Form 8-K VERIZON COMMUNICATIONS For: Jul 24
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E-mailUNITED 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: July 24, 2018
(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 of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
1095 Avenue of the Americas New York, New York | 10036 | |
(Address of principal executive offices) | (Zip Code) | |
Registrant’s telephone number, including area code: (212) 395-1000
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))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
[ ] Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period or complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Item 2.02. Results of Operations and Financial Condition
Attached as an exhibit hereto are a press release and financial tables dated July 24, 2018 issued by Verizon Communications Inc. (Verizon).
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. It is management's intent to provide non-GAAP financial information to enhance the understanding of Verizon's GAAP financial information and it should be considered by the reader in addition to, but not instead of, the financial statements prepared in accordance with GAAP. Each non-GAAP financial measure is presented along with the corresponding GAAP measure so as not to imply that more emphasis should be placed on the non-GAAP measure. We believe that non-GAAP measures provide relevant and useful information, which is used by management, investors and other users of our financial information in assessing both consolidated and segment performance. The non-GAAP financial information presented may be determined or calculated differently by other companies and may not be directly comparable to that of other companies.
Consolidated Operating Revenues Excluding Oath, Divested Businesses and the Revenue Recognition Standard
Consolidated Operating Revenues Excluding Oath, Divested Businesses and the Revenue Recognition Standard is a non-GAAP financial measure that we believe is useful to management, investors and other users of our financial information in evaluating our revenue growth and trends on a comparable basis. For the three months ended June 30, 2018, Consolidated Operating Revenues Excluding Oath, Divested Businesses and the Revenue Recognition Standard excludes (i) operating revenues from our Oath business and (ii) the impact of Accounting Standards Codification Topic 606, "Revenues from Contracts with Customers (Topic 606)" (Topic 606, ASC 606 or Revenue Recognition Standard), which we adopted effective January 1, 2018. For the three months ended June 30, 2017, Consolidated Operating Revenues Excluding Oath, Divested Businesses and the Revenue Recognition Standard excludes operating revenues from (i) our Oath business, (ii) the data center businesses divested on May 1, 2017 and (iii) insignificant divestitures completed in the third quarter of 2017.
Consolidated Operating Revenues Excluding Oath, Divested Businesses and the Revenue Recognition Standard is calculated by subtracting operating revenues from (i) Oath, (ii) divested businesses and (iii) impacts from the Revenue Recognition Standard from our consolidated operating revenues.
EBITDA and EBITDA Margin Related Non-GAAP Measures
Consolidated earnings before interest, taxes, depreciation and amortization (Consolidated EBITDA), Consolidated EBITDA Margin, Segment EBITDA, Segment EBITDA Margin, Pre-Topic 606 Segment EBITDA and Pre-Topic 606 Segment EBITDA Margin are non-GAAP financial measures that we believe are useful to management, investors and other users of our financial information in evaluating operating profitability on a more variable cost basis as they exclude depreciation and amortization expense related primarily to capital expenditures and acquisitions that occurred in prior periods, as well as in evaluating operating performance in relation to Verizon’s competitors. Further, the exclusion of the impact of Topic 606 enables comparability to prior period performance and trend analysis.
Consolidated EBITDA is calculated by adding back interest, taxes, depreciation and amortization expense, equity in losses of unconsolidated businesses and other (income) and expense, net to net income. Consolidated EBITDA Margin is calculated by dividing Consolidated EBITDA by consolidated operating revenues.
Segment EBITDA is calculated by adding back depreciation and amortization expense to segment operating income. Segment EBITDA Margin is calculated by dividing Segment EBITDA by segment total operating revenues.
Pre-Topic 606 Segment EBITDA is calculated by adding back depreciation and amortization expense to segment operating income and excluding the impact of Topic 606. Pre-Topic 606 Segment EBITDA Margin is calculated by dividing Pre-Topic 606 Segment EBITDA by segment total operating revenues excluding the impact of Topic 606.
