Verizon Communications Inc. News
Verizon Reports Double-Digit Earnings Growth, Strong Operating Cash Flows, Sales Gains in All Key Areas in 2Q
NEW YORK, July 28 PRNewswire — 2Q 2008 HIGHLIGHTS Consolidated Results — 66 cents in diluted EPS and 67 cents in adjusted EPS (non-GAAP), compared with 2Q 2007 diluted EPS of 58 cents both on a reported and adjusted basis. Wireless — Highest net adds in the industry — 1.5 million net customer additions; 68.7 million total customers; 66.7 million retail (non-wholesale) customers, most in the industry, up 11.0 percent. — Record low churn — 1.12 percent total churn and 0.83 percent retail post-paid churn. — 11.8 percent increase in total revenues; data revenues up 45.3 percent. — 45.6 percent EBITDA margin on service revenues (non-GAAP). Wireline — 176,000 net new FiOS TV customers and 187,000 net new FiOS Internet customers — with increases in the sales penetration rate for both services. — 10.4 percent increase in consumer ARPU in legacy telecom markets. — 18.7 percent increase in Verizon Business strategic services revenues.
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. Discontinued operations relate to the disposition of Telecomunicaciones de
Verizon Communications Inc. (NYSE: VZ) today reported continued strong results in the second quarter 2008. Verizon Wireless again led the industry in key metrics, while Verizon Wireline expanded penetration of FiOS services and continued to increase sales of strategic business services.
Verizon reported
On an adjusted basis (non-GAAP), second-quarter 2008 earnings were
Adjusted earnings in the second quarter 2008 excluded
Investments Delivering New Growth
"Verizon continued to grow in all key strategic areas in the second quarter, despite the economic headwinds," said Verizon Chairman and CEO
"Our second quarter results were on track with our business plan, and top- and bottom-line growth remained solid," he said. "We remain focused on steady improvements in revenue growth and productivity that will increase profitability and cash flows and create future opportunities to enhance shareholder returns."
Revenue Growth, Margin Expansion and Strong Operating Cash Flows
Verizon's total operating revenues grew to
Verizon's operating income grew 9.6 percent to
Cash flows from continuing operations were
Total debt was
Wireless Continues to Gain Share, Posts Record Low Churn
Verizon Wireless continued to lead the industry with strong, quality customer growth, record-low churn and the highest profitability. In the second quarter:
— Of the 1.5 million total net customer additions, essentially all were retail post-paid. — Retail gross customer additions were strong, up 3.2 percent over the prior year. — Total churn was industry-leading and down year over year at 1.12 percent, a record low for the company. Among the company's retail post-paid customers, churn was even lower at 0.83 percent, also a record low. — Wireless continued its double-digit revenue growth, with total revenues of $12.1 billion, up 11.8 percent year over year. Service revenues were $10.5 billion, up 11.6 percent year over year, driven by customer growth and demand for data services. ARPU levels (average monthly revenue per customer) increased year over year for the ninth consecutive quarter. Total service ARPU of $51.53 was up 0.9 percent year over year driven by total data ARPU, which was up 31.3 percent. — Wireless operating income margin was 28.6 percent, the highest ever. — EBITDA margin on service revenues (non-GAAP) was 45.6 percent. (EBITDA is earnings before interest, taxes, depreciation and amortization.)
Significant Business Development Initiatives
Verizon Wireless, which expects the closing of the Rural Cellular acquisition soon, also launched or completed several significant business development initiatives in the second quarter:
— The company paid for the 700 MHz spectrum it gained in the FCC's auction. The purchase includes a nationwide footprint the company will use to build its 4G LTE (fourth generation, Long Term Evolution) network in the 2010 timeframe. — The company announced an agreement to purchase Alltel, with completion of the merger targeted for the end of the year, subject to regulatory approvals. — The company announced a five-year agreement with Qwest Communications International for Qwest to market and sell Verizon Wireless service beginning this summer.
