RNS Number:7738G
Verizon Communications
29 January 2003
John Diercksen
212-395-1842
Dominic Di Bucci
212-395-1924
Verizon Communications Reports Strong Yearly
Operational Growth and Gives Outlook for 2003
FOURTH-QUARTER HIGHLIGHTS
* 964,000 Verizon Wireless net customer additions, excluding acquisitions; 32.5
million total customers
* 566,000 long-distance net customer additions, for a total of 10.4 million --
making Verizon the U.S.'s third largest long-distance carrier for consumers
* 148,000 new net digital subscriber lines (DSL), for a total of 1.8 million
lines
2002 HIGHLIGHTS
* Met or exceeded year-end targets for revenue growth, diluted EPS (earnings per
share), capital expenditures, debt management, and long-distance and DSL
customers
* Total debt reduced by $10.2 billion, to $54.1 billion from $64.3 billion, a
15.9 percent decrease
* Net debt (total debt less cash and cash equivalents) reduced by $10.7 billion,
to $52.6 billion from $63.3 billion, a 16.9 percent decrease; commercial paper
reduced 83.6 percent, to $2.1 billion from $12.8 billion
* $4.8 billion in free cash flow (cash from operating activities less capital
expenditures of $12.0 billion, capitalized non-network software and dividends)
2003 GUIDANCE
* EPS of $2.70 to $2.80, after offsets from reduced pension income, reduced
income from 2002 access line sales, and expensing stock options
* Comparable revenue growth of 0 to 2 percent
* Capital expenditures (including capitalized non-network software) of $12.5 to
$13.5 billion
* Net debt of $49 to $51 billion
NEW YORK -- Verizon Communications Inc. (NYSE:VZ) today announced fourth-quarter
2002 diluted EPS of 83 cents, or 79 cents before special items, on the strength
of comparable quarterly revenue growth and expense reduction, and continued
strong sales of wireless, long-distance, DSL and bundled product offerings.
For the fourth quarter, Verizon's reported earnings were $2.3 billion, or 83
cents per share, including a net of $99 million, or 4 cents per share, in
special items. Nearly $1.2 billion in gains, primarily associated with $1.1
billion in tax benefits, were largely offset by after-tax charges totaling $1.1
billion, including $604 million primarily for pension and benefit costs related
to prior force reductions, $292 million for costs related to the bankruptcy of
Genuity Inc., $129 million for merger transition costs, and $42 million in other
items. This is the final quarter that Verizon will incur transition costs.
Reported operating revenues were $17.2 billion, and operations and support
expenses were $11.0 billion in the fourth quarter 2002. Revenues, operating
expenses and statistics described on a comparable basis exclude special gains
and charges and the effects of the sale of 1.27 million switched access lines
during third quarter 2002, and include the consolidation of Telecomunicaciones
de Puerto Rico, Inc. (PRTC) and the deconsolidation of CTI Holdings S.A.
beginning in 2002.
Fourth-quarter operating revenues, on a comparable basis, increased 1.5 percent
to $17.2 billion from $17.0 billion, including a double-digit increase for the
second consecutive quarter in Verizon Wireless revenues, which grew 16.3 percent
to $5.2 billion, from $4.4 billion in the fourth quarter of 2001. Fourth-quarter
operations and support expenses, on a comparable basis, declined 3.5 percent to
$9.6 billion, from $9.9 billion in fourth quarter 2001.
Also today, Verizon Wireless will withdraw its registration statement for an
initial public offering of equity securities, filed with the Securities and
Exchange Commission, given the ongoing strong cash flow at Verizon Wireless and
the lack of significant funding requirements that need to be addressed.
A Year of Great Progress
Chief Executive Officer Ivan Seidenberg said, "We achieved great progress in
2002. Our business model proved strong enough to carry us through a very
difficult economic environment and allowed us to anticipate and adapt to the
unprecedented technological changes in our industry. Throughout the year, we
have focused on execution, generating cash flow and maintaining operational
excellence, and we delivered on our financial and operational targets. While
conserving capital, we met customer demands through product and packaging
innovations and by using advanced technology to efficiently provide more
capabilities through our world-class wireline and wireless networks."
Seidenberg added, "Our wireless, long-distance and DSL businesses continue to
position Verizon well in growth markets. We have built an excellent foundation
for 2003. Our continuing product innovation, combined with the quality of our
customer service and the sophistication, scope and reliability of our networks,
has Verizon poised for more customer growth in the year ahead."
In the fourth quarter, Verizon saw gains in EBITDA margins on a comparable
basis. (EBITDA is determined by adding depreciation and amortization to
operating income; EBITDA margin is calculated by dividing EBITDA by total
operating revenues, or service revenues for Verizon Wireless.) Verizon's
consolidated EBITDA margin was 44.4 percent in the quarter, a 290 basis-point
improvement over fourth quarter 2001. Verizon Wireless' EBITDA margin was 40.1
percent, a 520 basis-point improvement over the prior year's quarter. The EBITDA
margin at Verizon's largest business unit, Domestic Telecom, was 45.1 percent in
the quarter, a 270 basis-point improvement over fourth quarter 2001.
This also marked the eighth consecutive quarter that Domestic Telecom has
reduced its operations and support expenses over the prior-year period. On a
comparable basis with the fourth quarter 2001, these expenses decreased by 7.1
percent, to $5.5 billion, in the fourth quarter 2002. Year-over-year on a
comparable basis, these expenses were reduced by $1.3 billion in 2002.
