RNS Number:6711L
Verizon Communications
28 April 2005
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: April 27, 2005
(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 (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
1095 Avenue of the Americas 10036
New York, New York (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code:
(212) 395-2121
Not applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of
the following provisions:
( ) Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
( ) Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
( ) Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
( ) Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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Item 2.02. Results of Operations and Financial Condition.
Attached as an exhibit hereto is a press release and financial tables dated
April 27, 2005 issued by Verizon Communications Inc.
Non-GAAP Measures
Verizon's press release and financial tables include financial information
prepared in conformity with generally accepted accounting principles (GAAP) as
well as non-GAAP financial information. The non-GAAP financial information may
be determined or calculated differently by other companies.
The consolidated statements of income before special items eliminate special
items and non-recurring items of revenues, expenses, gains and losses primarily
as a result of their non-operational and/or non-recurring nature. Management
believes this presentation of operating performance assists readers in better
understanding our results of operations and trends from period to period,
consistent with management's evaluation of Verizon's consolidated and segment
results of operations for a variety of internal measures including strategic
business planning, capital allocation and compensation. Management believes that
the consolidated statements of income before special items provide current and
prior period results of operations on a comparable basis as well as provide
trends that are more indicative of future operating results than GAAP results of
operations, given the non-operational and/or non-recurring nature of the special
items removed for purposes of reporting results of operations before special
items. While some of these items have been periodically reported in Verizon's
consolidated results of operations, such as significant severance and impairment
charges, their occurrence in future periods is dependent upon future business
and economic factors, among other evaluation criteria, and may frequently be
beyond the control of management. As a result of these factors, management also
provides this information externally, along with a complete reconciliation to
their comparable GAAP amounts so readers have access to the detail and general
nature of adjustments made to GAAP results. Descriptions of the special items
are provided in the schedules accompanying the news release.
Management believes that Domestic Telecom's cash expenses excluding net pension
and other postretirement (OPEB) expenses, a non-GAAP financial measure, is also
useful to investors and other users of our financial information in evaluating
operating financial performance. Cash expenses excluding net pension/OPEB
expenses is a non-GAAP operating performance measure used internally to evaluate
current and prior operating expense efficiency, as well as assist management in
evaluating the financial results of Verizon and its largest operating segment
with and without a significant expense driver compared to prior periods.
Management believes this presentation assists readers in better understanding
the impact of this significant expense driver on our results of operations and
trends from period to period.
It is managements intent to provide non-GAAP financial information to enhance
understanding of Verizons GAAP consolidated financial statements and should be
considered by the reader in addition to, but not instead of, the financial
statements prepared in accordance with GAAP.
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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: April 27, 2005
/s/ David H. Benson
David H. Benson
Senior Vice President and Controller
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EXHIBIT INDEX
Exhibit
Number Description
99 Press release and financial tables, dated April 27, 2005 issued by
Verizon Communications Inc. and contained in its investor relations
bulletin
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FOR IMMEDIATE RELEASE Media contacts:
April 27, 2005 Peter Thonis
212-395-2355
peter.thonis@verizon.com
Bob Varettoni
212-395-7726
robert.a.varettoni@verizon.com
Verizon Reports Continued Strong Results With EPS
Growth of 8.6 Percent, Revenue Growth of 6.6 Percent
Another Record-Breaking Quarter at Verizon Wireless; Solid Increases in
Wireline Data and Broadband; $1.8 Billion in First-Quarter Earnings
FIRST-QUARTER HIGHLIGHTS
Consolidated Results
* 63 cents in diluted EPS (earnings per share), up 8.6 percent year-over-year
from 58 cents in adjusted EPS (non-GAAP measure)
Wireless
* First-quarter Verizon Wireless record of 1.64 million net customer
additions, up 18.0 percent; 45.5 million total customers, up 16.8 percent
* Total quarterly revenues up 20.4 percent, to $7.4 billion; average monthly
service revenue per customer up 2.1 percent; churn (customer turnover) of
1.33 percent, a new record low for the second consecutive quarter
Wireline
* Verizons best-ever quarterly DSL line growth; 385,000 net new broadband
connections (DSL and FiOS data customers), 3.9 million total broadband
connections
* Data revenues up 11.6 percent; long-distance revenues up 8.3 percent
Notes: Growth percentages cited above compare first quarter 2005 with first
quarter 2004. See the schedules accompanying this news release and
www.verizon.com/investor for reconciliations to generally accepted accounting
principles (GAAP) for the non-GAAP financial measures included in this
announcement. Discontinued operations in the prior-year quarterly period
presented includes the operations of Verizon Information Services Canada,
following an agreement to sell that business.
