EX-99 2 d467522dex99.htm PRESS RELEASE AND FINANCIAL TABLES Press Release and Financial Tables

Exhibit 99

 

NEWS RELEASE    LOGO
FOR IMMEDIATE RELEASE    Media contacts:
January 22, 2013    Peter Thonis
   212-395-2355
   peter.thonis@verizon.com
   Bob Varettoni
   908-559-6388
   robert.a.varettoni@verizon.com

Verizon Reports Strong Revenue and Customer Growth for

Verizon Wireless and FiOS Services in 4Q 2012

Earnings Impacted by Previously Announced Non-Operational Charges

4Q 2012 HIGHLIGHTS

Wireless

 

 

8.5 percent year-over-year increase in service revenues in 4Q 2012; 8.4 percent year-over-year increase in retail service revenues.

 

 

2.2 million retail net additions, excluding acquisitions and adjustments, including a record-high 2.1 million retail postpaid net connections; low retail postpaid churn of 0.95 percent; 98.2 million total retail connections, 92.5 million total retail postpaid connections.

 

 

4G LTE service now available to more than 273 million people in 476 markets across the U.S.

Wireline

 

 

4.1 percent year-over-year increase in consumer revenues; consumer ARPU (average revenue per user) up 9.5 percent year over year, to $105.63.

 

 

144,000 FiOS Internet and 134,000 FiOS Video net additions, with continued increased sales penetration for both services; 5.4 million total FiOS Internet, 4.7 million total FiOS Video customers.


Verizon News Release, page 2

 

Consolidated Earnings

 

 

A loss of $1.48 in earnings per share (EPS), compared with a loss of 71 cents per share in 4Q 2011, impacted by non-cash pension items in both quarters and additional non-operational debt retirement and other restructuring items in 4Q 2012.

 

 

A 7-cent-per-share impact due to Superstorm Sandy yielded 38 cents per share in adjusted EPS (non-GAAP), compared with 52 cents in adjusted EPS in 4Q 2011.

NEW YORK – Verizon Communications Inc. (NYSE, Nasdaq: VZ) today reported strong customer and revenue growth in Verizon Wireless and Verizon FiOS services in fourth-quarter 2012 -- positioning the company well for 2013.

Verizon Wireless reported record-setting customer additions in the quarter, while Verizon FiOS customer additions were higher in fourth-quarter 2012 than in the prior two quarters, despite the impact of Superstorm Sandy.

“Verizon seized growth opportunities in the fourth quarter to cap a year of solid progress across the entire business,” said Lowell McAdam, Verizon chairman and CEO. “We delivered a total return of 13.2 percent to shareholders in 2012, and we enter 2013 ready to accelerate the momentum we’ve achieved and create significant shareholder value in the years to come.”

4Q and Full-Year Earnings Results

Due to the impact of non-operational items announced earlier this month, Verizon reported a loss of $1.48 in EPS in fourth-quarter 2012, compared with a fourth-quarter 2011 loss of 71 cents per share.

A reduction of 7 cents per share due to impacts from Superstorm Sandy, yielded a total of 38 cents per share in adjusted fourth-quarter 2012 earnings (non-GAAP). Fourth-quarter 2012 charges totaled $1.86 per share: $1.55 per share related to severance, pension and benefit charges primarily for the annual actuarial valuation of Verizon’s benefit plans as well as the annuitization


Verizon News Release, page 3

 

of various pension liabilities during the quarter, and 31 cents per share related to the early retirement of debt and other restructuring activities.

Comparable adjusted fourth-quarter 2011 earnings of 52 cents per share excluded charges of $1.23 per share, primarily related to the valuation of pension plans.

On an annual basis, Verizon reported 31 cents in 2012 EPS, compared with 85 cents per share in 2011. Adjusted annual EPS (non-GAAP) was $2.24 in 2012, compared with $2.15 in 2011.

Revenue Growth Across All Strategic Areas; Continued Strong Cash Flow

In fourth-quarter 2012, Verizon’s consolidated quarterly operating revenues exceeded $30.0 billion for the first time in company history. This represented a 5.7 percent increase compared with fourth-quarter 2011 and was the company’s highest year-over-year quarterly growth rate in 2012.

For full-year 2012, Verizon’s revenues totaled $115.8 billion, an increase of 4.5 percent, or $5.0 billion, compared with 2011. In fourth-quarter 2012, Verizon saw year-over-year revenue increases across all strategic growth areas: 8.5 percent for Verizon Wireless service revenues, 15.7 percent for FiOS revenues and 5.3 percent for strategic enterprise services.