Consolidated Adjusted EBITDA and Consolidated Adjusted EBITDA Margin Related Non-GAAP Measures
Consolidated Adjusted EBITDA, Consolidated Adjusted EBITDA Margin, Consolidated Adjusted EBITDA excluding Operating Results from Divested Businesses, Pre-Topic 606 Consolidated Adjusted EBITDA and Pre-Topic 606 Consolidated Adjusted EBITDA Margin are non-GAAP financial measures that we believe provide relevant and useful information to management, investors and other users of our financial information in evaluating the effectiveness of our operations and underlying business trends in a manner that is consistent with management’s evaluation of business performance. We believe that Consolidated Adjusted EBITDA, Consolidated Adjusted EBITDA Margin, Pre-Topic 606 Consolidated Adjusted EBITDA and Pre-Topic 606 Consolidated
Adjusted EBITDA Margin are used by investors to compare a company’s operating performance to its competitors by minimizing impacts caused by differences in capital structure, taxes and depreciation policies. Further, the exclusion of special items and the impact of Topic 606 enables comparability to prior period performance and trend analysis.
Consolidated Adjusted EBITDA is calculated by excluding from Consolidated EBITDA the effect of the following special items: net gain on sale of divested businesses, severance charges, gain on spectrum license transactions, product realignment charges and acquisition and integration related charges. Product realignment charges primarily relate to the discontinuation of the go90 platform and associated content and other early-stage developmental technologies. Acquisition and integration related charges represent transaction expenses related to business acquisitions and incremental expenses directly incurred to integrate the acquired businesses into our operations. We believe that the exclusion of the above-noted special items enables management, investors and other users of our financial information to assess our sequential and year-over-year performance on a more comparable basis and is consistent with management’s own evaluation of performance.
Consolidated Adjusted EBITDA Margin is calculated by dividing Consolidated Adjusted EBITDA by Consolidated Operating Revenues.
Consolidated Adjusted EBITDA excluding Operating Results from Divested Businesses is calculated by excluding the operating results from divested businesses from Consolidated Adjusted EBITDA. Management uses this measure to assess our ability to repay debt and we believe that this measure is also useful to rating agencies, lenders and other parties in evaluating our creditworthiness.
Pre-Topic 606 Consolidated Adjusted EBITDA is calculated by subtracting the impact of Topic 606 from Consolidated Adjusted EBITDA. Pre-Topic 606 Consolidated EBITDA Margin is calculated by dividing Pre-Topic 606 Consolidated EBITDA by Pre-Topic 606 consolidated operating revenues.
Net Debt and Net Debt to Consolidated Adjusted EBITDA Ratio
Net Debt and Net Debt to Consolidated Adjusted EBITDA Ratio are non-GAAP financial measures that we believe are useful to management, investors and other users of our financial information in evaluating Verizon’s ability to service its debt.
Net Debt is calculated by subtracting cash and cash equivalents from the sum of debt maturing within one year and long-term debt. Net Debt to Consolidated Adjusted EBITDA Ratio is calculated by dividing Net Debt by Consolidated Adjusted EBITDA excluding Operating Results from Divested Businesses. For purposes of Net Debt to Consolidated Adjusted EBITDA Ratio, Consolidated Adjusted EBITDA excluding Operating Results from Divested Businesses is calculated for the last twelve months.
Adjusted Earnings per Common Share
Adjusted Earnings per Common Share (Adjusted EPS) is a non-GAAP financial measure that we believe is useful to management, investors and other users of our financial information in evaluating our operating results and understanding our operating trends without the effect of special items. We believe excluding special items provides more comparable assessment of our financial results from period to period.
Adjusted EPS is calculated by excluding the effect of the following special items: net gain on sale of divested businesses, severance charges, acquisition and integration related charges and product realignment charges.