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Verizon News Release, page 2
NEW YORK - Verizon Communications Inc. (NYSE:VZ) today reported first-quarter
2005 earnings of $1.8 billion, or 63 cents per diluted share, as quarterly
revenues increased 6.6 percent, driven by the fifth consecutive quarter of more
than 20 percent total revenue growth year-over-year at Verizon Wireless.
The $1.8 billion in reported first-quarter 2005 earnings compares with $1.2
billion, or 43 cents per share, in the first quarter 2004. Verizons 63 cents
per share in first-quarter 2005 earnings increased 8.6 percent compared with 58
cents per share in the first quarter 2004, when 2004 results are adjusted for
special items, primarily for pension settlements associated with a voluntary
separation plan (non-GAAP measure). No special items or adjustments are included
in first-quarter 2005 results.
Consolidated revenues of $18.2 billion in the first quarter 2005 increased 6.6
percent, or $1.1 billion, compared with the first quarter 2004.
Verizon Wireless contributed $7.4 billion, or 40.8 percent, of first-quarter
2005 consolidated revenues. This compares with wireless revenues of $6.2
billion, or 36.1 percent of consolidated revenues, in the first quarter 2004.
Total wireless revenues have increased by more than 10 percent year-over-year
for 11 consecutive quarters, including the 20 percent-plus year-over-year
increases for the past five quarters.
Operating revenues for Domestic Telecom, the companys U.S. wireline business
segment, were $9.5 billion in the first quarter 2005, a 1.2 percent decrease
compared with $9.6 billion in the first quarter 2004. This is the segments
lowest rate of revenue decline in nearly four years.
Sustained High Performance
"This is not only a great start to 2005, its also an improvement on key
industry-leading results that Verizon has delivered over the past year," said
Ivan Seidenberg, Verizon chairman and CEO. "Our significant network investments
have given us a technology platform to successfully compete for customers in
changing and growing markets, as evidenced by our unrivaled results in wireless.
Even as we continue to transform our business, we are driving revenue growth and
sustaining high-performance operating metrics and financial results.
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Verizon News Release, page 3
In an outstanding first quarter, Verizon Wireless launched exciting new
broadband services and improved on its industry-leading customer loyalty, while
wireline produced strong revenue growth in the broadband, long-distance and data
markets. Our margins continue to be stable as we continue to make strategic
capital investments in growth markets.
Record-Setting Wireless Quarter
Verizon Wireless added 1.64 million net new customers, the largest first-quarter
customer increase in the history of the company. Wireless has added more than
6.5 million net new customers over the past year and now has a total of 45.5
million customers nationwide.
Customer turnover reached record-low levels for the second consecutive quarter.
The total churn rate, a key measure of customer loyalty, was 1.33 percent for
the first quarter 2005, down from 1.60 percent in the first quarter 2004 and
1.43 percent in the fourth quarter 2004. Churn among retail post-pay customers -
representing 92 percent of the companys customer base - was a record 1.11
percent for the first quarter 2005, compared with 1.35 percent for the first
quarter 2004.
Wireline Broadband and Data Growth
Verizon added a net of 385,000 wireline broadband connections in the first
quarter 2005 for a total of 3.9 million broadband connections - a growth rate of
48 percent compared with first quarter 2004. Wireline broadband connections
include both DSL lines and new FiOS next-generation, fiber-optic-based services.
DSL net additions in the first quarter 2005 were the highest quarterly total in
Verizons history, representing the vast majority of the 385,000 total.
Revenues from wireline broadband services contributed to total wireline data
revenues of $2.1 billion in the first quarter 2005, an 11.6 percent increase
compared with $1.9 billion in the first quarter 2004.
Revenues from wireline long-distance services, including regional toll services,
were $1.1 billion in the first quarter 2005, an 8.3 percent increase compared
with $1.0 billion in the first quarter 2004. The number of Verizon long-distance
lines in service rose to more than 18 million, an 11.6 percent increase compared
with the first quarter 2004.
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Verizon News Release, page 4
Expense Control and Cash Management
In the first quarter 2005, operating expenses increased 1.4 percent to $14.8
billion, compared with first-quarter 2004 operating expenses of $14.6 billion.
