Verizon
Delivers Double-Digit Adjusted Earnings Growth and Strong Cash
Flows in Second Quarter
NEW YORK, July 21, 2015 --
2Q 2015
HIGHLIGHTS
Consolidated
- $1.04 in earnings per share
(EPS), compared with $1.01 per share
and 91 cents in adjusted EPS
(non-GAAP) in 2Q 2014.
Wireless
- 1.1 million net retail postpaid connections added in the
quarter; retail postpaid churn of 0.90 percent, the lowest in three
years; 109.5 million total retail connections; 103.7 million total
retail postpaid connections.
- 5.3 percent year-over-year increase in total revenues; 34.0
percent operating income margin.
- 56.1 percent segment EBITDA margin on service revenues
(non-GAAP), and 43.9 percent segment EBITDA margin on total
revenues (non-GAAP).
Wireline
- 10.0 percent year-over-year increase in FiOS revenues; 72,000
FiOS Internet and 26,000 FiOS Video net additions.
- 4.5 percent year-over-year increase in consumer revenues.
Reporting second-quarter 2015 results today, Verizon
Communications Inc. (NYSE, Nasdaq: VZ) announced double-digit
percentage growth in year-over-year quarterly earnings on an
adjusted basis (non-GAAP) and continued strong cash flows.
"Verizon has delivered another quarter of strong financial and
operational results, based on consistent network reliability and
superior value that continues to attract new customers," said
Chairman and CEO Lowell McAdam. "In
the second quarter, we again balanced quality Verizon Wireless
connections growth with low churn and profitability, and we
announced and completed our acquisition of AOL. We're now poised to
offer customers exciting new over-the-top (OTT) mobile video
services, and we look forward to a very positive second half of
2015."
The company reported $1.04 in EPS
in second-quarter 2015, compared with $1.01 per share in second-quarter 2014.
There were no non-operational adjustments to second-quarter 2015
per-share results; second-quarter-2014 results included a
10-cent-per-share non-operational
gain related to the sale of spectrum licenses.
Second-quarter 2015 earnings of $1.04 per share compares with 91 cents per share in adjusted EPS (non-GAAP) in
second-quarter 2014 – an increase of 14.3 percent.
Consolidated Revenue Growth, Strong Cash Flow
On a consolidated basis, Verizon generated top-line revenue
growth driven by wireless and FiOS, with emerging revenue streams
from the Internet of Things (IoT) and telematics, and continued
strong cash flow.
Consolidated Highlights
- Total operating revenues in second-quarter 2015 were
$32.2 billion, a 2.4 percent increase
compared with second-quarter 2014. Excluding second-quarter 2014
revenues from a business that has since been sold, the comparable
year-over-year growth rate (non-GAAP) would have been 2.8
percent.
- New revenue streams from IoT and telematics totaled
approximately $165 million in
second-quarter 2015 and about $320
million year to date.
- Cash flow from operating activities increased to $18.9 billion in first-half 2015, compared with
$14.8 billion in first-half 2014.
This year's cash flow has included a non-recurring $2.4 billion related to the monetization of tower
assets in the first quarter.
- Excluding the tower-transaction impact, free cash flow
(non-GAAP, cash flow from operations less capital expenditures)
totaled $8.4 billion in first-half
2015. Verizon continues to expect full-year 2015 capital
expenditures to range between $17.5 billion
and $18.0 billion.
In second-quarter 2015, Verizon announced and completed the
acquisition of AOL Inc. to further drive the company's expansion
into digital media, including its OTT mobile video strategy. This
acquisition closed June 23, and
Verizon's balance sheet at the end of the quarter includes the
assets and liabilities of AOL. Verizon's second-quarter income
statement does not reflect any results from AOL operations since
these were immaterial for the last seven days of the quarter. AOL
financial results will be fully included in Verizon's third-quarter
2015 results.
Verizon's $5 billion accelerated
share repurchase program was completed in early June, resulting in
an overall reduction of 101.6 million shares.
Verizon CFO Fran Shammo said, "We
are committed to building the business for future growth. In the
first half of this year, we invested approximately $18 billion in spectrum licenses and capital for
future network capacity. We also invested more than $4 billion to acquire new capabilities with the
AOL transaction, which supports our longer-term video strategy. In
addition, we returned more than $9
billion to our shareholders in the form of dividends and
share repurchases. Meanwhile, we've kept our leverage ratio
essentially unchanged, and we remain on track with our deleveraging
plan."
Regarding consolidated revenue outlook, Verizon expects a higher
year-over-year growth rate in third-quarter 2015 than in
second-quarter 2015. For the full year, the company estimates
consolidated revenue growth of at least 3.0 percent. These growth
estimates exclude revenue from AOL.
Verizon
Wireless Delivers Quality Customer Growth and Profitability
In second-quarter 2015, Verizon Wireless continued to deliver
quality connections growth, low churn and strong profitability.
Wireless Financial Highlights
- Total revenues were $22.6 billion
in second-quarter 2015, up 5.3 percent year over year. Service
revenues totaled $17.7 billion, down
2.2 percent year over year, while equipment revenues increased to
$3.9 billion in second-quarter 2015
from $2.4 billion in second-quarter
2014 as more customers chose to buy new devices with installment
pricing.
