EX-99 2 a2018q4exhibit99.htm EXHIBIT 99 Exhibit
Exhibit 99
vzlogoa05.jpg


News Release




FOR IMMEDIATE RELEASE
Media contacts:
January 29, 2019
Bob Varettoni
 
908.559.6388
 
robert.a.varettoni@verizon.com
 
 
 
Eric Wilkens
 
908.559.3063
 
eric.wilkens@verizon.com


Strong wireless customer growth and loyalty
highlight Verizon’s 4Q results

4Q 2018 highlights
Consolidated:
47 cents in earnings per share (EPS), compared with $4.56 in 4Q 2017; adjusted EPS (non-GAAP), excluding special items, of $1.12, compared with 86 cents in 4Q 2017.
Wireless:
1.2 million retail postpaid net additions, including 653,000 phone net additions and 873,000 postpaid smartphone net additions.
Retail postpaid churn of 1.08 percent, and retail postpaid phone churn of 0.82 percent.
Service revenue growth of 1.9 percent year over year, excluding the impact of the revenue recognition standard adopted on Jan. 1, 2018.
Total revenue growth of 2.1 percent year over year, excluding the impact of the revenue recognition standard, to $24.3 billion.
Wireline:
54,000 Fios Internet net additions; Fios total revenue growth of 2.9 percent year over year.

2018 highlights
Consolidated:
Full year EPS of $3.76, compared with $7.36 in 2017; adjusted EPS (non-GAAP), excluding special items, of $4.71, compared with 2017 adjusted EPS of $3.74.
Full-year 2018 operating cash flow of $34.3 billion, an increase of $10 billion year over year.
Unsecured debt is lower by $5.2 billion and total net debt is lower by $4.7 billion from year-end 2017.


Page 1


NEW YORK - Verizon Communications Inc. (NYSE, Nasdaq: VZ) closed 2018 with fourth-quarter results highlighted by strong growth and retention at Verizon Wireless, increased cash flow and momentum leading into the 5G era.
“Verizon finished 2018 by delivering solid financial and operational performance, as evidenced by our strong wireless service revenue and earnings growth,” said CEO Hans Vestberg. “2018 was a remarkable year full of 5G firsts, including being first in the world to commercially deploy 5G with our 5G Home product. As we head into 2019 and the 5G era, we’re beginning a period of transformational change. We are laser focused on delivering customers a best-in-class and game-changing experience on our networks.”
For fourth-quarter 2018, Verizon reported EPS of 47 cents, compared with $4.56 in fourth-quarter 2017. On an adjusted basis (non-GAAP), fourth-quarter 2018 EPS, excluding special items, was $1.12, compared with adjusted EPS of 86 cents in fourth-quarter 2017. Verizon’s fourth-quarter 2018 EPS included a 9 cent impact due to the effects of accounting changes for revenue recognition.
Fourth-quarter 2018 adjusted EPS included a net pre-tax loss from special items of about $4.9 billion, which consisted of a previously announced goodwill impairment for Verizon Media of $4.6 billion, acquisition and integration charges of $189 million, and severance and annual mark-to-market for pension and OPEB (other post-employment benefits) charges of $165 million. Adjusted EPS also included a deferred tax benefit of $2.1 billion related to an internal reorganization.
For full-year 2018, Verizon reported $3.76 in EPS, compared with $7.36 in full-year 2017. On an adjusted basis (non-GAAP), 2018 EPS was $4.71, compared with 2017 EPS of $3.74.

Consolidated results
Total consolidated operating revenues in fourth-quarter 2018 were $34.3 billion, up 1.0 percent from fourth-quarter 2017. Full-year 2018 consolidated operating revenues were $130.9 billion, up 3.8 percent year over year. Excluding the impact of the revenue recognition standard, fourth-quarter 2018 consolidated operating revenues were $34.1 billion, an increase of 0.5 percent year over year.
Cash flow from operations totaled $34.3 billion in 2018, an increase of $10 billion year over year. This increase was driven by strong operating results, tax reform benefits, reduced impacts from the wireless device payment plan model, and lower discretionary pension and benefit contributions.

Page 2


Full-year 2018 capital expenditures totaled $16.7 billion. In 2018, Verizon made $9.8 billion in cash dividend payments to shareholders. The company’s unsecured debt decreased by $5.2 billion and its total net debt decreased by $4.7 billion during 2018.
Verizon is on track to deliver against its goal to achieve $10 billion in cumulative cash savings by 2021. This initiative includes zero-based budgeting and has yielded approximately $2.3 billion of cumulative cash savings by year-end 2018, of which a majority has been derived from capital efficiencies.
For fourth-quarter 2018, Verizon Media revenues were $2.1 billion, down 5.8 percent year over year. Revenue trends were up sequentially from third-quarter 2018 due to seasonal advertising spending.
In the telematics business, total Verizon Connect revenues, excluding the impact of the revenue recognition standard, were $242 million in fourth-quarter 2018. IoT (Internet of Things) fourth-quarter revenues, including Verizon Connect, increased approximately 9.5 percent year over year, excluding the impact of the revenue recognition standard.
Net income was $2.1 billion in fourth-quarter 2018. EBITDA (non-GAAP, earnings before interest, taxes, depreciation and amortization) totaled approximately $6.9 billion. Consolidated operating income margin was 1.9 percent. Consolidated EBITDA margin (non-GAAP) was 20.2 percent in fourth-quarter 2018, compared with 25.4 percent in fourth-quarter 2017. Adjusted EBITDA margin (non-GAAP) in fourth-quarter 2018 was 33.8 percent. Excluding the impact of the revenue recognition standard, adjusted EBITDA margin (non-GAAP) was 32.2 percent.