Customer Growth
Operationally in the fourth quarter, Verizon Wireless added 964,000 customers on
a net basis, 34.8 percent more than in the prior year's quarter. Verizon added
566,000 long-distance customers on a net basis to become the nation's third-
largest provider of consumer long-distance service, with 10.4 million customers.
Net additions of DSL lines exceeded 148,000 in the quarter, for a year-end total
of 1.8 million lines and a year-over-year increase of 50 percent.
For the year, the total number of customers increased by 3.1 million, including
acquisitions, for Verizon Wireless and 3 million for Verizon long distance.
Nearly 570,000 customers subscribe to the Verizon "Veriations" package plans
that were introduced less than six months ago. These plans bundle local services
with various combinations of long distance, wireless and Internet access in a
discounted package available on one bill.
Year-End Financials: Strong Cash Management
Verizon's 2002 earnings, before special items, were $8.4 billion, or $3.05 a
share, compared to $8.2 billion, or $3.00 a share, in 2001. On a comparable
basis, operating revenues were flat for the year, at $67.0 billion, while
operating expenses declined 1.4 percent to $51.2 billion, from $51.9 billion in
2001.
Total debt decreased 15.9 percent to $54.1 billion at year-end 2002, compared to
$64.3 billion at year-end 2001. Verizon reduced commercial paper by $10.7
billion in 2002, to $2.1 billion at year-end 2002 compared to $12.8 billion at
year-end 2001. Net debt was $52.6 billion at year-end 2002, which was at a lower
level than the company's guidance.
Free cash flow improved by $7.8 billion for the year, aided by improved cash
from operations and by reductions in capital expenditures, which totaled $12.0
billion in 2002 compared to $17.4 billion in 2001.
At year-end 2002, Verizon recorded a balance sheet adjustment for additional
minimum liability (AML), in accordance with FAS 87 accounting rules. AML is the
difference between the funded status and the accrued benefit obligation for each
pension plan, determined on a plan-by-plan basis. Verizon's adjustment increased
its employee benefit liabilities by $1.3 billion. This non-cash adjustment was
recorded as an after-tax reduction in shareowners' investment of approximately
$811 million.
Seidenberg said, "We produced strong cash-management results in 2002, and we
expect to continue this trend in 2003. Our guidance reflects a view that while
the effects of the economic downturn may persist, we will be in a position to
further reduce debt and operating expense. At the same time, we expect to
stabilize revenue declines in certain markets, use our new nationwide long-
distance capabilities to make inroads into the business market, and grow
revenues in consumer markets through continued product and packaging innovation
for wireline, wireless, long-distance and DSL services."
2003 Guidance
Revenue growth, on a comparable basis, is anticipated to be 0 to 2 percent in
2003.
The company anticipates that operational growth will contribute from 6 to 18
cents in EPS -- offset 41 to 43 cents by reduced pension income of 30 to 32
cents, reduced income from 2002 access line sales of 9 cents, and an accounting
change of 2 cents to expense stock options. This results in a 2003 EPS target of
$2.70 to $2.80, compared to last year's $3.05.
Capital expenditures, including capitalized non-network software, are targeted
in the $12.5 to $13.5 billion range, compared to $13.1 billion in equivalent
expenditures in 2002.
The company expects to once again generate significant free cash flow, which
will continue to be utilized in its debt reduction program. Year-end net debt is
targeted to decline to approximately $49 to $51 billion.
Accounting for Asset Retirement Obligations
Effective Jan. 1, 2003, Verizon has adopted new accounting rules (SFAS 143) for
recognizing the costs of legal obligations associated with the retirement of
fixed assets. Verizon has not yet finalized the impact of adopting SFAS 143 but
expects to record a one-time net income benefit of approximately $2 billion in
the first quarter 2003 and an ongoing annual net income benefit of approximately
1 to 2 cents per share.
Reported Results for 2002
For the year, reported earnings were $4.1 billion, or $1.49 a share, including a
net charge of $4.3 billion, or $1.56 a share. This net charge includes special
gains of $4.0 billion related to the sales of assets and tax benefits. These
gains were more than offset by charges, including $5.7 billion in investment-
related items associated with Genuity, CANTV in Venezuela and other interests;
$1.3 billion related to severance, pension and benefit costs; nearly $0.5
billion for the cumulative effects of an accounting change; merger transition
costs of $0.3 billion; and other items totaling $0.5 billion.
Reported operating revenues and operations and support expenses were $67.6
billion and $42.0 billion, respectively, for the year.
Business Segment Highlights
Following are fourth-quarter and year-end 2002 highlights from Verizon's four
business segments.
Domestic Telecom:
Current and prior periods exclude the 1.27 million switched access lines sold
during the third quarter of 2002.
* More than half of Verizon's 10.4 million long-distance customers are in
states in the former Bell Atlantic territory, and long-distance market share
among consumers is more than 35 percent in New York and Massachusetts.
Verizon has 2.7 million long-distance customers in New York and Connecticut,
nearly 1 million customers in both Massachusetts and Pennsylvania, and nearly
500,000 customers in New Jersey.
* ONE-BILL service, which provides Verizon local, long-distance and wireless
charges on a single monthly bill, is now available in 20 of the 29 states
where Verizon provides wireline services, with more than 150,000 customers
enrolled in the service.