- Service revenues plus installment billings increased 2.3
percent year over year. The percentage of phone activations on
installment plans was about 49 percent in second-quarter 2015,
compared with 39 percent in first-quarter 2015 and only 18 percent
in second-quarter 2014. Verizon expects the percentage of phone
activations on installment plans to continue to increase and will
likely be around 60 percent in third-quarter 2015.
- In second-quarter 2015, wireless operating income margin was
34.0 percent, up from 32.5 percent in second-quarter 2014. Segment
EBITDA margin on service revenues was 56.1 percent, compared with
50.3 percent in second-quarter 2014. Segment EBITDA margin on total
revenues was 43.9 percent, compared with 42.3 percent in
second-quarter 2014.
Wireless Operational Highlights
- Verizon Wireless had 1.1 million retail postpaid net additions
in second-quarter 2015, nearly twice the net additions in
first-quarter 2015. At the end of second-quarter 2015, the company
had 109.5 million retail connections, a 4.7 percent year-over-year
increase, and 103.7 million retail postpaid connections, a 5.2
percent year-over-year increase. These totals do not include
wholesale or IoT connections.
- The quality of the net additions remained strong: Verizon added
842,000 4G smartphones to its postpaid customer base in
second-quarter 2015. Postpaid phone net adds totaled 321,000 as net
smartphone adds of 588,000 were partially offset by a net decline
of 266,000 basic phones. Tablet net adds totaled 852,000 in the
quarter, and net prepaid devices declined by 126,000.
- 4G devices now constitute approximately 73 percent of the
retail postpaid connections base, with the LTE network handling
about 87 percent of total wireless data traffic in second-quarter
2015. Overall traffic on LTE has essentially doubled in the past
year.
- About 7.2 percent of Verizon's retail postpaid base upgraded to
a new device in second-quarter 2015. In the past year, the number
of 4G smartphones in Verizon's customer base has increased by 17.8
million, to 61.6 million, an increase of about 40 percent. The
company continues to see opportunities to upgrade its base of about
16 million basic phone and 9 million 3G smartphone customers to 4G
devices.
- At 0.90 percent in second-quarter 2015, retail postpaid churn
improved both sequentially and year over year. Low churn is an
indicator of high customer loyalty, and this was Verizon's lowest
churn rate in three years.
- Verizon's network densification plans are on schedule. These
plans include deployment of small cells, DAS (distributed antenna
system) nodes and in-building solutions.
Wireline Consumer Revenue Growth Driven by FiOS
In the wireline segment, Verizon reported continued strong
revenue growth for consumer services.
Wireline Financial Highlights
- In second-quarter 2015, consumer revenues were $4.0 billion, an increase of 4.5 percent compared
with second-quarter 2014. Consumer revenues have now grown by at
least 4 percent for 12 consecutive quarters, with FiOS revenues
representing 79 percent of the total.
- Total FiOS revenues grew 10.0 percent, to $3.4 billion, comparing second-quarter 2015 with
second-quarter 2014.
- Wireline operating income margin was 5.3 percent in
second-quarter 2015, up from 2.6 percent in second-quarter 2014.
Segment EBITDA margin (non-GAAP) was 23.5 percent in second-quarter
2015, compared with 23.4 percent in second-quarter 2014.
Wireline Operational Highlights
- In second-quarter 2015, Verizon added 72,000 net new FiOS
Internet connections and 26,000 net new FiOS Video connections.
Verizon had totals of 6.8 million FiOS Internet and 5.8 million
FiOS Video connections at the end of the second quarter,
representing year-over-year increases of 8.1 percent and 6.4
percent, respectively.
- FiOS Internet penetration (subscribers as a percentage of
potential subscribers) was 41.4 percent at the end of
second-quarter 2015, compared with 40.1 percent at the end of
second-quarter 2014. In the same periods, FiOS Video penetration
was 35.7 percent, compared with 35.3 percent.
- Verizon saw higher-than-anticipated demand for its new Custom
TV packages, with more than one-third of FiOS Video gross customer
additions opting for Custom TV and migration demand from existing
customers. While Custom TV adoption has an initial negative impact
on revenue growth, it is expected to improve profitability.
- By the end of second-quarter 2015, 64 percent of consumer FiOS
Internet customers subscribed to FiOS Quantum, which provides
speeds ranging from 50 to 500 megabits per second. The highest rate
of growth is in the 75-megabit-per-second tier, to which 23 percent
of FiOS customers subscribe.
- Evolving its wireline network, Verizon continues to replace
portions of its residential copper network with fiber optics to
provide customers with a more reliable and resilient
infrastructure. In second-quarter 2015, Verizon migrated 51,000
customers who had been using copper connections, toward a full-year
goal of 200,000.
