Verizon Reports Strong Wireless Customer and Data Growth in 4Q
Delivers Higher Operating Cash Flows Results Include 4Q Costs for Steps to Transform Wireline, Strengthen Business
- Continued cash flow growth in 4Q 2009: $31.6 billion in cash flow from operations in 2009, up $4.0 billion, or 14.5 percent, from 2008.
- A loss of 23 cents per share and adjusted earnings (non-GAAP) of 54 cents per share, compared with 4Q 2008 EPS of 43 cents and 61 cents, respectively.
Wireless
- 2.2 million total net customer additions, excluding acquisitions and adjustments, in 4Q 2009; 1.2 million retail net customer additions in quarter; 87.5 million retail customers, up 25 percent from year-end 2008; 91.2 million total customers, up 26.6 percent from year-end 2008.
- 22.5 percent increase in total revenues from 4Q 2008; continued low retail postpaid churn, 1.06 percent; data revenues up 45.9 percent; 27.3 percent operating income margin and 45.0 percent EBITDA margin on service revenues (non-GAAP).
Wireline
- 153,000 each of net FiOS Internet and FiOS TV customer additions in 4Q 2009; 3.4 million total FiOS Internet customers and 2.9 million total FiOS TV customers.
- 12.6 percent increase in consumer ARPU from 4Q 2008; total broadband and video revenues of $1.7 billion, up 25.5 percent from 4Q 2008.
Verizon Communications Inc. (NYSE: VZ) today reported continued strong cash flow in the fourth quarter 2009, fueled by quarterly growth in strategic areas. Verizon Wireless added a net of 2.2 million total customers, including 1.2 million retail customers, and reported increased data revenue. Verizon's wireline operations posted customer and revenue gains in FiOS broadband services and increased sales of strategic business services.
In the fourth quarter, Verizon recorded a loss of 23 cents in diluted earnings per share (EPS), compared with EPS of 43 cents per share in the fourth quarter 2008. Contributing to the loss was a special item of $3.0 billion in pre-tax costs related to workforce reductions. On an adjusted basis (non-GAAP), fourth-quarter 2009 EPS was 54 cents, compared with 61 cents in the fourth quarter 2008.
On an annual basis, Verizon reported $1.29 in 2009 EPS, compared with $2.26 in 2008. On an adjusted basis, full-year 2009 EPS was $2.40, compared with 2008 EPS of $2.54.
Positioned to Deliver Long-Term Growth
"In last year's turbulent economy, we took significant steps to strengthen Verizon going forward," said Chairman and CEO Ivan Seidenberg. "We focused on expanding wireless data and set the stage to deploy a nationwide 4G network later this year. We also expanded the scale of FiOS and our global IP network. We saw growth in all these areas in 2009, and we expect continued growth in 2010 and beyond, with a goal of delivering long-term shareowner value."
In the fourth quarter, Verizon continued streamlining its wireline operations. The company also incurred costs in preparation for the spinoff of wireline access lines to Frontier Communications, a transaction that Seidenberg said was on track to close in the second quarter of 2010.
Seidenberg added: "Our fourth-quarter earnings reflect costs to re-size and simplify our wireline business. This transformation is realigning our wireline cost structure, improving productivity, and focusing resources on sales of FiOS and strategic business services. Verizon Wireless also underwent a successful transformation in 2009. Our customer base moved more toward data-centric devices and services, and we are successfully integrating Alltel operations and capturing merger synergies."
Revenue and Cash Flow Growth
In the fourth quarter 2009, Verizon's total operating revenues grew 9.9 percent to $27.1 billion, compared with the fourth quarter 2008. This includes revenues from Alltel, which Verizon acquired in January 2009. On a pro forma basis (consolidating the operating results of Verizon and the former Alltel as though the acquisition had occurred on Jan. 1, 2008), fourth-quarter 2009 operating revenue growth was 0.2 percent, compared with the fourth quarter 2008.
For 2009, annual operating revenues totaled $107.8 billion, an increase of 10.7 percent from 2008 on a reported basis and 1.5 percent on a pro forma basis.
Cash flow from operations totaled $31.6 billion in 2009, up 14.5 percent, or $4.0 billion, from 2008. Free cash flow (non-GAAP; cash flow from operations less capital expenditures) totaled $14.5 billion in 2009, up $4.2 billion from 2008. Verizon's capital expenditures were $17.0 billion in 2009, compared with $17.2 billion in 2008.
Details of 4Q Adjustments
Adjusted earnings in the fourth quarter 2009 excluded 77 cents per share in special items: 66 cents for severance, pension and benefit charges in connection with workforce reductions in the fourth quarter and continuing into 2010; 2 cents for merger integration and acquisition costs primarily in connection with the Alltel transaction; and 9 cents for other charges, including costs related to the pending spinoff of non-strategic wireline access lines.
Adjusted earnings in the fourth quarter 2008 excluded 15 cents per share for severance, pension and benefit related charges; 1 cent per share for merger integration costs; and 1 cent per share for an other-than-temporary decline in investment values.
Verizon announced today that, in future quarterly earnings reports, the company will no longer adjust reported results for non-operational or special items. However, the company will continue to provide information to help investors understand reported results on a comparable basis with historical periods.
Wireless Customer Growth and Profitability Continue Strong
Verizon Wireless delivered sustained high margins and solid customer growth. In the fourth quarter 2009:
- Verizon Wireless continued to grow its high-quality retail (non-wholesale) customer base. The company added 1.2 million retail net customers in the quarter (almost all postpaid) and 4.6 million retail net customers in the full year, both excluding acquisitions and adjustments.