* In November, Verizon's Enterprise Services Group launched its Enterprise
Advance initiative to interconnect the company's local networks and provide
large business and government customers with advanced communications
services. Initial sales were generated based on the new regional availability
of frame relay and SONET (Synchronous Optical Network) services that provide
reliable high-speed transport.
* Data services revenues grew to more than $1.85 billion in the quarter, driven
by nearly 7 percent quarterly growth over the same period last year for data
transport services and 9.2 percent growth for the year. Annual data revenue
reached nearly $7.3 billion.
* In the network services market, special access revenues increased 9.5 percent
in the quarter, to $1.38 billion. For the year, special access revenues grew
11.6 percent, to $5.5 billion.
* Domestic access line equivalents increased 4.5 percent to 135.8 million,
compared to the fourth quarter 2001.
Verizon Wireless:
* Verizon Wireless continued its focus on quality, profitable growth. The
company's strong fourth-quarter performance was due to its continued low
churn, low-cost structure, increasing average revenue per user (ARPU) and
strong demand for Verizon Wireless branded products.
* Retail net adds in the quarter were 929,000, up 18.4 percent over the fourth
quarter 2001. The company also added 6,000 new customers from property
acquisitions and 35,000 from reseller operations. The company's retail
customer base grew 14.7 percent year-over-year to 31.4 million of the
company's 32.5 million total customers.
* Monthly service revenue per subscriber increased to more than $49 for the
quarter, up 6 percent over the prior year's quarter.
* The company continued to lead the industry in low-cost structure as cash
expense per subscriber decreased more than 2 percent for the quarter and
1 percent for the year. EBITDA margin increased for the quarter and the year,
to 40.1 percent and 39.1 percent, respectively.
* Retail churn for both the quarter and for 2002 continued to decrease
year-over-year. Including post-pay and pre-pay, retail churn was 2.1 percent
in the quarter and for the year. Churn in the retail post-pay segment, which
is 91 percent of the company's base, was even lower -- at 1.8 percent for the
fourth quarter and the year. Total churn, including retail and resellers, was
2.1 percent in the quarter, and 2.3 percent for the year.
* Quarterly EBITDA increased more than 34 percent to $1.9 billion, while EBITDA
for the year was up more than 15 percent to $6.9 billion. Service revenues
for the quarter grew almost 17 percent to $4.7 billion, with total revenues
up more than 16 percent to $5.2 billion. For the year, service revenues and
total revenues each grew nearly 11 percent to $17.7 billion and $19.3
billion, respectively.
* Coupled with this growth, the company reduced its capital expenditures in
2002 to $4.4 billion from $5.0 billion in 2001, excluding capitalized
non-network software.
* The company continued to invest in its premier network to preserve quality
and gain new efficiencies. Network usage increased more than 45 percent in
2002 over 2001, while efficiency as measured by percentage of capital
expenditures to revenue, capital expenditures per minutes of use and cost per
minutes of use continued to improve.
* Demand for the company's data and text services continued to increase in the
quarter. The company also launched more data-friendly devices with color
screens, 1X speeds, and Get It Now capability for downloading games,
entertainment and other applications. Text messaging continued to grow
dramatically, with the number of billed messages increasing more than
43 percent over the prior quarter.
* Product innovation in the fourth quarter included a suite of services for
corporate customers that enables them to receive alerts from and access and
navigate their corporate e-mail and voice mail using their wireless phones
and voice commands.
International:
Reflects deconsolidation of CTI to the equity method and consolidation of PRTC
in both the current and prior periods.
* Fourth-quarter revenues were $731 million, bringing full-year revenues to
$3.0 billion, compared to $813 million and $3.2 billion in the fourth quarter
and full-year 2001, respectively. The revenue decline reflects weak economic
conditions and declining foreign exchange rates. Operating income improved
6.6 percent in the quarter, to $146 million, due primarily to cost reductions
driven by improved productivity.
* The number of proportionate wireless customers in Verizon's core Americas
properties grew by 12.8 percent to 3.0 million, compared to the prior year.
Total proportionate wireless customers served by Verizon's International
investments is now 8.7 million, compared to 8.9 million in 2001. Adjusted for
assets sold during 2002, total proportionate wireless subscribers grew
12 percent.
* During 2002, International successfully implemented roaming agreements that
enable customers of Verizon affiliates in Canada, Mexico and Puerto Rico to
have seamless roaming services on the Verizon Wireless network when they are
in the United States.
* During the fourth quarter, Verizon sold its 5.4 percent interest in Cable &
Wireless plc. The transaction, which is part of the company's continuing
efforts to sell non-strategic assets, resulted in proceeds of approximately
$281 million. The impact of this sale has been removed from Verizon's
International segment results and from Verizon's income before non-recurring
items.
Information Services:
* Fourth-quarter revenues from Verizon's directory publishing and electronic
commerce operations of $1.4 billion decreased 3.8 percent primarily due to
the impact of changes in publication dates. Revenues for 2002 of $4.3 billion
were down slightly compared to 2001, reflecting the sale of certain wireline
properties and related directories as well as reduced affiliate revenue.
* Revenues from SuperPages.com, Verizon's domestic Internet directory service,
grew 43.3 percent and 63.7 percent over the fourth quarter and the year,
respectively, as Information Services continues to be the dominant leader in
online directory services. SuperPages.com yellow pages searches grew 28.7
percent and 82.4 percent over the fourth quarter and the year, respectively.