On a comparable basis, first-quarter 2005 expenses increased 6.7 percent over
first-quarter 2004 expenses adjusted to exclude the non-recurring pension
settlements noted earlier (non-GAAP measure).
Verizons total debt at the end of the first quarter 2005 declined to $39.2
billion, compared with $39.3 billion at year-end 2004 and $44.5 billion at the
end of the first quarter 2004.
Cash Flows From Operating Activities (CFFO) were $3.9 billion in the first
quarter 2005, compared with $4.0 billion in the first quarter 2004. There were
significant non-recurring cash outflows in both periods, including pension
contributions and taxes on prior-year investment sales in the first quarter 2005
and severance payments in the first quarter 2004.
In the first quarter 2005, net cash used in investing activities was $4.3
billion, and net cash used in financing activities was $1.2 billion. Included in
first-quarter 2005 investing activities were $3.6 billion in capital
expenditures, which were $953 million higher than in the first quarter 2004 due
to increased infrastructure investments to support broadband wireline and
wireless growth and operational efficiency initiatives.
On a segment level, Domestic Telecoms CFFO was $2.0 billion in the first
quarter 2005, a 1.0 percent decrease compared with the first quarter 2004.
Wireless CFFO was $3.0 billion in the first quarter 2005, a 32.4 percent
increase compared with the first quarter 2004.
Business Segment Highlights
Following are first-quarter 2005 highlights from Verizons four business
segments.
Wireline:
* The average revenue per month per Verizon residential wireline customer
rose to $49.95 in the first quarter 2005, a 4.6 percent increase compared
with the first quarter 2004, as more customers continue to choose high-value
communications services.
* Approximately 58 percent of Verizon residential customers have purchased
local services in combination with either Verizon long-distance or a
Verizon broadband connection, or both. This compares with 51 percent
in the first quarter 2004.
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Verizon News Release, page 5
* Approximately 4.7 million Verizon Freedom packages were in service to
residential and business customers by the end of the first quarter 2005, an
increase of 1.1 million compared with the first quarter last year. Verizon
Freedom plans help retain and win back customers by offering local services with
various combinations of long-distance, wireless and Internet access, available
on one bill.
* By the end of the first quarter, the company was constructing fiber-to-the-
premises (FTTP) broadband networks in half the states where it offers landline
communications service. FTTP-based FiOS broadband services are being offered in
more than 250 communities, with marketing efforts having just begun in many
communities. The company plans to introduce FTTP-based FiOS TV services in the
second half of the year.
* Revenues of $3.8 billion in the consumer market were down $41 million
compared with last years first quarter, while business revenues of $2.8 billion
and wholesale revenues of $2.1 billion were essentially flat. The segments $114
million year-over-year revenue decline is significantly impacted by lower
revenues from non-core initiatives that have been discontinued or divested since
last year.
* Wireline total operating expenses were $8.2 billion in the first quarter
2005, a 0.9 percent increase from the first quarter 2004. Cash expenses,
excluding pension and retiree medical and life insurance benefit costs,
increased slightly to $5.7 billion per quarter (non-GAAP measure).
* Wholesale voice connections - which includes resale, Unbundled Network
Element-Platform (UNE-P) and end-to-end wholesale voice services provided under
commercial agreements totaled 6.4 million at the end of the first quarter
2005, up 2.3 percent from the end of the first quarter 2004 and down from 6.6
million at year-end 2004. UNE-P lines decreased by 186,000 from year-end 2004 to
the end of the first quarter 2005. The company had 52.2 million switched
wireline access lines in service as of the end of the first quarter, down 5.1
percent from a year ago.
* Verizons Enterprise Solutions Group saw continued growth with more than 800
Enterprise Advance sales. First-quarter sales included a five-year, $7 million
contract with one of the largest school systems in Los Angeles, Hacienda La
Puente, for Verizons Enterprise Advance extended network reach and density.
Additional contracts were signed with Computer Associates International, Inc.
and The Bank of New York.
Wireless:
* Retail gross additions increased 6.5 percent over the first quarter 2004.
Retail net additions increased 31.3 percent, to 1.58 million of the companys
1.64 million total net additions. (Retail and total net additions include 32,000
customers from acquisitions.)
* Service revenues (which do not include taxes and regulatory fees) were $6.6
billion in the first quarter 2005, up 19.2 percent compared with the first
quarter 2004. Average monthly service revenue per customer increased 2.1 percent
in the first quarter 2005 to $49.03.
