-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EU84/ueem1CZo7Y8lurnaI78R0Tx06FRKum9XDMdkoWCzSxClm6cuhHEgsjBVnU/ l7XbDjqdsI566TdyQmA2Ww== 0000950134-02-000735.txt : 20020414 0000950134-02-000735.hdr.sgml : 20020414 ACCESSION NUMBER: 0000950134-02-000735 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20020131 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20020201 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VERIZON COMMUNICATIONS INC CENTRAL INDEX KEY: 0000732712 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 232259884 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08606 FILM NUMBER: 02524677 BUSINESS ADDRESS: STREET 1: 1095 AVE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10036 BUSINESS PHONE: 2123952121 MAIL ADDRESS: STREET 1: 1717 ARCH ST 47TH FL CITY: PHILADELPHIA STATE: PA ZIP: 19103 FORMER COMPANY: FORMER CONFORMED NAME: BELL ATLANTIC CORP DATE OF NAME CHANGE: 19920703 8-K 1 d93882e8-k.txt FORM 8-K ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report: January 31, 2002 (Date of earliest event reported) VERIZON COMMUNICATIONS INC. (Exact name of registrant as specified in its charter) Delaware 1-8606 23-2259884 (State or other jurisdiction of (Commission File Number) (I.R.S. Employer Identification No.) incorporation) 1095 Avenue of the Americas, New York, New York 10036 (Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 395-2121 Not applicable (Former name or former address, if changed since last report) ================================================================================ Item 5. Other Events. Attached as an exhibit is a press release issued by Verizon Communications Inc. on January 31, 2002, announcing earnings for the fourth quarter of 2001 and the year ended December 31, 2001, and providing its financial outlook for 2002. The Company has included in its targeted earnings per share range of $3.20 - $3.30 an estimated $0.07 benefit from the implementation of Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets," related to a change in the amortization of goodwill and an estimated increase in pension and other post-retirement benefit costs of $0.09 and potential changes such as amortization of wireless licenses and additional costs of approximately $0.04 related to the September 11th terrorist attacks. The financial targets do not reflect the consolidation of Telecomunicaciones de Puerto Rico, Inc. (TELPRI), which became effective January 1, 2002. Consolidating TELPRI revenues is estimated to increase the expected revenue growth rate in 2002 by approximately 200 basis points. The Company expects growth in 2002 to be driven primarily by the Company's Wireless and International businesses and its Long Distance, DSL and Data Transport services. The Company estimates Domestic Telecom growth for 2002 to be flat, with negative growth during the first half of the year. Expected reductions in capital expenditures for 2002 are reflected primarily by a reduction of approximately $2 billion for Domestic Telecom operations. The Company is targeting its Long Distance business to be profitable in 2003. Cautionary Statement Concerning Forward-Looking Statements This Current Report on Form 8-K 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: the duration and extent of the current economic downturn; materially adverse changes in economic conditions in the markets served by us or by companies in which we have substantial investments; material changes in available technology; an adverse change in the ratings afforded our debt securities by nationally accredited ratings organizations; the final outcome of federal, state, and local regulatory initiatives and proceedings, including arbitration proceedings, and judicial review of those initiatives and proceedings, pertaining to, among other matters, the terms of interconnection, access charges, and unbundled network element and resale rates; the extent, timing, success, and overall effects of competition from others in the local telephone and toll service markets; the timing and profitability of our entry and expansion in the national long-distance market; our ability to satisfy regulatory merger conditions and obtain combined company revenue enhancements and cost savings; the profitability of our broadband operations; the ability of Verizon Wireless to achieve revenue enhancements and cost savings, and obtain sufficient spectrum resources; the continuing financial needs of Genuity Inc., our ability to convert our ownership interest in Genuity into a controlling interest consistent with regulatory conditions, and Genuity's ensuing profitability; our ability to recover insurance proceeds relating to equipment losses and other adverse financial impacts resulting from the terrorist attacks on Sept. 11, 2001; and 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. Item 7. Financial Statements and Exhibits. (c) Exhibits. 99 Press release and financial tables dated January 31, 2002, issued by Verizon Communications Inc. and contained in its Investor Relations Bulletin. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Verizon Communications Inc. ---------------------------------------- (Registrant) Date: January 31, 2002 /s/ Lawrence R. Whitman --------------------- ---------------------------------------- Lawrence R. Whitman Senior Vice President and Controller EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 99 Press release and financial tables, dated January 31, 2002, issued by Verizon Communications Inc. and contained in its Investor Relations Bulletin.