Wireless results
Verizon reported 1.2 million retail postpaid net additions in fourth-quarter 2018, consisting of 653,000 phone net additions, 11,000 tablet additions and 556,000 other connected devices, primarily wearables. Postpaid smartphone net additions were 873,000, compared with 647,000 in fourth-quarter 2017, a 34.9 percent increase.
Verizon reported full-year 2018 postpaid net additions of 2.5 million, consisting of phone net additions of 1.1 million, tablet losses of 181,000 and 1.6 million other connected device additions. Postpaid smartphone net additions for full-year 2018 were 2 million, up 13 percent year over year.
Total revenues were $24.4 billion, an increase of 2.7 percent year over year. For full-year 2018, operating revenues totaled $91.7 billion, an increase of 4.8 percent year over year. Excluding the impact of the revenue recognition standard, total revenues grew 2.1 percent year over year in fourth-quarter 2018 and 4.4 percent for the full year, compared with 2017, to $24.3 billion and $91.3 billion, respectively.
Service revenues increased 0.1 percent in fourth-quarter 2018, driven by ongoing customer growth, step-ups to unlimited plans and the benefits of customers customizing their experience through mix-and-match plans. Full-year service revenues decreased 0.2 percent year over year.

Page 3


Excluding the impact of the revenue recognition standard, service revenues increased 1.9 percent in fourth-quarter 2018 and 1.7 percent for the full year, on a year over year basis.
Total retail postpaid churn was 1.08 percent in fourth-quarter 2018, and retail postpaid phone churn was 0.82 percent.
Segment EBITDA (non-GAAP) totaled $10.4 billion in fourth-quarter 2018, an increase of 9.7 percent year over year. Excluding the impact of the revenue recognition standard, segment EBITDA totaled $9.8 billion in fourth-quarter 2018. Segment EBITDA margin on total revenues (non-GAAP) was 42.5 percent. Excluding the impact of the revenue recognition standard, segment EBITDA margin was 40.5 percent. For the full year, segment EBITDA margin was 46.4 percent in 2018, compared with 44.1 percent in 2017.
Wireline results
Total wireline revenues decreased 3.2 percent year over year in fourth-quarter 2018 and 3.0 percent for the full year, compared with 2017, to $7.4 billion and $29.8 billion, respectively.
Total Fios revenues grew 2.5 percent year over year, excluding the impact of the revenue recognition standard. In fourth-quarter 2018, Verizon added a net of 54,000 Fios Internet connections and lost a net of 46,000 Fios Video connections, continuing to reflect the shift from traditional linear video to over-the-top offerings. At year-end 2018, Verizon had 6.1 million Fios Internet connections and 4.5 million Fios Video connections.
Wireline operating loss was $273 million in fourth-quarter 2018, and segment operating loss margin was 3.7 percent. Full-year 2018 segment operating loss was $273 million, and segment operating loss margin was 0.9 percent.
Segment EBITDA (non-GAAP) was $1.3 billion in fourth-quarter 2018. Excluding the impact of the revenue recognition standard, segment EBITDA was $1.2 billion. Segment EBITDA margin (non-GAAP) was 17.6 percent in fourth-quarter 2018, compared with 20.9 percent in fourth-quarter 2017. Excluding the impact of the revenue recognition standard, segment EBITDA margin was 16.9 percent. For the full year, segment EBITDA margin was 19.9 percent in 2018, compared with 21.1 percent in 2017.

Outlook and guidance
For 2019, Verizon expects the following:
Low single-digit percentage growth in full-year consolidated revenues on a GAAP reported basis.
Adjusted EPS excluding the impact of the new lease accounting standard to be similar to 2018 adjusted EPS. The new lease accounting standard is expected to have an approximately 1 to 2 cent per quarter headwind impact on EPS for full-year 2019.
The effective tax rate for full-year 2019 to be in the range of 24 to 26 percent.
Cash taxes to be $2 billion to $3 billion higher than in 2018 due to benefits that were realized in 2018 that are not expected to repeat in 2019.
Capital spending for 2019 to be in the range of $17 billion to $18 billion, including the expanded commercial launch of 5G.

Page 4


NOTE: See the accompanying schedules and www.verizon.com/about/investors 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 City, generated revenues of $130.9 billion in 2018. The company operates America’s most reliable wireless network and the nation’s premier all-fiber network, and delivers integrated solutions to businesses worldwide. With brands like Yahoo, TechCrunch and HuffPost, the company’s media group helps consumers stay informed and entertained, communicate and transact, while creating new ways for advertisers and partners to connect. Verizon’s corporate responsibility prioritizes the environmental, social and governance issues most relevant to its business and impact to society.