--------------------------------------------------------------------------------
Verizon News Release, page 6
* Verizon Wireless continued its industry-leading cost management. In the
first quarter 2005, cash expense per customer increased only 2.0 percent year-
over-year as the company added a high volume of new customers. This contributed
to operating income margin of 20.8 percent in the first quarter 2005, compared
with 19.5 percent in the first quarter 2004.
* Data services usage continued to climb, contributing $416 million in
revenues in the first quarter 2005. The company had 17.8 million data customers
a 53 percent increase compared with a year ago.
* Contributing to wireless data revenues, 3.6 billion text messages were
exchanged during the quarter. Additionally, there were 41.4 million picture
messages and 34.1 million downloads of Get It Nows more than 500 games,
exclusive content and other applications.
* Also contributing to data revenue were sales of broadband 3G (third-
generation) services to business and consumers, which are exceeding company
expectations. During the quarter, the company launched V CAST, the nations
first 3G consumer multimedia service, delivering high-quality video, movies, 3D
games and music clips to 3G handsets. The company continues to add new V CAST
video from leading content providers, such as Sesame Street, ESPN, CNN and
AccuWeather, to its wide array of 300 daily updated videos. BroadbandAccess
service for business customers, providing broadband-speed remote access from
laptops and PDAs, continues to grow as the company introduced new 3G PC cards
and devices in the first quarter.
* These broadband services are made possible by the companys (3G) EV-DO
network, the largest and fastest wide-area broadband network in the nation. This
network reached 75 million Americans at year-end and is growing steadily.
* As part of its long-standing strategy of continual network enhancements, the
company recently strengthened its spectrum position substantially with the
closing of the purchase of several key spectrum licenses, including licenses
from NextWave and Qwest, and its participation in the FCCs Auction 58, which
ended in February.
* Verizon Wireless was again recognized as a great place to work when in
February the company was ranked 14th in Training magazines "top 100 training
organizations in America. This is the fourth consecutive year the magazine has
recognized Verizon Wireless for training and development of employees.
Information Services:
* Verizon Information Services (VIS) revenues of $897 million decreased 2.4
percent for the first quarter 2005 compared with the first quarter 2004,
primarily due to reduced domestic print advertising revenue. Revenues were up
slightly compared with the fourth quarter 2004.
--------------------------------------------------------------------------------
Verizon News Release, page 7
* VIS domestic online directory and search service, SuperPages.com, continues
to achieve strong growth, as demonstrated by a 25 percent increase in revenue.
International:
* First-quarter revenues of $517 million represented an increase of 10.5
percent from the first quarter 2004. The increase reflects favorable foreign
exchange impacts and operational growth at Verizon Dominicana, Verizons 100
percent-owned affiliate in the Dominican Republic.
* First-quarter segment income was $351 million, compared with $281 million
in the first quarter 2004.
With more than $71 billion in annual revenues, Verizon Communications Inc.
(NYSE:VZ) is one of the worlds leading providers of communications services.
Verizon has a diverse work force of 214,000 in four business units: Domestic
Telecom provides customers with wireline and other telecommunications services,
including broadband. Verizon Wireless owns and operates the nations most
reliable wireless network, serving 45.5 million voice and data customers across
the United States. Information Services operates directory publishing businesses
and provides electronic commerce services. International includes wireline and
wireless operations and investments, primarily in the Americas and Europe. For
more information, visit www.verizon.com.
####
VERIZONS ONLINE NEWS CENTER: Verizon news releases, executive speeches and
biographies, media contacts, high quality video and images, and other
information are available at Verizons 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 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: 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; 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
impacts 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; a significant change
in the timing of, or the imposition of any government conditions to, the closing
of our business combination transaction with MCI, Inc., if consummated; actual
and contingent liabilities in connection with the MCI transaction; and the
extent and timing of our ability to obtain revenue enhancements and cost savings
following the MCI transaction.
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Verizon Communications Inc.