See the accompanying schedules for reconciliations of non-GAAP financial measures to GAAP.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits. | ||
Exhibit Number | Description | |
99 | Press release and financial tables, dated July 24, 2018, issued by Verizon Communications Inc. | |
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: | July 24, 2018 | /s/ Anthony T. Skiadas | ||||
Anthony T. Skiadas | ||||||
Senior Vice President and Controller | ||||||
EXHIBIT INDEX
Exhibit Number | Description | |
Press release and financial tables, dated July 24, 2018, issued by Verizon Communications Inc. | ||
Exhibit 99
News Release
FOR IMMEDIATE RELEASE | Media contacts: |
July 24, 2018 | Bob Varettoni |
908.559.6388 | |
Eric Wilkens | |
908.559.3063 | |
Verizon ends first-half 2018 with strong operating results
2Q 2018 highlights
Consolidated:
• | $1.00 in earnings per share (EPS), compared with $1.07 in 2Q 2017; adjusted EPS (non-GAAP), excluding special items, of $1.20, compared with 96 cents in 2Q 2017. |
• | Total consolidated revenue growth of 5.4 percent year over year, or 2.6 percent on an adjusted basis (non-GAAP). |
Wireless:
• | 531,000 retail postpaid net additions, including 398,000 postpaid smartphone net adds. |
• | Strong customer loyalty with 0.75 percent retail postpaid phone churn, the fifth consecutive period of retail postpaid phone churn at 0.80 percent or better. |
• | Total revenue growth of 4.7 percent year over year, excluding the impact of the revenue recognition standard adopted on Jan. 1, 2018. |
Wireline:
• | 43,000 Fios Internet net adds; total Fios revenue growth of 2.3 percent year over year, excluding the impact of the revenue recognition standard. |
NEW YORK - Strong revenue momentum and operating results at Verizon Wireless highlighted second-quarter 2018 performance at Verizon Communications Inc. (NYSE, Nasdaq: VZ), which today reported EPS of $1.00 for the quarter.
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“Verizon is extremely well-positioned for the future,” said Chairman and CEO Lowell McAdam. “Our financial and operating results for the first half of 2018 were strong, as evidenced by service revenue, earnings and operating cash flow growth delivered in a highly competitive marketplace.”
For second-quarter 2018, Verizon reported EPS of $1.00, compared with $1.07 in second-quarter 2017. On an adjusted basis (non-GAAP), second-quarter 2018 EPS was $1.20, compared with 96 cents in second-quarter 2017. Verizon’s second-quarter 2018 EPS included approximately 21 cents due to the net effects of tax reform and accounting changes for revenue recognition.
Adjusted second-quarter 2018 earnings included a pre-tax charge for product realignment of $658 million, mainly related to the discontinuation of Verizon’s go90 platform and associated content, severance charges of $339 million, and acquisition and integration-related charges of $120 million, primarily pertaining to Oath. The net impact of these items, after tax, was approximately $0.9 billion, or 20 cents per share.
Consolidated results
Total consolidated operating revenues in second-quarter 2018 were $32.2 billion, up 5.4 percent from second-quarter 2017. On a comparable basis excluding the impacts of Oath, divested businesses and the revenue recognition standard (non-GAAP), consolidated revenues were $30.2 billion, up approximately 2.6 percent.
Net income was $4.2 billion in second-quarter 2018. EBITDA (non-GAAP, earnings before interest, taxes, depreciation and amortization) totaled approximately $11 billion. For second-quarter 2018, consolidated operating income margin was 20.5 percent. Consolidated EBITDA margin (non-GAAP) was 34.1 percent in second-quarter 2018, compared with 39.9 percent in second-quarter 2017. Adjusted EBITDA margin (non-GAAP) in second-quarter 2018 was 36.8 percent. Excluding the impact of the revenue recognition standard, adjusted EBITDA margin (non-GAAP) was 35.6 percent.
Cash flow from operations totaled $9.8 billion during second-quarter 2018, up $1.9 billion year over year. Total capital expenditures in the second quarter were $3.3 billion, bringing first-half capital spending to $7.8 billion. Verizon’s total debt balance declined by $4.4 billion sequentially in second-quarter 2018, as the company began to realize benefits from tax reform.