- Verizon Wireless has the most retail customers of any U.S. wireless provider. The company had 87.5 million retail customers at the end of the fourth quarter, an increase of 25.0 percent year over year and 5.7 percent on a pro forma basis.
- The company also added 1.0 million reseller customers in the fourth quarter, bringing its total number of customers at the end of the quarter to 91.2 million, an increase of 26.6 percent year over year and 7.0 percent on a pro forma basis.
- Retail postpaid churn and total retail churn remained low, at 1.06 percent and 1.44 percent, respectively. Total churn was 1.42 percent.
- Retail service revenues in the quarter totaled $13.2 billion, up 22.5 percent year over year and 5.2 percent on a pro forma basis. Service revenues in the fourth quarter were $13.5 billion, up 22.5 percent and 5.0 percent on a pro forma basis. Total revenues were $15.7 billion, up 22.5 percent year over year and 3.1 percent on a pro forma basis. Full-year revenues were $62.1 billion, up 25.9 percent and 6.1 percent on a pro forma basis.
- Retail service ARPU (average monthly service revenue per user) decreased 2.2 percent year over year and 0.6 percent on a pro forma basis to $50.75. Retail data ARPU increased to $16.24, up 16.1 percent year over year and 20.5 percent on a pro forma basis.
- Wireless operating income margin, adjusted for merger integration and acquisition costs, was 27.3 percent, a decrease of 2.4 percentage points year over year and 1.7 percentage points on a pro forma basis. Adjusted on the same basis, EBITDA (earnings before interest, taxes, depreciation and amortization) margin on service revenues (non-GAAP) was 45.0 percent, a decrease of 2.2 percentage points year over year and 2.5 percentage points on a pro forma basis.
Continued Growth in Consumer Broadband and Video
In wireline, Verizon posted another consecutive quarter of gains in the number of customers using fiber-optic-based FiOS Internet and FiOS TV services. In consumer markets served by Verizon's wireline network, increased revenues from broadband and video services again helped produce overall revenue growth, as well as ARPU growth. In the fourth quarter:
- Verizon added 153,000 net new FiOS Internet customers. The company served 3.4 million FiOS Internet customers by the end of the quarter, a 38.4 percent year-over-year increase.
- FiOS Internet penetration (customers as a percentage of potential customers) was 28.1 percent by the end of the fourth quarter, with the product available for sale to 12.2 million premises. This compares with a 24.9 percent penetration and 10.0 million premises open for sale at the end of the fourth quarter 2008.
- Verizon also added 153,000 net new FiOS TV customers and served 2.9 million FiOS TV customers by the end of the quarter, a 49.2 percent year-over-year increase.
- FiOS TV penetration was 24.5 percent by the end of the fourth quarter, with the product available for sale to 11.7 million premises. This compares with a 20.8 percent penetration and 9.2 million premises open for sale at the end of the fourth quarter 2008.
- Total broadband and video revenues were $1.7 billion, a 25.5 percent increase compared with the fourth quarter 2008. This contributed to an overall 1.2 percent revenue growth in consumer markets served by Verizon's wireline network.
- Revenue growth from broadband and video services boosted consumer ARPU to $77.06 in the fourth quarter 2009, a 12.6 percent year-over-year increase. FiOS ARPU is more than $140, driven primarily by triple-play bundles of voice, Internet and TV services.
- Triple-play customers increased from 1.6 million in fourth-quarter 2008 to 2.4 million in fourth-quarter 2009, a 47 percent increase.
- Worldwide sales of strategic business services -- such as IP (Internet protocol), managed services, Ethernet and security solutions -- generated $1.6 billion in revenue in the quarter, up 6.0 percent compared with the fourth quarter 2008. Revenue from IP data services alone increased 8.6 percent year over year.
2010 Expectations
Regarding 2010, Verizon announced the following consolidated expectations:
- Capital spending targeted in the range of $16.8 billion to $17.2 billion.
- Incremental pressure of approximately 4 cents to 6 cents on EPS due to non-cash pension and retiree benefit costs.
- An annual effective tax rate attributable to Verizon in the range of 33 percent to 35 percent.
- A year-end net debt-to-EBITDA ratio (non-GAAP, total debt less cash and cash equivalents, divided by EBITDA on a comparable basis to 2009) of 1.4 to 1.5.
Additional Highlights
Wireless
- At the end of 2009, retail customers (postpaid and prepaid) represented 96 percent of the company's base. Verizon Wireless is the nation's largest wireless provider based on total customers.
- Verizon Wireless continued to lead the industry in cost efficiency. Monthly cash expense per customer (non-GAAP) increased in the fourth quarter 2009 to $27.62 from $26.77 in the fourth quarter 2008 on a pro forma basis. For the full year, cash expense per customer was $27.49, unchanged from 2008 on a pro forma basis.
- Data revenues of $16.0 billion for the full year were up 31 percent over 2008 on a pro forma basis. In the fourth quarter, data revenues were 31.9 percent of all service revenues, up from 26.5 percent in the fourth quarter 2008 on a pro forma basis.
- Verizon Wireless continued to extend the reach of its broadband network, the nation's largest and most reliable 3G (third-generation) network. Verizon's 3G network provides more coverage than any other U.S. carrier and is available where more than 285 million people reside.
- In December, the company updated specifications for wireless devices that will run on its LTE 4G (Long Term Evolution, fourth generation) network, which ultimately will connect a full range of electronics and machines, and enable a new class of services, such as online gaming, media sharing and video entertainment. Verizon Wireless plans to launch its 4G network in 25 to 30 markets in 2010 and cover virtually all of its current nationwide 3G footprint by the end of 2013.
