EX-99 2 d286338dex99.htm PRESS RELEASE AND FINANCIAL TABLES Press release and financial tables

Exhibit 99

 

NEWS RELEASE    LOGO
FOR IMMEDIATE RELEASE    Media contacts:
January 24, 2012    Peter Thonis
   212-395-2355
   peter.thonis@verizon.com
   Bob Varettoni
   908-559-6388
   robert.a.varettoni@verizon.com

Verizon Reports Record Revenue Growth in 4Q, Fueled by

Strong Demand for Wireless, FiOS and Strategic Services

Verizon Generates Strong Cash Flows, 18.2 Percent Shareholder Returns in 2011;

4Q Earnings Impacted by Non-Cash Pension Items

4Q 2011 HIGHLIGHTS

Consolidated

 

 

7.7 percent year-over-year quarterly revenue growth in 4Q, a company record.

 

 

A loss of 71 cents in diluted earnings per share (EPS), impacted by non-cash pension items, compared with earnings of 93 cents per share in 4Q 2010.

 

 

52 cents per share in adjusted EPS (non-GAAP), which excludes $1.23 per share in non-operational items, compared with 54 cents in adjusted EPS in 4Q 2010.

Wireless

 

 

$18.3 billion in total 4Q revenues, up 13.0 percent year over year; data revenues of $6.3 billion, up 19.2 percent, representing 41.6 percent of service revenues; $15.1 billion in service revenues, up 6.4 percent.

 

 

1.5 million retail net additions (excluding acquisitions and adjustments), largest increase in three years, includes 1.2 million retail postpaid net customer additions; 108.7 million total connections, includes 92.2 million retail customers.

 

 

2.6 percent growth in retail service ARPU over 4Q 2010; retail postpaid data ARPU up 14.3 percent.


Verizon News Release, page 2

 

 

23.7 percent operating income margin; 42.2 percent Segment EBITDA margin on service revenues (non-GAAP).

Wireline

 

 

201,000 FiOS Internet and 194,000 FiOS Video net additions, with increased sales penetration for both products; net increase of 98,000 broadband connections from 3Q 2011.

 

 

8.5 percent year-over-year increase in consumer ARPU; FiOS ARPU was more than $148 per month.

 

 

14.7 percent increase in strategic services revenues, representing 51 percent of global enterprise revenues.

 

 

3.0 percent operating income margin; 23.8 percent Segment EBITDA margin (non-GAAP), compared with 23.5 percent in 4Q 2010 and 21.4 percent in 3Q 2011.

NEW YORK – Verizon Communications Inc. (NYSE, Nasdaq: VZ) posted the highest year-over-year quarterly revenue growth in the company’s 11-year history in fourth-quarter 2011, fueled by continued strong demand for Verizon Wireless services and handsets, FiOS fiber-optic services, and strategic business products and services.

‘Great Momentum for 2012’

“Verizon finished 2011 very strong, both in terms of revenue growth and by delivering an 18.2 percent total return to our shareholders for the full year, and the company has great momentum for 2012,” said Lowell McAdam, Verizon chairman, president and chief executive officer. “Verizon Wireless produced particularly strong growth in the fourth quarter. While that diluted wireless margins in the short term, it is good news for revenue and margin growth over the long term, particularly given our leadership in the rapidly developing 4G LTE ecosystem.”

McAdam added: “Wireline margins recovered from third-quarter pressures, and we expect wireline margin expansion in 2012. With recent strategic moves and our investments in FiOS, LTE, and global IP and cloud-based strategic services, Verizon has set the stage for accelerated growth across our business units, and we look to continue to build significant value for shareholders in 2012.”


Verizon News Release, page 3

 

Verizon’s total shareholder return is a combination of stock-price appreciation and dividend payments. Regarding recent strategic moves, Verizon last month strengthened its ability to provide fully integrated solutions by creating Verizon Enterprise Solutions, a sales and marketing organization, to harness all of Verizon’s solutions for business and government customers globally. In addition, Verizon Wireless announced agreements to purchase AWS (Advanced Wireless Spectrum) licenses, an important step toward meeting customers’ needs for wireless data and broadband services.

4Q and Full-Year Earnings Results

Due primarily to the impact of previously announced non-cash pension items, Verizon reported a loss of 71 cents in EPS in fourth-quarter 2011, compared with earnings of 93 cents per share in fourth-quarter 2010.

Adjusted fourth-quarter 2011 earnings (non-GAAP) of 52 cents per share exclude $1.20 per share, or $3.4 billion after-tax, due to the actuarial valuation of Verizon’s benefit plans, and 3 cents per share for the early extinguishment of debt. This annual valuation adjustment, resulting from changes in actuarial assumptions, is in accordance with a Verizon accounting policy adopted last year. Comparable adjusted fourth-quarter 2010 earnings were 54 cents per share, excluding the impact of non-operational items, the largest of which was a gain from benefit-plan valuation of 44 cents per share.

On an annual basis, Verizon reported 85 cents in 2011 EPS, compared with 90 cents per share in 2010. Adjusted annual EPS (non-GAAP) was $2.15 in 2011, compared with $2.08 on a comparable basis (non-GAAP, excluding results from divested businesses) in 2010.