EX-99 3 d93882ex99.txt PRESS RELEASE DATED JANUARY 31, 2002 EXHIBIT 99 NEWS RELEASE [VERIZON LOGO] FOR IMMEDIATE RELEASE CONTACTS: JANUARY 31, 2002 PETER THONIS 212-395-2355 peter.thonis@verizon.com BOB VARETTONI 212-395-7726 robert.a.varettoni@verizon.com VERIZON COMMUNICATIONS REPORTS SOLID RESULTS FOR FOURTH QUARTER, PROVIDES OUTLOOK FOR 2002 COMPANY POSTS ADJUSTED EPS OF 77 CENTS; LONG-DISTANCE, DSL, WIRELESS SALES HIGHLIGHT STRONG OPERATIONAL EXECUTION 2001 HIGHLIGHTS o 59 percent increase in long-distance customers year-over-year, with approximately 40 percent of the customer base coming from New York, Massachusetts and Pennsylvania. o 122 percent increase in DSL (digital subscriber line) customers while improving customer service. o 21.2 percent increase in data transport revenues; total data revenues exceed $7 billion. o Continued industry-leading cost control, with the Domestic Telecom unit showing a year-over-year decline in expenses, including three consecutive quarters of cash expense reductions. o Technology deployment that enabled the launch of the nation's first major next-generation, 1XRTT wireless network and expanded the company's DSL reach to central offices serving 79 percent of access lines. o 22.8 percent year-over-year increase in proportionate international wireless customers, including a 1.8 million increase year-over-year, to 9.6 million total. o Year-end totals: 29.4 million domestic wireless customers, 7.4 million long-distance customers, 1.2 million DSL customers; $17.4 billion in capital expenditures. 2002 GUIDANCE o EPS (earnings per share) target of $3.20 to $3.30; comparable revenue growth of 3 to 5 percent; capital expenditures of $15 to $16 billion. Verizon News Release, page 2 NEW YORK -- Verizon Communications Inc. (NYSE:VZ) today announced adjusted diluted earnings per share of 77 cents for the fourth quarter 2001 and $3.00 for the full year on increased sales in long distance, DSL and wireless, and continued industry-leading cost cutting. The company's adjusted net income for 2001 was $8.2 billion, compared to $8.0 billion for 2000. Fourth-quarter adjusted net income was $2.1 billion, essentially flat compared to the fourth quarter 2000. The adjusted net income for the fourth quarter and year-end 2001 include the previously announced impact related to the Sept. 11 terrorist attacks. The impact in the fourth quarter was 3 cents per share, and 6 cents per share for the full year. Consolidated adjusted revenues grew 5.9 percent for the year, to $67.2 billion in 2001 from $63.4 billion in 2000. Revenues for 2000 did not include revenues from Vodafone properties prior to their contribution to Verizon Wireless in April 2000; adjusting for those revenues, the 2001 revenue increase was 4.1 percent. In the fourth quarter 2001, revenues grew 1.0 percent to $17.0 billion from $16.9 billion in the year-earlier quarter. EXPENSE CONTROL Consolidated adjusted expenses increased 1.8 percent and cash expenses decreased by 0.3 percent compared to the fourth quarter 2000. For the third consecutive quarter, Verizon's largest business unit, Domestic Telecom, decreased its adjusted cash expenses over the prior-year period. In the fourth quarter, the unit's adjusted cash expenses were down 4.6 percent to $6.0 billion from $6.3 billion in the fourth quarter 2000, and the unit's total operating expenses were down 2.3 percent to $8.4 billion from $8.6 billion. Verizon ended 2001 with a headcount of approximately 247,000, a reduction of more than 16,000 from year-end 2000 that was accomplished largely through attrition and a fourth-quarter voluntary program. Domestic Telecom expense-control initiatives, such as reductions in overtime expenses and in the use of contractors, produced an additional equivalent headcount reduction of 13,000. The company's 2001 capital expenditures totaled $17.4 billion, compared to $17.6 billion in 2000. "In Verizon's first full year of operation, we have repeatedly demonstrated the strength of the GTE and Bell Atlantic merger," said Verizon Chairman and Co-CEO Charles R. Lee. "We achieved solid results for the quarter and for the year despite the continuing downturn in the Verizon News Release, page 3 economy. Synergies have enabled us to continuously reduce expenses, while our combined assets have given us a more diverse geographic base and product line. With Verizon's great businesses, the company is well-positioned for profitable growth in the years ahead." Verizon President and Co-CEO Ivan Seidenberg said, "Verizon's focus is on operational execution. In 2001, we moved early and aggressively to head off the effects of the economy with cost-reduction efforts. At the same time, we had the management discipline and skilled workforce to respond effectively to Sept. 11, remain focused on operational metrics, and accelerate our merger integration and transition efforts. The solid foundation we built in 2001 will lead to continued quality growth and continued customer-service improvements in 2002." REPORTED RESULTS Reported results incorporate the net after-tax effect of gains and charges. For the fourth quarter 2001, Verizon reported a consolidated loss of $2.0 billion, or 75 cents per diluted share, compared to net income of $1.9 billion, or 70 cents per share, in the fourth quarter 2000. Results for the fourth quarter 2001 include charges totaling $4.1 billion, or $1.52 per diluted share. These charges relate to a variety of items, including severance costs for the reduction of approximately 10,000 employees, primarily through the fourth-quarter voluntary program; charges reflecting the current market values of investments, including Genuity; a restructuring of CTI, the company's wireless affiliate in Argentina, as a result of recent economic events in that country; charges for the sales or exit of non-strategic businesses and other asset impairments; and merger transition costs. Reported net income for year-end 2001 was $0.4 billion, or 14 cents per diluted share, compared to $11.8 billion, or $4.31 per share, for 2000. Reported operating revenues rose 0.8 percent in the fourth quarter 2001, to $17.0 billion, compared to the fourth