Consolidated Statements of Income
(dollars in millions, except per share amounts)
Unaudited 3 Mos. Ended 3 Mos. Ended % Change
3/31/05 3/31/04
------- ------- -------
Operating Revenues $ 18,179 $ 17,056 6.6
Operating Expenses
Cost of services and sales 6,123 5,490 11.5
Selling, general & administrative expense 5,214 5,675 (8.1)
Depreciation and amortization expense 3,460 3,425 1.0
------- -------
Total Operating Expenses 14,797 14,590 1.4
Operating Income 3,382 2,466 37.1
Equity in earnings of unconsolidated businesses 193 199 (3.0)
Income from other unconsolidated businesses 56 72 (22.2)
Other income and (expense), net 79 (34) *
Interest expense (561) (638) (12.1)
Minority interest (613) (477) 28.5
------- -------
Income Before Provision for Income Taxes and
Discontinued Operations 2,536 1,588 59.7
Provision for income taxes (779) (405) 92.3
------- -------
Income Before Discontinued Operations 1,757 1,183 48.5
Discontinued Operations(1)
Income from operations - 29 (100.0)
Provision for income taxes - (13) (100.0)
------- -------
Income on discontinued operations - 16 (100.0)
------- -------
Net Income $ 1,757 $ 1,199 46.5
------- -------
Basic Earnings per Share $ .63 $ .43 46.5
Weighted average number of common shares
(in millions) 2,769 2,770
Diluted Earnings per Share(2) $ .63 $ .43 46.5
Weighted average number of common shares-assuming
dilution (in millions) 2,821 2,847
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Footnotes:
(1) Discontinued Operations includes the operations of Verizon Information
Services Canada as a result of an agreement to sell the business reached in the
third quarter of 2004.
(2) Diluted Earnings per Share include (i) income related to share dilution
(exchangeable equity interests and zero coupon convertible debt) of $14 million
for the first quarter of 2005, and $22 million for the first quarter of 2004,
and (ii) the dilutive effect of shares issuable under our stock-based
compensation plans, exchangeable equity interests and zero coupon convertible
debt, which represent the only potential dilution.
* Not meaningful
--------------------------------------------------------------------------------
Verizon Communications Inc.
Consolidated Statements of Income Before Special Items
(dollars in millions, except per share amounts)
Unaudited
3 Mos. Ended 3 Mos. Ended % Change
3/31/05 3/31/04
------- ------- -------
Operating Revenues
Domestic Telecom $ 9,500 $ 9,614 (1.2)
Domestic Wireless 7,418 6,162 20.4
Information Services 897 919 (2.4)
International 517 468 10.5
Other (153) (107) 43.0
------- ------- -------
Total Operating Revenues 18,179 17,056 6.6
------- ------- -------
Operating Expenses
Cost of services and sales 6,123 5,490 11.5
Selling, general & administrative expense 5,214 4,947 5.4
Depreciation and amortization expense 3,460 3,425 1.0
------- ------- -------
Total Operating Expenses 14,797 13,862 6.7
------- ------- -------
Operating Income 3,382 3,194 5.9
Equity in earnings of unconsolidated
businesses 193 199 (3.0)
Income from other unconsolidated businesses 56 29 93.1
Other income and (expense), net 79 9 *
Interest expense (561) (638) (12.1)
Minority interest (613) (477) 28.5
------- ------- -------
Income Before Provision for Income Taxes
and Discontinued Operations 2,536 2,316 9.5
Provision for income taxes (779) (703) 10.8
------- ------- -------
Income Before Discontinued Operations 1,757 1,613 8.9
Discontinued Operations (1)
Income from operations - 29 (100.0)
Provision for income taxes - (13) (100.0)
------- ------- -------
Income on discontinued operations - 16 (100.0)
------- ------- -------
Net Income Before Special Items $ 1,757 $ 1,629 7.9
------- ------- -------
Basic Earnings per Share $ .63 $ .59 6.8
Weighted average number of common shares
(in millions) 2,769 2,770
Diluted Adjusted Earnings per Share (2) $ .63 $ .58 8.6
Weighted average number of common
shares-assuming dilution (in millions) 2,821 2,847
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Footnotes:
(1) Discontinued Operations includes the operations of Verizon Information
Services Canada as a result of an agreement to sell the business reached in the
third quarter of 2004.
(2) Diluted Earnings per Share include (i) income related to share dilution
(exchangeable equity interests and zero coupon convertible debt) of $14 million
for the first quarter of 2005, and $22 million for the first quarter of 2004,
and (ii) the dilutive effect of shares issuable under our stock-based
compensation plans, exchangeable equity interests and zero coupon convertible
debt, which represent the only potential dilution.
* Not meaningful
--------------------------------------------------------------------------------
Verizon Communications Inc.