Continued Growth in FiOS, Strategic Services
Verizon Wireline expanded penetration of FiOS services and continued to increase sales of enterprise strategic services. In the second quarter (with prior-period comparisons adjusted to reflect the impact of the previously mentioned spinoff):
— Sales penetration rates (percentage of potential customers who buy the service) increased for both FiOS Internet (available for sale to nearly 8.4 million premises) and FiOS TV (available for sale to 7.0 million premises). FiOS Internet penetration averaged 23.5 percent across all markets, up from 18.7 percent in last year's second quarter. FiOS TV penetration averaged 19.7 percent across all markets, up from 13.3 percent. — Verizon added 176,000 net new FiOS TV customers, for a total of nearly 1.4 million FiOS TV customers as of the end of the quarter. — Verizon added 187,000 net new FiOS Internet customers. The company had nearly 2 million FiOS Internet customers at the end of the quarter, nearly doubling the number of FiOS Internet customers since the end of second quarter 2007. Verizon added its 2 millionth FiOS Internet customer earlier this month. — Broadband and video revenues from consumer customers totaled more than $1.0 billion in the second quarter, representing year-over-year growth of 52.9 percent. — Growing revenue from broadband and video services drove consumer ARPU in legacy Verizon wireline markets (which excludes consumer markets served by the former MCI) to $63.76, a 10.4 percent increase compared with last year's second quarter. The ARPU among FiOS customers was more than $130 per month. — Verizon Business had total revenues of $5.3 billion, or growth of 0.9 percent compared with last year's second quarter. This was Verizon Business' seventh consecutive quarter of year-over-year pro-forma revenue growth (non-GAAP, calculated as if Verizon and MCI had merged on Jan. 1, 2005). Global enterprise revenue, representing retail sales, increased 1.7 percent to $4.0 billion, compared with last year's second quarter. — Sales of strategic services - such as IP (Internet protocol), managed services, Ethernet and optical ring services - continued to drive growth at Verizon Business. These services generated $1.5 billion in revenue, up 18.7 percent from second quarter 2007. Additional Highlights Wireless — The company has the most retail customers in the industry. At the end of the second quarter, 97 percent of the company's base was retail (post-pay and pre-pay). — Verizon Wireless continued to lead the industry in cost efficiency. Cash expense per customer (non-GAAP) was $28.02 in the second quarter 2008, an increase of 1.2 percent over the second quarter 2007 and a decrease of 0.1 percent from the first quarter 2008. — Data revenues grew 45.3 percent over the prior year, contributing nearly $2.6 billion. The company had 49.6 million retail data customers in June (approximately three-quarters of its retail customer base), a 25.6 percent increase over the prior year. — Building on the success of its first Open Development Initiative (ODI) conference held in March, Verizon Wireless during the second quarter certified the first device for use on its network under ODI. Provided by SupplyNet Communications, the device is a machine-to-machine wireless inventory telemetry system to monitor inventories at customer locations and send alerts when set levels are reached. — The company continued to extend the reach of its nationwide wireless broadband network. This is the nation's largest and most reliable 3G (third generation) network, and it was available to more than 256 million Americans by the end of the second quarter. More than 60 percent of the company's retail customers - 40.5 million - had 3G broadband-capable devices at the end of the quarter. — To continue to meet demand for broadband devices, Verizon Wireless launched the BlackBerry Curve 8330, the Moto Q 9c and the Palm Centro for business connectivity and productivity. The company also announced the availability of three new multimedia handsets by LG: the Dare, featuring an all-touch screen operation; the Decoy, the world's first phone with a built-in detachable Bluetooth headset; and the Chocolate 3, the latest version of the iconic music phone. In addition, in the second quarter, the company launched the Glyde by Samsung, the Motorola w755 and the Nokia 6205 (The Dark Knight Edition). — During the quarter, Verizon Wireless launched V CAST Music with Rhapsody, a monthly subscription service combining the company's world-class mobile music service with Rhapsody's leading desktop music solution, which delivers unlimited access to music on select wireless phones and players, and online on PCs, for $14.99 a month. — During the quarter, Verizon Wireless