quarter 2000. For the year, reported operating revenues rose 3.8 percent, to $67.2 billion in 2001 from $64.7 billion in 2000. Verizon News Release, page 4 2002 GUIDANCE Verizon today also issued the following financial and operational guidance for 2002. o EPS: $3.20 to $3.30 o Revenue growth: 3 to 5 percent o EBITDA (earnings before interest, taxes, depreciation and amortization) growth: 7 to 9 percent o Capital expenditures: $15 to $16 billion o Long-distance customers: 10 million plus o DSL customers: 1.8 to 2 million FOURTH QUARTER AND 2001 OPERATIONAL HIGHLIGHTS LONG DISTANCE: o Verizon Long Distance, the nation's fourth largest long-distance provider, ended 2001 with 7.4 million customers in 40 states, an increase of 2.7 million during the year, or 59 percent. o Approximately 40 percent of the long-distance customer base comes from three states where the service has been most recently introduced. There are nearly 2.3 million customers in New York, 600,000 in Massachusetts and nearly 250,000 in Pennsylvania. o Verizon now has more than 30 percent consumer in-franchise market share in New York and in the former GTE states, and more than 20 percent consumer in-franchise market share in Massachusetts. Sales results for Pennsylvania, where Verizon began marketing long-distance services in late October 2001, are in line with the early success rates in other Verizon states. o On Jan. 4, 2002, the Department of Justice (DOJ) recommended that the Federal Communications Commission (FCC) approve Verizon's long-distance application in Rhode Island. In New Jersey, the state's Board of Public Utilities gave its support to Verizon's long-distance application on Jan. 9, and the DOJ recommended FCC approval on Jan. 28. On Jan. 17, Verizon filed with the FCC to provide long-distance service in Vermont. DSL, DATA AND TELECOM: o In 2001, Verizon increased the number of DSL customers by 660,000, to 1.2 million, a 122 percent increase from 2000. Verizon added 225,000 customers in the fourth quarter. o Verizon has deployed DSL to central offices serving 79 percent of the company's access lines. Operational improvements have reduced DSL installation intervals from 15 to 8 days. o Data Services revenues grew to more than $1.8 billion for the quarter, driven by 14 percent fourth-quarter growth of Data Transport Services over 2000 and 21.2 percent growth for the year. Total annual revenues for Data Services exceeded $7 billion. Verizon News Release, page 5 o Access line equivalents grew 13 percent in the quarter and totaled 132.1 million by year-end. Data circuits account for more than half of that total. o Sales of packages of domestic wireline telecommunications services -- combining Caller ID, voice mail and other features -- increased 47 percent year-over-year. VERIZON WIRELESS: o As previously announced, Verizon Wireless ended 2001 with 29.4 million customers, growing its total number of customers nearly 10 percent year-over-year. When fully allocating in the prior year previously announced subscriber-base adjustments, the growth rate would be nearly 12 percent. During the fourth quarter, the company added 715,000 net new customers. o The company maintained its strong focus on the quality and profitability of its subscriber base. Nearly 94 percent of Verizon Wireless' total base is made up of contract customers, most of which are retail. o Verizon Wireless continued to lead the industry in profitability and low cost structure. Operating cash flow margin improved to a strong 35 percent for the quarter and 38 percent for the year. Cash-expense-per-subscriber decreased more than 6 percent for the quarter and 1 percent for the year, due in part to a decrease in roaming costs. o Average monthly total churn was 2.5 percent for the year and 2.7 percent for the quarter, while post-paid retail churn was 2.1 percent for both the quarter and the year. These industry-leading customer loyalty levels are due in part to the company's Worry Free Guarantee(SM) introduced early in 2001. o Verizon Wireless has the most digital customers, and the most total customers, of any U.S. wireless carrier. The company ended the fourth quarter with 22 million digital customers, or 75 percent of its subscriber base. o Service revenues for the quarter grew 8.1 percent to $4.0 billion, with total revenues up 8.8 percent to $4.4 billion. For the year, on a comparable basis including Vodafone property revenues in the first quarter 2000, service revenues grew 14.1 percent to $16.0 billion, with total revenues up 13.2 percent to $17.4 billion. Service-revenue-per-subscriber decreased by $1, to $46 in the fourth quarter, due to lower roaming revenues. For the full year, service-revenue-per-subscriber increased by more than 1 percent to $48. o Quarterly operating income rose 10.6 percent to $448 million, and operating cash flow increased 15.3 percent to $1.4 billion. For the year, on a comparable basis, operating income grew 28.3 percent to $2.3 billion, with operating cash flow up 16.3 percent to $6.0 billion. o Verizon Wireless continued to invest to preserve and expand its premier network. In 2001, the company handled a 41 percent increase in total traffic while achieving dramatic improvement in key network-quality metrics. Verizon News Release, page 6 o Earlier this week, the company launched the nation's first major next-generation wireless network. With more than 20 percent of the Verizon Wireless network already converted to 1XRTT technology, the company's Express Network is now available to customers in East and West Coast markets -- including New York, Boston, Washington and San Francisco -- as well as in Salt Lake City. INFORMATION SERVICES: o Revenues from Verizon's directory publishing and electronic commerce operations were $1.4 billion in the fourth quarter, an increase of 6.6 percent from fourth quarter 2000. The increase was due to strong operational growth, shifts in directory publication dates and increased revenues from international operations. Revenues for 2001 of $4.3 billion grew 4.1 percent over 2000. Revenues from SuperPages.com, Verizon's Internet directory service, grew 87.1 percent over fourth