Verizon Communications (NYSE:VZ) is one of the world's leading providers of
communications services. Verizon companies are the largest providers of wireline
and wireless communications in the United States, with 135.8 million access line
equivalents and 32.5 million Verizon Wireless customers. Verizon is also the
largest directory publisher in the world. With more than $67 billion in annual
revenues and 229,500 employees, Verizon's global presence extends to 33
countries in the Americas, Europe, Asia and the Pacific. For more information on
Verizon, visit www.verizon.com.
####
VERIZON'S ONLINE NEWS CENTER: Verizon news releases, executive speeches and
biographies, media contacts and other information are available at Verizon's
News Center on the World Wide Web at www.verizon.com/news. To receive news
releases by e-mail, visit the News Center and register for 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: the duration and extent of the current economic
downturn; materially adverse changes in economic or labor conditions 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; our
ability to satisfy regulatory merger conditions; the ability of Verizon Wireless
to continue to obtain sufficient spectrum resources; our ability to recover
insurance proceeds relating to equipment losses and other adverse financial
impacts resulting from the terrorist attacks on Sept. 11, 2001; and changes in
our accounting assumptions that regulatory agencies, including the SEC, may
require or that result from changes in the accounting rules or their
application, which could result in an impact on earnings.
CONSOLIDATED STATEMENTS OF INCOME
VERIZON COMMUNICATIONS INC. AND SUBSIDIARIES
(dollars in millions, except per share amounts)
3 Mos. Ended 3 Mos. Ended 12 Mos. Ended 12 Mos. Ended
Unaudited 12/31/02 12/31/01 % Change 12/31/02 12/31/01 % Change
Operating Revenues $ 17,214 $ 17,011 1.2 $ 67,625 $ 67,190 .6
Operations and support expense 11,001 12,714 (13.5) 41,952 41,651 .7
Depreciation and amortization expense 3,427 3,495 (1.9) 13,423 13,657 (1.7)
Sales of assets, net - 355 (100.0) (2,747) 350 *
Operating Income 2,786 447 * 14,997 11,532 30.0
Income (loss) from unconsolidated
businesses 12 (1,736) * (4,414) (5,042) (12.5)
Other income and (expense), net 34 181 (81.2) 140 449 (68.8)
Interest expense (822) (742) 10.8 (3,237) (3,369) (3.9)
Minority interest (342) (89) * (1,270) (622) *
Mark-to-market adjustment - financial
instruments 14 (16) * (14) (182) (92.3)
Benefit (provision) for income taxes 608 (71) * (1,618) (2,176) (25.6)
Income (Loss) from
Continuing Operations 2,290 (2,026) * 4,584 590 *
Extraordinary item, net of tax - (11) (100.0) (9) (19) (52.6)
Cumulative effect of accounting change - - - (496) (182) *
Net Income (Loss) $ 2,290 $ (2,037) * $ 4,079 $ 389 *
Diluted Earnings per Share(1) $ .83 $ (.75) * $ 1.49 $ .14 *
Weighted average number of common
shares-assuming dilution (in millions) 2,772 2,716 2,745 2,730
Footnote:
(1)Diluted Earnings per Share include the dilutive effect of shares issuable
under our stock-based compensation plans and exchangeable equity interests,
which represent the only potential dilution. There is no impact of dilutive
securities in the fourth quarter of 2001, since a net loss from continuing
operations was reported.
* Not meaningful
CONSOLIDATED STATEMENTS OF INCOME BEFORE NON-RECURRING ITEMS
(dollars in millions, except per share amounts)
3 Mos. Ended 3 Mos. Ended 12 Mos. Ended 12 Mos. Ended
Unaudited 12/31/02 12/31/01 % Change 12/31/02 12/31/01 % Change
Operating Revenues(1)
Domestic Telecom $ 10,027 $ 10,296 (2.6) $ 40,712 $ 42,081 (3.3)
Domestic Wireless 5,166 4,443 16.3 19,260 17,393 10.7
International 731 813 (10.1) 2,962 3,172 (6.6)
Information Services 1,374 1,428 (3.8) 4,287 4,313 (.6)
Other (84) (14) * (219) 69 *
Total Operating Revenues 17,214 16,966 1.5 67,002 67,028 .0
Operating Expenses(1)
Operations and support expense 9,570 9,921 (3.5) 37,749 38,187 (1.1)
Depreciation and amortization expense 3,426 3,519 (2.6) 13,422 13,686 (1.9)
Total Operating Expenses 12,996 13,440 (3.3) 51,171 51,873 (1.4)
Operating Income 4,218 3,526 19.6 15,831 15,155 4.5
Operating income impact of
operations sold(1) - 165 (100.0) 382 584 (34.6)
Income from unconsolidated businesses 151 197 (23.4) 732 674 8.6
Other income and (expense), net 34 176 (80.7) 140 441 (68.3)
Interest expense (822) (722) 13.9 (3,237) (3,299) (1.9)
Minority interest (358) (162) * (1,333) (891) 49.6
Provision for income taxes (1,032) (1,087) (5.1) (4,152) (4,474) (7.2)
Adjusted Net Income $ 2,191 $ 2,093 4.7 $ 8,363 $ 8,190 2.1
Diluted Adjusted Earnings per Share(2) $ .79 $ .77 2.6 $ 3.05 $ 3.00 1.7
Weighted average number of common
shares-assuming dilution (in millions) 2,772 2,734 2,745 2,730
Footnotes:
(1)Certain reclassifications of prior period amounts have been made, where
appropriate, to reflect comparable operating results excluding significant
operations sold, the previously announced Domestic Telecom access lines, as
follows:
Revenues $ - $ 243 $ 623 $ 997
Expenses $ - $ 78 $ 241 $ 413
Also, reflects the deconsolidation of CTI to the equity method and the
consolidation of PRTC in both current and prior years.