customers sent or received nearly 70 billion text messages and 1.4 billion picture/video messages. Customers also completed 36.5 million music and video downloads. Wireline — Wireline total operating revenues were $12.1 billion, a 1.8 percent decrease compared with the second quarter 2007. Wireline total operating expenses decreased 1.7 percent over the same period. — Verizon gained final approval for the New York City video franchise in July, and the company today is announcing the sales launch of FiOS TV service in the city - as well as the availability of 100 high-definition FiOS TV channels in the New York metropolitan area. The New York City franchise covers 3 million premises, and Verizon already passes about 25 percent of these with fiber. About 2 million premises are in multiple dwelling units. — Verizon's broadband fiber-to-the-premises network, which delivers FiOS Internet and FiOS TV services, passed 11.0 million and 9.6 million premises, respectively, throughout the company's entire service territory by the end of the quarter. — Total broadband connections were 8.3 million, a net increase of 54,000 over the first quarter 2008. This includes a decrease of 133,000 DSL-based Verizon High Speed Internet connections, which was more than offset by the increase in FiOS Internet customers. The 8.3 million is an 11.5 percent year-over year increase, excluding broadband connections in 2007 in the three New England states that have since been spun off. — Wireline data revenues - which now represent 41.8 percent of total wireline revenues - were $5.1 billion, an increase of 16.1 percent compared with the second quarter 2007. This includes revenues from consumer broadband services, wholesale data transport and Verizon Business data services. — Verizon Business, which delivers integrated global solutions to large-business and government customers and operates the world's most connected public IP network, again announced significant capability enhancements. These included expanded unified communications services for multinational companies; expanded global professional consulting services; enhanced optical capabilities for Ethernet networks; expanded enterprise mobility offerings in Asia-Pac and Canada; and several additional managed security services. — Verizon Business continued to expand its reach into high-growth, global markets, announcing that it had joined the Europe India Gateway submarine cable consortium, which will build a 9,000-mile high-speed submarine cable network from the United Kingdom to India. The company also unveiled plans to open an office in Dubai to further strengthen its Middle East operations, and it received approval to directly deliver advanced communications services in Mexico. — Additional global network enhancements included turning up 1,940 route-miles of Ultra Long Haul network in Europe connecting London, Amsterdam, Frankfurt, Paris and Brussels, as well as 804 additional U.S. route-miles; deploying new multiplexer technology in nine additional U.S. markets, enabling remote configuration and provisioning of bandwidth; and installing additional MPLS-based (multi protocol label switching) switches in 22 additional global business centers. — New commercial customer agreements included Liz Claiborne Inc., Milliman Inc., Parsons Brinckerhoff, Standard Register and Western Union. In addition, Buhler became the first customer of the Swisscom/Verizon Business strategic alliance announced during the second quarter. Verizon Business also signed new contracts with several U.S. government agencies, including a 10-year, $678.5 million agreement under the Networx Universal program to deploy and manage a global IP network for the U.S. Department of Homeland Security.
Verizon Communications Inc. (NYSE: VZ), headquartered in
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NOTE: This news 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: materially adverse changes in economic and industry conditions and 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; material changes in available technology, including disruption of our suppliers' provisioning of critical products or services; the impact of natural or man-made disasters or 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; the final results of federal and state regulatory proceedings concerning our provision of retail and wholesale services and judicial review of those results; the effects of competition in our markets; the timing, scope and financial impact of our deployment of fiber-to-the-premises broadband technology; the ability of Verizon Wireless to continue to obtain sufficient spectrum resources; 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; and the ability to complete acquisitions and dispositions.