- Verizon Enterprise Solutions helped clients around the globe
manage risk, improve customer experience, and drive growth and
business performance in the second quarter. The company deployed
innovative enterprise-grade network, cloud, security, IoT, mobility
and other business solutions for some of the world's leading
brands, including Scripps Networks Interactive, Lear Corporation,
CDK Global, Inc., Aurubis and Allstate; energy clients Marathon
Petroleum Corporation, Peninsula Lighting Company and PSE&G;
healthcare clients Bright! Now Dental, Inovalon and Moda Health;
and public sector clients U.S. Department of the Interior and the
State of California.
Wireline results include operations being sold to Frontier
Communications Corp. in the non-contiguous states of California, Florida and Texas. This is part of Verizon's network
evolution, to better enable the company to focus wireline efforts
on the East Coast. Verizon's consolidated balance sheet will
reflect these operations as assets held for sale until the
transaction's closing, targeted for first-half 2016.
NOTE: See the accompanying schedules
and www.verizon.com/about/investors for reconciliations to
generally accepted accounting principles (GAAP) for non-GAAP
financial measures cited in this document.
Verizon Communications Inc. (NYSE, Nasdaq: VZ), headquartered in
New York, is a global leader in
delivering the promise of the digital world. Verizon Wireless
operates America's most reliable wireless network, with 109.5
million retail connections nationwide. Verizon also provides
converged communications, information and entertainment services
over America's most advanced fiber-optic network, and delivers
integrated business solutions to customers worldwide. A Fortune 15
company with more than $127 billion
in 2014 revenues, Verizon employs a diverse workforce of 178,500.
For more information, visit www.verizon.com/news/.
VERIZON'S ONLINE NEWS CENTER: Verizon news releases, executive
speeches and biographies, media contacts and other information are
available at Verizon's online News Center at
www.verizon.com/news/. The news releases are available
through an RSS feed. To subscribe, visit
www.verizon.com/about/rss-feeds/.
Forward-Looking Statements
In this communication we have made forward-looking statements.
These statements are based on our estimates and assumptions and are
subject to risks and uncertainties. Forward-looking statements
include the information concerning our possible or assumed future
results of operations. Forward-looking statements also include
those preceded or followed by the words "anticipates," "believes,"
"estimates," "hopes" or similar expressions. 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, along with those
discussed in our filings with the Securities and Exchange
Commission (the "SEC"), could affect future results and could cause
those results to differ materially from those expressed in the
forward-looking statements: adverse conditions in the U.S. and
international economies; the effects of competition in the markets
in which we operate; material changes in technology or technology
substitution; disruption of our key suppliers' provisioning of
products or services; changes in the regulatory environment in
which we operate, including any increase in restrictions on our
ability to operate our networks; breaches of network or information
technology security, natural disasters, terrorist attacks or acts
of war or significant litigation and any resulting financial impact
not covered by insurance; our high level of indebtedness; an
adverse change in the ratings afforded our debt securities by
nationally accredited ratings organizations or adverse conditions
in the credit markets affecting the cost, including interest rates,
and/or availability of further financing; material adverse changes
in labor matters, including labor negotiations, and any resulting
financial and/or operational impact; significant increases in
benefit plan costs or lower investment returns on plan assets;
changes in tax laws or treaties, or in their interpretation;
changes in 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 inability to implement our business
strategies.
| Verizon Communications
Inc. |
|
|
|
|
|
|
|
| Condensed
Consolidated Statements of Income |
|
|
|
|
|
|
|
|
|
(dollars in millions, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
3
Mos. Ended |
3 Mos.
Ended |
|
|
6 Mos.
Ended |
6 Mos.
Ended |
|
| Unaudited |
6/30/15 |
6/30/14 |
% Change |
|
6/30/15 |
6/30/14 |
% Change |
|
|
|
|
|
|
|
|
|
| Operating
Revenues |
|
|
|
|
|
|
|
| Service