####

VERIZON’S ONLINE MEDIA CENTER: News releases, stories, media contacts and other resources are available at www.verizon.com/about/news/. News releases are also available through an RSS feed. To subscribe, visit www.verizon.com/about/rss-feeds/.

Forward-looking statements
In this communication we have made forward-looking statements. These statements are based on our estimates and assumptions and are subject to risks and uncertainties. Forward-looking statements include the information concerning our possible or assumed future results of operations. Forward-looking statements also include those preceded or followed by the words “anticipates,” “believes,” “estimates,” “expects,” “hopes” or similar expressions. 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. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The following important factors, along with those discussed in our filings with the Securities and Exchange Commission (the “SEC”), 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; the effects of competition in the markets in which we operate; material changes in technology or technology substitution; disruption of our key suppliers’ provisioning of products or services; changes in the regulatory environment 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 acts of war or significant litigation and any resulting financial impact not covered by insurance; our high level of indebtedness; an adverse change in the ratings afforded our debt securities by nationally accredited ratings organizations or adverse conditions in the credit markets affecting the cost, including interest rates, and/or availability of further financing; material adverse changes in labor matters, including labor negotiations, and any resulting financial and/or operational impact; significant increases in benefit plan costs or lower investment returns on plan assets; changes in tax laws or treaties, or in their interpretation; changes in 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; the inability to implement our business strategies; and the inability to realize the expected benefits of strategic transactions.


Page 5

Verizon Communications Inc.
Condensed Consolidated Statements of Income



(dollars in millions, except per share amounts)
Unaudited
 
3 Mos. Ended 12/31/18

 
3 Mos. Ended 12/31/17

 
%
Change
 
12 Mos. Ended 12/31/18

 
12 Mos. Ended 12/31/17

 
%
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Revenues
 
 
 
 
 

 
 
 
 
 
 
Service revenues and other
 
$
27,460

 
$
27,480

 
(0.1
)
 
$
108,605

 
$
107,145

 
1.4

Wireless equipment revenues
 
6,821

 
6,475

 
5.3

 
22,258

 
18,889

 
17.8

Total Operating Revenues
 
34,281

 
33,955

 
1.0

 
130,863

 
126,034

 
3.8

 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Expenses
 
 
 
 
 


 
 
 
 
 


Cost of services
 
8,163

 
8,219

 
(0.7
)
 
32,185

 
30,916

 
4.1

Wireless cost of equipment
 
7,128

 
7,339

 
(2.9
)
 
23,323

 
22,147

 
5.3

Selling, general and administrative expense
 
9,410

 
8,480

 
11.0

 
31,083

 
28,592

 
8.7

Depreciation and amortization expense
 
4,352

 
4,456

 
(2.3
)
 
17,403

 
16,954

 
2.6

Oath goodwill impairment
 
4,591

 

 
*

 
4,591

 

 
*

Total Operating Expenses
 
33,644

 
28,494

 
18.1

 
108,585

 
98,609

 
10.1

 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Income
 
637

 
5,461

 
(88.3
)
 
22,278

 
27,425

 
(18.8
)
Equity in earnings (losses) of unconsolidated businesses
 
64

 
(6
)
 
*

 
(186
)
 
(77
)
 
*

Other income (expense), net
 
1,865

 
(1,302
)
 
*

 
2,364

 
(2,021
)
 
*

Interest expense
 
(1,199
)
 
(1,219
)
 
(1.6
)
 
(4,833
)
 
(4,733
)
 
2.1

Income Before (Provision) Benefit For Income Taxes
 
1,367

 
2,934

 
(53.4
)
 
19,623

 
20,594

 
(4.7
)
(Provision) benefit for income taxes
 
698

 
15,849

 
(95.6
)
 
(3,584
)
 
9,956

 
*

Net Income
 
$
2,065

 
$
18,783

 
(89.0
)
 
$
16,039

 
$
30,550

 
(47.5
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income attributable to noncontrolling interests
 
$
126

 
$
114

 
10.5

 
$
511

 
$
449

 
13.8

Net income attributable to Verizon
 
1,939

 
18,669

 
(89.6
)
 
15,528

 
30,101

 
(48.4
)
Net Income
 
$
2,065

 
$
18,783

 
(89.0
)
 
$
16,039

 
$
30,550

 
(47.5
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic Earnings Per Common Share
 
 
 
 
 


 
 
 
 
 


Net income attributable to Verizon
 
$
0.47

 
$
4.57

 
(89.7
)
 
$
3.76

 
$
7.37

 
(49.0
)
Weighted average number of common shares (in millions)
 
4,137

 
4,087

 


 
4,128

 
4,084

 


 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted Earnings Per Common Share (1)
 
 
 
 
 


 
 
 
 
 


Net income attributable to Verizon
 
$
0.47

 
$
4.56

 
(89.7
)
 
$
3.76

 
$
7.36

 
(48.9
)
Weighted average number of common shares-assuming dilution (in millions)
 
4,141

 
4,090

 
 
 
4,132

 
4,089

 


Footnotes:
 
(1)
Diluted Earnings per Common Share includes the dilutive effect of shares issuable under our stock-based compensation plans, which represents the only potential dilution.
*
Not meaningful