Cash flow from operating activities totaled $31.5 billion in 2012, an increase of 5.7 percent compared with $29.8 billion in 2011.

Capital expenditures were $16.2 billion in 2012, including $135 million in companywide capital related to Superstorm Sandy recovery efforts, and totaled about $70 million less than in 2011. Free cash flow (non-GAAP, cash flow from operations less capex) was $15.3 billion for the year, an increase of 13.1 percent compared with $13.5 billion in 2011.


Verizon News Release, page 4

 

Verizon maintained a strong balance sheet, with year-end 2012 total debt of $52.0 billion, down from $55.2 billion at year-end 2011.

Verizon Wireless Delivers Record-High Customer Additions and Strong Revenue Growth

In fourth-quarter 2012, Verizon Wireless delivered the highest number of retail postpaid net additions of any quarter in its history, strong growth in revenues, an increase in smartphone penetration, and continued low retail postpaid churn.

Wireless Financial Highlights

 

   

Total revenues were $20.0 billion in fourth-quarter 2012, up 9.5 percent year over year. Service revenues in the quarter totaled $16.4 billion, up 8.5 percent year over year. Retail service revenues grew 8.4 percent year over year, to $15.8 billion.

 

   

For full-year 2012, total revenues were $75.9 billion, up 8.1 percent over full-year 2011, and service revenues were $63.7 billion in 2012, up 7.7 percent year over year.

 

   

Retail postpaid ARPA (average revenue per account) grew 6.6 percent over fourth-quarter 2011, to $146.80 per month. As customers continue to add multiple devices to accounts following the introduction of the Share Everything Plan in June, Verizon Wireless now reports ARPA instead of ARPU since customers can share data among multiple devices.

 

   

In fourth-quarter 2012, wireless operating income margin was 24.0 percent and segment EBITDA margin on service revenues (non-GAAP) was 41.4 percent, down 80 basis points from fourth-quarter 2011. For full-year 2012, operating income margin was 28.7 percent, up 230 basis points from full-year 2011; segment EBITDA margin was 46.6 percent, up 180 basis points year over year.

Wireless Operational Highlights

 

   

Verizon Wireless added 2.2 million net retail connections in the fourth quarter, including a record-high 2.1 million retail postpaid net connections. The company added 5.0 million net retail postpaid connections in 2012, the most in four years. These additions exclude acquisitions and adjustments.

 

   

At the end of 2012, the company had 98.2 million retail connections, a 6.6 percent increase year over year -- including 92.5 million retail postpaid connections.


Verizon News Release, page 5

 

   

Verizon Wireless had 35.1 million retail postpaid accounts at the end of the fourth quarter, a 1.4 percent increase over the fourth quarter 2011, and an average of 2.6 connections per account, up 4.3 percent year over year.

 

   

At year-end 2012, smartphones accounted for more than 58 percent of the Verizon Wireless retail postpaid customer phone base, up from 53 percent at the end of third-quarter 2012.

 

   

Retail postpaid churn was 0.95 percent in the fourth quarter and retail churn was 1.24 percent, both up 1 basis point 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 today (Jan. 22), Verizon Wireless 4G LTE service is available to more than 273 million people -- close to 89 percent of the population -- in 476 markets across the U.S.

 

   

The company continued to enhance its device lineup with new smartphones and tablets. In the fourth quarter, Verizon Wireless launched eight 4G LTE smartphones: the DROID RAZR HD and DROID RAZR MAXX HD by Motorola; Windows Phone 8X by HTC; Nokia Lumia 822; Samsung Galaxy Note II; Spectrum 2 by LG; Samsung Galaxy Stratosphere II; and the DROID DNA by HTC. In addition, Verizon Wireless launched three tablets in the quarter: the Samsung Galaxy Tab 2, Apple iPad with Retina display and Apple iPad mini.

 

   

Verizon Wireless announced it will begin offering shared data plans for business on Jan. 24, 2013, with the Share Everything Plan for Small Business and the Nationwide for Business Data Packages and Plans.

Wireline Reports Continued Strong FiOS Customer and Revenue Growth

In the Wireline segment, FiOS customer growth in fourth-quarter 2012 was greater than in the prior two quarters, despite the disruption caused by Superstorm Sandy. In global enterprise and wholesale, increased sales of strategic services continued to help mitigate lower revenues resulting from secular and global economic impacts.