Verizon News Release, page 4

 

Consolidated Revenue Growth, Strong Cash Flows

In fourth-quarter 2011, Verizon’s total operating revenues were $28.4 billion on a consolidated basis, an increase of 7.7 percent compared with fourth-quarter 2010. For full-year 2011, revenues totaled $110.9 billion, a 4.0 percent increase compared with 2010, when results included revenues from operations that have since been divested. On a comparable basis (non-GAAP), Verizon’s 2011 full-year revenues increased 6.2 percent compared with 2010.

Consolidated EBITDA (earnings before interest, taxes, depreciation and amortization) totaled $29.4 billion in 2011. On an adjusted basis (non-GAAP), EBITDA increased by more than $950 million in 2011 compared with 2010.

Cash flow from operating activities totaled $29.8 billion in 2011, and capital expenditures totaled $16.2 billion. Free cash flow (non-GAAP, cash flow from operations less capex) was more than $13.5 billion in 2011. From this total, Verizon returned $5.6 billion in quarterly dividends to shareholders in 2011, as the company’s Board of Directors approved a fifth consecutive year of dividend increases.

Verizon Wireless Delivers Strong Customer and Revenue Growth

In fourth-quarter 2011, Verizon Wireless delivered the highest number of retail net additions in three years and strong growth in revenues, driven by increased smartphone penetration and increased retail postpaid ARPU (average monthly service revenue per user).

Wireless Financial Highlights

 

   

Total revenues were $18.3 billion in fourth-quarter 2011, up 13.0 percent year over year. Data revenues were $6.3 billion, up more than $1.0 billion or 19.2 percent year over year, and represented 41.6 percent of all service revenues. Service revenues were $15.1 billion, up 6.4 percent year over year. For full-year 2011, total revenues were $70.2 billion, up 10.6 percent over full-year 2010, and service revenues were $59.2 billion in 2011, up 6.3 percent year over year.


Verizon News Release, page 5

 

   

Retail service ARPU grew 2.6 percent over fourth-quarter 2010, to $53.14. Retail postpaid ARPU grew 2.5 percent, to $54.80. Retail postpaid data ARPU increased to $22.76, up 14.3 percent year over year.

 

   

In fourth-quarter 2011, wireless operating income margin was 23.7 percent, and wireless generated $6.4 billion of EBITDA. Segment EBITDA margin on service revenues (non-GAAP) was 42.2 percent, down 530 basis points from fourth-quarter 2010. For full-year 2011, operating income margin was 26.4 percent, down 310 basis points from full-year 2010; Segment EBITDA margin was 44.8 percent, down 210 basis points.

Wireless Operational Highlights

 

   

Verizon Wireless added 1.0 million total net connections in fourth-quarter 2011. The company added 1.5 million retail customers, including 1.2 million retail postpaid customers. While the wholesale channel grew during the fourth quarter, a loss of telematics customers resulted in a net decrease of 490,000 wholesale and other connections in the quarter. These totals exclude acquisitions and adjustments.

 

   

At year-end 2011, the company had 108.7 million total connections, a 6.3 percent increase year over year, consisting of 92.2 million retail connections and 16.5 million wholesale and other connections.

 

   

At year-end 2011, smartphones accounted for 44 percent of the Verizon Wireless retail postpaid customer phone base, up from 39 percent at the end of third-quarter 2011.

 

   

Retail postpaid churn was 0.94 percent in fourth-quarter 2011, an improvement of 7 basis points year over year. Total retail churn was 1.23 percent, an improvement of 14 basis points year over year.

 

   

Verizon Wireless continued to roll out its 4G LTE mobile broadband network, the largest 4G LTE network in the U.S. As of Monday (Jan. 23), Verizon Wireless 4G LTE service was available to more than 200 million people in 195 markets across the U.S.

 

   

Verizon Wireless introduced six new 4G LTE devices in fourth-quarter 2011: the Droid Razr by Motorola; the Samsung Stratosphere; the HTC Rezound; the Galaxy Nexus by Samsung; and Droid Xyboard tablets in 10.1-inch and 8-inch form factors. Earlier this month, the company announced that six additional 4G LTE devices would be available in the coming weeks, including two mobile hotspots, now called Jetpacks, from ZTE and Novatel; three smartphones – the Droid 4 and Droid Razr Maxx from Motorola, and the Spectrum from LG, which launched last week; and the Samsung Galaxy Tab 7.7.

 

   

In December, Verizon Wireless announced agreements to purchase AWS licenses from SpectrumCo – a joint venture of Comcast, Time Warner and Bright House Networks – and from Cox TMI Wireless. The spectrum licenses under the two agreements cover 93 percent of the U.S. population, and the purchases are subject to regulatory approval.


Verizon News Release, page 6

 

   

Verizon Wireless’ 4G LTE network was ranked No. 1 on PC World’s 100 Best Products of 2011 list. In October, RootMetrics ranked Verizon Wireless tops for network performance in Boston and 21 other cities nationwide; in November, Verizon Wireless won the RootMetrics RootScore award for data performance in 36 markets.

FiOS, Strategic Services Contribute to Revenue Growth

In fourth-quarter 2011, revenues and customers continued to increase for FiOS services, and sales of strategic services to business customers remained strong. Segment EBITDA margins (non-GAAP) also increased both sequentially and year over year.