(2)Prior year depreciation and amortization includes amortization of $.04 per
diluted share for the quarter and $.14 per diluted share year-to-date related
to intangible assets that are no longer being amortized, as required by SFAS
142.
* Not meaningful
EARNINGS RECONCILIATIONS
(dollars in millions, except per share amounts)
3 Mos. Ended 12/31/02 3 Mos. Ended 12/31/01 12 Mos. Ended 12/31/02 12 Mos. Ended 12/31/01
Unaudited Net Income Diluted EPS Net Income Diluted EPS Net Income Diluted EPS Net Income Diluted EPS
Reported Earnings
(Loss) $ 2,290 $ .83 $ (2,037) $ (.75) $ 4,079 $ 1.49 $ 389 $ .14
Non-recurring
items:
Mark-to-market
adjustment -
financial
instruments (13) - 15 .01 15 .01 179 .07
Sales of assets
and investments,
net(1) - - 229 .08 (1,895) (.69) 226 .08
Transition costs 129 .05 184 .07 288 .10 578 .21
Severance, pension
and benefit charges 604 .22 1,001 .37 1,264 .46 1,001 .37
Cumulative effect
of accounting change - - - - 496 .18 182 .07
International
restructuring - - 26 .01 - - 26 .01
Investment-related
charges / (gains)
CANTV - - - - 1,400 .51 - -
MFN - - - - 436 .16 1,136 .42
CTI - - 637 .23 190 .07 637 .23
Genuity 292 .11 1,251 .46 2,735 1.00 1,251 .46
Telus - - - - 430 .16 - -
C&W (45) (.02) 90 .03 230 .08 952 .35
Other - - 591 .22 231 .08 1,519 .56
NorthPoint settlement - - - - 114 .04 - -
Tax benefits (1,121) (.40) - - (2,104) (.77) - -
Other special
items(2) 55 .02 106 .04 454 .17 114 .04
Earnings before
Non-Recurring
Items(3) $ 2,191 $ .79 $ 2,093 $ .77 $ 8,363 $ 3.05 $ 8,190 $ 3.00
Footnotes:
(1)Year-to-date includes $229 million related to the third quarter 2002 sale of
TCNZ securities.
(2)Year-to-date 2002 includes $183 million related to WorldCom financial
exposure.
(3)Totals for Diluted EPS do not add for all periods due to rounding in EPS
calculations.
SELECTED FINANCIAL AND OPERATING STATISTICS
(dollars in millions, except per share amounts)
3 Mos. Ended 3 Mos. Ended 12 Mos. Ended 12 Mos. Ended
Unaudited 12/31/02 12/31/01 12/31/02 12/31/01
Debt ratio-end of period 62.4% 66.4% 62.4% 66.4%
Book value per common share $ 11.89 $ 11.98 $ 11.89 $ 11.98
Cash dividends declared per common share $ .385 $ .385 $ 1.54 $ 1.54
Common shares outstanding (in millions)
End of period 2,743 2,716 2,743 2,716
Capital expenditures
Domestic Telecom $ 2,254 $ 3,010 $ 6,977 $11,480
Domestic Wireless 1,373 1,664 4,354 5,006
International 209 180 532 704
Information Services 15 24 69 93
Other 25 16 52 88
Total $ 3,876 $ 4,894 $ 11,984 $ 17,371
Total employees(1) 229,497 250,309 229,497 250,309
Footnote:
(1)Prior period adjusted to reflect a comparable figure.