- As part of its strategic partnership with Google, Verizon Wireless introduced two Android-based devices in November: the DROID by Motorola and the DROID Eris by HTC. Other 3G smartphones launched during the fourth quarter include the BlackBerry Storm2( )and BlackBerry Curve 8530, both with built-in Wi-Fi, and the Samsung Omnia II powered by Windows Mobile 6.5.
- During the fourth quarter, Verizon Wireless customers sent or received more than 162 billion text messages. Customers also sent more than 4 billion picture/video messages and completed more than 38 million music and video downloads.
Wireline
- Fourth-quarter operating revenues were $11.5 billion, a decline of 3.9 percent compared with the fourth quarter 2008. This is an improvement of 0.9 percentage points compared with the year-over-year revenue declines reported in the third quarter 2009.
- Broadband connections totaled 9.2 million at the end of the fourth quarter, a 6.3 percent year-over-year increase. This is a net increase of 46,000 from the third quarter 2009, as the increase in FiOS Internet connections more than offset a decrease in DSL-based High Speed Internet connections.
- As of the end of 2009, the FiOS network passed 15.4 million premises, or approximately
48 percent of total households in areas currently covered by Verizon's wireline network. - New Verizon offerings for multinational corporate customers and government customers included IT consulting and managed services to help enterprises transition to cloud computing technologies; telehealth collaboration services; consulting services aimed at helping track and protect corporate data; a cloud-based application performance monitoring service; and solutions to prevent hacker threats to corporate applications. Additionally, Verizon announced a global strategic alliance with McAfee to provide integrated security solutions.
- Continuing to widen and deepen its global scope and capabilities, Verizon expanded its Virtual Private LAN service to Europe, Asia-Pacific and additional North American locations. The company also deployed the industry's first commercial 100G (gigabits per second) ultra-long-haul optical system for live traffic on its European optical core network; added a Japan landing to its Trans-Pacific Express submarine cable system; and installed 19 Private IP edge routers for a total of 753 edge routers in 212 sites throughout 59 countries.
- New agreements with large-business customers included Aon Corp.; Danfoss A/S; Expedia Inc.; and Nissan North America. Verizon also announced new agreements with U.S. government agencies, including the U.S. Army Reserve Command.
NOTE: Comparisons are year over year unless otherwise noted. 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 news release. Reclassifications of prior-period amounts have been made in accordance with the adoption of the accounting standard on noncontrolling interests in consolidated financial statements and, where appropriate, to reflect comparable operating results for the spinoff of the Wireline segment's non-strategic local exchange and related business assets in Maine, New Hampshire and Vermont in the first quarter of 2008. Unless stated otherwise, segment results shown are adjusted for special items. Adjusted EPS is calculated based on net income attributable to Verizon before special items, which eliminates items of revenues, expenses, gains and losses primarily as a result of their non-operational or non-recurring nature.
Verizon Communications Inc. (NYSE: VZ), headquartered in New York, is a global leader in delivering broadband and other wireless and wireline communications services to mass market, business, government and wholesale customers. Verizon Wireless operates America's most reliable wireless network, serving more than 91 million customers nationwide. Verizon also provides converged communications, information and entertainment services over America's most advanced fiber-optic network, and delivers innovative, seamless business solutions to customers around the world. A Dow 30 company, Verizon employs a diverse workforce of approximately 222,900 and last year generated consolidated revenues of more than $107 billion. For more information, visit www.verizon.com.
VERIZON'S ONLINE NEWS CENTER: Verizon news releases, executive speeches and biographies, media contacts, high-quality video and images, and other information are available at Verizon's News Center on the World Wide Web at www.verizon.com/news. To receive news releases by e-mail, visit the News Center and register for customized automatic delivery of Verizon news releases.
NOTE: This document 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 effects of adverse conditions in the U.S. and international economies; the effects of competition in our markets; materially adverse changes in labor matters, including workforce levels and labor negotiations, and any resulting financial and/or operational impact, in the markets served by us or by companies in which we have substantial investments; the effect of material changes in available technology; any disruption of our suppliers' provisioning of critical products or services; significant increases in benefit plan costs or lower investment returns on plan assets; the impact of natural or man-made disasters or existing or future litigation and any resulting financial impact not covered by insurance; technology substitution; an adverse change in the ratings afforded our debt securities by nationally accredited ratings organizations or adverse conditions in the credit markets impacting the cost, including interest rates, and/or availability of financing; any changes in the regulatory environments in which we operate, including any loss of or inability to renew wireless licenses, and the final results of federal and state regulatory proceedings and judicial review of those results; the timing, scope and financial impact of our deployment of fiber-to-the-premises broadband technology; changes in our accounting assumptions that regulatory agencies, including the SEC, may require or that result from changes in the accounting rules or their application, which could result in an impact on earnings; our ability to complete acquisitions and dispositions; our ability to successfully integrate Alltel Corporation into Verizon Wireless' business and achieve anticipated benefits of the acquisition; and the inability to implement our business strategies.
Verizon Communications Inc.