Consolidated Statements of Income - Reconciliations
(dollars in millions, except per share amounts)
Special and Non-Recurring Items
--------------------------------
Unaudited 3Mos.Ended Severance, Sales of Other 3Mos.Ended
3/31/04 Pension and Investments, Special 3/31/04
Reported Benefit Net Items Before Special
(GAAP) Charges Items
------- ------- -------- ------ -------
Operating Revenues $ 17,056 $ - $ - $ - $ 17,056
Operating Expenses
Cost of services and sales 5,490 - - - 5,490
Selling, general &
administrative expense 5,675 (728) - - 4,947
Depreciation and amortization
expense 3,425 - - - 3,425
------- ------- ------- ------- -------
Total Operating Expenses 14,590 (728) - - 13,862
------- ------- ------- ------- -------
Operating Income 2,466 728 - - 3,194
Equity in earnings of
unconsolidated businesses 199 - - - 199
Income from other unconsolidated
businesses 72 - (43) - 29
Other income and (expense), net (34) - - 43 9
Interest expense (638) - - - (638)
Minority interest (477) - - - (477)
------- ------- ------- ------- -------
Income Before Provision for
Income Taxes and Discontinued
Operations 1,588 728 (43) 43 2,316
Provision for income taxes (405) (282) - (16) (703)
------- ------- ------- ------- -------
Income Before Discontinued
Operations 1,183 446 (43) 27 1,613
Discontinued Operations
Income from operations 29 - - - 29
Provision for income taxes (13) - - - (13)
------- ------- ------- ------- -------
Income on discontinued operations 16 - - - 16
------- ------- ------- ------- -------
Net Income $ 1,199 $ 446 $ (43) $ 27 $ 1,629
------- ------- ------- ------- -------
Basic Earnings per Common
Share (1) $ .43 $ .16 $ (.02) $ .01 $ .59
Diluted Earnings per Common
Share (1) $ .43 $ .16 $ (.02) $ .01 $ .58
--------------------------------------------------------------------------------
Footnote:
(1) EPS totals may not add across due to rounding.
Note: See www.verizon.com/investor for a reconciliation of other non-GAAP
measures included in this Quarterly Bulletin.
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Verizon Communications Inc.
Selected Financial and Operating Statistics
(dollars in millions, except per share amounts)
Unaudited 3Mos.Ended 3Mos.Ended
3/31/05 3/31/04
-------- -------
Debt to debt and shareowners equity ratio-end of
period 50.8% 57.0%
Book value per common share $ 13.73 $ 12.09
Cash dividends declared per common share $ .405 $ .385
Common shares outstanding (in millions)
End of period 2,767 2,770
Capital expenditures (including capitalized
software)
Domestic Telecom $ 1,892 $ 1,282
Domestic Wireless 1,641 1,314
Information Services 13 13
International 46 28
Other 2 4
------- -------
Total $ 3,594 $ 2,641
------- -------
Total employees (1) 213,872 203,811
Footnote:
(1) Prior period adjusted to reflect comparable figure.
------------------------------------------------
Verizon Communications Inc.
Consolidated Balance Sheets
(dollars in millions)
Unaudited 3/31/05 12/31/04 $Change
Assets ------ ------ ------
Current assets
Cash and cash equivalents $ 692 $ 2,290 $ (1,598)
Short-term investments 2,019 2,257 (238)
Accounts receivable, net 9,285 9,801 (516)
Inventories 1,460 1,535 (75)
Assets held for sale 964 950 14
Prepaid expenses and other 2,591 2,646 (55)
------- ------- -------
Total current assets 17,011 19,479 (2,468)
------- ------- -------
Plant, property and equipment 187,482 185,522 1,960
Less accumulated depreciation 113,111 111,398 1,713
------- ------- -------
74,371 74,124 247
------- ------- -------
Investments in unconsolidated 5,817 5,855 (38)
businesses
Wireless licenses 42,629 42,090 539
Goodwill 837 837
Other intangible assets, net 4,520 4,521 (1)
Other assets 19,697 19,052 645
------- ------- -------
Total Assets $ 164,882 $ 165,958 $ (1,076)
------- ------- -------
Liabilities and Shareowners Investment
Current liabilities
Debt maturing within one year $ 3,716 $ 3,593 $ 123
Accounts payable and accrued 13,202 13,177 25
liabilities
Liabilities related to assets held for sale 400 525 (125)
Other 5,841 5,834 7
------- ------- -------
Total current liabilities 23,159 23,129 30
------- ------- -------
Long-term debt 35,471 35,674 (203)
Employee benefit obligations 17,687 17,941 (254)
Deferred income taxes 21,811 22,532 (721)
Other liabilities 4,020 4,069 (49)
Minority interest 24,754 25,053 (299)
Shareowners investment
Common stock 277 277 -
Contributed capital 25,387 25,404 (17)
Reinvested earnings 13,621 12,984 637
Accumulated other comprehensive loss (1,222) (1,053) (169)
Common stock in treasury, at cost (229) (142) (87)
Deferred compensation - employee stock
ownership plans and other 146 90 56
------- ------- -------
Total shareowners investment 37,980 37,560 420
------- ------- -------
Total Liabilities and Shareowners
Investment $ 164,882 $ 165,958 $ (1,076)
------- ------- -------
Verizon Communications Inc.