CONSOLIDATED BALANCE SHEETS
(dollars in millions)
Unaudited 12/31/02 12/31/01 $ Change
Assets
Current assets
Cash and cash equivalents $ 1,438 $ 979 $ 459
Short-term investments 2,042 1,991 51
Accounts receivable, net 12,598 14,254 (1,656)
Inventories 1,502 1,968 (466)
Net assets held for sale - 1,199 (1,199)
Prepaid expenses and other 3,341 2,796 545
Total current assets 20,921 23,187 (2,266)
Plant, property and equipment 178,028 169,586 8,442
Less accumulated depreciation 103,532 95,167 8,365
74,496 74,419 77
Investments in unconsolidated businesses 4,988 10,202 (5,214)
Intangible assets 46,739 44,262 2,477
Other assets 20,324 18,725 1,599
Total Assets $ 167,468 $ 170,795 $ (3,327)
Liabilities and Shareowners' Investment
Current liabilities
Debt maturing within one year $ 9,288 $ 18,669 $ (9,381)
Accounts payable and accrued
liabilities 12,745 13,947 (1,202)
Other 5,014 5,404 (390)
Total current liabilities 27,047 38,020 (10,973)
Long-term debt 44,791 45,657 (866)
Employee benefit obligations 15,390 11,898 3,492
Deferred income taxes 19,468 16,543 2,925
Other liabilities 4,015 3,989 26
Minority interest 24,141 22,149 1,992
Shareowners' investment
Common stock 275 275 -
Contributed capital 24,685 24,676 9
Reinvested earnings 10,536 10,704 (168)
Accumulated other comprehensive loss (2,110) (1,187) (923)
33,386 34,468 (1,082)
Less common stock in treasury, at cost 218 1,182 (964)
Less deferred compensation -
employee stock ownership plans and other 552 747 (195)
Total shareowners' investment 32,616 32,539 77
Total Liabilities and Shareowners'
Investment $ 167,468 $ 170,795 $ (3,327)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in millions)
12 Mos. Ended 12 Mos. Ended
Unaudited 12/31/02 12/31/01 $ Change
Cash Flows From Operating Activities
Income before extraordinary item and cumulative effect
of accounting change $ 4,584 $ 590 $ 3,994
Adjustments to reconcile income before extraordinary
item and cumulative effect of accounting change to net cash
provided by operating activities:
Depreciation and amortization 13,423 13,657 (234)
Sales of assets, net (2,747) 350 (3,097)
Mark-to-market adjustment - financial instruments 14 182 (168)
Employee retirement benefits (501) (1,327) 826
Deferred income taxes 1,722 1,065 657
Provision for uncollectible accounts 2,905 1,952 953
Loss from unconsolidated businesses 4,414 5,042 (628)
Changes in current assets and liabilities, net of
effects from acquisition/disposition of businesses (1,800) (2,402) 602
Other, net 86 664 (578)
Net cash provided by operating activities 22,100 19,773 2,327
Cash Flows From Investing Activities
Capital expenditures (11,984) (17,371) 5,387
Acquisitions, net of cash acquired, and investments (1,093) (3,142) 2,049
Proceeds from disposition of businesses 4,638 415 4,223
Proceeds from spectrum payment refund 1,740 - 1,740
Net change in short-term investments (168) (407) 239
Other, net 39 (1,121) 1,160
Net cash used in investing activities (6,828) (21,626) 14,798
Cash Flows From Financing Activities
Proceeds from long-term borrowings 7,882 14,199 (6,317)
Repayments of long-term borrowings and capital lease obligations (8,460) (7,589) (871)
Decrease in short-term obligations,
excluding current maturities (11,024) (546) (10,478)
Dividends paid (4,200) (4,168) (32)
Proceeds from sale of common stock 915 501 414
Other, net 74 (322) 396
Net cash provided by (used in) financing activities (14,813) 2,075 (16,888)
Increase in cash and cash equivalents 459 222 237
Cash and cash equivalents, beginning of period 979 757 222
Cash and cash equivalents, end of period $ 1,438 $ 979 $ 459
DOMESTIC TELECOM SELECTED FINANCIAL RESULTS
(dollars in millions)
3 Mos. Ended 3 Mos. Ended 12 Mos. Ended 12 Mos. Ended
Unaudited 12/31/02 12/31/01 % Change 12/31/02 12/31/01 % Change
Operating Revenues
Local services $ 4,906 $ 5,277 (7.0) $ 20,271 $ 21,438 (5.4)
Network access services 3,341 3,210 4.1 13,295 12,968 2.5
Long distance services 777 784 (.9) 3,170 3,070 3.3
Other services 1,003 1,025 (2.1) 3,976 4,605 (13.7)
Total Operating Revenues 10,027 10,296 (2.6) 40,712 42,081 (3.3)
Operating Expenses
Operations and support 5,506 5,928 (7.1) 22,297 23,599 (5.5)
Depreciation and amortization 2,359 2,373 (.6) 9,433 9,248 2.0
Total Operating Expenses 7,865 8,301 (5.3) 31,730 32,847 (3.4)
Operating Income $ 2,162 $ 1,995 8.4 $ 8,982 $ 9,234 (2.7)
Operating Income Margin 21.6% 19.4% 22.1% 21.9%
EBITDA $ 4,521 $ 4,368 3.5 $ 18,415 $ 18,482 (.4)
EBITDA Margin 45.1% 42.4% 45.2% 43.9%
Footnotes:
The segment financial results above are adjusted to exclude the effects of
non-recurring items. The company's chief decision makers exclude these items in
assessing business unit performance, primarily due to their non-operational
nature.
Intercompany and intersegment transactions have not been eliminated.
EBITDA is determined by adding depreciation and amortization to operating
income. EBITDA margin is calculated by dividing EBITDA by total operating
revenues.
Certain reclassifications of prior period amounts have been made, where
appropriate, to reflect comparable operating results.
DOMESTIC TELECOM SELECTED OPERATING STATISTICS
3 Mos. Ended 3 Mos. Ended 12 Mos. Ended 12 Mos. Ended
Unaudited 12/31/02 12/31/01 % Change 12/31/02 12/31/01 % Change
Switched access lines in service (000)
Residence 37,460 38,542 (2.8) 37,460 38,542 (2.8)
Business 19,992 21,092 (5.2) 19,992 21,092 (5.2)
Public 522 591 (11.7) 522 591 (11.7)
Total 57,974 60,225 (3.7) 57,974 60,225 (3.7)
Special DS0 equivalents 77,823 69,769 11.5 77,823 69,769 11.5
Total voice grade equivalents (000) 135,797 129,994 4.5 135,797 129,994 4.5
Resale & UNE-P lines (000) 4,235 3,659 15.7 4,235 3,659 15.7
Minutes of use from Carriers and
CLECs (in millions) 62,111 69,227 (10.3) 256,806 280,401 (8.4)
Long distance subscribers
(excl. Verizon CLEC) (000) 10,404 7,443 39.8 10,404 7,443 39.8
High capacity and digital data
revenues ($ in millions)
Data transport $ 1,665 $ 1,557 6.9 $ 6,616 $ 6,058 9.2
Data solutions 188 203 (7.4) 680 725 (6.2)
Total revenues $ 1,853 $ 1,760 5.3 $ 7,296 $ 6,783 7.6
Footnote:
Certain reclassifications of prior period amounts have been made, where
appropriate, to reflect comparable operating results.