Condensed Consolidated Statements of Income
-------------------------------------------
(dollars in millions, except per share amounts)
3 Mos. 3 Mos.
Ended Ended
Unaudited 12/31/09 12/31/08 % Change
--------- -------- -------- --------
Operating Revenues $27,091 $24,645 9.9
Operating Expenses
Cost of services and sales 12,514 9,976 25.4
Selling, general & administrative
expense 9,407 7,090 32.7
Depreciation and amortization expense 4,241 3,747 13.2
----- -----
Total Operating Expenses 26,162 20,813 25.7
------ ------
Operating Income 929 3,832 (75.8)
Equity in earnings of
unconsolidated businesses 131 109 20.2
Other income and (expense), net 13 62 (79.0)
Interest expense (686) (517) 32.7
---- ----
Income Before Provision for Income Taxes 387 3,486 (88.9)
Income tax (provision)/benefit 714 (555) *
--- ----
Net income $1,101 $2,931 (62.4)
====== ======
Net income attributable to
noncontrolling interest 1,754 1,696 3.4
Net income (loss) attributable to
Verizon (653) 1,235 *
---- -----
Net Income $1,101 $2,931 (62.4)
====== ======
Basic Earnings per Common Share
Net income attributable to Verizon $(.23) $.43 *
Weighted average number of common
shares (in millions) 2,841 2,841
Diluted Earnings per Common Share (1)
Net income attributable to Verizon $(.23) $.43 *
Weighted average number of common
shares-assuming dilution (in millions) 2,841 2,841
(dollars in millions, except per share amounts)
12 Mos. 12 Mos.
Ended Ended
Unaudited 12/31/09 12/31/08 % Change
--------- -------- -------- --------
Operating Revenues $107,808 $97,354 10.7
Operating Expenses
Cost of services and sales 44,299 39,007 13.6
Selling, general & administrative
expense 32,950 26,898 22.5
Depreciation and amortization expense 16,532 14,565 13.5
------ ------
Total Operating Expenses 93,781 80,470 16.5
------ ------
Operating Income 14,027 16,884 (16.9)
Equity in earnings of unconsolidated
businesses 553 567 (2.5)
Other income and (expense), net 90 282 (68.1)
Interest expense (3,102) (1,819) 70.5
------ ------
Income Before Provision for Income
Taxes 11,568 15,914 (27.3)
Income tax (provision)/benefit (1,210) (3,331) (63.7)
------ ------
Net income $10,358 $12,583 (17.7)
======= =======
Net income attributable to
noncontrolling interest 6,707 6,155 9.0
Net income (loss) attributable to
Verizon 3,651 6,428 (43.2)
----- -----
Net Income $10,358 $12,583 (17.7)
======= =======
Basic Earnings per Common Share
Net income attributable to Verizon $1.29 $2.26 (42.9)
Weighted average number of common
shares (in millions) 2,841 2,849
Diluted Earnings per Common Share (1)
Net income attributable to Verizon $1.29 $2.26 (42.9)
Weighted average number of common
shares-assuming dilution (in millions) 2,841 2,850
(1) Diluted Earnings per 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 Statements of Income Before Special Items
----------------------------------------------------------------
(dollars in millions, except per share amounts)
3 Mos. 3 Mos.
Ended Ended
Unaudited 12/31/09 12/31/08 % Change
--------- -------- -------- --------
Operating Revenues (1)
Domestic Wireless $15,732 $12,846 22.5
Wireline 11,456 11,917 (3.9)
Other (97) (118) (17.8)
--- ----
Total Operating Revenues 27,091 24,645 9.9
------ ------
Operating Expenses (1)
Cost of services and sales 11,004 9,905 11.1
Selling, general & administrative
expense 7,341 6,417 14.4
Depreciation and amortization expense 4,156 3,747 10.9
----- -----
Total Operating Expenses 22,501 20,069 12.1
------ ------
Operating Income 4,590 4,576 0.3
Operating income impact of divested
operations (1) - - -
Equity in earnings of unconsolidated
businesses 131 109 20.2
Other income and (expense), net 13 110 (88.2)
Interest expense (686) (517) 32.7
---- ----
Income Before Provision for Income Taxes 4,048 4,278 (5.4)
Provision for income taxes (712) (855) (16.7)
---- ----
Net Income Before Special Items $3,336 $3,423 (2.5)
====== ======
Net income attributable to
noncontrolling interest 1,810 1,698 6.6
Net income attributable to Verizon 1,526 1,725 (11.5)
----- -----
Net Income Before Special Items $3,336 $3,423 (2.5)
====== ======
Basic Adjusted Earnings per Common Share
Net income attributable to Verizon $.54 $.61 (11.5)
Weighted average number of common
shares (in millions) 2,841 2,841
Diluted Adjusted Earnings per Common
Share (2)
Net income attributable to Verizon $.54 $.61 (11.5)
Weighted average number of common
shares-assuming dilution (in millions) 2,841 2,841
Footnotes:
(1) Reclassifications of prior period amounts have been made, where
appropriate, to reflect comparable operating results for the
spin-off of the wireline segment's non-strategic local exchange
and related business assets in Maine, New Hampshire and Vermont in
the first quarter of 2008. Reclassifications were determined using
specific information where available and allocations where data is
not maintained on a state-specific basis within the Company's books
and records as follows:
Revenues $- $-
Expenses $- $-
(2) Diluted Earnings per Share includes the dilutive effect of shares
issuable under our stock-based compensation plans, which represents
the only potential dilution.