quarter 2000 and 71.9 percent for the year, as Verizon Information Services carried out its strategy to bundle print and online services. o Operating income increased to $804 million, up 18.8 percent, in the fourth quarter 2001 compared to the fourth quarter 2000. The year-over-year increase was $229 million, or 11.2 percent. These increases include expense reductions as a result of cost-containment initiatives and merger synergies. INTERNATIONAL: o The number of proportionate international wireless customers served by Verizon investments increased by 1.8 million to 9.6 million, a 22.8 percent increase over 2000. During 2001, Omnitel passed the 17 million subscriber mark, Eurotel Praha passed 3 million subscribers, Stet Hellas passed 2 million subscribers and Eurotel Bratislava reached more than 900,000 subscribers. o Revenues from consolidated international operations grew $75 million, or 13.9 percent, over fourth quarter 2000 to $615 million. For the year, consolidated revenues of $2.3 billion grew $361 million, or 18.3 percent, compared to the prior year. Total proportionate revenues were $1.5 billion in the fourth quarter 2001, bringing full year 2001 proportionate revenues to $5.9 billion, an increase of $400 million or 7.3 percent compared to 2000. o Fourth quarter 2001 operating income of $78 million brought full year 2001 operating income to $293 million, an increase of 11.8 percent compared to the prior year. Operating cash flow of $196 million in the fourth quarter 2001 brought the full year operating cash flow to $715 million, an increase of 15.9 percent compared to 2000. Equity income from international investments increased $65 million over fourth quarter 2000 to $234 million. For the year, equity income was $919 million, an increase of $247 million over 2000. Verizon News Release, page 7 o During the year, Verizon Global Solutions Inc. established high-speed connectivity among leading commercial centers around the world, deploying a core set of global voice and data product offerings. Global Solutions Inc. switched more than 1 billion minutes in 2001 and has agreements with more than 80 different global carriers. o On Jan. 25, 2002, Verizon Communications exercised its option to purchase an additional 12 percent of Telecomunicaciones de Puerto Rico, Inc. (TELPRI) common stock from the government of Puerto Rico, for a purchase price of $138 million. TELPRI is the holding company of the Puerto Rico Telephone Company and Verizon Wireless de Puerto Rico, Inc. Verizon obtained the option as part of the March 1999 TELPRI privatization. Verizon now holds 52 percent of TELPRI stock, up from 40 percent. Verizon Communications (NYSE:VZ) is one of the world's leading providers of communications services. Verizon companies are the largest providers of wireline and wireless communications in the United States, with 132.1 million access line equivalents and 29.4 million wireless customers. Verizon is also the largest directory publisher in the world. A Fortune 10 company with more than $67 billion in annual revenues and approximately 247,000 employees, Verizon's global presence extends to more than 40 countries in the Americas, Europe, Asia and the Pacific. For more information on Verizon, visit www.verizon.com. #### ON THE INTERNET: Verizon news releases, executive speeches, biographies, media contacts 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 e-mail, visit the News Center and register for personalized automatic delivery of Verizon news releases. NOTE: This press release 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: the duration and extent of the current economic downturn; materially adverse changes in economic conditions in the markets served by us or by companies in which we have substantial investments; material changes in available technology; an adverse change in the ratings afforded our debt securities by nationally accredited ratings organizations; the final outcome of federal, state, and local regulatory initiatives and proceedings, including arbitration proceedings, and judicial review of those initiatives and proceedings, pertaining to, among other matters, the terms of interconnection, access charges, and unbundled network element and resale rates; the extent, timing, success, and overall effects of competition from others in the local telephone and toll service markets; the timing and profitability of our entry and expansion in the national long-distance market; our ability to satisfy regulatory merger conditions and obtain combined company revenue enhancements and cost savings; the profitability of our broadband operations; the ability of Verizon Wireless to achieve revenue enhancements and cost savings, and obtain sufficient spectrum resources; the continuing financial needs of Genuity Inc., our ability to convert our ownership interest in Genuity into a controlling interest consistent with regulatory conditions, and Genuity's ensuing profitability; our ability to recover insurance proceeds relating to equipment losses and other adverse financial impacts resulting from the terrorist attacks on Sept. 11, 2001; and 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. - -------------------------------------------------------------------------------- VERIZON COMMUNICATIONS INC. CONSOLIDATED STATEMENTS OF INCOME - REPORTED BASIS - --------------------------------------------------------------------------------