Wireline Financial Highlights

 

   

Fourth-quarter 2012 operating revenues were $10.0 billion, a decline of 1.5 percent compared with fourth-quarter 2011. Consumer revenues grew 4.1 percent compared with fourth-quarter 2011. On an annual basis, 2012 consumer revenues totaled $14.0 billion, an increase of 3.2 percent compared with 2011 and Verizon’s highest annual revenue growth rate in consumer wireline in 10 years.


Verizon News Release, page 6

 

   

Consumer ARPU for wireline services increased to $105.63 in fourth-quarter 2012, up 9.5 percent compared with fourth-quarter 2011.

 

   

ARPU for FiOS customers continues to be more than $150. FiOS services produced about 68 percent of consumer wireline revenues in fourth-quarter 2012. About two-thirds of FiOS consumer customers have purchased a “triple play” of phone, Internet and video services.

 

   

Global enterprise revenues totaled $3.8 billion in the quarter, down 2.1 percent compared with fourth-quarter 2011. Sales of strategic services increased 5.3 percent compared with fourth-quarter 2011 and represented 54 percent of global enterprise revenues. Strategic services include Verizon Terremark cloud and data center services, security and IT solutions, advanced communications, and strategic networking.

 

   

For 2012, wireline operating income margin was 0.2 percent and wireline EBITDA margin (non-GAAP) was 21.3 percent, including the negative impact of fourth-quarter storm recovery. Excluding identifiable storm impacts (non-GAAP), wireline operating income margin was 1.0 percent and wireline EBITDA margin was 22.1 percent.

Wireline Operational Highlights

 

   

Verizon added 144,000 net new FiOS Internet connections and 134,000 net new FiOS Video connections in fourth-quarter 2012. Verizon had a total of 5.4 million FiOS Internet and 4.7 million FiOS Video connections at the end of the quarter, representing year-over-year increases of 12.6 percent and 13.3 percent, respectively.

 

   

FiOS penetration (subscribers as a percentage of potential subscribers) continued to increase. FiOS Internet penetration was 37.3 percent at the end of fourth-quarter 2012, compared with 35.5 percent at the end of fourth-quarter 2011. In the same periods, FiOS Video penetration was 33.3 percent, compared with 31.5 percent. The FiOS network passed 17.6 million premises at year-end 2012.

 

   

Broadband connections totaled 8.8 million at year-end 2012, a 1.4 percent year-over-year increase. Revenues from broadband connections grew 3.1 percent -- to $3.5 billion for full-year 2012 -- over the same period, driven by customer purchases of higher-speed FiOS services.

 

   

Verizon has been replacing high-maintenance portions of its residential copper network with fiber optics to provide enhanced services and to reduce ongoing repair costs. In 2012, Verizon migrated 223,000 homes to fiber, which contributed to an 11 percent improvement in trouble reports across Verizon’s entire copper network for the year. The company has a target of 300,000 additional migrations within FiOS markets in 2013.

 

   

To meet rapidly growing customer-traffic demands, Verizon deployed additional 100G (gigabits per second) technology on network routes in the U.S. and Europe in fourth-quarter 2012. In the U.S., these high-capacity routes included Atlanta to Tampa, Kansas City to Dallas and Salt Lake City to Seattle. During 2012, the company added 13,000 miles to its 100G network in the U.S.


Verizon News Release, page 7

 

   

Verizon Enterprise Solutions completed agreements with multinational and U.S. corporations The Coca-Cola Company, Hongkong and Shanghai Hotels Ltd., Bridgestone Americas, CME Group, Redbox and Shred-It for advanced business technology solutions.

 

   

Verizon Enterprise Solutions launched a comprehensive cloud and data center infrastructure portfolio specifically designed to help the health care industry meet the federal Health Insurance Portability and Accountability Act (HIPAA) requirements for safeguarding electronic protected health information.

NOTE: 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 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 more than 98 million retail 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 nearly $116 billion in 2012 revenues, Verizon employs a diverse workforce of 183,400. For more information, visit www.verizon.com.