Last year Verizon announced a goal to achieve $10 billion in cumulative cash savings over the next four years. This initiative, which includes zero-based budgeting, has yielded approximately $500
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million of cumulative cash savings on a year-to-date basis and is on track to deliver against the company’s goals.
In Verizon’s media business, Oath revenues, excluding the impact of the revenue recognition standard, were $1.9 billion in second-quarter 2018, which were relatively flat on a sequential basis. In the telematics business, total Verizon Connect revenues, excluding the impact of the revenue recognition standard, were $241 million in second-quarter 2018. IoT (Internet of Things) revenues, including Verizon Connect, increased approximately 13 percent year over year, excluding the impact of the revenue recognition standard.
Wireless results
• | Total revenues were $22.4 billion, an increase of 5.5 percent year over year. Excluding the impact of the revenue recognition standard, total revenues were $22.3 billion in second-quarter 2018, an increase of 4.7 percent compared with second-quarter 2017. |
• | Service revenues for the quarter on a reported basis grew 0.8 percent year over year. Excluding the impact of the revenue recognition standard, service revenues grew 2.5 percent year over year, driven by customer step-ups to higher access plans and increases in the average connections per account. Sequentially, service revenues increased 1.5 percent, excluding the impact of the revenue recognition standard. |
• | In second-quarter 2018, approximately 82 percent of Verizon’s postpaid phone base were on unsubsidized plans, compared with 81 percent in first-quarter 2018 and 75 percent in the same period last year. |
• | Verizon reported a net increase of 531,000 retail postpaid net additions in second-quarter 2018, consisting of net phone additions of 199,000, tablet losses of 37,000 and 369,000 other connected devices additions, primarily wearables. Postpaid smartphone net additions for the quarter were 398,000. |
• | Total retail postpaid churn was 0.97 percent in second-quarter 2018, slightly up year-over-year. Retail postpaid phone churn of 0.75 percent in second-quarter 2018 was the fifth consecutive quarter of retail postpaid phone churn of 0.80 percent or better. |
• | Segment operating income in second-quarter 2018 was $8.3 billion, and segment operating income margin on total revenues was 36.9 percent. |
• | Segment EBITDA (non-GAAP) totaled $10.7 billion. Excluding the impact of the revenue recognition standard, segment EBITDA totaled $10.3 billion in second-quarter 2018. Segment EBITDA margin on total revenues (non-GAAP) was 47.8 percent, compared with 45.8 percent in second-quarter 2017. Excluding the impact of the revenue recognition standard, segment EBITDA margin was 46.2 percent, an improvement of 40 basis points year over year. |
Wireline results
• | Total wireline revenues were $7.5 billion. Excluding the impact of the revenue recognition standard, total wirelines revenues decreased 3.4 percent year over year in second-quarter 2018. |
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• | Total Fios revenues were $3.0 billion, an increase of 2.0 percent year over year. Excluding the impact of the revenue recognition standard, total Fios revenues grew 2.3 percent year over year, driven by Verizon’s broadband offerings. |
• | In second-quarter 2018, Verizon added a net of 43,000 Fios Internet connections, indicative of strong demand as customers value broadband connections more than ever. Verizon lost 37,000 Fios Video connections in second-quarter 2018 amid pressures from cord-cutting of video bundles. |
• | Wireline operating loss was $19 million in second-quarter 2018, and segment operating loss margin was 0.3 percent. Segment EBITDA (non-GAAP) was $1.5 billion in second-quarter 2018. Excluding the impact of the revenue recognition standard, segment EBITDA was $1.5 billion. Segment EBITDA margin (non-GAAP) was 20.2 percent in second-quarter 2018, compared with 20.7 percent in second-quarter 2017. Excluding the impact of the revenue recognition standard, segment EBITDA margin was 19.6 percent. |
Outlook and guidance
Verizon expects the following:
• | Full-year consolidated revenue growth at low-to-mid single-digit percentage rates on a GAAP reported basis. This update to full-year guidance is due to better-than-expected equipment revenue trends. |
• | The impact of revenue recognition on EPS for full-year 2018 to be between 27 and 31 cents. The accretive benefit to full-year 2018 consolidated operating income is expected to moderate in 2019 and become insignificant in 2020, as the timing impacts to revenues and commission costs converge. |
• | Low single-digit percentage growth in adjusted EPS in 2018, before the net impact of tax reform and the revenue recognition standard. |
• | Capital spending for 2018 to be closer to the lower end of the range of $17.0 to $17.8 billion, including the commercial launch of 5G. |
• | The effective tax rate for full-year 2018 to be at the low end of the range of 24 to 26 percent. |
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 City, generated $126 billion in 2017 revenues. The company operates America’s most reliable wireless network and the nation’s premier all-fiber network, and delivers integrated solutions to businesses worldwide. Its Oath subsidiary reaches people around the world with a dynamic house of media and technology brands.