Verizon Communications Inc.
Condensed Consolidated Balance Sheets
(dollars in millions)
Unaudited
 
12/31/18

 
12/31/17

 
$ Change
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
Current assets
 
 
 
 
 
 
Cash and cash equivalents
 
$
2,745

 
$
2,079

 
$
666

Accounts receivable, net
 
25,102

 
23,493

 
1,609

Inventories
 
1,336

 
1,034

 
302

Prepaid expenses and other
 
5,453

 
3,307

 
2,146

Total current assets
 
34,636

 
29,913

 
4,723

 
 
 
 
 
 
 
Property, plant and equipment
 
252,835

 
246,498

 
6,337

Less accumulated depreciation
 
163,549

 
157,930

 
5,619

Property, plant and equipment, net
 
89,286


88,568


718

Investments in unconsolidated businesses
 
671

 
1,039

 
(368
)
Wireless licenses
 
94,130

 
88,417

 
5,713

Goodwill
 
24,614

 
29,172

 
(4,558
)
Other intangible assets, net
 
9,775

 
10,247

 
(472
)
Other assets
 
11,717

 
9,787

 
1,930

Total assets
 
$
264,829


$
257,143


$
7,686

 
 
 
 
 
 
 
Liabilities and Equity
 
 
 
 
 
 
Current liabilities
 
 
 
 
 
 
Debt maturing within one year
 
$
7,190

 
$
3,453

 
$
3,737

Accounts payable and accrued liabilities
 
22,501

 
21,232

 
1,269

Other current liabilities
 
8,239

 
8,352

 
(113
)
Total current liabilities
 
37,930

 
33,037

 
4,893

 
 
 
 
 
 
 
Long-term debt
 
105,873

 
113,642

 
(7,769
)
Employee benefit obligations
 
18,599

 
22,112

 
(3,513
)
Deferred income taxes
 
33,795

 
31,232

 
2,563

Other liabilities
 
13,922

 
12,433

 
1,489

Total long-term liabilities
 
172,189

 
179,419

 
(7,230
)
 
 
 
 
 
 
 
Equity
 
 
 
 
 


Common stock
 
429

 
424

 
5

Additional paid in capital
 
13,437

 
11,101

 
2,336

Retained earnings
 
43,542

 
35,635

 
7,907

Accumulated other comprehensive income
 
2,370

 
2,659

 
(289
)
Common stock in treasury, at cost
 
(6,986
)
 
(7,139
)
 
153

Deferred compensation – employee stock ownership plans and other
 
353

 
416

 
(63
)
Noncontrolling interests
 
1,565

 
1,591

 
(26
)
Total equity
 
54,710

 
44,687

 
10,023

Total liabilities and equity
 
$
264,829

 
$
257,143

 
$
7,686

Verizon - Selected Financial and Operating Statistics
Unaudited
 
12/31/18

 
12/31/17

 
 
 
 
 
Total debt (in millions)
 
$
113,063

 
$
117,095

Net debt (in millions)
 
$
110,318

 
$
115,016

Net debt / Consolidated Adjusted EBITDA(1)
 
2.3x

 
2.6x

Common shares outstanding end of period (in millions)
 
4,132

 
4,079

Total employees (‘000)
 
144.5

 
155.4

Quarterly cash dividends declared per common share
 
$
0.6025

 
$
0.5900

Footnotes: 
(1)
Consolidated adjusted EBITDA excludes the effects of non-operational items, special items and operating results of divested businesses.


Verizon Communications Inc.
Condensed Consolidated Statements of Cash Flows


(dollars in millions)
Unaudited
 
12 Mos. Ended 12/31/18

 
12 Mos. Ended 12/31/17

 
$ Change
 
 
 
 
 
 
 
Cash Flows from Operating Activities
 
 
 
 
 
 
Net Income
 
$
16,039

 
$
30,550

 
$
(14,511
)
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
 
 
Depreciation and amortization expense
 
17,403

 
16,954

 
449

Employee retirement benefits
 
(2,657
)
 
440

 
(3,097
)
Deferred income taxes
 
389

 
(14,463
)
 
14,852

Provision for uncollectible accounts
 
980

 
1,167

 
(187
)
Equity in losses of unconsolidated businesses, net of dividends received
 
231

 
117

 
114

Net gain on sale of divested businesses
 

 
(1,774
)
 
1,774

Oath goodwill impairment
 
4,591

 

 
4,591

Changes in current assets and liabilities, net of effects from acquisition/disposition of businesses
 
(1,177
)
 
(5,938
)
 
4,761

Discretionary employee benefits contributions
 
(1,679
)
 
(3,411
)
 
1,732

Other, net
 
219

 
676

 
(457
)
Net cash provided by operating activities
 
34,339

 
24,318

 
10,021

 
 
 
 
 
 
 
Cash Flows from Investing Activities
 
 
 
 
 
 
Capital expenditures (including capitalized software)
 
(16,658
)
 
(17,247
)
 
589

Acquisitions of businesses, net of cash acquired
 
(230
)
 
(5,880
)
 
5,650

Acquisitions of wireless licenses
 
(1,429
)
 
(583
)
 
(846
)
Proceeds from dispositions of businesses
 

 
3,614

 
(3,614
)
Other, net
 
383

 
1,640

 
(1,257
)
Net cash used in investing activities
 
(17,934
)
 