(dollars in millions, except per share amounts)
12 Mos. 12 Mos.
Ended Ended
Unaudited 12/31/09 12/31/08 % Change
--------- -------- -------- --------
Operating Revenues (1)
Domestic Wireless $62,131 $49,332 25.9
Wireline 46,080 48,214 (4.4)
Other (403) (450) (10.4)
---- ----
Total Operating Revenues 107,808 97,096 11.0
------- ------
Operating Expenses (1)
Cost of services and sales 42,622 38,801 9.8
Selling, general & administrative
expense 29,491 25,723 14.6
Depreciation and amortization
expense 16,215 14,505 11.8
------ ------
Total Operating Expenses 88,328 79,029 11.8
------ ------
Operating Income 19,480 18,067 7.8
Operating income impact of
divested operations (1) - 44 (100.0)
Equity in earnings of
unconsolidated businesses 553 567 (2.5)
Other income and (expense), net 92 330 (72.1)
Interest expense (2,847) (1,819) 56.5
------ ------
Income Before Provision for
Income Taxes 17,278 17,189 0.5
Provision for income taxes (3,367) (3,797) (11.3)
------ ------
Net Income Before Special Items $13,911 $13,392 3.9
======= =======
Net income attributable to
noncontrolling interest 7,106 6,157 15.4
Net income attributable to Verizon 6,805 7,235 (5.9)
----- -----
Net Income Before Special Items $13,911 $13,392 3.9
======= =======
Basic Adjusted Earnings per Common Share
Net income attributable to Verizon $2.40 $2.54 (5.5)
Weighted average number of common
shares (in millions) 2,841 2,849
Diluted Adjusted Earnings per
Common Share (2)
Net income attributable to Verizon $2.40 $2.54 (5.5)
Weighted average number of common
shares-assuming dilution (in millions) 2,841 2,850
Footnotes:
(1) Reclassifications of prior period amounts have been made, where
appropriate, to reflect comparable operating results for the
spin-off of the wireline segment's non-strategic local exchange
and related business assets in Maine, New Hampshire and Vermont
in the first quarter of 2008. Reclassifications were determined
using specific information where available and allocations where
data is not maintained on a state-specific basis within the
Company's books and records as follows:
Revenues $- $258
Expenses $- $214
(2) Diluted Earnings per Share includes the dilutive effect of shares
issuable under our stock-based compensation plans, which represents
the only potential dilution.
Verizon Communications Inc.
Condensed Consolidated Statements of Income - Reconciliations
--------------------------------------------------------------
(dollars in millions, except per share amounts)
Special and Non-Recurring Items
-------------------------------
Access 3 Mos.
3 Mos. Merger Severance, Line Ended
Ended Integration Pension Spin-Off 12/31/09
12/31/09 and and and Before
Reported Acquisition Benefit Other Special
Unaudited (GAAP) Costs Charges Charges Items
--------- ------ ----- ------- ------- -----
Operating Revenues $27,091 $- $- $- $27,091
Operating Expenses
Cost of services and sales 12,514 (31) (1,444) (35) 11,004
Selling, general &
administrative expense 9,407 (134) (1,576) (356) 7,341
Depreciation and
amortization expense 4,241 (85) - - 4,156
----- --- --- --- -----
Total Operating Expenses 26,162 (250) (3,020) (391) 22,501
------ ---- ------ ---- ------
Operating Income 929 250 3,020 391 4,590
Equity in earnings of
unconsolidated businesses 131 - - - 131
Other income and (expense),
net 13 - - - 13
Interest expense (686) - - - (686)
---- --- --- --- ----
Income Before Provision for
Income Taxes 387 250 3,020 391 4,048
Income tax (provision)/
benefit 714 (123) (1,158) (145) (712)
--- ---- ------ ---- ----
Net income $1,101 $127 $1,862 $246 $3,336
====== ==== ====== ==== ======
Net income attributable to
noncontrolling interest 1,754 56 - - 1,810
Net income (loss)
attributable to Verizon (653) 71 1,862 246 1,526
---- --- ----- --- -----
Net income $1,101 $127 $1,862 $246 $3,336
====== ==== ====== ==== ======
Basic Earnings per Common
Share (1)
Net income attributable to
Verizon $(.23) $.02 $.66 $.09 $.54
Diluted Earnings per
Common Share (1)
Net income attributable to
Verizon $(.23) $.02 $.66 $.09 $.54
(dollars in millions, except per share amounts)
Special and Non-Recurring Items
------------------------------- 3 Mos.
3 Mos. Severance, Ended
Ended Pension Invest- 12/31/08
12/31/08 Merger and ment- Before
Reported Integration Benefit Related Special
Unaudited (GAAP) Costs Charges Charges Items
--------- ------ ----- ------- ------- -----
Operating Revenues $24,645 $- $- $- $24,645
Operating Expenses
Cost of services and sales 9,976 (6) (65) - 9,905
Selling, general &
administrative expense 7,090 (53) (620) - 6,417
Depreciation and
amortization expense 3,747 - - - 3,747
----- --- --- --- -----
Total Operating Expenses 20,813 (59) (685) - 20,069
------ --- ---- --- ------
Operating Income 3,832 59 685 - 4,576
Equity in earnings of
unconsolidated businesses 109 - - - 109
Other income and (expense),
net 62 - - 48 110
Interest expense (517) - - - (517)
---- --- --- --- ----
Income Before Provision for
Income Taxes 3,486 59 685 48 4,278
Provision for income taxes (555) (22) (261) (17) (855)
---- --- ---- --- ----
Net income $2,931 $37 $424 $31 $3,423
====== === ==== === ======
Net income attributable to
noncontrolling interest 1,696 2 - - 1,698
Net income attributable
to Verizon 1,235 35 424 31 1,725
----- --- --- --- -----
Net income $2,931 $37 $424 $31 $3,423
====== === ==== === ======
Basic Earnings per Common
Share (1)
Net income attributable
to Verizon $.43 $.01 $.15 $.01 $.61
Diluted Earnings per Common
Share (1)
Net income attributable
to Verizon $.43 $.01 $.15 $.01 $.61
Footnote:
(1) EPS totals may not add due to rounding.