(dollars in millions, except per share amounts) 3 Mos. Ended 3 Mos. Ended 12 Mos. Ended 12 Mos. Ended Unaudited 12/31/01 12/31/00 % Change 12/31/01 12/31/00 % Change - --------- ------------ ------------ -------- ------------ ------------ --------- OPERATING REVENUES $ 17,011 $ 16,873 .8 $ 67,190 $ 64,707 3.8 Operations and support expense 12,714 10,276 23.7 41,651 39,481 5.5 Depreciation and amortization expense 3,495 3,231 8.2 13,657 12,261 11.4 Sales of assets, net 355 (13) * 350 (3,793) (109.2) ------------ ------------ ------------ ------------ OPERATING INCOME 447 3,379 (86.8) 11,532 16,758 (31.2) Equity in income (loss) from unconsolidated businesses (1,736) 8 * (5,042) 3,792 (233.0) Other income and (expense), net 181 93 94.6 449 311 44.4 Interest expense (742) (887) (16.3) (3,369) (3,490) (3.5) Minority interest (89) (39) 128.2 (622) (216) 188.0 Mark-to-market adjustment - financial instruments (16) -- -- (182) 664 (127.4) Provision for income taxes (71) (852) (91.7) (2,176) (7,009) (69.0) ------------ ------------ ------------ ------------ INCOME (LOSS) FROM CONTINUING OPERATIONS (2,026) 1,702 (219.0) 590 10,810 (94.5) Extraordinary items, net of tax (11) 210 (105.2) (19) 1,027 (101.9) Cumulative effect of accounting change -- -- -- (182) (40) * ------------ ------------ ------------ ------------ NET INCOME (LOSS) (2,037) 1,912 (206.5) 389 11,797 (96.7) Redemption of subsidiary preferred stock -- (2) (100.0) -- (10) (100.0) ------------ ------------ ------------ ------------ NET INCOME (LOSS) AVAILABLE TO COMMON SHAREOWNERS $ (2,037) $ 1,910 (206.6) $ 389 $ 11,787 (96.7) ============ ============ ============ ============ DILUTED EARNINGS (LOSS) PER SHARE (1) $ (.75) $ .70 (207.1) $ .14 $ 4.31 (96.8) Weighted average number of common shares-assuming dilution (in millions) 2,716 2,725 2,730 2,737
FOOTNOTE: (1) Diluted Earnings per Share include the dilutive effect of shares issuable under our stock-based compensation plans, which represent the only potential dilutive common shares. There is no impact of dilutive securities in the fourth quarter of 2001, since a net loss available to common shareowners was reported. * Not meaningful - -------------------------------------------------------------------------------- VERIZON COMMUNICATIONS INC. CONSOLIDATED STATEMENTS OF INCOME - ADJUSTED BASIS - --------------------------------------------------------------------------------
(dollars in millions, except per share amounts) 3 Mos. Ended 3 Mos. Ended 12 Mos. Ended 12 Mos. Ended Unaudited 12/31/01 12/31/00 % Change 12/31/01 12/31/00 % Change - --------- ------------ ------------ -------- ------------ ------------ --------- OPERATING REVENUES (1) Domestic Telecom $ 10,539 $ 10,934 (3.6) $ 43,078 $ 43,343 (.6) Domestic Wireless 4,443 4,084 8.8 17,393 14,236 22.2 International 615 540 13.9 2,337 1,976 18.3 Information Services 1,428 1,339 6.6 4,313 4,144 4.1 Other (14) (47) (70.2) 69 (276) (125.0) ------------ ------------ ------------ ------------ TOTAL OPERATING REVENUES 17,011 16,850 1.0 67,190 63,423 5.9 ------------ ------------ ------------ ------------ OPERATING EXPENSES (1) Operations and support expense (2) 9,884 9,909 (.3) 38,125 36,849 3.5 Depreciation and amortization expense 3,495 3,231 8.2 13,657 12,127 12.6 ------------ ------------ ------------ ------------ TOTAL OPERATING EXPENSES (2) 13,379 13,140 1.8 51,782 48,976 5.7 ------------ ------------ ------------ ------------ OPERATING INCOME (2) 3,632 3,710 (2.1) 15,408 14,447 6.7 Operating income impact of operations sold (1) -- 15 (100.0) -- 530 (100.0) Equity in income from unconsolidated businesses 229 214 7.0 839 909 (7.7) Other income and (expense), net 178 94 89.4 444 329 35.0 Interest expense (739) (887) (16.7) (3,369) (3,455) (2.5) Minority interest (133) (87) 52.9 (730) (420) 73.8 Provision for income taxes (1,074) (951) 12.9 (4,402) (4,378) .5 ------------ ------------ ------------ ------------ ADJUSTED NET INCOME $ 2,093 $ 2,108 (.7) $ 8,190 $ 7,962 2.9 ============ ============ ============ ============ DILUTED ADJUSTED EARNINGS PER SHARE (2) $ .77 $ .77 -- $ 3.00 $ 2.91 3.1 Weighted average number of common shares-assuming dilution (in millions) 2,734 2,725 2,730 2,737
FOOTNOTES: (1) Certain reclassifications of prior period amounts have been made, where appropriate, to reflect comparable results excluding significant operations sold, primarily previously announced Domestic Telecom access lines, as follows: Revenues $ -- $ 23 $ -- $ 874 Expenses $ -- $ 8 $ -- $ 344
The Verizon Wireless joint venture was formed in April 2000 with the acquisition of Vodafone's domestic wireless investments. Also, results of Bell Atlantic and GTE overlap wireless properties were included in Domestic Wireless's results through June 30, 2000. If the joint venture was formed on January 1, 2000 and the impact of overlap wireless properties were excluded, certain comparative financial information would be as follows:
12 Mos. Ended 12 Mos. Ended Unaudited 12/31/01 12/31/00 % Change --------- ------------- ------------- -------- OPERATING REVENUES Domestic Telecom $ 43,078 $ 43,343 (.6) Domestic Wireless 17,393 15,363 13.2 International 2,337 1,976 18.3 Information Services 4,313 4,144 4.1 Other 69 (276) (125.0) ------------ ------------ TOTAL OPERATING REVENUES 67,190 64,550 4.1 ------------ ------------ OPERATING EXPENSES Operations and support expense 38,125 37,479 1.7 Depreciation and amortization expense 13,657 12,606 8.3 ------------ ------------ TOTAL OPERATING EXPENSES 51,782 50,085 3.4 ------------ ------------ OPERATING INCOME $ 15,408 $ 14,465 6.5
(2) Current year expenses include costs, net of estimated insurance recoveries, totaling approximately $.03 per share for the fourth quarter and $.06 per share year to date related to the September 11 terrorist attacks. Excluding the costs associated with the September 11 terrorist attacks, fourth quarter and year to date 2001 operations and support expenses would have decreased 1.7% and increased 2.7%, respectively, total operating expenses would have increased .7% and 5.1%, respectively, and operating income would have increased 1.8% and 8.6%, respectively, compared to the fourth quarter and year to date 2000. * Not meaningful - -------------------------------------------------------------------------------- Verizon Communications Inc. Earnings Reconciliations - --------------------------------------------------------------------------------