(18,456
)
 
522

 
 
 
 
 
 
 
Cash Flows from Financing Activities
 
 
 
 
 
 
Proceeds from long-term borrowings
 
5,967

 
27,707

 
(21,740
)
Proceeds from asset-backed long-term borrowings
 
4,810

 
4,290

 
520

Repayments of long-term borrowings and capital lease obligations
 
(10,923
)
 
(23,837
)
 
12,914

Repayments of asset-backed long-term borrowings
 
(3,635
)
 
(400
)
 
(3,235
)
Dividends paid
 
(9,772
)
 
(9,472
)
 
(300
)
Other, net
 
(1,824
)
 
(4,439
)
 
2,615

Net cash used in financing activities
 
(15,377
)
 
(6,151
)
 
(9,226
)
 
 
 
 
 
 
 
Increase (decrease) in cash, cash equivalents and restricted cash
 
1,028

 
(289
)
 
1,317

Cash, cash equivalents and restricted cash, beginning of period
 
2,888

 
3,177

 
(289
)
Cash, cash equivalents and restricted cash, end of period
 
$
3,916

 
$
2,888

 
$
1,028





Verizon Communications Inc.
Wireless – Selected Financial Results


(dollars in millions)
Unaudited
 
3 Mos. Ended 12/31/18

 
3 Mos. Ended 12/31/17

 
%
Change
 
12 Mos. Ended 12/31/18

 
12 Mos. Ended 12/31/17

 
%
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Revenues
 
 
 
 
 
 
 
 
 
 
 
 
Service
 
$
15,898

 
$
15,880

 
0.1

 
$
63,020

 
$
63,121

 
(0.2
)
Equipment
 
6,821

 
6,475

 
5.3

 
22,258

 
18,889

 
17.8

Other
 
1,693

 
1,416

 
19.6

 
6,456

 
5,501

 
17.4

Total Operating Revenues
 
24,412

 
23,771

 
2.7

 
91,734

 
87,511

 
4.8

 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Expenses
 
 
 
 
 


 
 
 
 
 


Cost of services
 
2,351

 
2,210

 
6.4

 
9,251

 
8,886

 
4.1

Cost of equipment
 
7,128

 
7,339

 
(2.9
)
 
23,323

 
22,147

 
5.3

Selling, general and administrative expense
 
4,552

 
4,760

 
(4.4
)
 
16,604

 
17,876

 
(7.1
)
Depreciation and amortization expense
 
2,395

 
2,344

 
2.2

 
9,736

 
9,395

 
3.6

Total Operating Expenses
 
16,426

 
16,653

 
(1.4
)
 
58,914

 
58,304

 
1.0

 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Income
 
$
7,986

 
$
7,118

 
12.2

 
$
32,820

 
$
29,207

 
12.4

Operating Income Margin
 
32.7
%
 
29.9
%
 


 
35.8
%
 
33.4
%
 


 
 
 
 
 
 
 
 
 
 
 
 
 
Segment EBITDA
 
$
10,381

 
$
9,462

 
9.7

 
$
42,556

 
$
38,602

 
10.2

Segment EBITDA Margin
 
42.5
%
 
39.8
%
 
 
 
46.4
%
 
44.1
%
 
 
Footnotes:
The segment financial results and metrics above are adjusted to exclude the effects of special items, as the Company’s chief operating decision maker excludes these items in assessing business unit performance.
Intersegment transactions have not been eliminated.
 
 


Verizon Communications Inc.
Wireless – Selected Operating Statistics


Unaudited
 
12/31/18

 
12/31/17

 
% Change
Connections (‘000)
 
 
 
 
 
 
 
 
 
 
 
 
Retail postpaid
 
 
 
 
 
 
 
113,353

 
110,854

 
2.3

Retail prepaid
 
 
 
 
 
 
 
4,646

 
5,403

 
(14.0
)
Total retail
 
 
 
 
 
 
 
117,999

 
116,257

 
1.5

 
 
 
 
 
 
 
 
 
 
 
 
 
Unaudited
 
3 Mos. Ended 12/31/18

 
3 Mos. Ended 12/31/17

 
%
Change
 
12 Mos. Ended 12/31/18

 
12 Mos. Ended 12/31/17

 
%
Change
Net Add Detail (‘000) (1)
 
 
 
 
 
 
 
 
 
 
 
 
Retail postpaid
 
1,220

 
1,174

 
3.9

 
2,526

 
2,084

 
21.2

Retail prepaid
 
(90
)
 
(184
)
 
51.1

 
(757
)
 
(43
)
 
*

Total retail
 
1,130

 
990

 
14.1

 
1,769

 
2,041

 
(13.3
)
Account Statistics
 
 
 
 
 


 
 
 
 
 


Retail postpaid accounts (‘000) (2)
 
 
 
 
 


 
35,427

 
35,404

 
0.1

Retail postpaid connections per account (2)
 
 
 
 
 


 
3.20

 
3.13

 
2.2

Retail postpaid ARPA (3) (5)
 
$
135.11

 
$
135.78

 
(0.5
)
 
$
134.49

 
$
135.99

 
(1.1
)
Retail postpaid I-ARPA (4) (5)
 