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VERIZON’S ONLINE MEDIA CENTER: News releases, stories, media contacts and other resources are available at www.verizon.com/about/news/. News releases are also available through an RSS feed. To subscribe, visit www.verizon.com/about/rss-feeds/
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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,” “expects,” “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. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. 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; the inability to implement our business strategies; and the inability to realize the expected benefits of strategic transactions.
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Verizon Communications Inc.
Condensed Consolidated Statements of Income
(dollars in millions, except per share amounts)
Unaudited | 3 Mos. Ended 6/30/18 | 3 Mos. Ended 6/30/17 | % Change | 6 Mos. Ended 6/30/18 | 6 Mos. Ended 6/30/17 | % Change | ||||||||||||||||
Operating Revenues | ||||||||||||||||||||||
Service revenues and other | $ | 27,159 | $ | 26,250 | 3.5 | $ | 53,891 | $ | 52,300 | 3.0 | ||||||||||||
Wireless equipment revenues | 5,044 | 4,298 | 17.4 | 10,084 | 8,062 | 25.1 | ||||||||||||||||
Total Operating Revenues | 32,203 | 30,548 | 5.4 | 63,975 | 60,362 | 6.0 | ||||||||||||||||
Operating Expenses | ||||||||||||||||||||||
Cost of services | 8,234 | 7,449 | 10.5 | 16,180 | 14,688 | 10.2 | ||||||||||||||||
Wireless cost of equipment | 5,397 | 5,035 | 7.2 | 10,706 | 9,843 | 8.8 | ||||||||||||||||
Selling, general and administrative expense | 7,605 | 5,883 | 29.3 | 14,449 | 12,629 | 14.4 | ||||||||||||||||
Depreciation and amortization expense | 4,350 | 4,167 | 4.4 | 8,674 | 8,226 | 5.4 | ||||||||||||||||
Total Operating Expenses | 25,586 | 22,534 | 13.5 | 50,009 | 45,386 | 10.2 | ||||||||||||||||
Operating Income | 6,617 | 8,014 | (17.4 | ) | 13,966 | 14,976 | (6.7 | ) | ||||||||||||||
Equity in losses of unconsolidated businesses | (228 | ) | (28 | ) | * | (247 | ) | (49 | ) | * | ||||||||||||
Other income (expense), net | 360 | 199 | 80.9 | 285 | (428 | ) | * | |||||||||||||||
Interest expense | (1,222 | ) | (1,218 | ) | 0.3 | (2,423 | ) | (2,350 | ) | 3.1 | ||||||||||||
Income Before Provision For Income Taxes | 5,527 | 6,967 | (20.7 | ) | 11,581 | 12,149 | (4.7 | ) | ||||||||||||||
Provision for income taxes | (1,281 | ) | (2,489 | ) | (48.5 | ) | (2,669 | ) | (4,118 | ) | (35.2 | ) | ||||||||||
Net Income | $ | 4,246 | $ | 4,478 | (5.2 | ) | $ | 8,912 | $ | 8,031 | 11.0 | |||||||||||
Net income attributable to noncontrolling interests | $ | 126 | $ | 116 | 8.6 | $ | 247 | $ | 219 | 12.8 | ||||||||||||
Net income attributable to Verizon | 4,120 | 4,362 | (5.5 | ) | 8,665 | 7,812 | 10.9 | |||||||||||||||
Net Income | $ | 4,246 | $ | 4,478 | (5.2 | ) | $ | 8,912 | $ | 8,031 | 11.0 | |||||||||||
Basic Earnings Per Common Share | ||||||||||||||||||||||
Net income attributable to Verizon | $ | 1.00 | $ | 1.07 | (6.5 | ) | $ | 2.10 | $ | 1.91 | 9.9 | |||||||||||