Verizon Communications Inc. Condensed Consolidated Statements of Income (dollars in millions, except per share amounts) 3 Mos. 3 Mos. 6 Mos. 6 Mos. Ended Ended % Ended Ended % Unaudited 6/30/08 6/30/07 Change 6/30/08 6/30/07 Change Operating Revenues $24,124 $23,273 3.7 $47,957 $45,857 4.6 Operating Expenses Cost of services and sales 9,466 9,231 2.5 18,983 18,143 4.6 Selling, general & administrative expense 6,528 6,320 3.3 12,929 12,663 2.1 Depreciation and amortization expense 3,584 3,573 0.3 7,166 7,106 0.8 Total Operating Expenses 19,578 19,124 2.4 39,078 37,912 3.1 Operating Income 4,546 4,149 9.6 8,879 7,945 11.8 Equity in earnings of unconsolidated businesses 150 185 (18.9) 247 345 (28.4) Other income and (expense), net 92 27 * 115 75 53.3 Interest expense (403) (455) (11.4) (862) (940) (8.3) Minority interest (1,522) (1,268) 20.0 (2,929) (2,422) 20.9 Income Before Provision for Income Taxes, Discontinued Operations and Extraordinary Item 2,863 2,638 8.5 5,450 5,003 8.9 Provision for income taxes (981) (955) 2.7 (1,926) (1,836) 4.9 Income Before Discontinued Operations and Extraordinary Item 1,882 1,683 11.8 3,524 3,167 11.3 Income from discontinued operations, net of tax (1) - - * - 142 (100.0) Extraordinary item, net of tax - - * - (131) (100.0) Net Income $1,882 $1,683 11.8 $3,524 $3,178 10.9 Basic Earnings per Common Share (2) Income before discontinued operations and extraordinary item $.66 $.58 13.8 $1.23 $1.09 12.8 Income from discontinued operations, net of tax - - * - .05 (100.0) Extraordinary item, net of tax - - * - (.05) (100.0) Net income $.66 $.58 13.8 $1.23 $1.09 12.8 Weighted average number of common shares (in millions) 2,850 2,903 2,856 2,906 Diluted Earnings per Common Share (2)(3) Income before discontinued operations and extraordinary item $.66 $.58 13.8 $1.23 $1.09 12.8 Income from discontinued operations, net of tax - - * - .05 (100.0) Extraordinary item, net of tax - - * - (.05) (100.0) Net income $.66 $.58 13.8 $1.23 $1.09 12.8 Weighted average number of common shares-assuming dilution (in millions) 2,851 2,907 2,858 2,909 Footnotes: (1) Discontinued operations includes a gain on the sale of Telecomunicaciones de Puerto Rico, Inc. (TELPRI) of $70 million, net of tax. The disposition of this non-strategic business was completed on March 30, 2007. (2) EPS totals may not add due to rounding. (3) Diluted Earnings per Share includes the dilutive effect of shares issuable under our stock-based compensation plans, which represent 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. 6 Mos. 6 Mos. Ended Ended % Ended Ended % Unaudited 6/30/08 6/30/07 Change 6/30/08 6/30/07 Change Operating Revenues (1) Wireline $12,113 $12,330 (1.8) $24,139 $24,508 (1.5) Domestic Wireless 12,118 10,843 11.8 23,787 21,150 12.5 Other (107) (173) (38.2) (227) (347) (34.6) Total Operating Revenues 24,124 23,000 4.9 47,699 45,311 5.3 Operating Expenses (1) Cost of services and sales 9,458 9,120 3.7 18,853 17,925 5.2 Selling, general & administrative expense 6,500 6,241 4.1 12,737 12,420 2.6 Depreciation and amortization expense 3,584 3,509 2.1 7,106 6,978 1.8 Total Operating Expenses 19,542 18,870 3.6 38,696 37,323 3.7 Operating Income 4,582 4,130 10.9 9,003 7,988 12.7 Operating income impact of divested operations (1) - 46 (100.0) 44 98 (55.1) Equity in earnings of unconsolidated businesses 150 185 (18.9) 247 345 (28.4) Other income and (expense), net 92 27 * 115 75 53.3 Interest expense (403) (455) (11.4) (862) (940) (8.3) Minority interest (1,522) (1,268) 20.0 (2,929) (2,422) 20.9 