Condensed Consolidated Statements of Cash Flows
(dollars in millions)
Unaudited 3Mos.Ended 3Mos.Ended $Change
3/31/05 3/31/04
--------- -------- -------
Cash Flows From Operating Activities
Income before discontinued operations $ 1,757 $ 1,183 $ 574
Adjustments to reconcile income before
discontinued operations to net cash provided by
operating activities:
Depreciation and amortization expense 3,460 3,425 35
Employee retirement benefits 435 1,054 (619)
Deferred income taxes (281) 124 (405)
Provision for uncollectible accounts 316 390 (74)
Income from unconsolidated businesses (249) (271) 22
Changes in current assets and liabilities,
net of effects from acquisition/disposition
of businesses (250) (1,771) 1,521
Other, net (1,252) (92) (1,160)
------- ------- -------
Net cash provided by operating activities 3,936 4,042 (106)
------- ------- -------
Cash Flows From Investing Activities
Capital expenditures (including capitalized
software) (3,594) (2,641) (953)
Acquisitions, net of cash acquired, and
investments (1,178) (34) (1,144)
Proceeds from disposition of businesses - 117 (117)
Net change in short-term investments 237 282 (45)
Other, net 223 188 35
------- ------- -------
Net cash used in investing activities (4,312) (2,088) (2,224)
Cash Flows From Financing Activities
Proceeds from long-term borrowings 8 500 (492)
Repayments of long-term borrowings and capital
lease obligations (384) (2,049) 1,665
Increase in short-term obligations, excluding current
maturities 334 572 (238)
Dividends paid (1,066) (1,065) (1)
Proceeds from sale of common stock 25 80 (55)
Purchase of common stock for treasury (118) - (118)
Other, net (21) (86) 65
------- ------- -------
Net cash used in financing activities (1,222) (2,048) 826
------- ------- -------
Decrease in cash and cash equivalents (1,598) (94) (1,504)
Cash and cash equivalents, beginning of period 2,290 669 1,621
------- ------- -------
Cash and cash equivalents, end of period $ 692 $ 575 $ 117
------- ------- -------
Verizon Communications Inc.
Domestic Telecom Selected Financial Results
(dollars in millions)
Unaudited 3Mos.Ended 3Mos.Ended %Change
3/31/05 3/31/04
Operating Revenues
Local services $ 4,481 $ 4,681 (4.3)
Network access services 3,107 3,099 .3
Long distance services 1,081 998 8.3
Other services 831 836 (.6)
------- -------
Total Operating Revenues 9,500 9,614 (1.2)
------- -------
Operating Expenses
Cost of services and sales 3,898 3,718 4.8
Selling, general & administrative
expense 2,115 2,149 (1.6)
Depreciation and amortization expense 2,187 2,257 (3.1)
------- -------
Total Operating Expenses 8,200 8,124 .9
------- -------
Operating Income $ 1,300 $ 1,490 (12.8)
Operating Income Margin 13.7% 15.5%
Segment Income $ 528 $ 697 (24.2)
Footnotes:
The segment financial results above are adjusted to exclude the effects of
special and non-recurring items. The companys chief decision makers exclude
these items in assessing business unit performance, primarily due to their
non-operational nature.
Intersegment transactions have not been eliminated.
Verizon Communications Inc.
Domestic Telecom Selected Operating Statistics
Unaudited 3Mos.Ended 3Mos.Ended %Change
3/31/05 3/31/04
------- ------- -------
Switched access lines in service (000)
Residence 33,644 35,775 (6.0)
Business 18,138 18,806 (3.6)
Public 422 450 (6.2)
------- -------
Total 52,204 55,031 (5.1)
------- -------
Wholesale voice connections* (000) 6,378 6,232 2.3
Minutes of use from Carriers and CLECs (in
millions) 53,054 58,473 (9.3)
Long distance lines (000) 18,031 16,156 11.6
Broadband connections (000) 3,944 2,664 48.0
High capacity and digital data revenues
($ in millions)
Data transport $ 1,894 $ 1,694 11.8
Data solutions 180 165 9.1
------- -------
Total revenues $ 2,074 $ 1,859 11.6
------- -------
Footnote:
* Resale & UNE-P lines, including lines covered under commercial agreements.