Weighted average number of common shares (in millions) | 4,135 | 4,082 | 4,120 | 4,082 | ||||||||||||||||||
Diluted Earnings Per Common Share (1) | ||||||||||||||||||||||
Net income attributable to Verizon | $ | 1.00 | $ | 1.07 | (6.5 | ) | $ | 2.10 | $ | 1.91 | 9.9 | |||||||||||
Weighted average number of common shares-assuming dilution (in millions) | 4,139 | 4,087 | 4,123 | 4,088 | ||||||||||||||||||
Footnotes:
(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. |
* | Not meaningful |
Verizon Communications Inc.
Condensed Consolidated Balance Sheets
(dollars in millions)
Unaudited | 6/30/18 | 12/31/17 | $ Change | |||||||||
Assets | ||||||||||||
Current assets | ||||||||||||
Cash and cash equivalents | $ | 1,750 | $ | 2,079 | $ | (329 | ) | |||||
Accounts receivable, net | 23,099 | 23,493 | (394 | ) | ||||||||
Inventories | 1,102 | 1,034 | 68 | |||||||||
Prepaid expenses and other | 4,925 | 3,307 | 1,618 | |||||||||
Total current assets | 30,876 | 29,913 | 963 | |||||||||
Property, plant and equipment | 249,294 | 246,498 | 2,796 | |||||||||
Less accumulated depreciation | 161,513 | 157,930 | 3,583 | |||||||||
Property, plant and equipment, net | 87,781 | 88,568 | (787 | ) | ||||||||
Investments in unconsolidated businesses | 787 | 1,039 | (252 | ) | ||||||||
Wireless licenses | 93,855 | 88,417 | 5,438 | |||||||||
Goodwill | 29,200 | 29,172 | 28 | |||||||||
Other intangible assets, net | 9,861 | 10,247 | (386 | ) | ||||||||
Other assets | 10,943 | 9,787 | 1,156 | |||||||||
Total assets | $ | 263,303 | $ | 257,143 | $ | 6,160 | ||||||
Liabilities and Equity | ||||||||||||
Current liabilities | ||||||||||||
Debt maturing within one year | $ | 5,466 | $ | 3,453 | $ | 2,013 | ||||||
Accounts payable and accrued liabilities | 18,560 | 21,232 | (2,672 | ) | ||||||||
Other current liabilities | 8,303 | 8,352 | (49 | ) | ||||||||
Total current liabilities | 32,329 | 33,037 | (708 | ) | ||||||||
Long-term debt | 109,174 | 113,642 | (4,468 | ) | ||||||||
Employee benefit obligations | 19,955 | 22,112 | (2,157 | ) | ||||||||
Deferred income taxes | 35,069 | 31,232 | 3,837 | |||||||||
Other liabilities | 13,201 | 12,433 | 768 | |||||||||
Total long-term liabilities | 177,399 | 179,419 | (2,020 | ) | ||||||||
Equity | ||||||||||||
Common stock | 429 | 424 | 5 | |||||||||
Additional paid in capital | 13,438 | 11,101 | 2,337 | |||||||||
Retained earnings | 41,657 | 35,635 | 6,022 | |||||||||
Accumulated other comprehensive income | 3,205 | 2,659 | 546 | |||||||||
Common stock in treasury, at cost | (6,990 | ) | (7,139 | ) | 149 | |||||||
Deferred compensation – employee stock ownership plans and other | 285 | 416 | (131 | ) | ||||||||
Noncontrolling interests | 1,551 | 1,591 | (40 | ) | ||||||||
Total equity | 53,575 | 44,687 | 8,888 | |||||||||
Total liabilities and equity | $ | 263,303 | $ | 257,143 | $ | 6,160 | ||||||
Verizon - Selected Financial and Operating Statistics
Unaudited | 6/30/18 | 12/31/17 | ||||||
Total debt (in millions) | $ | 114,640 | $ | 117,095 | ||||
Net debt (in millions) | $ | 112,890 | $ | 115,016 | ||||