Note: See www.verizon.com/investor for a reconciliation of other non-GAAP
measures.
Verizon Communications Inc.
Condensed Consolidated Statements of Income -Reconciliations
------------------------------------------------------------
(dollars in millions, except per share amounts)
Special and Non-Recurring Items
-------------------------------
Access 12 Mos.
12 Mos. Merger Severance, Line Ended
Ended Integration Pension Spin-Off 12/31/09
12/31/09 and and and Before
Reported Acquisition Benefit Other Special
Unaudited (GAAP) Costs Charges Charges Items
--------- ------ ----- ------- ------- -----
Operating Revenues $107,808 $- $- $- $107,808
Operating Expenses
Cost of services and sales 44,299 (195) (1,444) (38) 42,622
Selling, general &
administrative expense 32,950 (442) (2,602) (415) 29,491
Depreciation and amortization
expense 16,532 (317) - - 16,215
------ ---- --- --- ------
Total Operating Expenses 93,781 (954) (4,046) (453) 88,328
------ ---- ------ ---- ------
Operating Income 14,027 954 4,046 453 19,480
Equity in earnings of
unconsolidated businesses 553 - - - 553
Other income and (expense),
net 90 2 - - 92
Interest expense (3,102) 255 - - (2,847)
------ --- --- --- ------
Income Before Provision for
Income Taxes 11,568 1,211 4,046 453 17,278
Provision for income taxes (1,210) (432) (1,559) (166) (3,367)
------ ---- ------ ---- ------
Net income $10,358 $779 $2,487 $287 $13,911
======= ==== ====== ==== =======
Net income attributable to
noncontrolling interest 6,707 399 - - 7,106
Net income attributable to
Verizon 3,651 380 2,487 287 6,805
----- --- ----- --- -----
Net income $10,358 $779 $2,487 $287 $13,911
======= ==== ====== ==== =======
Basic Earnings per Common
Share (1)
Net income attributable to
Verizon $1.29 $.13 $.88 $.10 $2.40
Diluted Earnings per Common
Share (1)
Net income attributable to
Verizon $1.29 $.13 $.88 $.10 $2.40
Special and Non-Recurring Items
-------------------------------
12 Mos. Access
Ended Line Invest-
12/31/08 Merger Spin-Off ment-
Reported Integration Related Related
Unaudited (GAAP) Costs Charges Charges
--------- ------ ----- ------- -------
Operating Revenues $97,354 $- $- $-
Operating Expenses
Cost of services and sales 39,007 (24) (16) -
Selling, general & administrative
expense 26,898 (150) (87) -
Depreciation and amortization
expense 14,565 - - -
------ --- --- ---
Total Operating Expenses 80,470 (174) (103) -
---- ----
Operating Income 16,884 174 103 -
Operating income impact of divested
operations - - - -
Equity in earnings of unconsolidated
businesses 567 - - -
Other income and (expense), net 282 - - 48
Interest expense (1,819) - - -
------ --- --- ---
Income Before Provision for Income
Taxes 15,914 174 103 48
Provision for income taxes (3,331) (65) (22) (17)
------ --- --- ---
Net income $12,583 $109 $81 $31
======= ==== === ===
Net income attributable to
noncontrolling interest 6,155 2 - -
Net income attributable to Verizon 6,428 107 81 31
Net income $12,583 $109 $81 $31
======= ==== === ===
Basic Earnings per Common Share (1)
Net income attributable to Verizon $2.26 $.03 $.03 $.01
Diluted Earnings per Common Share (1)
Net income attributable to Verizon $2.26 $.03 $.03 $.01
(dollars in millions, except per share amounts)
Special and Non-Recurring Items
------------------------------- 12 Mos.
Severance, Ended
Pension 12/31/08
and Impact of Before
Benefit Divested Special
Unaudited Charges Operations Items
--------- ------- ---------- -----
Operating Revenues $- $(258) $97,096
Operating Expenses
Cost of services and sales (65) (101) 38,801
Selling, general & administrative
expense (885) (53) 25,723
Depreciation and amortization
expense - (60) 14,505
--- --- ------
Total Operating Expenses (950) (214) 79,029
---- ---- ------
Operating Income 950 (44) 18,067
Operating income impact of divested
operations - 44 44
Equity in earnings of unconsolidated
businesses - - 567
Other income and (expense), net - - 330
Interest expense - - (1,819)
--- --- ------
Income Before Provision for Income
Taxes 950 - 17,189
Provision for income taxes (362) - (3,797)
---- --- ------
Net income $588 $- $13,392
==== === =======
Net income attributable to
noncontrolling interest - - 6,157
Net income attributable to Verizon 588 - 7,235
Net income $588 $- $13,392
==== === =======
Basic Earnings per Common Share (1)
Net income attributable to Verizon $.21 $- $2.54
Diluted Earnings per Common Share
(1)
Net income attributable to Verizon $.21 $- $2.54
Footnote:
(1) EPS totals may not add due to rounding.
Note: See www.verizon.com/investor for a reconciliation of other non-GAAP
measures.
Verizon Communications Inc.