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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 changes in available technology or technology substitution; disruption of our key suppliers’ provisioning of products or services; changes in the regulatory environments in which we operate, including any increase in restrictions on our ability to operate our networks; breaches of network or information technology security, natural disasters, terrorist attacks or significant litigation and any resulting financial impact not covered by insurance; 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; 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; significant increases in benefit plan costs or lower investment returns on plan assets; 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
12/31/12
    3 Mos. Ended
12/31/11
    % Change     12 Mos. Ended
12/31/12
    12 Mos. Ended
12/31/11
    % Change  

Operating Revenues

     $    30,045        $    28,436        5.7        $  115,846        $  110,875        4.5   

Operating Expenses

            

Cost of services and sales

     13,069        12,090        8.1        46,275        45,875        0.9   

Selling, general and administrative expense

     16,008        13,278        20.6        39,951        35,624        12.1   

Depreciation and amortization expense

     4,137        4,180        (1.0     16,460        16,496        (0.2
  

 

 

   

 

 

     

 

 

   

 

 

   

Total Operating Expenses

     33,214        29,548        12.4        102,686        97,995        4.8   
  

 

 

   

 

 

     

 

 

   

 

 

   

Operating Income (Loss)

     (3,169     (1,112     *        13,160        12,880        2.2   

Equity in earnings of unconsolidated businesses

     87        97        (10.3     324        444        (27.0

Other income and (expense), net

     (1,079     (84     *        (1,016     (14     *   

Interest expense

     (575     (703     (18.2     (2,571     (2,827     (9.1
  

 

 

   

 

 

     

 

 

   

 

 

   

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

     (4,736     (1,802     *        9,897        10,483        (5.6

(Provision) Benefit for income taxes

     2,810        1,590        76.7        660        (285     *   
  

 

 

   

 

 

     

 

 

   

 

 

   

Net Income (Loss)

     $    (1,926     $        (212     *        $    10,557        $    10,198        3.5   
  

 

 

   

 

 

     

 

 

   

 

 

   

Net income attributable to noncontrolling interest

     $     2,303        $      1,811        27.2        $      9,682        $      7,794        24.2   

Net income (loss) attributable to Verizon

     (4,229     (2,023     *        875        2,404        (63.6
  

 

 

   

 

 

     

 

 

   

 

 

   

Net Income (Loss)

     $    (1,926     $        (212     *        $    10,557        $    10,198        3.5   
  

 

 

   

 

 

     

 

 

   

 

 

   

Basic Earnings (Loss) per Common Share

            

Net income (loss) attributable to Verizon

     $      (1.48     $         (.71     *        $          .31        $          .85        (63.5

Weighted average number of common shares (in
millions)

     2,862        2,835          2,853        2,833     

Diluted Earnings (Loss) per Common Share (1)

            

Net income (loss) attributable to Verizon

     $      (1.48     $         (.71     *        $          .31        $          .85        (63.5

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

     2,862        2,835          2,862        2,839     

Footnotes:

 

(1) If there is a net loss, diluted EPS is the same as basic EPS. Diluted Earnings per Common 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

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

Assets

      

Current assets

      

Cash and cash equivalents

     $      3,093        $    13,362        $  (10,269

Short-term investments

     470        592        (122

Accounts receivable, net

     12,576        11,776        800   

Inventories

     1,075        940        135   

Prepaid expenses and other

     4,021        4,269        (248
  

 

 

   

 

 

   

 

 

 

Total current assets

     21,235        30,939        (9,704
  

 

 

   

 

 

   

 

 

 

Plant, property and equipment

     209,575        215,626        (6,051

Less accumulated depreciation

     120,933        127,192        (6,259
  

 

 

   

 

 

   

 

 

 
     88,642        88,434        208   
  

 

 

   

 

 

   

 

 

 

Investments in unconsolidated businesses

     3,401        3,448        (47

Wireless licenses

     77,744        73,250        4,494   

Goodwill

     24,139        23,357        782   

Other intangible assets, net

     5,933        5,878        55   

Other assets

     4,128        5,155        (1,027
  

 

 

   

 

 

   

 

 

 

Total Assets

     $  225,222        $  230,461        $    (5,239
  

 

 

   

 

 

   

 

 

 

Liabilities and Equity

      

Current liabilities

      

Debt maturing within one year

     $      4,369        $      4,849        $       (480

Accounts payable and accrued liabilities

     16,182        14,689        1,493   

Other

     6,405        11,223        (4,818
  

 

 

   

 

 

   

 

 

 

Total current liabilities

     26,956        30,761        (3,805
  

 

 

   

 

 

   

 

 

 

Long-term debt

     47,618        50,303        (2,685

Employee benefit obligations

     34,346        32,957        1,389   

Deferred income taxes

     24,677        25,060        (383

Other liabilities

     6,092        5,472        620   

Equity

      

Common stock

     297        297        —     

Contributed capital

     37,990        37,919        71   

Reinvested earnings (Accumulated deficit)