Income Before Provision for Income Taxes and Discontinued Operations 2,899 2,665 8.8 5,618 5,144 9.2 Provision for income taxes (995) (965) 3.1 (1,973) (1,886) 4.6 Income Before Discontinued Operations 1,904 1,700 12.0 3,645 3,258 11.9 Income from discontinued operations, net of tax - - * - 72 (100.0) Net Income Before Special Items $1,904 $1,700 12.0 $3,645 $3,330 9.5 Basic Adjusted Earnings per Common Share (2) Income before discontinued operations $.67 $.59 13.6 $1.28 $1.12 14.3 Income from discontinued operations, net of tax - - * - .02 (100.0) Net income $.67 $.59 13.6 $1.28 $1.15 11.3 Weighted average number of common shares (in millions) 2,850 2,903 2,856 2,906 Diluted Adjusted Earnings per Common Share (2) (3) Income before discontinued operations $.67 $.58 15.5 $1.28 $1.12 14.3 Income from discontinued operations, net of tax - - * - .02 (100.0) Net income $.67 $.58 15.5 $1.28 $1.14 12.3 Weighted average number of common shares-assuming dilution (in millions) 2,851 2,907 2,858 2,909 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 $- $273 $258 $546 Expenses $- $227 $214 $448 (2) EPS totals may not add due to rounding. (3) Diluted Earnings per Share includes the dilutive effect of shares issuable under our stock-based compensation plans, which represent the only potential dilution. * Not meaningful Verizon Communications Inc. Condensed Consolidated Statements of Income - Reconciliations (dollars in millions, except per share amounts) Special and Non-Recurring Items 3 Mos. —————— 3 Mos. Ended Ended 6/30/08 Merger 6/30/08 Unaudited Reported Integration Before (GAAP) Costs Special Items Operating Revenues $24,124 $- $24,124 Operating Expenses Cost of services and sales 9,466 (8) 9,458 Selling, general & administrative expense 6,528 (28) 6,500 Depreciation and amortization expense 3,584 - 3,584 Total Operating Expenses 19,578 (36) 19,542 Operating Income 4,546 36 4,582 Equity in earnings of unconsolidated businesses 150 - 150 Other income and (expense), net 92 - 92 Interest expense (403) - (403) Minority interest (1,522) - (1,522) Income Before Provision for Income Taxes 2,863 36 2,899 Provision for income taxes (981) (14) (995) Net Income $1,882 $22 $1,904 Basic Earnings per Common Share (1) Net income $.66 $.01 $.67 Diluted Earnings per Common Share (1) Net income $.66 $.01 $.67 (dollars in millions, except per share amounts) Special and Non- Recurring Items ———————— 3 Mos. 3 Mos. Ended Ended Merger 6/30/07 6/30/07 Inte- Impact of Before Reported gration Divested Special Unaudited (GAAP) Costs Operations Items Operating Revenues $23,273 $- $(273) $23,000 Operating Expenses Cost of services and sales 9,231 (2) (109) 9,120 Selling, general & administrative expense 6,320 (25) (54) 6,241 Depreciation and amortization expense 3,573 - (64) 3,509 Total Operating Expenses 19,124 (27) (227) 18,870 Operating Income 4,149 27 (46) 4,130 Operating income impact of divested operations - - 46 46 Equity in earnings of unconsolidated businesses 185 - - 185 Other income and (expense), net 27 - - 27 Interest expense (455) - - (455) Minority interest (1,268) - - (1,268) Income Before Provision for Income Taxes 2,638 27 - 2,665 Provision for income taxes (955) (10) - (965) Net Income $1,683 $17 $- $1,700 Basic Earnings per Common Share (1) Net income $.58 $.01 - $.59 Diluted Earnings per Common Share (1) Net income $.58 $.01 - $.58 Footnote: (1) EPS totals may not add due to rounding.
Note: See www.verizon.com/investor for a reconciliation of other non- GAAP measures included in this Quarterly Bulletin.