(dollars in millions, except per share amounts) 3 Mos. Ended 12/31/01 3 Mos. Ended 12/31/00 12 Mos. Ended 12/31/01 12 Mos. Ended 12/31/00 Unaudited Net Income Diluted EPS Net Income Diluted EPS Net Income Diluted EPS Net Income Diluted EPS - --------- ---------- ----------- ---------- ----------- ---------- ----------- ---------- ----------- Reported Earnings (Loss) $ (2,037) $ (.75) $ 1,910 $ .70 $ 389 $ .14 $ 11,787 $ 4.31 Adjustments: Mark-to-market adjustment - financial instruments CWC exchangeable notes -- -- -- -- -- -- (431) (.16) Other financial instr. 15 .01 -- -- 179 .07 -- -- Loss/(gain) on securities (1) 1,932 .71 -- -- 4,858 1.78 (1,941) (.71) Sales of assets, net 229 .08 (1) -- 226 .08 (1,987) (.73) Merger related costs -- -- -- -- -- -- 749 .27 Transition costs 184 .07 204 .07 578 .21 316 .12 Severance benefits 1,001 .37 -- -- 1,001 .37 -- -- Settlements (conforming) -- -- -- -- -- -- (564) (.21) Cumulative effect of accounting change -- -- -- -- 182 .07 40 .01 NorthPoint investment write-off -- -- 153 .06 -- -- 153 .06 International restructuring (2) 663 .24 50 .02 663 .24 50 .02 Other charges and special items 95 .03 -- -- 95 .03 526 .19 Genuity loss -- -- -- -- -- -- 281 .10 Extraordinary items 11 -- (210) (.08) 19 .01 (1,027) (.38) Redemption of subsidiary preferred stock -- -- 2 -- -- -- 10 -- ---------- ----------- ---------- ----------- ---------- ----------- ---------- ----------- Adjusted Earnings (3) $ 2,093 $ .77 $ 2,108 $ .77 $ 8,190 $ 3.00 $ 7,962 $ 2.91 ========== =========== ========== =========== ========== =========== ========== ===========
Footnotes: (1) Current year losses pertain to other than temporary market value declines of securities, including marketable securities and $1,251 million related to our investment in Genuity. Prior year gain pertains to the exchange of CWC stock for C&W/NTL stock. (2) Current quarter and year to date includes $637 million related to CTI. (3) Totals for Diluted EPS do not add for all periods due to rounding in EPS calculations. - -------------------------------------------------------------------------------- Verizon Communications Inc. Selected Financial and Operating Statistics - --------------------------------------------------------------------------------
(dollars in millions, except per share amounts) 3 Mos. Ended 3 Mos. Ended 12 Mos. Ended 12 Mos. Ended Unaudited 12/31/01 12/31/00 12/31/01 12/31/00 - --------- ------------ ------------ ------------- ------------- Debt ratio-end of period 66.4% 62.4% 66.4% 62.4% Book value per common share $ 11.98 $ 12.80 $ 11.98 $ 12.80 Cash dividends declared per common share $ 0.385 $ 0.385 $ 1.54 $ 1.54 Common shares outstanding (in millions) End of period 2,716 2,702 2,716 2,702 Capital expenditures Domestic Telecom $ 3,010 $ 3,539 $ 11,480 $ 12,119 Domestic Wireless (1) 1,664 1,944 5,006 4,322 International 180 237 704 586 Information Services 24 17 93 48 Other (2) 16 16 88 558 ------------ ------------ ------------- ------------- Total $ 4,894 $ 5,753 $ 17,371 $ 17,633 ------------ ------------ ------------- ------------- Total employees 247,309 263,552 247,309 263,552 ============ ============ ============= =============
Footnotes: (1) Bell Atlantic Mobile and GTE Wireless only prior to April 2000. (2) Includes amounts from Genuity (formerly GTE Internetworking) prior to July 2000. - -------------------------------------------------------------------------------- VERIZON COMMUNICATIONS INC. CONSOLIDATED BALANCE SHEETS - --------------------------------------------------------------------------------
(dollars in millions) Unaudited 12/31/01 12/31/00 $ Change - --------- ---------- ---------- ---------- ASSETS Current assets Cash and cash equivalents $ 979 $ 757 $ 222 Short-term investments 1,991 1,613 378 Accounts receivable, net 14,254 14,010 244 Inventories 1,968 1,910 58 Net assets held for sale 1,199 518 681 Prepaid expenses and other 2,796 3,313 (517) ---------- ---------- ---------- Total current assets 23,187 22,121 1,066 ---------- ---------- ---------- Plant, property and equipment 169,586 158,957 10,629 Less accumulated depreciation 95,167 89,453 5,714 ---------- ---------- ---------- 74,419 69,504 4,915 ---------- ---------- ---------- Investments in unconsolidated businesses 10,202 13,115 (2,913) Intangible assets 44,262 41,990 2,272 Other assets 18,725 18,005 720 ---------- ---------- ---------- TOTAL ASSETS $ 170,795 $ 164,735 $ 6,060 ========== ========== ========== LIABILITIES AND SHAREOWNERS' INVESTMENT Current liabilities Debt maturing within one year $ 18,669 $ 14,838 $ 3,831 Accounts payable and accrued liabilities 13,947 13,965 (18) Other 5,404 5,433 (29) ---------- ---------- ---------- Total current liabilities 38,020 34,236 3,784 ---------- ---------- ---------- Long-term debt 45,657 42,491 3,166 Employee benefit obligations 11,898 12,543 (645) Deferred income taxes 16,543 15,260 1,283 Other liabilities 3,989 3,797 192 Minority interest 22,149 21,830 319 Shareowners' investment Common stock 275 275 -- Contributed capital 24,676 24,555 121 Reinvested earnings 10,704 14,667 (3,963) Accumulated other comprehensive loss (1,187) (2,176) 989 ---------- ---------- ---------- 34,468 37,321 (2,853) Less common stock in treasury, at cost 1,182 1,861 (679) Less deferred compensation - employee stock ownership plans and other 747 882 (135) ---------- ---------- ---------- Total shareowners' investment 32,539 34,578 (2,039) ---------- ---------- ---------- TOTAL LIABILITIES AND SHAREOWNERS' INVESTMENT $ 170,795 $ 164,735 $ 6,060 ========== ========== ==========
- -------------------------------------------------------------------------------- VERIZON COMMUNICATIONS INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - --------------------------------------------------------------------------------