VERIZON WIRELESS SELECTED OPERATING RESULTS
(dollars in millions)
3 Mos. Ended 3 Mos. Ended 12 Mos. Ended 12 Mos. Ended
Unaudited 12/31/02 12/31/01 % Change 12/31/02 12/31/01 % Change
Revenues
Service revenues $ 4,713 $ 4,031 16.9 $ 17,747 $ 16,011 10.8
Equipment and other 453 412 10.0 1,513 1,382 9.5
Total Revenues 5,166 4,443 16.3 19,260 17,393 10.7
Operating Expenses
Operations and support 3,278 3,035 8.0 12,327 11,379 8.3
Depreciation and amortization 899 960 (6.4) 3,293 3,709 (11.2)
Total Operating Expenses 4,177 3,995 4.6 15,620 15,088 3.5
Operating Income $ 989 $ 448 120.8 $ 3,640 $ 2,305 57.9
EBITDA $ 1,888 $ 1,408 34.1 $ 6,933 $ 6,014 15.3
EBITDA Margin 40.1% 34.9% 39.1% 37.6%
Selected Operating Statistics
Subscribers (000) 32,491 29,398 10.5 32,491 29,398 10.5
Penetration 14.3% 13.3% 14.3% 13.3%
Subscriber net adds in period* (000) 970 715 35.7 3,093 2,793 10.7
Total churn rate, including prepaid 2.1% 2.7% 2.3% 2.5%
Footnotes:
The segment financial results above are adjusted to exclude the effects of
non-recurring items. The company's chief decision makers exclude these items in
assessing business unit performance, primarily due to their non-operational
nature.
Intercompany and intersegment transactions have not been eliminated.
Prior year depreciation and amortization includes amortization related to
intangible assets that are no longer being amortized, as required by SFAS 142.
EBITDA is determined by adding depreciation and amortization to operating
income. EBITDA margin is calculated by dividing EBITDA by service revenues.
*Includes acquisition of 6,000 subscribers in fourth quarter 2002, 411,000
subscribers in the third quarter of 2002 and 68,000 subscribers in the first
quarter of 2002.
INTERNATIONAL SELECTED FINANCIAL RESULTS
(dollars in millions)
3 Mos. Ended 3 Mos. Ended 12 Mos. Ended 12 Mos. Ended
Unaudited 12/31/02 12/31/01 % Change 12/31/02 12/31/01 % Change
Operating Revenues $ 731 $ 813 (10.1) $ 2,962 $ 3,172 (6.6)
Operating Expenses
Operations and support 458 536 (14.6) 1,823 2,013 (9.4)
Depreciation and amortization 127 140 (9.3) 532 535 (.6)
Total Operating Expenses 585 676 (13.5) 2,355 2,548 (7.6)
Operating Income $ 146 $ 137 6.6 $ 607 $ 624 (2.7)
EBITDA $ 273 $ 277 (1.4) $ 1,139 $ 1,159 (1.7)
EBITDA Margin 37.3% 34.1% 38.5% 36.5%
Income from Unconsolidated
Businesses $ 184 $ 202 (8.9) $ 861 $ 754 14.2
Proportionate Information
Revenues $ 1,349 $ 1,454 (7.2) $ 5,498 $ 5,530 (.6)
Operating income $ 268 $ 334 (19.8) $ 1,248 $ 1,350 (7.6)
Operating cash flow $ 486 $ 574 (15.3) $ 2,168 $ 2,275 (4.7)
Access lines (000) 3,241 3,247 (.2) 3,241 3,247 (.2)
Wireless subscribers (000) 8,704 8,865 (1.8) 8,704 8,865 (1.8)
Footnotes:
The segment financial results above are adjusted to exclude the effects of
non-recurring items. The company's chief decision makers exclude these items
in assessing business unit performance, primarily due to their non-operational
nature.
Intercompany and intersegment transactions have not been eliminated.
Certain reclassifications of prior period amounts have been made, where
appropriate, to reflect comparable operating results. Also, reflects the
deconsolidation of CTI to the equity method and the consolidation of PRTC in
both current and prior years.
EBITDA is determined by adding depreciation and amortization to operating
income. EBITDA margin is calculated by dividing EBITDA by operating revenues.