     (3,734     1,179        (4,913

Accumulated other comprehensive income

     2,235        1,269        966   

Common stock in treasury, at cost

     (4,071     (5,002     931   

Deferred compensation - employee stock ownership plans and other

     440        308        132   

Noncontrolling interest

     52,376        49,938        2,438   
  

 

 

   

 

 

   

 

 

 

Total equity

     85,533        85,908        (375
  

 

 

   

 

 

   

 

 

 

Total Liabilities and Equity

     $  225,222        $  230,461        $    (5,239
  

 

 

   

 

 

   

 

 

 

Verizon – Selected Financial and Operating Statistics

 

Unaudited

   12/31/12      12/31/11  

Total debt (in millions)

     $  51,987         $  55,152   

Net debt (in millions)

     $  48,894         $  41,790   

Net debt / Adjusted EBITDA (1)

     1.3x         1.2x   

Common shares outstanding end of period (in millions)

     2,859         2,834   

Total employees

     183,400         193,900   

Quarterly cash dividends declared per common share

     $    0.515         $    0.500   

Footnotes:

 

(1) Adjusted EBITDA excludes the effects of 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
12/31/12
    12 Mos. Ended
12/31/11
    $ Change  

Cash Flows From Operating Activities

      

Net Income

   $ 10,557      $ 10,198      $           359   

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

      

Depreciation and amortization expense

     16,460        16,496        (36

Employee retirement benefits

     8,198        7,426        772   

Deferred income taxes

     (952     (223     (729

Provision for uncollectible accounts

     972        1,026        (54

Equity in earnings of unconsolidated businesses, net of dividends received

     77        36        41   

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

     (403     (2,279     1,876   

Other, net

     (3,423     (2,900     (523
  

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities

     31,486        29,780        1,706   
  

 

 

   

 

 

   

 

 

 

Cash Flows From Investing Activities

      

Capital expenditures (including capitalized software)

     (16,175     (16,244     69   

Acquisitions of investments and businesses, net of cash acquired

     (913     (1,797     884   

Acquisitions of Wireless licenses, net

     (3,935     (221     (3,714

Net change in short-term investments

     27        35        (8

Other, net

     494        977        (483
  

 

 

   

 

 

   

 

 

 

Net cash used in investing activities

     (20,502     (17,250     (3,252
  

 

 

   

 

 

   

 

 

 

Cash Flows From Financing Activities

      

Proceeds from long-term borrowings

     4,489        11,060        (6,571

Repayments of long-term borrowings and capital lease obligations

     (6,403     (11,805     5,402   

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

     (1,437     1,928        (3,365

Dividends paid

     (5,230     (5,555     325   

Proceeds from sale of common stock

     315        241        74   

Special distribution to noncontrolling interest

     (8,325     —          (8,325

Other, net

     (4,662     (1,705     (2,957
  

 

 

   

 

 

   

 

 

 

Net cash used in financing activities

     (21,253     (5,836     (15,417
  

 

 

   

 

 

   

 

 

 

Increase (decrease) in cash and cash equivalents

     (10,269     6,694        (16,963

Cash and cash equivalents, beginning of period

     13,362        6,668        6,694   
  

 

 

   

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 3,093      $ 13,362      $ (10,269
  

 

 

   

 

 

   

 

 

 


Verizon Communications Inc.

Verizon Wireless – Selected Financial Results

(dollars in millions)

 

Unaudited

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

Operating Revenues

            

Retail service

     $  15,786        $  14,562        8.4        $  61,440        $  56,660        8.4   

Other service

     607        544        11.6        2,293        2,497        (8.2
  

 

 

   

 

 

     

 

 

   

 

 

   

Service

     16,393        15,106        8.5        63,733        59,157        7.7   

Equipment

     2,559        2,215        15.5        8,023        7,457        7.6   

Other

     1,042        933        11.7        4,112        3,540        16.2   
  

 

 

   

 

 

     

 

 

   

 

 

   

Total Operating Revenues

     19,994        18,254        9.5        75,868        70,154        8.1   
  

 

 

   

 

 

     

 

 

   

 

 

   

Operating Expenses

            

Cost of services and sales

     7,332        6,707        9.3        24,490        24,086        1.7   

Selling, general and administrative expense

     5,877        5,167        13.7        21,650        19,579        10.6   

Depreciation and amortization expense

     1,994        2,045        (2.5     7,960        7,962        —     
  

 

 

   

 

 

     

 

 

   

 

 

   

Total Operating Expenses

     15,203        13,919        9.2        54,100        51,627        4.8   
  

 

 

   

 

 

     

 

 

   

 

 

   

Operating Income

     $    4,791        $    4,335        10.5        $  21,768        $  18,527        17.5   

Operating Income Margin

     24.0     23.7       28.7     26.4  

Segment EBITDA

     $    6,785        $    6,380        6.3        $  29,728        $  26,489        12.2   

Segment EBITDA Service Margin

     41.4     42.2       46.6     44.8  

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.