(dollars in millions) 12 Mos. Ended 12 Mos. Ended Unaudited 12/31/01 12/31/00 $ Change - --------- ------------- ------------- -------- CASH FLOWS FROM OPERATING ACTIVITIES Income before extraordinary items and cumulative effect $ 590 $ 10,810 $(10,220) of accounting change Adjustments to reconcile income before extraordinary items and cumulative effect of accounting change to net cash provided by operating activities: Depreciation and amortization 13,657 12,261 1,396 Sales of assets, net 350 (3,793) 4,143 Mark-to-market adjustment - financial instruments 182 (664) 846 Employee retirement benefits (1,327) (3,340) 2,013 Deferred income taxes 1,065 3,434 (2,369) Provision for uncollectible accounts 1,952 1,409 543 Equity in unconsolidated businesses 5,042 (3,792) 8,834 Changes in current assets and liabilities, net of effects from acquisition/disposition of businesses (2,402) (1,261) (1,141) Other, net 664 763 (99) ------------- ------------- -------- Net cash provided by operating activities 19,773 15,827 3,946 ------------- ------------- -------- CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (17,371) (17,633) 262 Acquisitions, net of cash acquired, and investments (3,142) (2,247) (895) Proceeds from disposition of businesses 415 6,794 (6,379) Investments in notes receivable (50) (1,024) 974 Net change in short-term investments (407) (221) (186) Other, net (1,071) (1,724) 653 ------------- ------------- -------- Net cash used in investing activities (21,626) (16,055) (5,571) ------------- ------------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from long-term borrowings 14,199 8,781 5,418 Repayments of long-term borrowings and capital lease obligations (7,589) (7,238) (351) Increase (decrease) in short-term obligations, excluding current maturities (546) 3,515 (4,061) Dividends paid (4,168) (4,421) 253 Proceeds from sale of common stock 501 576 (75) Purchase of common stock for treasury (18) (2,294) 2,276 Other, net (304) 33 (337) ------------- ------------- -------- Net cash provided by (used in) financing activities 2,075 (1,048) 3,123 ------------- ------------- -------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 222 (1,276) 1,498 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 757 2,033 (1,276) ------------- ------------- -------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 979 $ 757 $ 222 ============= ============= ========
- -------------------------------------------------------------------------------- VERIZON COMMUNICATIONS INC. DOMESTIC TELECOM - SELECTED FINANCIAL RESULTS - --------------------------------------------------------------------------------
(dollars in millions) 3 Mos. Ended 3 Mos. Ended 12 Mos. Ended 12 Mos. Ended Unaudited 12/31/01 12/31/00 % Change 12/31/01 12/31/00 % Change - --------- ------------ ------------ -------- ------------ ------------ --------- OPERATING REVENUES Local services $ 5,395 $ 5,572 (3.2) $ 21,918 $ 22,033 (.5) Network access services 3,310 3,314 (.1) 13,379 13,142 1.8 Long distance services 794 767 3.5 3,107 3,152 (1.4) Other services 1,040 1,281 (18.8) 4,674 5,016 (6.8) ------------ ------------ ------------ ------------ TOTAL OPERATING REVENUES 10,539 10,934 (3.6) 43,078 43,343 (.6) ------------ ------------ ------------ ------------ OPERATING EXPENSES Operations and support (1) 6,008 6,300 (4.6) 23,928 24,537 (2.5) Depreciation and amortization 2,372 2,278 4.1 9,332 8,752 6.6 ------------ ------------ ------------ ------------ TOTAL OPERATING EXPENSES 8,380 8,578 (2.3) 33,260 33,289 (.1) ------------ ------------ ------------ ------------ OPERATING INCOME (1) $ 2,159 $ 2,356 (8.4) $ 9,818 $ 10,054 (2.3) OPERATING INCOME MARGIN 20.5% 21.5% 22.8% 23.2% OPERATING CASH FLOW (1) $ 4,531 $ 4,634 (2.2) $ 19,150 $ 18,806 1.8 OPERATING CASH FLOW MARGIN (1) 43.0% 42.4% 44.5% 43.4%
FOOTNOTES: (1) Current year expenses include costs, net of estimated insurance recoveries, totaling approximately $.03 per share for the quarter and $.06 per share year to date related to the September 11 terrorist attacks. Excluding the costs associated with the terrorist attacks, fourth quarter and year to date 2001 operations and support expenses would have declined 6.9% and 3.6%, respectively, operating income would have declined 2.2% and increased .5%, respectively, operating cash flow would have increased .9% and 3.3%, respectively, and the operating cash flow margin would have increased approximately 200 and 170 basis points, respectively, compared to the fourth quarter and year to date 2000. The segment financial results above are presented on an adjusted basis and exclude the effects of special items. Intercompany and intersegment transactions have not been eliminated. Certain reclassifications of prior period amounts have been made, where appropriate, to reflect comparable operating results. - -------------------------------------------------------------------------------- VERIZON COMMUNICATIONS INC. DOMESTIC TELECOM - SELECTED OPERATING STATISTICS - --------------------------------------------------------------------------------
3 Mos. Ended 3 Mos. Ended 12 Mos. Ended 12 Mos. Ended Unaudited 12/31/01 12/31/00 % Change 12/31/01 12/31/00 % Change - --------- ------------ ------------ -------- ------------ ------------ --------- Switched access lines in service (000) Residence 39,434 39,999 (1.4) 39,434 39,999 (1.4) Business 21,516 22,242 (3.3) 21,516 22,242 (3.3) Public 601 661 (9.1) 601 661 (9.1) ------------ ------------ ------------ ------------ Total 61,551 62,902 (2.1) 61,551 62,902 (2.1) Special DS0 equivalents 70,575 53,981 30.7 70,575 53,981 30.7 ------------ ------------ ------------ ------------ Total voice grade equivalents (000) 132,126 116,883 13.0 132,126 116,883 13.0 ------------ ------------ ------------ ------------ BRI ISDN lines (000) 1,347 1,389 (3.0) 1,347 1,389 (3.0) PRI ISDN lines (000) 1,921 1,934 (.7) 1,921 1,934 (.7) Resale & UNE-P Lines (000) 3,673 3,543 3.7 3,673 3,543 3.7 Minutes of use from Carriers and CLECs (in millions) 70,629 72,587 (2.7) 285,855 288,746 (1.0) Long distance subscribers (excl. Verizon CLEC) (000) 7,443 4,694 58.6 7,443 4,694 58.6 High capacity and digital data revenues ($ in millions) Data transport $ 1,609 $ 1,416 13.6 $ 6,306 $ 5,204 21.2 Data solutions 205 235 (12.8) 731 794 (7.9) ------------ ------------ ------------ ------------ Total revenues $ 1,814 $ 1,651 9.9 $ 7,037 $ 5,998 17.3 ------------ ------------ ------------ ------------
FOOTNOTE: Certain reclassifications of prior period amounts have been made, where appropriate, to reflect comparable operating results. - -------------------------------------------------------------------------------- VERIZON COMMUNICATIONS INC. VERIZON WIRELESS - SELECTED OPERATING RESULTS - --------------------------------------------------------------------------------