Verizon Communications Inc. Condensed Consolidated Statements of Income - Reconciliations (dollars in millions, except per share amounts) Special and Non-Recurring Items —————————————— 6 Mos. 6 Mos. Access Ended Ended Merger Line 6/30/08 6/30/08 Inte- Spin-Off Impact of Before Reported gration Related Divested Special Unaudited (GAAP) Costs Charges Operations Items Operating Revenues $47,957 $- $- $(258) $47,699 Operating Expenses Cost of services and sales 18,983 (13) (16) (101) 18,853 Selling, general & administrative expense 12,929 (52) (87) (53) 12,737 Depreciation and amortization expense 7,166 - - (60) 7,106 Total Operating Expenses 39,078 (65) (103) (214) 38,696 Operating Income 8,879 65 103 (44) 9,003 Operating income impact of divested operations - - - 44 44 Equity in earnings of unconsolidated businesses 247 - - - 247 Other income and (expense), net 115 - - - 115 Interest expense (862) - - - (862) Minority interest (2,929) - - - (2,929) Income Before Provision for Income Taxes 5,450 65 103 - 5,618 Provision for income taxes (1,926) (25) (22) - (1,973) Net Income $3,524 $40 $81 $- $3,645 Basic Earnings per Common Share (1) Net income $1.23 $.01 $.03 $- $1.28 Diluted Earnings per Common Share (1) Net income $1.23 $.01 $.03 $- $1.28 (dollars in millions, except per share amounts) Special and Non-Recurring Items ————————————————— 6 Mos. 6 Mos. Ended Ended Merger 6/30/07 6/30/07 Inte- Sale of Impact of Before Reported gration Puerto Loss on Divested Special Unaudited (GAAP) Costs Rico, Net CANTV Operations Items Operating Revenues $45,857 $- $- $- $(546) $45,311 Operating Expenses Cost of services and sales 18,143 (4) - - (214) 17,925 Selling, general & administrative expense 12,663 (37) (100) - (106) 12,420 Depreciation and amortization expense 7,106 - - - (128) 6,978 Total Operating Expenses 37,912 (41) (100) - (448) 37,323 Operating Income 7,945 41 100 - (98) 7,988 Operating income impact of divested operations - - - - 98 98 Equity in earnings of unconsolidated businesses 345 - - - - 345 Other income and (expense), net 75 - - - - 75 Interest expense (940) - - - - (940) Minority interest (2,422) - - - - (2,422) Income Before Provision for Income Taxes, Discontinued Operations and Extraordinary Item 5,003 41 100 - - 5,144 Provision for income taxes (1,836) (15) (35) - - (1,886) Income Before Discontinued Operations and Extraordinary Item 3,167 26 65 - - 3,258 Income from discontinued operations, net of tax 142 - (70) - - 72 Extraordinary item, net of tax (131) - - 131 - - Net Income $3,178 $26 $(5) $131 $- $3,330 Basic Earnings per Common Share (1) Income before discontinued operations and extraordinary item $1.09 $.01 $.02 $- $- $1.12 Income from discontinued operations, net of tax .05 - (.02) - - .02 Extraordinary item, net of tax (.05) - - .05 - - Net income $1.09 $.01 $- $.05 $- $1.15 Diluted Earnings per Common Share (1) Income before discontinued operations and extraordinary item $1.09 $.01 $.02 $- $- $1.12 Income from discontinued operations, net of tax $.05 - (.02) - - .02 Extraordinary item, net of tax (.05) - - .05 - - Net income $1.09 $.01 $- $.05 $- $1.14 Footnote: (1) EPS totals may not add due to rounding.
Note: See www.verizon.com/investor for a reconciliation of other non-GAAP measures included in this Quarterly Bulletin.
Verizon Communications Inc. Selected Financial and Operating Statistics (dollars in millions, except per share amounts) Unaudited 6/30/08 6/30/07 Debt to debt and shareowners' equity ratio-end of period 45.9% 39.5% Book value per common share $17.87 $17.17 Common shares outstanding (in millions) End of period 2,848 2,903 Total employees (1) 228,633 235,879 3 Mos. 3 Mos. 6 Mos. 6 Mos. Ended Ended Ended Ended Unaudited 6/30/08 6/30/07 6/30/08 6/30/07 Capital expenditures (including capitalized software) Wireline $2,456 $2,681 $4,835 $5,120 Domestic Wireless 1,528 1,667 3,250 3,388 Other 193 4 312 7 Total $4,177 $4,352 $8,397 $8,515 