Verizon Wireless – Selected Operating Statistics

 

Unaudited

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

Connections (‘000)

            

Retail postpaid

           92,530        87,382        5.9   

Retail prepaid

           5,700        4,785        19.1   
        

 

 

   

 

 

   

Retail

           98,230        92,167        6.6   

Unaudited

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

Net Add Detail (‘000) (1)

            

Retail postpaid

     2,100        1,207        74.0        5,024        4,252        18.2   

Retail prepaid

     142        252        (43.7     893        372        *   
  

 

 

   

 

 

     

 

 

   

 

 

   

Retail

     2,242        1,459        53.7        5,917        4,624        28.0   

Account Statistics

            

Retail Postpaid Accounts (‘000) (2)

           35,057        34,561        1.4   

Retail postpaid ARPA

     $  146.80        $  137.69        6.6        $  144.04        $  134.51        7.1   

Retail postpaid connections per account (2)

           2.64        2.53        4.3   

Churn Detail

            

Retail postpaid

     0.95     0.94       0.91     0.95  

Retail

     1.24     1.23       1.19     1.26  

Retail Postpaid Connection Statistics

            

Total Smartphone postpaid % of phones sold

     86.5     70.3       78.4     62.6  

Total Smartphone postpaid phone base (2)

           58.1     43.5  

Total Internet postpaid base (2)

           9.3     8.1  

Other Operating Statistics

            

Capital expenditures (in millions)

     $    2,791        $    1,787        56.2        $    8,857        $    8,973        (1.3

Footnotes:

 

(1) Connection net additions exclude acquisitions and adjustments.

 

(2) Statistics presented as of end of period.

 

  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.

Wireline – Selected Financial Results

(dollars in millions)

 

Unaudited

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

Operating Revenues

            

Consumer retail

     $  3,569        $  3,429        4.1        $  14,043        $  13,606        3.2   

Small business

     660        684        (3.5     2,659        2,731        (2.6
  

 

 

   

 

 

     

 

 

   

 

 

   

Mass Markets

     4,229        4,113        2.8        16,702        16,337        2.2   

Strategic services

     2,090        1,984        5.3        8,052        7,575        6.3   

Core

     1,756        1,945        (9.7     7,247        8,047        (9.9
  

 

 

   

 

 

     

 

 

   

 

 

   

Global Enterprise

     3,846        3,929        (2.1     15,299        15,622        (2.1

Global Wholesale

     1,770        1,938        (8.7     7,240        7,973        (9.2

Other

     145        159        (8.8     539        750        (28.1
  

 

 

   

 

 

     

 

 

   

 

 

   

Total Operating Revenues

     9,990        10,139        (1.5     39,780        40,682        (2.2
  

 

 

   

 

 

     

 

 

   

 

 

   

Operating Expenses

            

Cost of services and sales

     5,878        5,511        6.7        22,413        22,158        1.2   

Selling, general and administrative expense

     2,313        2,213        4.5        8,883        9,107        (2.5

Depreciation and amortization expense

     2,125        2,115        0.5        8,424        8,458        (0.4
  

 

 

   

 

 

     

 

 

   

 

 

   

Total Operating Expenses

     10,316        9,839        4.8        39,720        39,723        —     
  

 

 

   

 

 

     

 

 

   

 

 

   

Operating Income (Loss)

     $    (326     $     300        *        $         60        $       959        (93.7

Operating Income Margin

     (3.3 )%      3.0       0.2     2.4  

Segment EBITDA

     $  1,799        $  2,415        (25.5     $    8,484        $    9,417        (9.9

Segment EBITDA Margin

     18.0     23.8       21.3     23.1  

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.