Net debt / Consolidated adjusted EBITDA(1) | 2.5x | 2.6x | ||||||
Common shares outstanding end of period (in millions) | 4,132 | 4,079 | ||||||
Total employees (‘000) | 153.1 | 155.4 | ||||||
Quarterly cash dividends declared per common share | $ | 0.59 | $ | 0.59 | ||||
Footnotes:
(1) | Consolidated adjusted EBITDA excludes the effects of special items and operating results of divested businesses. |
Verizon Communications Inc.
Condensed Consolidated Statements of Cash Flows
(dollars in millions)
Unaudited | 6 Mos. Ended 6/30/18 | 6 Mos. Ended 6/30/17 | $ Change | |||||||||
Cash Flows from Operating Activities | ||||||||||||
Net Income | $ | 8,912 | $ | 8,031 | $ | 881 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization expense | 8,674 | 8,226 | 448 | |||||||||
Employee retirement benefits | (300 | ) | (223 | ) | (77 | ) | ||||||
Deferred income taxes | 1,354 | 1,880 | (526 | ) | ||||||||
Provision for uncollectible accounts | 462 | 632 | (170 | ) | ||||||||
Equity in losses of unconsolidated businesses, net of dividends received | 268 | 67 | 201 | |||||||||
Changes in current assets and liabilities, net of effects from acquisition/disposition of businesses | (1,538 | ) | (3,721 | ) | 2,183 | |||||||
Discretionary employee benefits contributions | (1,679 | ) | (3,411 | ) | 1,732 | |||||||
Net gain on sale of divested businesses | — | (1,774 | ) | 1,774 | ||||||||
Other, net | 280 | (401 | ) | 681 | ||||||||
Net cash provided by operating activities | 16,433 | 9,306 | 7,127 | |||||||||
Cash Flows from Investing Activities | ||||||||||||
Capital expenditures (including capitalized software) | (7,838 | ) | (7,011 | ) | (827 | ) | ||||||
Acquisitions of businesses, net of cash acquired | (38 | ) | (6,231 | ) | 6,193 | |||||||
Acquisitions of wireless licenses | (1,155 | ) | (315 | ) | (840 | ) | ||||||
Proceeds from dispositions of businesses | — | 3,512 | (3,512 | ) | ||||||||
Other, net | 303 | 786 | (483 | ) | ||||||||
Net cash used in investing activities | (8,728 | ) | (9,259 | ) | 531 | |||||||
Cash Flows from Financing Activities | ||||||||||||
Proceeds from long-term borrowings | 4,584 | 16,009 | (11,425 | ) | ||||||||
Proceeds from asset-backed long-term borrowings | 1,716 | 2,878 | (1,162 | ) | ||||||||
Repayments of long-term borrowings and capital lease obligations | (6,568 | ) | (10,294 | ) | 3,726 | |||||||
Repayments of asset-backed long-term borrowings | (2,000 | ) | — | (2,000 | ) | |||||||
Decrease in short-term obligations, excluding current maturities | (210 | ) | (152 | ) | (58 | ) | ||||||
Dividends paid | (4,845 | ) | (4,710 | ) | (135 | ) | ||||||
Other, net | (542 | ) | (1,831 | ) | 1,289 | |||||||
Net cash provided by (used in) financing activities | (7,865 | ) | 1,900 | (9,765 | ) | |||||||
Increase (decrease) in cash, cash equivalents and restricted cash | (160 | ) | 1,947 | (2,107 | ) | |||||||
Cash, cash equivalents and restricted cash, beginning of period | 2,888 | 3,177 | (289 | ) | ||||||||
Cash, cash equivalents and restricted cash, end of period | $ | 2,728 | $ | 5,124 | $ | (2,396 | ) | |||||
Verizon Communications Inc.