Wireline Financial Highlights

 

   

Fourth-quarter 2011 operating revenues were $10.1 billion, a decline of 1.5 percent compared with fourth-quarter 2010. Consumer revenues grew 1.3 percent compared with fourth-quarter 2010.

 

   

In fourth-quarter 2011, wireline operating income was $300 million, up 18.6 percent from fourth-quarter 2010. Segment EBITDA (non-GAAP) was $2.4 billion in fourth-quarter 2011, flat compared with fourth-quarter 2010 and an increase of $243 million from third-quarter 2011, when the Segment EBITDA was impacted by storm-related repair costs and a two-week strike. Operating income margin was 3.0 percent in fourth-quarter 2011. Segment EBITDA margin (non-GAAP) was 23.8 percent, compared with 23.5 percent in fourth-quarter 2010 and 21.4 percent in third-quarter 2011.

 

   

Consumer ARPU for wireline services was $96.43 in fourth-quarter 2011, up 8.5 percent compared with fourth-quarter 2010. ARPU for FiOS customers totaled more than $148 in fourth-quarter 2011, rising approximately $2 year over year. FiOS services to consumer retail customers represented 61 percent of consumer wireline revenues in fourth-quarter 2011.

 

   

Global enterprise revenues totaled $3.9 billion in the quarter, up 1.3 percent compared with fourth-quarter 2010. Sales of strategic services – including Terremark cloud services, security and IT solutions, and strategic networking – increased 14.7 percent compared with fourth-quarter 2010 and represented 51 percent of global enterprise revenues in fourth-quarter 2011.

Wireline Operational Highlights

 

   

Verizon added 201,000 net new FiOS Internet connections and 194,000 net new FiOS Video connections in fourth-quarter 2011. Verizon had a total of 4.8 million FiOS Internet and 4.2 million FiOS Video connections at year-end.


Verizon News Release, page 7

 

   

FiOS penetration (subscribers as a percentage of potential subscribers) continued to increase. FiOS Internet penetration was 35.5 percent at year-end 2011, compared with 31.9 percent at year-end 2010. In the same periods, FiOS Video penetration was 31.5 percent, compared with 28.0 percent, respectively. The FiOS network passed 16.5 million premises at year-end 2011, up more than 900,000 from year-end 2010.

 

   

Broadband connections totaled 8.7 million at year-end 2011, a 3.3 percent year-over-year increase. FiOS Internet connections more than offset a decrease in DSL-based HSI connections, resulting in a net increase of 98,000 broadband connections from third-quarter 2011. Total voice connections, which measures FiOS Digital Voice connections in addition to traditional switched access lines, declined 7.2 percent to 24.1 million – the smallest year-over-year decline since first-quarter 2006.

 

   

Verizon continued to enhance its global portfolio of secure IT and advanced communications platforms and industry-focused solutions. In fourth-quarter 2011, this included an expansion of the company’s Voice-over-IP service within the Asia-Pacific region and the rollout of an automated healthcare fraud-detection platform for private health insurers and government agencies.

 

   

Multinational corporations, leading businesses and government agencies – including Accenture plc; Chrysler Group LLC; the Commonwealth of Pennsylvania; GXS Inc.; MagnaCare Holdings Inc.; Tyson Foods Inc.; Consolidated Edison Company of New York Inc.; and Orange and Rockland Utilities Inc., a Con Edison subsidiary – completed new agreements or expanded their relationships with Verizon for a range of advanced communications and information technology solutions. Verizon also announced that it had been named a prime contractor under the U.S. General Services Administration’s CONNECTIONS II contract to provide professional and managed services and custom networking solutions at federal facilities.

 

   

Verizon continued to broaden the scope and capabilities of its network infrastructure. In fourth-quarter 2011, the company completed deployment of its next-generation 100 gigabit-per-second network route between New York City and Chicago and kicked off seven additional routes in the U.S.; expanded the Ethernet footprint to an additional 80 nodes supporting 23 areas in the Eastern part of the U.S.; expanded the global Private IP network into six additional countries in Africa and two more countries in the Middle East; and activated the first phase of the Europe India Gateway (EIG) submarine cable connecting Europe to the Middle East and Africa with 40G high-speed connections.

NOTE: Reclassifications of prior period amounts have been made, where appropriate, to reflect comparable operating results for the divestiture of overlapping wireless properties in 105 operating markets in 24 states during the first half of 2010; the wireless deferred revenue adjustment that was disclosed in Verizon’s Form 10-Q for the period ended June 30, 2010; the spinoff to Frontier of local exchange and related landline assets in 14 states, effective on July 1, 2010; and other non-operational items. See the accompanying schedules and www.verizon.com/investor for reconciliations to generally accepted accounting principles (GAAP) for non-GAAP financial measures cited in this document.


Verizon News Release, page 8

 

Verizon Communications Inc. (NYSE, Nasdaq: VZ), headquartered in New York, is a global leader in delivering broadband and other wireless and wireline communications services to consumer, business, government and wholesale customers. Verizon Wireless operates America’s most reliable wireless network, with nearly 109 million total connections nationwide. Verizon also provides converged communications, information and entertainment services over America’s most advanced fiber-optic network, and delivers integrated business solutions to customers in more than 150 countries, including all of the Fortune 500. A Dow 30 company with $111 billion in 2011 revenues, Verizon employs a diverse workforce of nearly 194,000. For more information, visit www.verizon.com.