revenues and other |
$
28,363 |
$
29,096 |
(2.5) |
|
$
56,974 |
$
58,045 |
(1.8) |
| Wireless
equipment revenues |
3,861 |
2,387 |
61.8 |
|
7,234 |
4,256 |
70.0 |
| Total Operating
Revenues |
32,224 |
31,483 |
2.4 |
|
64,208 |
62,301 |
3.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating
Expenses |
|
|
|
|
|
|
|
| Cost of
services |
6,994 |
7,094 |
(1.4) |
|
13,982 |
14,184 |
(1.4) |
| Wireless
cost of equipment |
5,455 |
4,993 |
9.3 |
|
10,563 |
9,092 |
16.2 |
| Selling,
general and administrative expense |
7,974 |
7,550 |
5.6 |
|
15,913 |
15,882 |
0.2 |
|
Depreciation and amortization expense |
3,980 |
4,161 |
(4.3) |
|
7,969 |
8,298 |
(4.0) |
| Total Operating
Expenses |
24,403 |
23,798 |
2.5 |
|
48,427 |
47,456 |
2.0 |
|
|
|
|
|
|
|
|
|
| Operating
Income |
7,821 |
7,685 |
1.8 |
|
15,781 |
14,845 |
6.3 |
| Equity in
earnings (losses) of unconsolidated businesses |
(18) |
(43) |
(58.1) |
|
(52) |
1,859 |
* |
| Other income and
(expense), net |
32 |
66 |
(51.5) |
|
107 |
(828) |
* |
| Interest expense |
(1,208) |
(1,164) |
3.8 |
|
(2,540) |
(2,378) |
6.8 |
| Income
Before Provision for Income Taxes |
6,627 |
6,544 |
1.3 |
|
13,296 |
13,498 |
(1.5) |
| Provision
for income taxes |
(2,274) |
(2,220) |
2.4 |
|
(4,605) |
(3,188) |
44.4 |
| Net
Income |
$
4,353 |
$
4,324 |
0.7 |
|
$
8,691 |
$
10,310 |
(15.7) |
|
|
|
|
|
|
|
|
|
| Net income attributable to
noncontrolling interests |
$
122 |
$
110 |
10.9 |
|
$
241 |
$
2,149 |
(88.8) |
| Net income attributable to
Verizon |
4,231 |
4,214 |
0.4 |
|
8,450 |
8,161 |
3.5 |
| Net
Income |
$
4,353 |
$
4,324 |
0.7 |
|
$
8,691 |
$
10,310 |
(15.7) |
|
|
|
|
|
|
|
|
|
| Basic
Earnings per Common Share |
|
|
|
|
|
|
|
| Net
income attributable to Verizon |
$
1.04 |
$
1.02 |
2.0 |
|
$
2.06 |
$
2.15 |
(4.2) |
|
|
|
|
|
|
|
|
|
Weighted average number of common shares (in millions) |
4,079 |
4,147 |
|
|
4,097 |
3,789 |
|
|
|
|
|
|
|
|
|
|
Diluted Earnings per Common Share (1) |
|
|
|
|
|
|
|
| Net
income attributable to Verizon |
$
1.04 |
$
1.01 |
3.0 |
|
$
2.06 |
$
2.15 |
(4.2) |
|
|
|
|
|
|
|
|
|
Weighted average number of common |
|
|
|
|
|
|
|
|
shares-assuming dilution (in
millions) |
4,085 |
4,153 |
|
|
4,103 |
3,795 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Footnotes: |
|
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| (1) |
Diluted Earnings per
Common Share includes the dilutive effect of shares issuable under
our stock-based compensation plans, which represents the only
potential dilution. |
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Certain reclassifications
have been made, where appropriate, to reflect comparable operating
results. |
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|
|
|
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| * |
Not meaningful |
|
|
|
|
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|
|
| Verizon Communications
Inc. |
|
|
| Condensed Consolidated
Balance Sheets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in
millions) |
|
|
|
|
|
|
|
| Unaudited |
6/30/15 |
|
12/31/14 |
|
$ Change |
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
| Current
assets |
|
|
|
|
|
|
Cash and cash
equivalents |
$
3,008 |
|
$
10,598 |
|
$
(7,590) |
|
Short-term
investments |
309 |
|
555 |
|
(246) |
|
Accounts receivable,
net |
13,444 |
|
13,993 |
|
(549) |
|
Inventories |
1,149 |
|
1,153 |
|
(4) |
|
Assets held for
sale |
774 |
|
552 |
|
222 |
|
Prepaid expenses and
other |
2,818 |
|
2,772 |
|
46 |
| Total
current assets |
21,502 |
|
29,623 |
|
(8,121) |
| Plant,
property and equipment |
213,661 |
|
230,508 |
|
(16,847) |
|
Less accumulated depreciation |
131,129 |
|
140,561 |
|
(9,432) |
|
|
82,532 |
|
89,947 |
|
(7,415) |
|
Investments in unconsolidated businesses |
794 |
|
802 |
|
(8) |
| Wireless
licenses |
86,321 |
|
75,341 |
|
10,980 |
|
Goodwill |
25,429 |
|
24,639 |
|
790 |
| Other
intangible assets, net |
7,983 |
|
5,728 |
|
2,255 |
|
Non-current assets held for sale |
9,647 |
|
- |
|
9,647 |
| Deposit
for wireless licenses |
- |
|
921 |
|
(921) |
| Other
assets |
6,545 |
|
5,707 |
|
838 |
| Total Assets |
$
240,753 |
|
$
232,708 |
|
$
8,045 |
|
|
|
|
|
|
|
| Liabilities and
Equity |
|
|
|
|
|
| Current
liabilities |
|
|
|
|
|
|
Debt maturing within
one year |
$
4,206 |
|
$
2,735 |
|
$
1,471 |
|
Accounts payable and
accrued liabilities |
16,953 |
|
16,680 |
|
273 |
|
Liabilities related
to assets held for sale |
457 |
|
- |
|
457 |
|
Other |
9,029 |
|
8,649 |
|
380 |
| Total
current liabilities |
30,645 |
|
28,064 |
|
2,581 |
| Long-term
debt |
109,465 |
|
110,536 |
|
(1,071) |
| Employee
benefit obligations |
32,711 |
|