$
170.51

 
$
167.19

 
2.0

 
$
168.61

 
$
166.28

 
1.4

Churn Detail
 
 
 
 
 


 
 
 
 
 


Retail postpaid
 
1.08
%
 
1.00
%
 


 
1.03
%
 
1.01
%
 


Retail
 
1.24
%
 
1.24
%
 


 
1.23
%
 
1.25
%
 


Retail Postpaid Connection Statistics (2)
 
 
 
 
 


 
 
 
 
 


Total smartphone postpaid phone base
 
 
 
 
 


 
92.2
%
 
90.1
%
 


Total Internet postpaid base
 
 
 
 
 


 
19.7
%
 
19.0
%
 


Other Operating Statistics
 
 
 
 
 


 
 
 
 
 


Capital expenditures (in millions)
 
$
2,342

 
$
3,383

 
(30.8
)
 
$
8,486

 
$
10,310

 
(17.7
)
Footnotes:
(1)
Connection net additions exclude acquisitions and adjustments.
(2)
Statistics presented as of end of period.
(3)
Retail postpaid ARPA - average service revenue per account from retail postpaid accounts.
(4)
Retail postpaid I-ARPA - average service revenue per account from retail postpaid account plus recurring device installment billings.
(5)
ARPA and I-ARPA for periods beginning after January 1, 2018 reflect the adoption of Accounting Standard Update 2014-09, “Revenue from Contracts with Customers (Topic 606)”. ARPA and I-ARPA for periods ending prior to January 1, 2018 were calculated based on the guidance per ASC Topic 605, "Revenue Recognition". Accordingly, amounts are not calculated on a comparative basis.
The segment financial results and metrics above are adjusted to exclude the effects of special items, as the Company’s chief operating decision maker excludes these items in assessing business unit performance.
Intersegment transactions have not been eliminated.
*
Not meaningful

 


Verizon Communications Inc.
Wireline – Selected Financial Results


(dollars in millions)
Unaudited
 
3 Mos. Ended 12/31/18

 
3 Mos. Ended 12/31/17

 
%
Change
 
12 Mos. Ended 12/31/18

 
12 Mos. Ended 12/31/17

 
%
Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Revenues
 
 
 
 
 
 
 
 
 
 
 
 
Consumer Markets
 
$
3,169

 
$
3,188

 
(0.6
)
 
$
12,589

 
$
12,777

 
(1.5
)
Enterprise Solutions
 
2,217

 
2,285

 
(3.0
)
 
8,840

 
9,167

 
(3.6
)
Partner Solutions
 
1,098

 
1,209

 
(9.2
)
 
4,692

 
4,917

 
(4.6
)
Business Markets
 
836

 
885

 
(5.5
)
 
3,397

 
3,585

 
(5.2
)
Other
 
53

 
50

 
6.0

 
242

 
234

 
3.4

Total Operating Revenues
 
7,373

 
7,617

 
(3.2
)
 
29,760

 
30,680

 
(3.0
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Expenses
 
 
 
 
 


 
 
 
 
 


Cost of services
 
4,478

 
4,465

 
0.3

 
17,701

 
17,922

 
(1.2
)
Selling, general and administrative expense
 
1,597

 
1,558

 
2.5

 
6,151

 
6,274

 
(2.0
)
Depreciation and amortization expense
 
1,571

 
1,532

 
2.5

 
6,181

 
6,104

 
1.3

Total Operating Expenses
 
7,646

 
7,555

 
1.2

 
30,033

 
30,300

 
(0.9
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Income (Loss)
 
$
(273
)
 
$
62

 
*

 
$
(273
)
 
$
380

 
*

Operating Income (Loss) Margin
 
(3.7
)%
 
0.8
%
 


 
(0.9
)%
 
1.2
%
 


 
 
 
 
 
 
 
 
 
 
 
 
 
Segment EBITDA
 
$
1,298

 
$
1,594

 
(18.6
)
 
$
5,908

 
$
6,484

 
(8.9
)
Segment EBITDA Margin
 
17.6
 %
 
20.9
%
 
 
 
19.9
 %
 
21.1
%
 
 
Footnotes:
The segment financial results and metrics above are adjusted to exclude the effects of special items, as the Company’s chief operating decision maker excludes these items in assessing business unit performance.
Intersegment transactions have not been eliminated.
*
Not meaningful





Verizon Communications Inc.
Wireline – Selected Operating Statistics


Unaudited
 
12/31/18

 
12/31/17

 
%
Change
Connections (‘000)
 
 
 
 
 
 
 
 
 
 
 
 
Fios video connections
 
 
 
 
 
 
 
4,451

 
4,619

 
(3.6
)
Fios Internet connections
 
 
 
 
 
 
 
6,067

 
5,850

 
3.7

Fios digital voice residence connections
 
 
 
 
 
 
 
3,803

 
3,905

 
(2.6
)
Fios digital connections
 
 
 
 
 
 
 
14,321

 
14,374

 
(0.4
)
High-speed Internet (HSI) connections
 
 
 
 
 
 
 
894

 
1,109

 
(19.4
)
Total broadband connections
 
 
 
 
 
 
 
6,961

 
6,959

 

