and capital lease obligations, including the repayment of $6.5 billion of borrowings under a term loan agreement $8.5 billion used for dividend payments and $5.0 billion payment for our accelerated share repurchase agreement. These uses of cash were partially offset by proceeds from long-term borrowings of $6.7 billion, which included $6.5 billion of borrowings under a term loan agreement which was used for general corporate purposes, including the acquisition of spectrum licenses, as well as $2.7 billion of cash proceeds received related to the Tower Monetization Transaction attributable to the portion of the towers that we continue to occupy and use for network operations. Proceeds from and Repayments of Long-Term Borrowings At December 31, 2015, our total debt decreased to $109.7 billion as compared to $112.8 billion at December 31, 2014. The substantial majority of our total debt portfolio consisted of fixed rate indebtedness, therefore, changes in interest rates did not have a material effect on our interest payments. See Note 6 to the consolidated financial statements for additional information regarding our debt activity. 32 verizon.com/2017AnnualReport
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