Notes to Consolidated Financial Statements continued Variable Interest Entities (VIEs) The ABS Entities meet the definition of a VIE for which we have determined we are the primary beneficiary as we have both the power to direct the activities of the entity that most significantly impact the entity’s performance and the obligation to absorb losses or the right to receive benefits of the entity. Therefore, the assets, liabilities and activities of the ABS Entities are consolidated in our financial results and are included in amounts presented on the face of our consolidated balance sheets. The assets and liabilities related to our asset-backed debt arrangements included on our consolidated balance sheets were as follows: (dollars in millions) At December 31, 2017 2016 Assets Account receivable, net $ 8,101 $ 3,383 Prepaid expenses and other 636 236 Other Assets 2,680 2,383 Liabilities Accounts payable and accrued liabilities 5 4 Short-term portion of long-term debt 1,932 Long-term debt 6,955 4,988 See Note 7 for additional information on device payment plan agreement receivables used to secure asset-backed debt. Early Debt Redemption and Other Costs During 2017 and 2016, we recorded losses on early debt redemptions of $2.0 billion and $1.8 billion, respectively. We recognize losses on early debt redemptions in Other income (expense), net on our consolidated statements of income and within our Net cash used in financing activities on our consolidated statements of cash flows. Additional Financing Activities (Non-Cash Transactions) During both the years ended December 31, 2017 and 2016, we financed, primarily through vendor financing arrangements, the purchase of approximately $0.5 billion of long-lived assets consisting primarily of network equipment. At December 31, 2017, $1.2 billion relating to these financing arrangements, including those entered into in prior years and liabilities assumed through acquisitions, remained outstanding. These purchases are non-cash financing activities and therefore not reflected within Capital expenditures on our consolidated statements of cash flows. Guarantees We guarantee the debentures of our operating telephone company subsidiaries. As of December 31, 2017, $0.8 billion aggregate principal amount of these obligations remained outstanding. Each guarantee will remain in place for the life of the obligation unless terminated pursuant to its terms, including the operating telephone company no longer being a wholly-owned subsidiary of Verizon. As a result of the closing of the Access Line Sale on April 1, 2016, GTE Southwest Inc., Verizon California Inc. and Verizon Florida LLC are no longer wholly-owned subsidiaries of Verizon, and the guarantees of $0.6 billion aggregate principal amount of debentures and first mortgage bonds of those entities have terminated pursuant to their terms. We also guarantee the debt obligations of GTE LLC as successor in interest to GTE Corporation that were issued and outstanding prior to July 1, 2003. As of December 31, 2017, $0.7 billion aggregate principal amount of these obligations remain outstanding. Debt Covenants We and our consolidated subsidiaries are in compliance with all of our restrictive covenants. Maturities of Long-Term Debt Maturities of long-term debt outstanding, excluding unamortized debt issuance costs, at December 31, 2017 are as follows: Years (dollars in millions) 2018 $ 3,308 2019 6,306 2020 6,587 2021 6,403 2022 9,520 Thereafter 85,355 Note 7 Wireless Device Payment Plans Under the Verizon device payment program, our eligible wireless customers purchase wireless devices under a device payment plan agreement. Customers that activate service on devices purchased under the device payment program pay lower service fees as compared to those under our fixed-term service plans, and their device payment plan charge is included on their standard wireless monthly bill. As of January 2017, we no longer offer consumers new fixed- term service plans for phones. However we continue to service existing plans and provide these plans to business customers. 2017 Annual Report | Verizon Communications Inc. and Subsidiaries 75
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