Total voice connections
 
 
 
 
 
 
 
11,732

 
12,821

 
(8.5
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Unaudited
 
3 Mos. Ended 12/31/18

 
3 Mos. Ended 12/31/17

 
%
Change
 
12 Mos. Ended 12/31/18

 
12 Mos. Ended 12/31/17

 
%
Change
Net Add Detail (‘000)
 
 
 
 
 
 
 
 
 
 
 
 
Fios video connections
 
(46
)
 
(29
)
 
(58.6
)
 
(168
)
 
(75
)
 
*

Fios Internet connections
 
54

 
47

 
14.9

 
217

 
197

 
10.2

Fios digital voice residence connections
 
(30
)
 
(15
)
 
*

 
(102
)
 
10

 
*

Fios digital connections
 
(22
)
 
3

 
*

 
(53
)
 
132

 
*

High-speed Internet (HSI) connections
 
(51
)
 
(66
)
 
22.7

 
(215
)
 
(276
)
 
22.1

Total broadband connections
 
3

 
(19
)
 
*

 
2

 
(79
)
 
*

Total voice connections
 
(277
)
 
(279
)
 
0.7

 
(1,089
)
 
(1,118
)
 
2.6

Revenue Statistics
 
 
 
 
 


 
 
 
 
 


Fios revenues (in millions)
 
$
3,046

 
$
2,959

 
2.9

 
$
11,939

 
$
11,691

 
2.1

Other Operating Statistics
 
 
 
 
 


 
 
 
 
 


Capital expenditures (in millions)
 
$
1,855

 
$
1,981

 
(6.4
)
 
$
6,255

 
$
5,339

 
17.2

Wireline employees (‘000)
 
 
 
 
 
 
 
54.3

 
57.1

 
 
Footnotes:
The segment financial results and metrics above are adjusted to exclude the effects of special items, as the Company’s chief operating decision maker excludes these items in assessing business unit performance.
Intersegment transactions have not been eliminated.
*
Not meaningful



Verizon Communications Inc.
Supplemental Information - Impact of Topic 606


We adopted Accounting Standard Update 2014-09, “Revenue from Contracts with Customers (Topic 606)” on January 1, 2018, using the modified retrospective application. This method does not impact the prior periods, which continue to reflect the accounting treatment prior to the adoption of Topic 606. As a result, for items that were affected by our adoption of Topic 606, financial results of periods prior to January 1, 2018 are not comparable to the current period financial results.  To provide comparability to our results, we provide the following supplemental schedule which contains certain financial information on a pre adoption of Topic 606 basis.


Consolidated
(dollars in millions)
 
 
3 Mos. Ended 12/31/18
 
3 Mos. Ended 12/31/17
 
Year Over Year
Unaudited
 
As reported
 
Balances without adoption of Topic 606
 
Adjustments
 
As reported
 
 $ Change
 
% Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Revenues
 
 
 
 
 
 
 
 
 
 
 
 
Service revenues and other
 
$
27,460

 
$
27,780

 
$
(320
)
 
$
27,480

 
$
300

 
1.1

Wireless equipment revenues
 
6,821

 
6,340

 
481

 
6,475

 
(135
)
 
(2.1
)
Total Operating Revenues
 
34,281

 
34,120

 
161

 
33,955

 
165

 
0.5

 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Expenses
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services
 
8,163

 
8,180

 
(17
)
 
8,219

 
(39
)
 
(0.5
)
Wireless cost of equipment
 
7,128

 
7,102

 
26

 
7,339

 
(237
)
 
(3.2
)
Selling, general and administrative expense
 
9,410

 
9,861

 
(451
)
 
8,480

 
1,381

 
16.3

Depreciation and amortization expense
 
4,352

 
4,352

 

 
4,456

 
(104
)
 
(2.3
)
Oath goodwill impairment
 
4,591

 
4,591

 

 

 
4,591

 
*

Total Operating Expenses
 
33,644

 
34,086

 
(442
)
 
28,494

 
5,592

 
19.6

Operating Income
 
$
637

 
$
34

 
$
603

 
$
5,461

 
$
(5,427
)
 
(99.4
)


(dollars in millions)
 
 
12 Mos. Ended 12/31/18
 
12 Mos. Ended 12/31/17
 
Year Over Year
Unaudited
 
As reported
 
Balances without adoption of Topic 606
 
Adjustments
 
As reported
 
 $ Change
 
% Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Revenues
 
 
 
 
 
 
 
 
 
 
 
 
Service revenues and other
 
$
108,605

 
$
109,964

 
$
(1,359
)
 
$
107,145

 
$
2,819

 
2.6

Wireless equipment revenues
 
22,258

 
20,474

 
1,784

 
18,889

 
1,585

 
8.4

Total Operating Revenues
 
130,863

 
130,438

 
425

 
126,034

 
4,404

 
3.5

 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Expenses
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services
 
32,185

 
32,240

 
(55
)
 
30,916

 
1,324

 
4.3

Wireless cost of equipment
 
23,323

 
23,189

 
134

 
22,147

 
1,042

 
4.7

Selling, general and administrative expense
 
31,083

 
32,588

 
(1,505
)
 