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VERIZON’S ONLINE NEWS CENTER: Verizon news releases, executive speeches and biographies, media contacts, high-quality video and images, and other information are available at Verizon’s News Center on the World Wide Web at www.verizon.com/news. To receive news releases by email, visit the News Center and register for customized automatic delivery of Verizon news releases.

NOTE: This presentation contains statements about expected future events and financial results that are forward-looking and subject to risks and uncertainties. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The following important factors could affect future results and could cause those results to differ materially from those expressed in the forward-looking statements: adverse conditions in the U.S. and international economies; competition in our markets; material adverse changes in labor matters, including labor negotiations, and any resulting financial and/or operational impact; material changes in available technology; any disruption of our key suppliers’ provisioning of products or services; significant increases in benefit plan costs or lower investment returns on plan assets; breaches of network or information technology security, natural disasters or terrorist attacks, or existing or future litigation and any resulting financial impact not covered by insurance; technology substitution; an adverse change in the ratings afforded our debt securities by nationally accredited ratings organizations or adverse conditions in the credit markets impacting the cost, including interest rates, and/or availability of financing; any changes in the regulatory environments in which we operate, including any increase in restrictions on our ability to operate our networks; the timing, scope and financial impact of our deployment of broadband technology; changes in our accounting assumptions that regulatory agencies, including the SEC, may require or that result from changes in the accounting rules or their application, which could result in an impact on earnings; our ability to complete acquisitions and dispositions; and the inability to implement our business strategies.


Verizon Communications Inc.

Condensed Consolidated Statements of Income

(dollars in millions, except per share amounts)

 

Unaudited

   3 Mos. Ended
12/31/11
    3 Mos. Ended
12/31/10
    % Change     12 Mos. Ended
12/31/11
    12 Mos. Ended
12/31/10
    % Change  

Operating Revenues

   $ 28,436      $ 26,395        7.7      $ 110,875      $ 106,565        4.0   

Operating Expenses

            

Cost of services and sales

     12,090        10,610        13.9        45,875        44,149        3.9   

Selling, general & administrative expense

     13,278        5,291        *        35,624        31,366        13.6   

Depreciation and amortization expense

     4,180        4,083        2.4        16,496        16,405        0.6   
  

 

 

   

 

 

     

 

 

   

 

 

   

Total Operating Expenses

     29,548        19,984        47.9        97,995        91,920        6.6   
  

 

 

   

 

 

     

 

 

   

 

 

   

Operating Income (Loss)

     (1,112 )      6,411        *        12,880        14,645        (12.1 ) 

Equity in earnings of unconsolidated businesses

     97        113        (14.2     444        508        (12.6

Other income and (expense), net

     (84     43        *        (14     54        *   

Interest expense

     (703     (567     24.0        (2,827     (2,523     12.0   
  

 

 

   

 

 

     

 

 

   

 

 

   

Income (Loss) Before (Provision) Benefit for Income Taxes

     (1,802 )      6,000        *        10,483        12,684        (17.4 ) 

(Provision) benefit for income taxes

     1,590        (1,352     *        (285     (2,467     (88.4
  

 

 

   

 

 

     

 

 

   

 

 

   

Net Income (Loss)

   $ (212 )    $ 4,648        *      $ 10,198      $ 10,217        (0.2 ) 
  

 

 

   

 

 

     

 

 

   

 

 

   

Net income attributable to noncontrolling interest

   $ 1,811      $ 2,009        (9.9   $ 7,794      $ 7,668        1.6   

Net income (loss) attributable to Verizon

     (2,023     2,639        *        2,404        2,549        (5.7
  

 

 

   

 

 

     

 

 

   

 

 

   

Net Income (Loss)

   $ (212 )    $ 4,648        *      $ 10,198      $ 10,217        (0.2 ) 
  

 

 

   

 

 

     

 

 

   

 

 

   

Basic Earnings (Loss) per Common Share

            

Net income (loss) attributable to Verizon

   $ (.71   $ .93        *      $ .85      $ .90        (5.6

Weighted average number of common shares (in millions)

     2,835        2,829          2,833        2,830     

Diluted Earnings (Loss) per Common Share (1)

            

Net income (loss) attributable to Verizon

   $ (.71   $ .93        *      $ .85      $ .90        (5.6

Weighted average number of common shares-assuming dilution (in millions)

     2,835        2,831          2,839        2,833     

Footnotes:

 

(1) If there is a net loss, diluted EPS is the same as basic EPS. Diluted Earnings per Share includes the dilutive effect of shares issuable under our stock-based compensation plans.

 

     Certain reclassifications have been made, where appropriate, to reflect comparable operating results.

 

* Not meaningful


Verizon Communications Inc.