Selected Financial and Operating Statistics
-------------------------------------------
(dollars in millions, except per share amounts)
Unaudited 12/31/09 12/31/08
--------- -------- --------
Debt to debt and Verizon's
equity ratio-end of period (1) 59.9% 55.5%
Book value per common share (1) $14.67 $14.68
Common shares outstanding (in millions)
End of period 2,836 2,841
Total employees 222,927 223,880
3 Mos. 3 Mos. 12 Mos. 12 Mos.
Ended Ended Ended Ended
Unaudited 12/31/09 12/31/08 12/31/09 12/31/08
--------- -------- -------- -------- --------
Capital expenditures
(including capitalized
software)
Domestic Wireless $2,018 $1,787 $7,152 $6,510
Wireline 2,278 2,479 8,892 9,797
Other 301 397 1,003 931
--- --- ----- ---
Total $4,597 $4,663 $17,047 $17,238
------ ------ ------- -------
Cash dividends declared
per common share $0.475 $0.460 $1.870 $1.780
Footnote:
(1) Calculations are based on the equity position attributable to
Verizon, which excludes noncontrolling interests.
Verizon Communications Inc.
Condensed Consolidated Balance Sheets
-------------------------------------
(dollars in
millions)
Unaudited 12/31/09 12/31/08 $Change
--------- -------- -------- -------
Assets
Current assets
Cash and cash equivalents $2,009 $9,782 $(7,773)
Short-term investments 490 509 (19)
Accounts receivable, net 12,573 11,703 870
Inventories 2,289 2,092 197
Prepaid expenses and other 5,247 1,989 3,258
----- ----- -----
Total current assets 22,608 26,075 (3,467)
------ ------ ------
Plant, property and equipment 228,518 215,605 12,913
Less accumulated depreciation 137,052 129,059 7,993
------- ------- -----
91,466 86,546 4,920
------ ------ -----
Investments in unconsolidated
businesses 3,535 3,393 142
Wireless licenses 72,067 61,974 10,093
Goodwill 22,472 6,035 16,437
Other intangible assets, net 6,764 5,199 1,565
Other investments - 4,781 (4,781)
Other assets 8,339 8,349 (10)
----- ----- ---
Total Assets $227,251 $202,352 $24,899
-------- -------- -------
Liabilities and Equity
Current liabilities
Debt maturing within one year $7,205 $4,993 $2,212
Accounts payable and accrued
liabilities 15,223 13,814 1,409
Other 6,708 7,099 (391)
----- ----- ----
Total current liabilities 29,136 25,906 3,230
------ ------ -----
Long-term debt 55,051 46,959 8,092
Employee benefit obligations 32,622 32,512 110
Deferred income taxes 19,310 11,769 7,541
Other liabilities 6,765 6,301 464
Equity
Common stock 297 297 -
Contributed capital 40,108 40,291 (183)
Reinvested earnings 17,592 19,250 (1,658)
Accumulated other comprehensive
loss (11,479) (13,372) 1,893
Common stock in treasury, at
cost (5,000) (4,839) (161)
Deferred compensation -employee
stock ownership plans and other 88 79 9
Noncontrolling interest 42,761 37,199 5,562
------ ------ -----
Total equity 84,367 - 78,905 5,462
------ --- ------ -----
Total Liabilities and Equity $227,251 $202,352 $24,899
-------- -------- -------
The unaudited consolidated balance sheets are based on preliminary
information.
Verizon Communications Inc.
Condensed Consolidated Statements of Cash Flows
-----------------------------------------------
(dollars in millions)
12 Mos. 12 Mos.
Ended Ended
Unaudited 12/31/09 12/31/08 $Change
--------- -------- -------- -------
Cash Flows From Operating
Activities
Net income $10,358 $12,583 $(2,225)
Adjustments to reconcile
net income to net cash
provided by
operating activities:
Depreciation and
amortization expense 16,532 14,565 1,967
Employee retirement
benefits 5,095 1,955 3,140
Deferred income taxes 1,384 2,183 (799)
Provision for uncollectible
accounts 1,306 1,085 221
Equity in earnings of
unconsolidated businesses,
net of dividends received 389 212 177
Changes in current assets
and liabilities, net of
effects from acquisition/
disposition of businesses (2,511) (3,033) 522
Other, net (988) (1,993) 1,005
---- ------ -----
Net cash provided by
operating activities 31,565 27,557 4,008
------ ------ -----
Cash Flows From Investing
Activities
Capital expenditures
(including capitalized
software) (17,047) (17,238) 191
Acquisitions of licenses,
investments and
businesses, net of cash
acquired (5,958) (15,904) 9,946
Net change in short-term
investments 84 1,677 (1,593)
Other, net (410) (114) (296)
---- ---- ----
Net cash used in investing
activities (23,331) (31,579) 8,248
------- ------- -----
Cash Flows From Financing
Activities
Proceeds from long-term
borrowings 12,040 21,598 (9,558)
Repayments of long-term
borrowings and capital (19,260) (4,146) (15,114)
lease obligations
Increase (decrease) in
short-term obligations,
excluding (1,652) 2,389 (4,041)
current maturities
Dividends paid (5,271) (4,994) (277)
Proceeds from sale of
common stock - 16 (16)
Purchase of common stock
for treasury - (1,368) 1,368
Other, net (1,864) (844) (1,020)
------ ---- ------
Net cash provided by (used
in) financing activities (16,007) 12,651 (28,658)
------- ------ -------
Increase (decrease) in cash
and cash equivalents (7,773) 8,629 (16,402)
Cash and cash equivalents,
beginning of period 9,782 1,153 8,629
----- ----- -----
Cash and cash equivalents,
end of period $2,009 $9,782 $(7,773)
------ ------ -------
Verizon Communications Inc.