28,592

 
3,996

 
14.0

Depreciation and amortization expense
 
17,403

 
17,403

 

 
16,954

 
449

 
2.6

Oath goodwill impairment
 
4,591

 
4,591

 

 

 
4,591

 
*

Total Operating Expenses
 
108,585

 
110,011

 
(1,426
)
 
98,609

 
11,402

 
11.6

Operating Income
 
$
22,278

 
$
20,427

 
$
1,851

 
$
27,425

 
$
(6,998
)
 
(25.5
)





Verizon Communications Inc.
Supplemental Information - Impact of Topic 606


Wireless(1)(2) 
(dollars in millions)
 
 
3 Mos. Ended 12/31/18
 
3 Mos. Ended 12/31/17
 
Year Over Year
Unaudited
 
As reported
 
Balances without adoption of Topic 606
 
Adjustments
 
As reported
 
 $ Change
 
% Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Revenues
 
 
 
 
 
 
 
 
 
 
 
 
Service
 
$
15,898

 
$
16,183

 
$
(285
)
 
$
15,880

 
$
303

 
1.9

Equipment
 
6,821

 
6,340

 
481

 
6,475

 
(135
)
 
(2.1
)
Other
 
1,693

 
1,746

 
(53
)
 
1,416

 
330

 
23.3

Total Operating Revenues
 
24,412

 
24,269

 
143

 
23,771

 
498

 
2.1

 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Expenses
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services
 
2,351

 
2,351

 

 
2,210

 
141

 
6.4

Cost of equipment
 
7,128

 
7,102

 
26

 
7,339

 
(237
)
 
(3.2
)
Selling, general and administrative expense
 
4,552

 
4,985

 
(433
)
 
4,760

 
225

 
4.7

Depreciation and amortization expense
 
2,395

 
2,395

 

 
2,344

 
51

 
2.2

Total Operating Expenses
 
16,426

 
16,833

 
(407
)
 
16,653

 
180

 
1.1

Operating Income
 
$
7,986

 
$
7,436

 
$
550

 
$
7,118

 
$
318

 
4.5



(dollars in millions)
 
 
12 Mos. Ended 12/31/18
 
12 Mos. Ended 12/31/17
 
Year Over Year
Unaudited
 
As reported
 
Balances without adoption of Topic 606
 
Adjustments
 
As reported
 
 $ Change
 
% Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Revenues
 
 
 
 
 
 
 
 
 
 
 
 
Service
 
$
63,020

 
$
64,222

 
$
(1,202
)
 
$
63,121

 
$
1,101

 
1.7

Equipment
 
22,258

 
20,474

 
1,784

 
18,889

 
1,585

 
8.4

Other
 
6,456

 
6,624

 
(168
)
 
5,501

 
1,123

 
20.4

Total Operating Revenues
 
91,734

 
91,320

 
414

 
87,511

 
3,809

 
4.4

 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Expenses
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services
 
9,251

 
9,251

 

 
8,886

 
365

 
4.1

Cost of equipment
 
23,323

 
23,189

 
134

 
22,147

 
1,042

 
4.7

Selling, general and administrative expense
 
16,604

 
18,006

 
(1,402
)
 
17,876

 
130

 
0.7

Depreciation and amortization expense
 
9,736

 
9,736

 

 
9,395

 
341

 
3.6

Total Operating Expenses
 
58,914

 
60,182

 
(1,268
)
 
58,304

 
1,878

 
3.2

Operating Income
 
$
32,820

 
$
31,138

 
$
1,682

 
$
29,207

 
$
1,931

 
6.6


Footnotes:
(1) The financial results above are adjusted to exclude the effects of special items, as the Company’s chief operating decision maker excludes these items in assessing business unit performance.
(2) Intersegment transactions have not been eliminated.




Verizon Communications Inc.
Supplemental Information - Impact of Topic 606


Wireline(1)(2)  
(dollars in millions)
 
 
3 Mos. Ended 12/31/18
 
3 Mos. Ended 12/31/17
 
Year Over Year
Unaudited
 
As reported
 
Balances without adoption of Topic 606
 
Adjustments
 
As reported
 
 $ Change
 
% Change
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Revenues
 
 
 
 
 
 
 
 
 
 
 
 
Consumer Markets
 
$
3,169

 
$
3,156

 
$
13

 
$
3,188

 
$
(32
)
 
(1.0
)
Enterprise Solutions
 
2,217

 
2,217

 

 
2,285

 
(68
)
 
(3.0
)
Partner Solutions
 
1,098

 
1,098

 

 
1,209

 
(111
)
 
(9.2
)
Business Markets
 
836

 
835

 
1

 
885

 
(50
)
 
(5.6
)
Other
 
53

 
47

 
6

 
50

 
(3
)
 
(6.0
)
Total Operating Revenues
 
7,373

 
7,353

 
20

 
7,617

 
(264
)
 
(3.5
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Expenses
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services
 
4,478

 
4,494

 
(16
)
 
4,465

 
29

 
0.6

Selling, general and administrative expense
 
1,597

 
1,616

 
(19
)
 
1,558

 
58

 
3.7

Depreciation and amortization expense
 
1,571

 
1,571

 

 
1,532

 
39

 
2.5

Total Operating Expenses
 
7,646