33,280 |
|
(569) |
| Deferred
income taxes |
42,945 |
|
41,578 |
|
1,367 |
|
Non-current liabilities related to assets held for sale |
942 |
|
- |
|
942 |
| Other
liabilities |
11,171 |
|
5,574 |
|
5,597 |
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
Common stock |
424 |
|
424 |
|
- |
|
Contributed
capital |
11,167 |
|
11,155 |
|
12 |
|
Reinvested
earnings |
6,418 |
|
2,447 |
|
3,971 |
|
Accumulated other
comprehensive income |
821 |
|
1,111 |
|
(290) |
|
Common stock in
treasury, at cost |
(7,741) |
|
(3,263) |
|
(4,478) |
|
Deferred compensation
– employee |
|
|
|
|
|
|
stock ownership plans
and other |
326 |
|
424 |
|
(98) |
|
Noncontrolling
interests |
1,459 |
|
1,378 |
|
81 |
| Total
equity |
12,874 |
|
13,676 |
|
(802) |
| Total Liabilities and
Equity |
$
240,753 |
|
$
232,708 |
|
$
8,045 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Verizon - Selected
Financial and Operating Statistics |
|
|
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|
|
|
|
|
|
| Unaudited |
6/30/15 |
|
12/31/14 |
|
|
|
|
|
|
|
|
|
| Total
debt (in millions) |
$
113,671 |
|
$
113,271 |
|
|
| Net debt
(in millions) |
$
110,663 |
|
$
102,673 |
|
|
| Net debt
/ Adjusted EBITDA(1) |
2.5x |
|
2.4x |
|
|
| Common
shares outstanding end of period (in millions) |
4,066 |
|
4,155 |
|
|
| Total
employees |
178,500 |
|
177,300 |
|
|
| Quarterly
cash dividends declared per common share |
$
0.550 |
|
$
0.550 |
|
|
|
|
|
|
|
|
|
|
Footnotes: |
|
|
|
|
|
| (1) |
Adjusted
EBITDA excludes the effects of non-operational items. |
|
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|
|
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|
|
The
unaudited condensed consolidated balance sheets are based on
preliminary information. |
| Verizon Communications
Inc. |
|
|
|
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|
| Condensed Consolidated
Statements of Cash Flows |
|
|
|
|
|
|
|
|
|
|
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|
|
(dollars
in millions) |
|
|
|
|
|
|
|
|
|
6 Mos. Ended |
|
6 Mos. Ended |
|
|
| Unaudited |
6/30/15 |
|
6/30/14 |
|
$ Change |
|
|
|
|
|
|
|
| Cash Flows from
Operating Activities |
|
|
|
|
|
| Net
Income |
$
8,691 |
|
$
10,310 |
|
$
(1,619) |
| Adjustments to reconcile
net income to net cash provided by |
|
|
|
|
|
| operating
activities: |
|
|
|
|
|
|
Depreciation and
amortization expense |
7,969 |
|
8,298 |
|
(329) |
|
Employee retirement
benefits |
561 |
|
562 |
|
(1) |
|
Deferred income
taxes |
826 |
|
253 |
|
573 |
|
Provision for
uncollectible accounts |
744 |
|
473 |
|
271 |
|
Equity in earnings
(losses) of unconsolidated businesses, net of dividends
received |
72 |
|
(1,841) |
|
1,913 |
|
Changes in current
assets and liabilities, net of effects from |
|
|
|
|
|
|
acquisition/disposition of businesses |
416 |
|
(847) |
|
1,263 |
|
Other, net |
(373) |
|
(2,404) |
|
2,031 |
| Net cash
provided by operating activities |
18,906 |
|
14,804 |
|
4,102 |
|
|
|
|
|
|
|
| Cash Flows from
Investing Activities |
|
|
|
|
|
| Capital expenditures
(including capitalized software) |
(8,153) |
|
(8,494) |
|
341 |
| Acquisitions of
investments and businesses, net of cash acquired |
(3,225) |
|
(179) |
|
(3,046) |
|
Acquisitions of wireless licenses |
(9,677) |
|
(271) |
|
(9,406) |
| Proceeds
from dispositions of wireless licenses |
- |
|
2,367 |
|
(2,367) |
| Other, net |
884 |
|
231 |
|
653 |
| Net cash
used in investing activities |
(20,171) |
|
(6,346) |
|
(13,825) |
|
|
|
|
|
|
|
| Cash Flows from
Financing Activities |
|
|
|
|
|
| Proceeds from long-term
borrowings |
6,497 |
|
20,245 |
|
(13,748) |
| Repayments of long-term
borrowings and capital lease obligations |
(5,797) |
|
(11,317) |
|
5,520 |
| Increase (decrease) in
short-term obligations, excluding current maturities |
(106) |
|
279 |
|
(385) |
| Dividends
paid |
(4,266) |
|
(3,583) |
|
(683) |
| Proceeds
from sale of common stock |
- |
|
34 |
|
(34) |
| Purchase
of common stock for treasury |
(5,074) |
|
- |
|
(5,074) |
|
Acquisition of noncontrolling interest |
- |
|
(58,886) |
|
58,886 |
| Other, net |
2,421 |
|
(2,982) |
|
5,403 |
| Net cash
used in financing activities |
(6,325) |
|
(56,210) |
|
49,885 |
|
|
|
|
|
|
|
| Decrease in cash and
cash equivalents |
(7,590) |
|
(47,752) |
|
40,162 |
| Cash and cash
equivalents, beginning of period |
10,598 |
|
53,528 |
|
(42,930) |
| Cash and cash
equivalents, end of period |
$
3,008 |
|
$
5,776 |
|
$
(2,768) |
|
|
|
|
|
|
|
| Footnotes: |
|
|
|
|
|
| Certain reclassifications of prior period
amounts have been made, where appropriate, to reflect comparable
operating results. |
Verizon Communications Inc.