Verizon Communications Inc.
Verizon Wireless Selected Financial Results
(dollars in millions)
Unaudited 3Mos.Ended 3Mos.Ended %Change
3/31/05 3/31/04
Revenues
Service revenues $ 6,557 $ 5,501 19.2
Equipment and other 861 661 30.3
------- -------
Total Revenues 7,418 6,162 20.4
------- -------
Operating Expenses
Cost of services and sales 2,098 1,658 26.5
Selling, general & administrative
expense 2,630 2,247 17.0
Depreciation and amortization expense 1,150 1,055 9.0
------- -------
Total Operating Expenses 5,878 4,960 18.5
------- -------
Operating Income $ 1,540 $ 1,202 28.1
Operating Income Margin 20.8% 19.5%
Segment Income $ 433 $ 318 36.2
Selected Operating Statistics
Subscribers (000) 45,452 38,909 16.8
Penetration 18.5% 16.2%
Subscriber net adds in period(1) (000) 1,636 1,387 18.0
Total churn rate, including prepaid 1.3% 1.6%
Footnotes:
The segment financial results above are adjusted to exclude the effects of
special and non-recurring items. The companys chief decision makers exclude
these items in assessing business unit performance, primarily due to their
non-operational nature.
Intersegment transactions have not been eliminated.
(1) Includes acquisition of 32,000 subscribers in the first quarter of 2005.
Verizon Communications Inc.
Information Services Selected Financial Results
(dollars in millions)
Unaudited 3Mos.Ended 3Mos.Ended %Change
3/31/05 3/31/04
------- ------- -------
Operating Revenues $ 897 $ 919 (2.4)
Operating Expenses
Cost of services and sales 156 135 15.6
Selling, general & administrative
expense 284 320 (11.3)
Depreciation and amortization expense 23 21 9.5
------- -------
Total Operating Expenses 463 476 (2.7)
------- -------
Operating Income $ 434 $ 443 (2.0)
Operating Income Margin 48.4% 48.2%
Segment Income $ 271 $ 271 -
Footnotes:
The segment financial results above are adjusted to exclude the effects of
special and non-recurring items. The companys chief decision makers exclude
these items in assessing business unit performance, primarily due to their
non-operational nature.
Intersegment transactions have not been eliminated.
Information Services results for the prior year exclude the operations of
Verizon Information Services Canada as a result of an agreement to sell the
business reached in the third quarter of 2004. The sale was completed in the
fourth quarter of 2004.
Verizon Communications Inc.
International - Selected Financial Results
(dollars in millions)
Unaudited 3Mos.Ended 3Mos.Ended %Change
3/31/05 3/31/04
------- --------
Operating Revenues $ 517 $ 468 10.5
Operating Expenses
Cost of services and sales 177 147 20.4
Selling, general & administrative
expense 157 128 22.7
Depreciation and amortization expense 84 77 9.1
------- -------
Total Operating Expenses 418 352 18.8
------- -------
Operating Income $ 99 $ 116 (14.7)
Operating Income Margin 19.1% 24.8%
Equity in Earnings of Unconsolidated
Businesses $ 225 $ 239 (5.9)
Income from Other Unconsolidated
Businesses $ 56 $ 29 93.1
Segment Income $ 351 $ 281 24.9
Footnotes:
The segment financial results above are adjusted to exclude the effects of
special and non-recurring items. The companys chief decision makers exclude
these items in assessing business unit performance, primarily due to their
non-operational nature.
Intersegment transactions have not been eliminated.
Verizon Communications Inc.
Other Reconciliations
(dollars in millions)
Unaudited 3Mos.Ended 3Mos.Ended
3/31/05 3/31/04
Domestic Telecom Cash Operating
Expense Excluding Net Pension/OPEB
Domestic Telecom
operating expenses $ 8,200 $ 8,124
Less: Domestic
Telecom depreciation
and amortization (2,187) (2,257)
Net pension/OPEB
expense (303) (214)
------- -------
Domestic Telecom
cash operating
expense excluding
net pension/OPEB $ 5,710 $ 5,653
------- -------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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