(dollars in millions) 3 Mos. Ended 3 Mos. Ended 12 Mos. Ended 12 Mos. Ended Unaudited 12/31/01 12/31/00 % Change 12/31/01 12/31/00 % Change - --------- ------------ ------------ -------- ------------ ------------ --------- REVENUES Service revenues $ 4,031 $ 3,730 8.1 $ 16,011 $ 13,015 23.0 Equipment and other 412 354 16.4 1,382 1,221 13.2 ------------ ------------ ------------ ------------ TOTAL REVENUES 4,443 4,084 8.8 17,393 14,236 22.2 ------------ ------------ ------------ ------------ OPERATING EXPENSES Operations and support 3,035 2,863 6.0 11,379 9,563 19.0 Depreciation and amortization 960 816 17.6 3,709 2,894 28.2 ------------ ------------ ------------ ------------ TOTAL OPERATING EXPENSES 3,995 3,679 8.6 15,088 12,457 21.1 ------------ ------------ ------------ ------------ OPERATING INCOME $ 448 $ 405 10.6 $ 2,305 $ 1,779 29.6 OPERATING CASH FLOW $ 1,408 $ 1,221 15.3 $ 6,014 $ 4,673 28.7 OPERATING CASH FLOW MARGIN 34.9% 32.7% 37.6% 35.9% SELECTED OPERATING STATISTICS Subscribers (000) 29,398 26,774 9.8 29,398 26,774 9.8 Penetration 13.3% 12.5% 13.3% 12.5% Subscriber net adds in period (000) 715 1,224 (41.6) 2,793 3,704 (24.6) Total churn rate, including prepaid 2.7% 2.7% 2.5% 2.6%
FOOTNOTES: The segment financial results above are presented on an adjusted basis and exclude the effects of special items. Intercompany and intersegment transactions have not been eliminated. Certain reclassifications of prior period amounts have been made, where appropriate, to reflect comparable operating results. The Verizon Wireless financial information presented above reflects the operations acquired from Vodafone (AirTouch) in connection with the formation of the Verizon Wireless joint venture effective April 2000. The first quarter 2000 financial results included in the year to date information above represent the combination of Bell Atlantic Mobile and GTE Wireless only. Also, the financial results of Bell Atlantic and GTE overlap wireless properties were included in Verizon Wireless's results through June 30, 2000. The quarterly operating statistics shown above represent the Verizon Wireless joint venture. Prior period subscriber counts reflect the retroactive impact from the subscriber base adjustment made in first quarter 2001 that is allocable to the prior period. Prior period penetration rates have been adjusted to reflect updated census and network coverage data. The information below represents comparative results for the Verizon Wireless joint venture, on a combined basis, had the joint venture been formed on January 1, 2000 and the impact of overlap wireless properties been excluded:
12 Mos. Ended 12 Mos. Ended Unaudited 12/31/01 12/31/00 % Change - --------- ------------- ------------- -------- REVENUES Service revenues $ 16,011 $ 14,038 14.1 Equipment and other 1,382 1,325 4.3 ------------- ------------- TOTAL REVENUES 17,393 15,363 13.2 ------------- ------------- OPERATING EXPENSES Operations and support 11,379 10,193 11.6 Depreciation and amortization 3,709 3,373 10.0 ------------- ------------- TOTAL OPERATING EXPENSES 15,088 13,566 11.2 ------------- ------------- OPERATING INCOME $ 2,305 $ 1,797 28.3 OPERATING CASH FLOW $ 6,014 $ 5,170 16.3 OPERATING CASH FLOW MARGIN 37.6% 36.8%
- -------------------------------------------------------------------------------- Verizon Communications Inc. International - Selected Financial Results - --------------------------------------------------------------------------------
(dollars in millions) 3 Mos. Ended 3 Mos. Ended 12 Mos. Ended 12 Mos. Ended Unaudited 12/31/01 12/31/00 % Change 12/31/01 12/31/00 % Change - --------- ------------ ------------ -------- -------------- -------------- --------- REVENUES Wireless $ 345 $ 325 6.2 $ 1,358 $ 1,218 11.5 Wireline and other 270 215 25.6 979 758 29.2 ------------ ------------ -------------- -------------- TOTAL REVENUES 615 540 13.9 2,337 1,976 18.3 ------------ ------------ -------------- -------------- OPERATING EXPENSES Operations and support 419 353 18.7 1,622 1,359 19.4 Depreciation and amortization 118 102 15.7 422 355 18.9 ------------ ------------ -------------- -------------- TOTAL OPERATING EXPENSES 537 455 18.0 2,044 1,714 19.3 ------------ ------------ -------------- -------------- OPERATING INCOME $ 78 $ 85 (8.2) $ 293 $ 262 11.8 OPERATING CASH FLOW $ 196 $ 187 4.8 $ 715 $ 617 15.9 OPERATING CASH FLOW MARGIN 31.9% 34.6% 30.6% 31.2% EQUITY IN INCOME FROM UNCONSOLIDATED BUSINESSES $ 234 $ 169 38.5 $ 919 $ 672 36.8 PROPORTIONATE INFORMATION Revenues $ 1,549 $ 1,409 9.9 $ 5,880 $ 5,480 7.3 Operating income $ 331 $ 336 (1.5) $ 1,315 $ 1,342 (2.0) Operating cash flow $ 603 $ 573 5.2 $ 2,348 $ 2,211 6.2 Access lines (000) 3,247 3,204 1.3 3,247 3,204 1.3 Wireless subscribers (000) 9,600 7,818 22.8 9,600 7,818 22.8
FOOTNOTES: The segment financial results above are presented on an adjusted basis and exclude the effects of special items. Intercompany and intersegment transactions have not been eliminated. Certain reclassifications of prior period amounts have been made, where appropriate, to reflect comparable operating results. - -------------------------------------------------------------------------------- Verizon Communications Inc. Information Services - Selected Financial Results - --------------------------------------------------------------------------------
(dollars in millions) 3 Mos. Ended 3 Mos. Ended 12 Mos. Ended 12 Mos. Ended Unaudited 12/31/01 12/31/00 % Change 12/31/01 12/31/00 % Change - --------- ------------ ------------ -------- ------------- ------------- --------- OPERATING REVENUES $ 1,428 $ 1,339 6.6 $ 4,313 $ 4,144 4.1 OPERATING EXPENSES Operations and support 607 644 (5.7) 1,961 2,026 (3.2) Depreciation and amortization 17 18 (5.6) 79 74 6.8 ------------ ------------ ------------- ------------- TOTAL OPERATING EXPENSES 624 662 (5.7) 2,040 2,100 (2.9) ------------ ------------ ------------- ------------- OPERATING INCOME $ 804 $ 677 18.8 $ 2,273 $ 2,044 11.2 OPERATING CASH FLOW $ 821 $ 695 18.1 $ 2,352 $ 2,118 11.0 OPERATING CASH FLOW MARGIN 57.5% 51.9% 54.5% 51.1%
FOOTNOTES: The segment financial results above are presented on an adjusted basis and exclude the effects of special items. Intercompany and intersegment transactions have not been eliminated. -----END PRIVACY-ENHANCED MESSAGE-----