Wireless - Selected Financial Results |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in millions) |
|
|
|
|
|
|
|
|
|
|
|
3 Mos.
Ended |
3 Mos.
Ended |
|
|
6 Mos.
Ended |
6 Mos.
Ended |
|
| Unaudited |
6/30/15 |
6/30/14 |
% Change |
|
6/30/15 |
6/30/14 |
% Change |
|
|
|
|
|
|
|
|
|
| Operating Revenues |
|
|
|
|
|
|
|
|
Service |
$
17,689 |
$
18,078 |
(2.2) |
|
$
35,603 |
$
36,065 |
(1.3) |
|
Equipment |
3,861 |
2,387 |
61.8 |
|
7,234 |
4,257 |
69.9 |
|
Other |
1,063 |
1,018 |
4.4 |
|
2,104 |
2,040 |
3.1 |
| Total Operating Revenues |
22,613 |
21,483 |
5.3 |
|
44,941 |
42,362 |
6.1 |
|
|
|
|
|
|
|
|
|
| Operating Expenses |
|
|
|
|
|
|
|
| Cost of services |
1,948 |
1,749 |
11.4 |
|
3,799 |
3,506 |
8.4 |
| Cost of equipment |
5,455 |
4,993 |
9.3 |
|
10,563 |
9,092 |
16.2 |
| Selling,
general and administrative expense |
5,289 |
5,649 |
(6.4) |
|
10,658 |
11,293 |
(5.6) |
| Depreciation and
amortization expense |
2,225 |
2,107 |
5.6 |
|
4,415 |
4,168 |
5.9 |
| Total Operating Expenses |
14,917 |
14,498 |
2.9 |
|
29,435 |
28,059 |
4.9 |
|
|
|
|
|
|
|
|
|
| Operating Income |
$
7,696 |
$
6,985 |
10.2 |
|
$
15,506 |
$
14,303 |
8.4 |
| Operating Income Margin |
34.0% |
32.5% |
|
|
34.5% |
33.8% |
|
|
|
|
|
|
|
|
|
|
| Segment EBITDA |
$
9,921 |
$
9,092 |
9.1 |
|
$
19,921 |
$
18,471 |
7.9 |
| Segment EBITDA Margin |
43.9% |
42.3% |
|
|
44.3% |
43.6% |
|
| Segment EBITDA Service Margin |
56.1% |
50.3% |
|
|
56.0% |
51.2% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Footnotes: |
|
|
|
|
|
|
|
|
The segment financial
results and metrics above are adjusted to exclude the effects of
non-operational items, as the Company's chief operating decision
maker excludes these items in assessing business unit
performance. |
|
|
|
Intersegment transactions
have not been eliminated. |
|
|
|
|
|
|
|
|
|
|
Certain reclassifications
have been made, where appropriate, to reflect comparable operating
results. |
| Verizon Communications
Inc. |
|
|
|
|
|
|
|
| Wireless
- Selected Operating Statistics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited |
|
|
|
|
6/30/15 |
6/30/14 |
% Change |
|
|
|
|
|
|
|
|
|
| Connections
('000) |
|
|
|
|
|
|
|
|
Retail postpaid |
|
|
|
|
103,731 |
98,593 |
5.2 |
|
Retail prepaid |
|
|
|
|
5,817 |
6,044 |
(3.8) |
|
Retail |
|
|
|
|
109,548 |
104,637 |
4.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3 Mos.