INFORMATION SERVICES SELECTED FINANCIAL RESULTS
(dollars in millions)
3 Mos. Ended 3 Mos. Ended 12 Mos. Ended 12 Mos. Ended
Unaudited 12/31/02 12/31/01 % Change 12/31/02 12/31/01 % Change
Operating Revenues $ 1,374 $ 1,428 (3.8) $ 4,287 $ 4,313 (.6)
Operating Expenses
Operations and support 607 607 - 2,099 1,961 7.0
Depreciation and amortization 22 17 29.4 74 79 (6.3)
Total Operating Expenses 629 624 .8 2,173 2,040 6.5
Operating Income $ 745 $ 804 (7.3) $ 2,114 $ 2,273 (7.0)
EBITDA $ 767 $ 821 (6.6) $ 2,188 $ 2,352 (7.0)
EBITDA Margin 55.8% 57.5% 51.0% 54.5%
Footnotes:
The segment financial results above are adjusted to exclude the effects of
non-recurring items. The company's chief decision makers exclude these items
in assessing business unit performance, primarily due to their non-operational
nature.
Intercompany and intersegment transactions have not been eliminated.
EBITDA is determined by adding depreciation and amortization to operating
income. EBITDA margin is calculated by dividing EBITDA by operating revenues.
WHAT'S NEWS
Verizon Earns FCC Approval To Offer Long-Distance Service to Consumers in
Virginia
Oct 30, 2002: Verizon Communications received approval from the FCC to offer
long-distance service in Virginia. Virginia becomes the 11th state in the
Mid-Atlantic and Northeast regions where Verizon has federal approval to offer
long-distance service, Verizon can now offer long-distance in 47 states, which
have approximately 90 percent of the company's phone lines nationwide.
Verizon Extending Network to Deliver Advanced Services to Large Business,
Government Customers
Nov 04, 2002: Verizon announced a new initiative, Enterprise Advance, to
interconnect its powerful local networks and provide large business and
government customers with advanced communications services that go well beyond
the company's existing offerings. Building on Verizon's local service to
enterprise customers, Verizon will offer large companies, governments and
others, data services that stretch beyond their local territories to affiliates
or subsidiaries in other regions around the U.S. Enterprise Advance services
include network management and data storage, business recovery, security, remote
access, voice and data networking.
Verizon Wireless and Research in Motion to Offer New Blackberry 6750 on Verizon
Wireless' High-Speed Express network
Dec 05, 2002: Verizon Wireless, the largest wireless service provider in the
U.S., and Research in Motion (RIM), the leading developer of wireless enterprise
solutions, intend to offer a new BlackBerry handheld for Verizon Wireless'
national high-speed Express Network. Express Network customers can expect
average data transmission speeds between 40 and 60 kilobits per second (kbps)
with bursts up to 144 kbps. The BlackBerry 6750 supports CDMA IX and will
operate on Verizon Wireless' national high-speed Express Network.
Verizon Communications Declares Quarterly Dividend
Dec 05, 2002: The board of directors of Verizon Communications Inc. declared a
quarterly dividend of $.385 per outstanding share, unchanged from the previous
quarter. The dividend is payable on Feb. 3, 2003, to Verizon Communications
shareowners of record at the close of business Jan. 10, 2003. Verizon
Communications has approximately 2.8 million individual shareowners and
approximately 2.7 billion shares of common stock outstanding.
Verizon Seeks To Offer Long-Distance Service To Consumers, Businesses in
Maryland, West Virginia and Washington, D.C.
Dec 19, 2002: Verizon filed an application with the FCC to offer long-distance
service in Maryland, West Virginia and Washington, D.C. The filing is the
culmination of the company's efforts to spread the benefits of all-out
competition to telecommunications markets in the Northeast and Mid-Atlantic
regions. The FCC has 90 days to review Venizon's application. The three local
regulatory commissions and the U.S. Department of Justice will provide their
input to the FCC before it makes a final decision.
Verizon Wireless To Purchase From Northcoast Communications Spectrum Licenses
Dec 19, 2002: Verizon Wireless announced it signed an agreement with Northcoast
Communications LLC to purchase 50 PCS licenses and related network assets, for
approximately $750 million in cash. The licenses cover large portions of the
East Coast and Midwest, including such major markets as New York, Boston,
Minneapolis, MN, Columbus. OH, Providence. RI, Rochester, NY and Hartford, CT.
The cash transaction is expected to close during the second quarter of 2003.
Verizon Now Third Largest Long-Distance Company
Jan 07, 2003: With more than 10 million customers in 47 states, Verizon has
passed Sprint to become the third largest long-distance provider in the U.S.,
according to independent surveys of long-distance customers. Verizon now has well
over 10 million long-distance customers and, according to surveys by the Yankee
Group and TNS Telecoms, is now the third largest provider of home long-distance
service behind AT&T and MCI/worldcom. Verizon's strategy has been to use long-
distance service as a linchpin in its approach to the consumer market,
developing packages of various combinations of services that usually start with
the natural bundle of local, regional and long-distance calling services.
Verizon Introduces Residential Service with Unlimited Direct-Dialed Local,
Regional and Domestic Long-Distance Calling
Jan 29, 2003: Verizon is adding to its Veriations packages a bold new offer that
delivers the ultimate in simplicity, in selected states, the company will offer
untimed, unlimited direct-dialed local and long-distance calling plus call-
management features for a low monthly price. The Variations Freedom package will
be available tomorrow in New Jersey and Pennsylvania and in four more states in
February. The Venations Freedom package covers every kind of direct-dialed
domestic call a person can make - local, regional and longdistance calling -
including calls to Canada and U.S. territories.
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCNKCKQBBKDODB
Verizon Comms (LSE:VZC)
Historical Stock Chart
Von Jun 2024 bis Jul 2024
Verizon Comms (LSE:VZC)
Historical Stock Chart
Von Jul 2023 bis Jul 2024
