EX-99.3 4 dex993.htm PRO FORMA COMBINED FINANCIAL INFORMATION Pro forma combined financial information
Verizon Communications Inc.    Exhibit 99.3

Pro Forma Combined Selected Financial Results Before Special Items

For the Quarter Ended March 31, 2006

 

          (dollars in millions)
          Pro Forma

Unaudited

   Verizon1    Adjustments2     Combined

Operating Revenues

   $  22,058    $  227     $  22,285

Operating Expenses

   18,365    240     18,605
               

Operating Income

   3,693    (13 )   3,680

Income Before Provision for Income Taxes and Discontinued Operations

   2,475    (16 )   2,459

Weighted average number of common shares (in millions) – Basic

   2,915    —       2,915

Weighted average number of common shares (in millions) – Diluted

   2,963    —       2,963

 

For the Year Ended December 31, 2005

 

          (dollars in millions)
     Historical    Pro Forma

Unaudited

   Verizon1    Adjustments3    Combined

Operating Revenues

   $  72,790    $  16,221    $  89,011

Operating Expenses

   58,807    15,574    74,381
              

Operating Income

   13,983    647    14,630

Income Before Provision for Income Taxes and Discontinued Operations

   9,937    698    10,635

Weighted average number of common shares (in millions) – Basic

   2,766    163    2,929

Weighted average number of common shares (in millions) – Diluted

   2,817    163    2,980

 

For the Year Ended December 31, 2005 by Quarter and Quarter Ended March 31, 2006

 

                        (dollars in millions)
    20053    2006

Unaudited

  1st Quarter    2nd Quarter    3rd Quarter    4th Quarter    Annual    1Q06

Operating Revenues

  $ 21,790    $ 22,168    $ 22,454    $ 22,599    $   89,011    $  22,285

Operating Expenses

    18,419      18,599      18,677      18,686      74,381    18,605
                                      

Operating Income

    3,371      3,569      3,777      3,913      14,630    3,680

Income Before Provision for Income Taxes and Discontinued Operations

    2,574      2,657      2,798      2,606      10,635    2,459

Weighted average number of common shares (in millions) – Basic

    2,932      2,929      2,928      2,927      2,929    2,915

Weighted average number of common shares (in millions) – Diluted

    2,984      2,981      2,980      2,979      2,980    2,963

Depreciation and Amortization Expense included in Operating Expenses

  $ 3,671    $ 3,705    $ 3,728    $ 3,784    $ 14,888    $    3,709

Income from discontinued operations

  $ 188    $ 89    $ 110    $ 114    $ 501    $       203

Footnotes:

 

1. Selected financial results before special items. See exhibit 99.2 for a reconciliation of reported results to results before special items.

 

2. MCI, Inc. results for the period prior to the acquisition, or January 1 thru January 5, 2006.

 

3. The unaudited pro forma information contains the actual combined operating results of Verizon and the former MCI, with the results prior to the acquisition date adjusted to include the pro forma impact of: the elimination of transactions between Verizon and the former MCI; the adjustment of amortization of acquired intangible assets and depreciation of fixed assets based on the preliminary purchase price allocation; the elimination of merger expenses incurred by the former MCI; the adjustment of interest expense reflecting the redemption of all of MCI’s debt and the replacement of that debt with $4 billion of new debt issued in February 2006 at Verizon’s weighted average borrowing rate; the elimination of severance expense incurred by the former MCI. Full year 2005 unaudited pro forma results include $82 million of income, which was reported as discontinued operations by the former MCI for an operation sold during the first quarter of 2005; and the conversion of MCI shares into Verizon shares issued in connection with the merger. Given that the former MCI’s 2005 reported tax provision includes certain one-time items, pro forma results are presented on an income before tax basis.