Ended |
3 Mos.
Ended |
|
|
6 Mos.
Ended |
6 Mos.
Ended |
|
| Unaudited |
6/30/15 |
6/30/14 |
% Change |
|
6/30/15 |
6/30/14 |
% Change |
|
|
|
|
|
|
|
|
|
| Net Add Detail ('000)
(1) |
|
|
|
|
|
|
|
|
Retail postpaid |
1,134 |
1,441 |
(21.3) |
|
1,699 |
1,980 |
(14.2) |
|
Retail prepaid |
(126) |
(14) |
* |
|
(314) |
(4) |
* |
|
Retail |
1,008 |
1,427 |
(29.4) |
|
1,385 |
1,976 |
(29.9) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Account
Statistics |
|
|
|
|
|
|
|
| Retail
Postpaid Accounts ('000) (2) |
|
|
|
|
35,560 |
35,186 |
1.1 |
| Retail
postpaid ARPA |
$
153.73 |
$
159.73 |
(3.8) |
|
$
154.93 |
$
159.70 |
(3.0) |
| Retail
postpaid connections per account (2) |
|
|
|
|
2.92 |
2.80 |
4.3 |
|
|
|
|
|
|
|
|
|
| Churn Detail |
|
|
|
|
|
|
|
| Retail
postpaid |
0.90% |
0.94% |
|
|
0.97% |
1.00% |
|
|
Retail |
1.18% |
1.25% |
|
|
1.26% |
1.31% |
|
|
|
|
|
|
|
|
|
|
| Retail Postpaid
Connection Statistics |
|
|
|
|
|
|
|
| Total
Smartphone postpaid % of phones activated |
91.7% |
90.8% |
|
|
91.6% |
90.4% |
|
| Total
Smartphone postpaid phone base (2) |
|
|
|
|
81.2% |
74.6% |
|
| Total
Internet postpaid base (2) |
|
|
|
|
15.4% |
12.3% |
|
|
|
|
|
|
|
|
|
| Other Operating
Statistics |
|
|
|
|
|
|
|
| Capital
expenditures (in millions) |
$
3,126 |
$
2,771 |
12.8 |
|
$
5,545 |
$
5,325 |
4.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Footnotes: |
| (1) |
Connection net additions
exclude acquisitions and adjustments. |
|
|
|
|
|
|
|
|
|
| (2) |
Statistics presented as of end of period. |
|
|
|
|
|
|
|
|
|
|
The segment financial
results and metrics above are adjusted to exclude the effects of
non-operational items, as the Company's chief operating decision
maker excludes these items in assessing business unit
performance. |
|
|
|
|
|
|
|
|
|
|
Intersegment transactions
have not been eliminated. |
|
|
|
|
|
|
|
|
|
|
Certain reclassifications
have been made, where appropriate, to reflect comparable operating
results. |
|
|
|
|
|
|
|
|
|
| * |
Not
meaningful |
| Verizon Communications
Inc. |
|
|
|
|
|
|
|
| Wireline
- Selected Financial Results |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in millions) |
|
|
|
|
|
|
|
|
|
|
|
3 Mos.
Ended |
3 Mos.
Ended |
|
|
6 Mos.
Ended |
6 Mos.
Ended |
|
| Unaudited |
6/30/15 |
6/30/14 |
% Change |
|
6/30/15 |
6/30/14 |
% Change |
|
|
|
|
|
|
|
|
|
| Operating
Revenues |
|
|
|
|
|
|
|
|
Consumer retail |
$
4,037 |
$
3,864 |
4.5 |
|
$
8,029 |
$
7,704 |
4.2 |
|
Small business |
593 |
621 |
(4.5) |
|
1,193 |
1,245 |
(4.2) |
| Mass
Markets |
4,630 |
4,485 |
3.2 |
|
9,222 |
8,949 |
3.1 |
|
|
|
|
|
|
|
|
|
|
Strategic services |
2,030 |
2,075 |
(2.2) |
|
4,078 |
4,146 |
(1.6) |
|
Core |
1,195 |
1,369 |
(12.7) |
|
2,410 |
2,769 |
(13.0) |
| Global
Enterprise |
3,225 |
3,444 |
(6.4) |
|
6,488 |
6,915 |
(6.2) |
|
|
|
|
|
|
|
|
|
| Global
Wholesale |
1,491 |
1,562 |
(4.5) |
|
3,015 |
3,145 |
(4.1) |
|
Other |
77 |
140 |
(45.0) |
|
167 |
284 |
(41.2) |
| Total
Operating Revenues |
9,423 |
9,631 |
(2.2) |
|
18,892 |
19,293 |
(2.1) |
|
|
|
|
|
|
|
|
|
| Operating
Expenses |
|
|
|
|
|
|
|
| Cost of
services |
5,206 |
5,342 |
(2.5) |
|
10,493 |
10,681 |
(1.8) |
| Selling,
general and administrative expense |
2,007 |
2,031 |
(1.2) |
|
4,038 |
4,180 |
(3.4) |
|
Depreciation and amortization expense |
1,706 |
2,005 |
(14.9) |
|
3,452 |
4,038 |
(14.5) |
| Total Operating
Expenses |
8,919 |
9,378 |
(4.9) |
|
17,983 |
18,899 |
(4.8) |
|
|
|
|
|
|
|
|
|
| Operating
Income |
$
504 |
$
253 |
99.2 |
|
$
909 |
$
394 |
* |
| Operating Income
Margin |
5.3% |
2.6% |
|
|
4.8% |
2.0% |
|
|
|
|
|
|
|
|
|
|
| Segment EBITDA |
$
2,210 |
$
2,258 |
(2.1) |
|
$
4,361 |
$
4,432 |
(1.6) |
| Segment EBITDA
Margin |
23.5% |
23.4% |
|
|
23.1% |
23.0% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Footnotes: |
|
|
|
|
|
|
|
|
The segment financial
results and metrics above are adjusted to exclude the effects of