Verizon Wireless - Selected Financial Results
---------------------------------------------
(dollars in millions)
3 Mos. 3 Mos.
Ended Ended
------ ------
Unaudited 12/31/09 12/31/08 % Change
--------- -------- -------- --------
Revenues
Service revenues $13,548 $11,063 22.5
Equipment and other 2,184 1,783 22.5
----- -----
Total Revenues 15,732 12,846 22.5
------ ------
Operating Expenses
Cost of services and sales 5,239 4,153 26.1
Selling, general &
administrative expense 4,396 3,467 26.8
Depreciation and amortization
expense 1,796 1,416 26.8
----- -----
Total Operating Expenses 11,431 9,036 26.5
------ -----
Operating Income $4,301 $3,810 12.9
Operating Income Margin 27.3% 29.7%
(dollars in millions)
12 Mos. 12 Mos.
Ended Ended
-------- --------
Unaudited 12/31/09 12/31/08 % Change
--------- -------- -------- --------
Revenues
Service revenues $53,497 $42,635 25.5
Equipment and other 8,634 6,697 28.9
----- -----
Total Revenues 62,131 49,332 25.9
------ ------
Operating Expenses
Cost of services and sales 19,749 15,660 26.1
Selling, general &
administrative expense 17,847 14,273 25.0
Depreciation and amortization
expense 7,030 5,405 30.1
----- -----
Total Operating Expenses 44,626 35,338 26.3
------ ------
Operating Income $17,505 $13,994 25.1
Operating Income Margin 28.2% 28.4%
Verizon Communications Inc.
Verizon Wireless - Selected Operating Statistics
------------------------------------------------
(numbers in thousands)
Unaudited 12/31/09 12/31/08 % Change
--------- -------- -------- --------
Total Customers 91,249 72,056 26.6
Retail Customers 87,523 70,021 25.0
3 Mos. 3 Mos.
Ended Ended
Unaudited 12/31/09 12/31/08 % Change
--------- -------- -------- --------
Total Customer net adds in
period (1) 2,236 1,248 79.2
Retail Customer net adds in
period (2) 1,232 1,214 1.5
Total churn rate 1.42% 1.35%
Retail churn rate 1.44% 1.34%
12 Mos. 12 Mos.
Ended Ended
Unaudited 12/31/09 12/31/08 % Change
--------- -------- -------- --------
Total Customer net adds in
period (1) 19,193 6,349 *
Retail Customer net adds in
period (2) 17,502 6,286 *
Total churn rate 1.44% 1.25%
Retail churn rate 1.44% 1.24%
Footnotes:
(1) Includes acquisitions and adjustments of 46, 646 and (122) customers
in the second, third and fourth quarter of 2008, respectively; and
13,219, 1, 79 and 20 customers in the first, second, third and
fourth quarter of 2009, respectively.
(2) Includes acquisitions and adjustments of 46, 627 and (139) customers
in the second, third and fourth quarter of 2008, respectively; and
12,813, 1, 81 and 20 customers in the first, second, third and
fourth quarter of 2009, respectively.
The segment financial results above are adjusted to exclude the
effects of special and non-recurring items. The company's chief
decision maker excludes these items in assessing business unit
performance, primarily due to their non-operational nature.
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)
3 Mos. 3 Mos.
Ended Ended
------- ------
Unaudited 12/31/09 12/31/08 % Change
--------- -------- -------- --------
Wireline Operating Revenues
Mass Markets $4,925 $4,969 (0.9)
Global Enterprise 3,744 3,921 (4.5)
Global Wholesale 2,413 2,528 (4.5)
Other 374 499 (25.1)
--- ---
Total Operating Revenues 11,456 11,917 (3.9)
------ ------
Operating Expenses
Cost of services and sales 6,094 6,041 0.9
Selling, general &
administrative expense 2,726 2,854 (4.5)
Depreciation and amortization
expense 2,345 2,309 1.6
----- -----
Total Operating Expenses 11,165 11,204 (0.3)
------ ------
Operating Income $291 $713 (59.2)
Operating Income Margin 2.5% 6.0%
(dollars in millions)
12 Mos. 12 Mos.
Ended Ended
-------- --------
Unaudited 12/31/09 12/31/08 % Change
--------- -------- -------- --------
Wireline Operating Revenues
Mass Markets $19,755 $19,799 (0.2)
Global Enterprise 14,988 15,779 (5.0)
Global Wholesale 9,637 10,360 (7.0)
Other 1,700 2,276 (25.3)
----- -----
Total Operating Revenues 46,080 48,214 (4.4)
------ ------
Operating Expenses
Cost of services and sales 24,144 24,274 (0.5)
Selling, general &
administrative expense 10,833 11,047 (1.9)
Depreciation and amortization
expense 9,122 9,031 1.0
----- -----
Total Operating Expenses 44,099 44,352 (0.6)
------ ------
Operating Income $1,981 $3,862 (48.7)
Operating Income Margin 4.3% 8.0%
Verizon Communications Inc.
Wireline - Selected Operating Statistics
----------------------------------------
(numbers in thousands)
Unaudited 12/31/09 12/31/08 % Change
--------- -------- -------- --------
Switched access lines in
service
Total Residence (includes
Primary residence) 18,373 20,956 (12.3)
Primary residence 16,231 18,083 (10.2)
Business 14,008 14,966 (6.4)
Public 180 239 (24.7)
--- ---
Total 32,561 36,161 (10.0)
------ ------
Broadband connections 9,220 8,673 6.3
FiOS Internet Subscribers 3,433 2,481 38.4
FiOS TV Subscribers 2,861 1,918 49.2
Footnotes:
The segment financial results above are adjusted to exclude the
effects of special and non-recurring items. The company's chief
decision maker excludes these items in assessing business unit
performance, primarily due to their non-operational nature.
Intersegment transactions have not been eliminated.
Certain reclassifications have been made, where appropriate, to
reflect comparable operating results.
SOURCE Verizon
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