Condensed Consolidated Balance Sheets

(dollars in millions)

 

Unaudited

   12/31/11     12/31/10     $ Change  

Assets

      

Current assets

      

Cash and cash equivalents

     $      13,362        $      6,668        $     6,694   

Short-term investments

     592        545        47   

Accounts receivable, net

     11,776        11,781        (5

Inventories

     940        1,131        (191

Prepaid expenses and other

     4,269        2,223        2,046   
  

 

 

   

 

 

   

 

 

 

Total current assets

     30,939        22,348        8,591   
  

 

 

   

 

 

   

 

 

 

Plant, property and equipment

     215,626        211,655        3,971   

Less accumulated depreciation

     127,192        123,944        3,248   
  

 

 

   

 

 

   

 

 

 
     88,434        87,711        723   
  

 

 

   

 

 

   

 

 

 

Investments in unconsolidated businesses

     3,448        3,497        (49

Wireless licenses

     73,250        72,996        254   

Goodwill

     23,357        21,988        1,369   

Other intangible assets, net

     5,878        5,830        48   

Other assets

     5,155        5,635        (480
  

 

 

   

 

 

   

 

 

 

Total Assets

     $    230,461        $  220,005        $   10,456   
  

 

 

   

 

 

   

 

 

 

Liabilities and Equity

      

Current liabilities

      

Debt maturing within one year

     $        4,849        $      7,542        $    (2,693

Accounts payable and accrued liabilities

     14,689        15,702        (1,013

Other

     11,223        7,353        3,870   
  

 

 

   

 

 

   

 

 

 

Total current liabilities

     30,761        30,597        164   
  

 

 

   

 

 

   

 

 

 

Long-term debt

     50,303        45,252        5,051   

Employee benefit obligations

     32,957        28,164        4,793   

Deferred income taxes

     25,060        22,818        2,242   

Other liabilities

     5,472        6,262        (790

Equity

      

Common stock

     297        297          

Contributed capital

     37,919        37,922        (3

Reinvested earnings

     1,179        4,368        (3,189

Accumulated other comprehensive income

     1,269        1,049        220   

Common stock in treasury, at cost

     (5,002     (5,267     265   

Deferred compensation - employee stock ownership plans and other

     308        200        108   

Noncontrolling interest

     49,938        48,343        1,595   
  

 

 

   

 

 

   

 

 

 

Total equity

     85,908        86,912        (1,004
  

 

 

   

 

 

   

 

 

 

Total Liabilities and Equity

     $    230,461        $  220,005        $   10,456   
  

 

 

   

 

 

   

 

 

 

Verizon – Selected Financial and Operating Statistics

 

Unaudited

   12/31/11      12/31/10  

Total debt (in millions)

     $    55,152         $    52,794   

Net debt (in millions)

     $    41,790         $    46,126   

Net debt / Adjusted EBITDA (1)

     1.2x         1.3x   

Common shares outstanding end of period (in millions)

     2,834         2,827   

Total employees

     193,900         194,400   

Cash dividends declared per common share

     $    0.5000         $    0.4875   

Footnotes:

 

(1) The adjusted EBITDA excludes the effects of non-recurring or non-operational items.

The unaudited condensed consolidated balance sheets are based on preliminary information.


Verizon Communications Inc.

Condensed Consolidated Statements of Cash Flows

(dollars in millions)

 

Unaudited

   12 Mos. Ended
12/31/11
    12 Mos. Ended
12/31/10
    $ Change  

Cash Flows From Operating Activities

      

Net Income

   $ 10,198      $ 10,217      $ (19

Adjustments to reconcile net income to net cash provided by operating activities:

      

Depreciation and amortization expense

     16,496        16,405        91   

Employee retirement benefits

     7,426        3,988        3,438   

Deferred income taxes

     (223     3,233        (3,456

Provision for uncollectible accounts

     1,026        1,246        (220

Equity in earnings of unconsolidated businesses, net of dividends received

     36        2        34   

Changes in current assets and liabilities, net of effects from acquisition/disposition of businesses

     (2,279     202        (2,481

Other, net

     (2,900     (1,930     (970
  

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities

     29,780        33,363        (3,583
  

 

 

   

 

 

   

 

 

 

Cash Flows From Investing Activities

      

Capital expenditures (including capitalized software)

     (16,244     (16,458     214   

Acquisitions of licenses, investments and businesses, net of cash acquired

     (2,018     (1,438     (580

Proceeds from dispositions

            2,594        (2,594

Net change in short-term investments

     35        (3     38   

Other, net

     977        251        726   
  

 

 

   

 

 

   

 

 

 

Net cash used in investing activities

     (17,250     (15,054     (2,196
  

 

 

   

 

 

   

 

 

 

Cash Flows From Financing Activities

      

Proceeds from long-term borrowings

     11,060               11,060   

Repayments of long-term borrowings and capital lease obligations

     (11,805     (8,136     (3,669

Increase (decrease) in short-term obligations, excluding current maturities

     1,928        (1,097     3,025   

Dividends paid

     (5,555     (5,412     (143

Proceeds from sale of common stock

     241               241   

Proceeds from access line spin-off

            3,083        (3,083

Other, net

     (1,705     (2,088     383   
  

 

 

   

 

 

   

 

 

 

Net cash used in financing activities

     (5,836     (13,650     7,814   
  

 

 

   

 

 

   

 

 

 

Increase in cash and cash equivalents

     6,694        4,659        2,035   

Cash and cash equivalents, beginning of period

     6,668        2,009        4,659   
  

 

 

   

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 13,362      $ 6,668      $ 6,694   
  

 

 

   

 

 

   

 

 

 


Verizon Communications Inc.