Wireline – Selected Operating Statistics

 

Unaudited

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

Connections (‘000)

            

FiOS Video Subscribers

           4,726        4,173        13.3   

FiOS Internet Subscribers

           5,424        4,817        12.6   

FiOS Digital Voice residence connections

           3,227        1,884        71.3   
        

 

 

   

 

 

   

FiOS Digital connections

           13,377        10,874        23.0   

HSI

           3,371        3,853        (12.5

Total Broadband connections

           8,795        8,670        1.4   

Primary residence switched access connections

           7,982        9,906        (19.4

Primary residence connections

           11,209        11,790        (4.9

Total retail residence voice connections

           11,849        12,626        (6.2

Total voice connections

           22,503        24,137        (6.8

Unaudited

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

Net Add Detail (‘000)

            

FiOS Video Subscribers

     134        194        (30.9     553        701        (21.1

FiOS Internet Subscribers

     144        201        (28.4     607        735        (17.4

FiOS Digital Voice residence connections

     289        424        (31.8     1,343        1,067        25.9   
  

 

 

   

 

 

     

 

 

   

 

 

   

FiOS Digital connections

     567        819        (30.8     2,503        2,503        —     

HSI

     (117     (103     13.6        (482     (457     5.5   

Total Broadband connections

     27        98        (72.4     125        278        (55.0

Primary residence switched access connections

     (402     (550     (26.9     (1,924     (1,851     3.9   

Primary residence connections

     (113     (126     (10.3     (581     (784     (25.9

Total retail residence voice connections

     (156     (183     (14.8     (777     (990     (21.5

Total voice connections

     (344     (382     (9.9     (1,634     (1,864     (12.3

Revenue and ARPU Statistics

            

Consumer ARPU

     $  105.63        $  96.43        9.5        $  101.77        $  93.07        9.3   

FiOS revenues (in millions)

     $    2,565        $  2,216        15.7        $    9,722        $  8,293        17.2   

Strategic services as a % of total Enterprise revenues

     54.3     50.5       52.6     48.5  

Other Operating Statistics

            

Capital expenditures (in millions)

     $    1,725        $  1,632        5.7        $    6,342        $  6,399        (0.9

Wireline employees (‘000)

           86.4        91.8     

FiOS Video Open for Sale (‘000)

           14,200        13,250     

FiOS Video penetration

           33.3     31.5  

FiOS Internet Open for Sale (‘000)

           14,528        13,585     

FiOS Internet penetration

           37.3     35.5  

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.

Reconciliations – Verizon

Adjusted EBITDA

(dollars in millions)

 

Unaudited

  3 Mos.
Ended
3/31/11
    3 Mos.
Ended
6/30/11
    3 Mos.
Ended
9/30/11
    3 Mos.
Ended
12/31/11
    3 Mos.
Ended
3/31/12
    3 Mos.
Ended
6/30/12
    3 Mos.
Ended
9/30/12
    3 Mos.
Ended
12/31/12
 

Verizon Consolidated EBITDA

               

Consolidated net income (loss)

    $    3,264        $    3,604        $    3,542        $      (212     $    3,906        $    4,285        $      4,292        $    (1,926

Add / (Subtract):

               

Provision (benefit) for income taxes

    617        702        556        (1,590     726        793        631        (2,810

Interest expense

    709        717        698        703        685        679        632        575   

Other (income) and expense, net

    (36     (10     (24     84        (19     (34     (10     1,079   

Equity in earnings of unconsolidated business

    (101     (121     (125     (97     (103     (72     (62     (87
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

    4,453        4,892        4,647        (1,112     5,195        5,651        5,483        (3,169

Add Depreciation and amortization expense

    4,024        4,113        4,179        4,180        4,028        4,128        4,167        4,137   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated EBITDA

    $    8,477        $    9,005        $    8,826        $    3,068        $    9,223        $    9,779        $      9,650        $        968   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other Items (Before Tax)

               

Severance, Pension, and Benefit Charges

    —          —          329        5,625        —          —          —          7,186   

Litigation Settlements

    —          —          —          —          —          —          384        —     

Other restructuring costs

    —          —          —          —          —          —          —          276   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    —          —          329        5,625        —          —          384        7,462   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated Adjusted EBITDA

    $    8,477        $    9,005        $    9,155        $    8,693        $    9,223        $    9,779        $    10,034        $     8,430   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Debt to Adjusted EBITDA Ratio

(dollars in millions)

 

Unaudited

   12/31/11      12/31/12  

Verizon Net Debt

     

Debt maturing within one year

     $      4,849         $      4,369   

Long-term debt

     50,303         47,618   
  

 

 

    

 

 

 
Total Debt      55,152         51,987   

Less Cash and cash equivalents

     13,362         3,093   
  

 

 

    

 

 

 
Net Debt      $    41,790         $    48,894   
  

 