Cash dividends declared per common share $0.430 $0.405 $0.860 $0.810 Footnote: (1) Prior period has been reclassified to reflect comparable amounts. Verizon Communications Inc. Condensed Consolidated Balance Sheets (dollars in millions) Unaudited 6/30/08 12/31/07 $ Change Assets Current assets Cash and cash equivalents $582 $1,153 $(571) Short-term investments 1,492 2,244 (752) Accounts receivable, net 11,584 11,736 (152) Inventories 2,216 1,729 487 Prepaid expenses and other 2,122 1,836 286 Total current assets 17,996 18,698 (702) Plant, property and equipment 212,605 213,994 (1,389) Less accumulated depreciation 127,450 128,700 (1,250) 85,155 85,294 (139) Investments in unconsolidated businesses 3,175 3,372 (197) Wireless licenses 60,423 50,796 9,627 Goodwill 5,218 5,245 (27) Other intangible assets, net 4,974 4,988 (14) Other investments 4,761 - 4,761 Other assets 18,944 18,566 378 Total Assets $200,646 $186,959 $13,687 Liabilities and Shareowners' Investment Current liabilities Debt maturing within one year $9,331 $2,954 $6,377 Accounts payable and accrued liabilities 13,299 14,462 (1,163) Other 7,270 7,325 (55) Total current liabilities 29,900 24,741 5,159 Long-term debt 33,778 28,203 5,575 Employee benefit obligations 29,246 29,960 (714) Deferred income taxes 16,346 14,784 1,562 Other liabilities 5,856 6,402 (546) Minority interest 34,633 32,288 2,345 Shareowners' investment Common stock 297 297 - Contributed capital 40,291 40,316 (25) Reinvested earnings 18,958 17,884 1,074 Accumulated other comprehensive loss (4,150) (4,506) 356 Common stock in treasury, at cost (4,591) (3,489) (1,102) Deferred compensation - employee stock ownership plans and other 82 79 3 Total shareowners' investment 50,887 50,581 306 Total Liabilities and Shareowners' Investment $200,646 $186,959 $13,687
The unaudited consolidated balance sheets are based on preliminary information.
Verizon Communications Inc. Condensed Consolidated Statements of Cash Flows (dollars in millions) 6 Mos. 6 Mos. Ended Ended Unaudited 6/30/08 6/30/07 $ Change Cash Flows From Operating Activities Net income $3,524 $3,178 $346 Adjustments to reconcile net income to net cash provided by operating activities - continuing operations: Depreciation and amortization expense 7,166 7,106 60 Employee retirement benefits 808 862 (54) Deferred income taxes 1,774 332 1,442 Provision for uncollectible accounts 494 498 (4) Equity in earnings of unconsolidated businesses, net of dividends received 507 (128) 635 Extraordinary item, net of tax - 131 (131) Changes in current assets and liabilities, net of effects from acquisition/disposition of businesses (2,309) (2,001) (308) Other, net 88 1,584 (1,496) Net cash provided by operating activities - continuing operations 12,052 11,562 490 Net cash used in operating activities - discontinued operations - (570) 570 Net cash provided by operating activities 12,052 10,992 1,060 Cash Flows From Investing Activities Capital expenditures (including capitalized software) (8,397) (8,515) 118 Acquisitions of businesses and licenses, net of cash acquired, and investments (14,493) (629) (13,864) Net change in short-term investments 736 748 (12) Other, net (114) 762 (876) Net cash used in investing activities - continuing operations (22,268) (7,634) (14,634) Net cash provided by investing activities - discontinued operations - 757 (757) Net cash used in investing activities (22,268) (6,877) (15,391) Cash Flows From Financing Activities Proceeds from long-term borrowings 8,144 3,402 4,742 Repayments of long-term borrowings and capital lease obligations (1,849) (4,811) 2,962 Increase (decrease) in short-term obligations, excluding current maturities 6,929 (2,497) 9,426 Dividends paid (2,464) (2,343) (121) Proceeds from sale of common stock 15 553 (538) Purchase of common stock for treasury (1,117) (952) (165) Other, net (13) (30) 17 Net cash provided by (used in) financing activities - continuing