Verizon Wireless – Selected Financial Results

(dollars in millions)

 

Unaudited

   3 Mos. Ended
12/31/11
    3 Mos. Ended
12/31/10
    % Change     12 Mos. Ended
12/31/11
    12 Mos. Ended
12/31/10
    % Change  

Operating Revenues

            

Retail service

   $ 14,562      $ 13,513        7.8      $ 56,660      $ 53,308        6.3   

Other service

     544        680        (20.0     2,497        2,321        7.6   
  

 

 

   

 

 

     

 

 

   

 

 

   

Service

     15,106        14,193        6.4        59,157        55,629        6.3   

Equipment

     2,215        1,126        96.7        7,457        4,418        68.8   

Other

     933        829        12.5        3,540        3,360        5.4   
  

 

 

   

 

 

     

 

 

   

 

 

   

Total Operating Revenues

     18,254        16,148        13.0        70,154        63,407        10.6   
  

 

 

   

 

 

     

 

 

   

 

 

   

Operating Expenses

            

Cost of services and sales

     6,707        4,817        39.2        24,086        19,245        25.2   

Selling, general & administrative expense

     5,167        4,596        12.4        19,579        18,082        8.3   

Depreciation and amortization expense

     2,045        1,881        8.7        7,962        7,356        8.2   
  

 

 

   

 

 

     

 

 

   

 

 

   

Total Operating Expenses

     13,919        11,294        23.2        51,627        44,683        15.5   
  

 

 

   

 

 

     

 

 

   

 

 

   

Operating Income

   $ 4,335      $ 4,854        (10.7 )    $ 18,527      $ 18,724        (1.1 ) 

Operating Income Margin

     23.7 %      30.1 %        26.4 %      29.5 %   

Segment EBITDA

   $ 6,380      $ 6,735        (5.3 )    $ 26,489      $ 26,080        1.6   

Segment EBITDA Service Margin

     42.2 %      47.5 %        44.8 %      46.9 %   

Footnotes:

The segment financial results and metrics above are adjusted to exclude the effects of non-recurring or non-operational items, as the Company’s chief operating decision maker excludes these items in assessing business unit performance.

Intersegment transactions have not been eliminated.

Certain reclassifications have been made, where appropriate, to reflect comparable operating results.


Verizon Communications Inc.

Verizon Wireless – Selected Operating Statistics

 

Unaudited

   12/31/11      12/31/10      % Change  

Connections (000)

        

Retail postpaid

     87,382         83,125         5.1   

Retail prepaid

     4,785         4,410         8.5   
  

 

 

    

 

 

    

Retail

     92,167         87,535         5.3   

Wholesale & other connections

     16,500         14,711         12.2   
  

 

 

    

 

 

    

Total connections

     108,667         102,246         6.3   
  

 

 

    

 

 

    

 

Unaudited

   3 Mos. Ended
12/31/11
    3 Mos. Ended
12/31/10
    % Change     12 Mos. Ended
12/31/11
    12 Mos. Ended
12/31/10
    % Change  

Net Add Detail (1) (000)

            

Retail postpaid

     1,207        872        38.4        4,252        2,529        68.1   

Retail prepaid

     252        (69     *        372        (552     *   
  

 

 

   

 

 

     

 

 

   

 

 

   

Retail

     1,459        803        81.7        4,624        1,977        *   

Wholesale & other connections

     (490     338        *        1,664        3,540        (53.0
  

 

 

   

 

 

     

 

 

   

 

 

   

Total connections

     969        1,141        (15.1     6,288        5,517        14.0   
  

 

 

   

 

 

     

 

 

   

 

 

   

Churn Detail

            

Retail postpaid

     0.94     1.01       0.95     1.02  

Retail

     1.23     1.37       1.26     1.38  

Revenue & ARPU Statistics

            

Total data revenues (in millions)

     $    6,278        $    5,268        19.2        $  23,646        $  19,550        21.0   

Retail postpaid data ARPU

     $    22.76        $    19.91        14.3        $    21.70        $    18.78        15.5   

Total data as a % of service revenues

     41.6     37.1       40.0     35.1  

Retail service ARPU

     $    53.14        $    51.79        2.6        $    52.69        $    51.51        2.3   

Retail postpaid ARPU

     $    54.80        $    53.45        2.5        $    54.34        $    53.14        2.3   

Retail Postpaid Connection Statistics

            

Total Smartphone postpaid % of phones sold

     70.3     49.3       62.6     42.0  

Total Smartphone postpaid phone base

           43.5     28.1  

Total Internet postpaid base

           8.1     7.0  

Other Operating Statistics

            

Capital expenditures (in millions)

     $    1,787        $    2,233        (20.0     $    8,973        $    8,438        6.3   

Footnotes:

 

(1) Connection net additions exclude acquisitions and adjustments.

The segment financial results and metrics above are adjusted to exclude the effects of non-recurring or non-operational items, as the Company’s chief operating decision maker excludes these items in assessing business unit performance.

Intersegment transactions have not been eliminated.

Certain reclassifications have been made, where appropriate, to reflect comparable operating results.

 

* Not meaningful


Verizon Communications Inc.