 

    

 

 

 
Net Debt to Adjusted EBITDA Ratio      1.2x         1.3x   
  

 

 

    

 

 

 

Adjusted EPS

 

Unaudited

   3 Mos. Ended
12/31/11
    3 Mos. Ended
12/31/12
    12 Mos. Ended
12/31/11
     12 Mos. Ended
12/31/12
 
Earnings Per Common Share, Reported      $    (0.71     $    (1.48     $    0.85         $    0.31   

Severance, Pension, and Benefit Charges

     1.20        1.55        1.27         1.55   

Litigation Settlements

     —          —          —           0.08   

Early Debt Redemption and Other Restructuring Costs

     0.03        0.31        0.03         0.31   
  

 

 

   

 

 

   

 

 

    

 

 

 

Adjusted EPS

     $     0.52        $     0.38        $    2.15         $    2.24   
  

 

 

   

 

 

   

 

 

    

 

 

 

Note: EPS may not add due to rounding.

Free Cash Flow

(dollars in millions)

 

Unaudited

   12 Mos. Ended
12/31/11
     12 Mos. Ended
12/31/12
 

Net cash provided by operating activities

     $    29,780         $    31,486   

Less Capital expenditures

     16,244         16,175   
  

 

 

    

 

 

 

Free Cash Flow

     $    13,536         $    15,311   
  

 

 

    

 

 

 


Verizon Communications Inc.

Reconciliations – Segments

Verizon Wireless

(dollars in millions)

 

Unaudited

   3 Mos.  Ended
12/31/11
    3 Mos. Ended
12/31/12
    12 Mos. Ended
12/31/11
    12 Mos. Ended
12/31/12
 

Verizon Wireless Segment EBITDA

        

Operating income

     $      4,335        $      4,791        $    18,527        $    21,768   

Add Depreciation and amortization expense

     2,045        1,994        7,962        7,960   
  

 

 

   

 

 

   

 

 

   

 

 

 

Verizon Wireless Segment EBITDA

     $      6,380        $      6,785        $    26,489        $    29,728   
  

 

 

   

 

 

   

 

 

   

 

 

 

Verizon Wireless total operating revenues

     $    18,254        $    19,994        $    70,154        $    75,868   
  

 

 

   

 

 

   

 

 

   

 

 

 

Verizon Wireless service revenues

     $    15,106        $    16,393        $    59,157        $    63,733   
  

 

 

   

 

 

   

 

 

   

 

 

 

Verizon Wireless operating income margin

     23.7     24.0     26.4     28.7
  

 

 

   

 

 

   

 

 

   

 

 

 

Verizon Wireless Segment EBITDA service margin

     42.2     41.4     44.8     46.6
  

 

 

   

 

 

   

 

 

   

 

 

 

Wireline

(dollars in millions)

 

Unaudited

   3 Mos. Ended
12/31/11
    3 Mos. Ended
12/31/12
    12 Mos. Ended
12/31/11
    12 Mos. Ended
12/31/12
 

Wireline Segment EBITDA

        

Operating income (loss)

     $         300        $      (326     $         959        $           60   

Add Depreciation and amortization expense

     2,115        2,125        8,458        8,424   
  

 

 

   

 

 

   

 

 

   

 

 

 

Wireline Segment EBITDA

     $      2,415        $    1,799        $      9,417        $      8,484   
  

 

 

   

 

 

   

 

 

   

 

 

 

Wireline total operating revenues

     $    10,139        $    9,990        $    40,682        $    39,780   
  

 

 

   

 

 

   

 

 

   

 

 

 

Wireline operating income margin

     3.0     (3.3 )%      2.4     0.2
  

 

 

   

 

 

   

 

 

   

 

 

 

Wireline Segment EBITDA margin

     23.8     18.0     23.1     21.3
  

 

 

   

 

 

   

 

 

   

 

 

 

 

Wireline Segment EBITDA

           

Operating income

              $           60   

Add Superstorm Sandy impact

              319   
           

 

 

 

Operating income excluding the Superstorm Sandy impact

              379   

Add Depreciation and amortization expense

              8,424   
           

 

 

 

Wireline Segment EBITDA excluding the Superstorm Sandy impact

              $      8,803   
           

 

 

 

Wireline total operating revenues

              $    39,780   
           

 

 

 

Wireline operating income margin excluding the Superstorm Sandy impact

              1.0
           

 

 

 

Wireline Segment EBITDA margin excluding the Superstorm Sandy impact

              22.1