non-operational items, as the Company's chief operating
decision maker excludes these items in assessing business unit
performance. |
|
|
|
|
|
|
|
|
|
|
Intersegment transactions
have not been eliminated. |
|
|
|
|
|
|
|
|
|
|
Certain reclassifications
have been made, where appropriate, to reflect comparable operating
results. |
|
|
|
|
|
|
|
|
|
| * |
Not meaningful |
| Verizon Communications
Inc. |
|
|
|
|
|
|
|
| Wireline
- Selected Operating Statistics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Unaudited |
|
|
|
|
6/30/15 |
6/30/14 |
% Change |
|
|
|
|
|
|
|
|
|
| Connections
('000) |
|
|
|
|
|
|
|
|
FiOS Video Subscribers |
|
|
|
|
5,765 |
5,419 |
6.4 |
|
FiOS Internet Subscribers |
|
|
|
|
6,821 |
6,309 |
8.1 |
|
FiOS Digital Voice residence
connections |
|
|
|
|
4,661 |
4,440 |
5.0 |
| FiOS
Digital connections |
|
|
|
|
17,247 |
16,168 |
6.7 |
|
|
|
|
|
|
|
|
|
|
HSI |
|
|
|
|
2,400 |
2,768 |
(13.3) |
| Total
Broadband connections |
|
|
|
|
9,221 |
9,077 |
1.6 |
|
Primary residence switched access
connections |
|
|
|
|
5,194 |
6,007 |
(13.5) |
| Primary
residence connections |
|
|
|
|
9,855 |
10,447 |
(5.7) |
|
|
|
|
|
|
|
|
|
| Total retail residence
voice connections |
|
|
|
|
10,239 |
10,903 |
(6.1) |
| Total voice
connections |
|
|
|
|
19,079 |
20,391 |
(6.4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3 Mos.
Ended |
3 Mos.
Ended |
|
|
6 Mos.
Ended |
6 Mos.
Ended |
|
| Unaudited |
6/30/15 |
6/30/14 |
% Change |
|
6/30/15 |
6/30/14 |
% Change |
|
|
|
|
|
|
|
|
|
| Net Add Detail
('000) |
|
|
|
|
|
|
|
|
FiOS Video Subscribers |
26 |
100 |
(74.0) |
|
116 |
157 |
(26.1) |
|
FiOS Internet Subscribers |
72 |
139 |
(48.2) |
|
205 |
237 |
(13.5) |
|
FiOS Digital Voice residence
connections |
- |
90 |
* |
|
59 |
192 |
(69.3) |
| FiOS
Digital connections |
98 |
329 |
(70.2) |
|
380 |
586 |
(35.2) |
|
|
|
|
|
|
|
|
|
|
HSI |
(97) |
(93) |
4.3 |
|
(189) |
(175) |
8.0 |
| Total
Broadband connections |
(25) |
46 |
* |
|
16 |
62 |
(74.2) |
|
Primary residence switched access
connections |
(203) |
(217) |
(6.5) |
|
(402) |
(474) |
(15.2) |
| Primary
residence connections |
(203) |
(127) |
59.8 |
|
(343) |
(282) |
21.6 |
|
|
|
|
|
|
|
|
|
| Total retail residence
voice connections |
(218) |
(145) |
50.3 |
|
(376) |
(326) |
15.3 |
| Total voice
connections |
(396) |
(342) |
15.8 |
|
(716) |
(694) |
3.2 |
|
|
|
|
|
|
|
|
|
| Revenue
Statistics |
|
|
|
|
|
|
|
| FiOS
revenues (in millions) |
$
3,438 |
$
3,125 |
10.0 |
|
$
6,790 |
$
6,166 |
10.1 |
| Strategic
services as a % of total Enterprise revenues |
62.9% |
60.2% |
|
|
62.9% |
60.0% |
|
|
|
|
|
|
|
|
|
|
| Other Operating
Statistics |
|
|
|
|
|
|
|
| Capital
expenditures (in millions) |
$
1,134 |
$
1,345 |
(15.7) |
|
$
2,211 |
$
2,730 |
(19.0) |
|
|
|
|
|
|
|
|
|
| Wireline
employees ('000) |
|
|
|
|
72.7 |
80.6 |
|
| FiOS
Video Open for Sale ('000) |
|
|
|
|
16,126 |
15,372 |
|
| FiOS
Video penetration |
|
|
|
|
35.7% |
35.3% |
|
| FiOS
Internet Open for Sale ('000) |
|
|
|
|
16,462 |
15,722 |
|
| FiOS
Internet penetration |
|
|
|
|
41.4% |
40.1% |
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| Footnotes: |
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The segment financial
results and metrics above are adjusted to exclude the effects of
non-operational items, as the Company's chief operating decision
maker excludes these items in assessing business unit
performance. |
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Intersegment transactions
have not been eliminated. |
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Certain reclassifications
have been made, where appropriate, to reflect comparable operating
results. |
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| * |
Not meaningful |
CONTACT: Bob Varettoni,
908-559-6388, robert.a.varettoni@verizon.com; Ray McConville, 908-559-3504,
raymond.mcconville@verizon.com