Wireline – Selected Financial Results

(dollars in millions)

 

Unaudited

   3 Mos. Ended
12/31/11
    3 Mos. Ended
12/31/10
    % Change     12 Mos. Ended
12/31/11
    12 Mos. Ended
12/31/10
    % Change  

Operating Revenues

            

Consumer retail

   $ 3,429      $ 3,385        1.3      $ 13,606      $ 13,419        1.4   

Small business

     684        700        (2.3     2,731        2,837        (3.7
  

 

 

   

 

 

     

 

 

   

 

 

   

Mass Markets

     4,113        4,085        0.7        16,337        16,256        0.5   

Strategic services

     1,990        1,735        14.7        7,607        6,602        15.2   

Other

     1,939        2,142        (9.5     8,015        8,714        (8.0
  

 

 

   

 

 

     

 

 

   

 

 

   

Global Enterprise

     3,929        3,877        1.3        15,622        15,316        2.0   

Global Wholesale

     1,938        2,098        (7.6     7,973        8,746        (8.8

Other

     159        229        (30.6     750        909        (17.5
  

 

 

   

 

 

     

 

 

   

 

 

   

Total Operating Revenues

     10,139        10,289        (1.5     40,682        41,227        (1.3
  

 

 

   

 

 

     

 

 

   

 

 

   

Operating Expenses

            

Cost of services and sales

     5,511        5,608        (1.7     22,158        22,618        (2.0

Selling, general & administrative expense

     2,213        2,267        (2.4     9,107        9,372        (2.8

Depreciation and amortization expense

     2,115        2,161        (2.1     8,458        8,469        (0.1
  

 

 

   

 

 

     

 

 

   

 

 

   

Total Operating Expenses

     9,839        10,036        (2.0     39,723        40,459        (1.8
  

 

 

   

 

 

     

 

 

   

 

 

   

Operating Income

   $ 300      $ 253        18.6      $ 959      $ 768        24.9   

Operating Income Margin

     3.0     2.5       2.4     1.9  

Segment EBITDA

   $ 2,415      $ 2,414             $ 9,417      $ 9,237        1.9   

Segment EBITDA Margin

     23.8     23.5       23.1     22.4  

Footnotes:

The segment financial results and metrics above are adjusted to exclude the effects of non-operational items, as the Company’s chief operating decision maker excludes these items in assessing business unit performance.

Intersegment transactions have not been eliminated.

Certain reclassifications have been made, where appropriate, to reflect comparable operating results.


Verizon Communications Inc.

Wireline – Selected Operating Statistics

 

Unaudited

   12/31/11      12/31/10      % Change  

Connections (000)

        

FiOS Video Subscribers

     4,173         3,472         20.2   

FiOS Internet Subscribers

     4,817         4,082         18.0   

FiOS Digital Voice residence connections

     1,884         817         *   
  

 

 

    

 

 

    

FiOS Digital connections

     10,874         8,371         29.9   

HSI and other

     3,853         4,310         (10.6

Total Broadband connections

     8,670         8,392         3.3   

Primary residence switched access connections

     9,906         11,757         (15.7

Primary residence connections

     11,790         12,574         (6.2

Total retail residence voice connections

     12,626         13,616         (7.3

Total voice connections

     24,137         26,001         (7.2

 

Unaudited

   3 Mos. Ended
12/31/11
    3 Mos. Ended
12/31/10
    % Change     12 Mos. Ended
12/31/11
    12 Mos. Ended
12/31/10
    % Change  

Net Add Detail (000)

            

FiOS Video Subscribers

     194        182        6.6        701        722        (2.9

FiOS Internet Subscribers

     201        197        2.0        735        796        (7.7

FiOS Digital Voice residence connections

     424        145        *        1,067        798        33.7   
  

 

 

   

 

 

     

 

 

   

 

 

   

FiOS Digital connections

     819        524        56.3        2,503        2,316        8.1   

HSI and other

     (103     (145     (29.0     (457     (564     (19.0

Total Broadband connections

     98        52        88.5        278        232        19.8   

Primary residence switched access connections

     (550     (396     38.9        (1,851     (1,886     (1.9

Primary residence connections

     (126     (251     (49.8     (784     (1,088     (27.9

Total retail residence voice connections

     (183     (303     (39.6     (990     (1,349     (26.6

Total voice connections

     (382     (543     (29.7     (1,864     (2,322     (19.7

Revenue & ARPU Statistics

            

Consumer ARPU

     $  96.43        $  88.85        8.5        $  93.07        $  85.24        9.2   

FiOS revenues (in millions)

     $  2,216        $  1,875        18.2        $  8,293        $  6,904        20.1   

Strategic services as a % of total Enterprise revenues

     50.6     44.8       48.7     43.1  

Other Operating Statistics

            

Capital expenditures (in millions)

     $  1,632        $  2,171        (24.8     $  6,399        $  7,269        (12.0

Wireline employees (000)

           91.8        92.3     

FiOS Internet Open for Sale (000)

           13,585        12,786     

FiOS Internet penetration

           35.5     31.9  

FiOS Video Open for Sale (000)

           13,250        12,388     

FiOS Video penetration

           31.5     28.0  

Footnotes:

The segment financial results and metrics above are adjusted to exclude the effects of non-operational items, as the Company’s chief operating decision maker excludes these items in assessing business unit performance.

Intersegment transactions have not been eliminated.

Certain reclassifications have been made, where appropriate, to reflect comparable operating results.

 

* Not meaningful


Verizon Communications Inc.