operations 9,645 (6,678) 16,323 Net cash provided by (used in) financing activities - discontinued operations - - - Net cash provided by (used in) financing activities 9,645 (6,678) 16,323 Decrease in cash and cash equivalents (571) (2,563) 1,992 Cash and cash equivalents, beginning of period 1,153 3,219 (2,066) Cash and cash equivalents, end of period $582 $656 $(74) Verizon Communications Inc. Wireline - Selected Financial Results (dollars in millions) 3 Mos. 3 Mos. 6 Mos. 6 Mos. Ended Ended % Ended Ended % Unaudited 6/30/08 6/30/07 Change 6/30/08 6/30/07 Change Wireline Operating Revenues Verizon Telecom Mass Markets $5,247 $5,367 (2.2) $10,471 $10,703 (2.2) Wholesale 1,895 1,956 (3.1) 3,807 3,875 (1.8) Other 357 429 (16.8) 729 873 (16.5) Verizon Business Enterprise Business 3,613 3,638 (0.7) 7,149 7,176 (0.4) Wholesale 846 844 0.2 1,680 1,694 (0.8) International and Other 859 789 8.9 1,703 1,587 7.3 Eliminations (704) (693) 1.6 (1,400) (1,400) - Total Operating Revenues 12,113 12,330 (1.8) 24,139 24,508 (1.5) Operating Expenses Cost of services and sales 5,997 5,986 0.2 12,078 11,908 1.4 Selling, general & administrative expense 2,808 3,051 (8.0) 5,504 6,021 (8.6) Depreciation and amortization expense 2,245 2,206 1.8 4,454 4,409 1.0 Total Operating Expenses 11,050 11,243 (1.7) 22,036 22,338 (1.4) Operating Income $1,063 $1,087 (2.2) $2,103 $2,170 (3.1) Operating Income Margin 8.8% 8.8% 8.7% 8.9% Verizon Communications Inc. Wireline - Selected Operating Statistics Unaudited 6/30/08 6/30/07 % Change Switched access lines in service (000) Residence 22,446 25,346 (11.4) Business 15,545 16,171 (3.9) Public 273 315 (13.3) Total 38,264 41,832 (8.5) Wholesale voice connections (000) 2,577 3,064 (15.9) Broadband connections (000) 8,330 7,471 11.5 3 Mos. 3 Mos. 6 Mos. 6 Mos. Ended Ended % Ended Ended % Unaudited 6/30/08 6/30/07 Change 6/30/08 6/30/07 Change High capacity and digital data revenues $5,063 $4,361 16.1 $9,862 $8,534 15.6
Footnotes:
The segment financial results above are adjusted to exclude the effects of special and non-recurring items. The company's chief decision makers exclude 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.
Verizon Communications Inc. Verizon Wireless - Selected Financial Results (dollars in millions) 3 Mos. 3 Mos. 6 Mos. 6 Mos. Ended Ended % Ended Ended % Unaudited 6/30/08 6/30/07 Change 6/30/08 6/30/07 Change Revenues Service revenues $10,492 $9,402 11.6 $20,637 $18,393 12.2 Equipment and other 1,626 1,441 12.8 3,150 2,757 14.3 Total Revenues 12,118 10,843 11.8 23,787 21,150 12.5 Operating Expenses Cost of services and sales 3,744 3,270 14.5 7,329 6,292 16.5 Selling, general & administrative expense 3,588 3,271 9.7 7,117 6,571 8.3 Depreciation and amortization expense 1,323 1,293 2.3 2,623 2,549 2.9 Total Operating Expenses 8,655 7,834 10.5 17,069 15,412 10.8 Operating Income $3,463 $3,009 15.1 $6,718 $5,738 17.1 Operating Income Margin 28.6% 27.8% 28.2% 27.1% Verizon Communications Inc. Verizon Wireless — Selected Operating Statistics Unaudited 6/30/08 6/30/07 % Change Total Customers (000) 68,681 62,054 10.7 Retail Customers (000) 66,680 60,080 11.0 3 Mos. 3 Mos. 6 Mos. 6 Mos. Ended Ended Ended Ended Unaudited 6/30/08 6/30/07 % Change 6/30/08 6/30/07 % Change Total Customer net adds in period (1) (000) 1,503 1,338 12.3 2,974 3,002 (0.9) Retail Customer net adds in period (1) (000) 1,494 1,622 (7.9) 2,945 3,268 (9.9) Total churn rate 1.12% 1.26% 1.16% 1.19% Retail churn rate 1.11% 1.08% 1.15% 1.08%
Footnotes:
The segment financial results above are adjusted to exclude the effects of special and non-recurring items. The company's chief decision makers exclude 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.
(1) Includes acquisitions and adjustments of 7,000 customers in the first
quarter of 2007 and 46,000 in the second quarter of 2008.
SOURCE Verizon Communications Inc.
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