Reconciliations – Verizon

Adjusted Operating Revenue

(dollars in millions)

 

Unaudited

   12 Months Ended
12/31/10
     12 Months Ended
12/31/11
 

Consolidated Operating Revenues

   $ 106,565       $ 110,875   

Less: Impact of divested operations

     2,407           

Add: Deferred revenue adjustment

     268           
  

 

 

    

 

 

 

Consolidated Adjusted Operating Revenues

   $ 104,426       $ 110,875   
  

 

 

    

 

 

 

Y/Y % Change

        6.2

Adjusted EBITDA

(dollars in millions)

 

Unaudited

   12 Months Ended
12/31/10
    12 Months Ended
12/31/11
 

Verizon Consolidated EBITDA

    

Consolidated net income

   $ 10,217      $ 10,198   

Add/subtract non-operating items:

    

Provision for income taxes

     2,467        285   

Interest expense

     2,523        2,827   

Other (income) and expense, net

     (54     14   

Equity in earnings of unconsolidated business

     (508     (444
  

 

 

   

 

 

 

Operating Income

     14,645        12,880   

Add: Depreciation and amortization expense

     16,405        16,496   
  

 

 

   

 

 

 

Consolidated EBITDA

   $ 31,050      $ 29,376   
  

 

 

   

 

 

 

Other Items (Before Tax)

    

Merger Integration & Acquisition Related Charges

     765          

Access Line Spin-Off Related Charges

     407          

Impact of Divested Operations

     (1,168       

Severance, Pension, and Benefit Charges

     3,054        5,954   

Deferred Revenue Adjustment

     268          
  

 

 

   

 

 

 
     3,326        5,954   
  

 

 

   

 

 

 

Consolidated Adjusted EBITDA

   $ 34,376      $ 35,330   
  

 

 

   

 

 

 


Verizon Communications Inc.

Reconciliations – Verizon

Adjusted EPS

 

Unaudited

   3 Months Ended
12/31/10
    3 Months Ended
12/31/11
    12 Months Ended
12/31/10
    12 Months Ended
12/31/11
 

Earnings Per Share, Reported

   $ 0.93      $ (0.71   $ 0.90      $ 0.85   

Merger Integration & Acquisition Related Charges

     0.05               0.14          

Access Line Spin-Off Related Charges

                   0.12          

Severance, Pension, and Benefit Charges

     (0.44     1.20        0.67        1.27   

Medicare Part D Subsidy Charges

                   0.34          

Deferred Revenue Adjustment

                   0.03          

Impact of Divested Operations

                   (0.13       

Extinguishment of Debt

            0.03               0.03   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EPS

   $ 0.54      $ 0.52      $ 2.08      $ 2.15   
  

 

 

   

 

 

   

 

 

   

 

 

 

Note:  EPS may not add due to rounding.

Free Cash Flow

(dollars in millions)

 

Unaudited

   12 Months Ended
12/31/11
 

Net cash provided by operating activities

   $ 29,780   

Less: Capital expenditures

     16,244   
  

 

 

 

Free Cash Flow

   $ 13,536   
  

 

 

 


Verizon Communications Inc.

Reconciliations – Segments

Verizon Wireless

(dollars in millions)

 

Unaudited

   3 Months Ended
12/31/10
    3 Months Ended
12/31/11
    12 Months Ended
12/31/10
    12 Months Ended
12/31/11
 

Verizon Wireless Segment EBITDA

        

Operating income

   $       4,854      $       4,335      $       18,724      $       18,527   

Add: Depreciation and amortization expense

     1,881        2,045        7,356        7,962   
  

 

 

   

 

 

   

 

 

   

 

 

 

Verizon Wireless Segment EBITDA

   $       6,735      $       6,380      $       26,080      $       26,489   
  

 

 

   

 

 

   

 

 

   

 

 

 

Verizon Wireless total operating revenues

   $     16,148      $     18,254      $       63,407      $       70,154   
  

 

 

   

 

 

   

 

 

   

 

 

 

Verizon Wireless service revenues

   $     14,193      $     15,106      $       55,629      $       59,157   
  

 

 

   

 

 

   

 

 

   

 

 

 

Verizon Wireless operating income margin

     30.1     23.7     29.5     26.4
  

 

 

   

 

 

   

 

 

   

 

 

 

Verizon Wireless Segment EBITDA service margin

     47.5     42.2     46.9     44.8
  

 

 

   

 

 

   

 

 

   

 

 

 

Wireline

(dollars in millions)

 

Unaudited

   3 Months Ended
12/31/10
    3 Months Ended
9/30/11
    3 Months Ended
12/31/11
 

Wireline Segment EBITDA

      

Operating income

   $        253      $          53      $        300   

Add: Depreciation and amortization expense

     2,161        2,119        2,115   
  

 

 

   

 

 

   

 

 

 

Wireline Segment EBITDA

   $     2,414      $     2,172      $     2,415   
  

 

 

   

 

 

   

 

 

 

Total operating revenues

   $   10,289      $   10,149      $   10,139   
  

 

 

   

 

 

   

 

 

 

Wireline operating income margin

     2.5     0.5     3.0
  

 

 

   

 

 

   

 

 

 

Wireline Segment EBITDA margin

     23.5     21.4     23.8