Wireless – Selected Financial Results
(dollars in millions)
Unaudited | 3 Mos. Ended 6/30/18 | 3 Mos. Ended 6/30/17 | % Change | 6 Mos. Ended 6/30/18 | 6 Mos. Ended 6/30/17 | % Change | ||||||||||||||||
Operating Revenues | ||||||||||||||||||||||
Service | $ | 15,754 | $ | 15,622 | 0.8 | $ | 31,156 | $ | 31,400 | (0.8 | ) | |||||||||||
Equipment | 5,044 | 4,298 | 17.4 | 10,084 | 8,062 | 25.1 | ||||||||||||||||
Other | 1,651 | 1,362 | 21.2 | 3,109 | 2,698 | 15.2 | ||||||||||||||||
Total Operating Revenues | 22,449 | 21,282 | 5.5 | 44,349 | 42,160 | 5.2 | ||||||||||||||||
Operating Expenses | ||||||||||||||||||||||
Cost of services | 2,335 | 2,219 | 5.2 | 4,550 | 4,406 | 3.3 | ||||||||||||||||
Cost of equipment | 5,397 | 5,035 | 7.2 | 10,706 | 9,843 | 8.8 | ||||||||||||||||
Selling, general and administrative expense | 3,984 | 4,271 | (6.7 | ) | 7,883 | 8,740 | (9.8 | ) | ||||||||||||||
Depreciation and amortization expense | 2,459 | 2,347 | 4.8 | 4,887 | 4,685 | 4.3 | ||||||||||||||||
Total Operating Expenses | 14,175 | 13,872 | 2.2 | 28,026 | 27,674 | 1.3 | ||||||||||||||||
Operating Income | $ | 8,274 | $ | 7,410 | 11.7 | $ | 16,323 | $ | 14,486 | 12.7 | ||||||||||||
Operating Income Margin | 36.9 | % | 34.8 | % | 36.8 | % | 34.4 | % | ||||||||||||||
Segment EBITDA | $ | 10,733 | $ | 9,757 | 10.0 | $ | 21,210 | $ | 19,171 | 10.6 | ||||||||||||
Segment EBITDA Margin | 47.8 | % | 45.8 | % | 47.8 | % | 45.5 | % | ||||||||||||||
Footnotes:
The segment financial results and metrics above are adjusted to exclude the effects of special items, as the Company’s chief operating decision maker excludes these items in assessing business unit performance.
Intersegment transactions have not been eliminated.
Verizon Communications Inc.
Wireless – Selected Operating Statistics
Unaudited | 6/30/18 | 6/30/17 | % Change | |||||||||||||||||||
Connections (‘000) | ||||||||||||||||||||||
Retail postpaid | 111,622 | 109,088 | 2.3 | |||||||||||||||||||
Retail prepaid | 4,832 | 5,448 | (11.3 | ) | ||||||||||||||||||
Total retail | 116,454 | 114,536 | 1.7 | |||||||||||||||||||
Unaudited | 3 Mos. Ended 6/30/18 | 3 Mos. Ended 6/30/17 | % Change | 6 Mos. Ended 6/30/18 | 6 Mos. Ended 6/30/17 | % Change | ||||||||||||||||
Net Add Detail (‘000) (1) | ||||||||||||||||||||||
Retail postpaid | 531 | 614 | (13.5 | ) | 791 | 307 | * | |||||||||||||||
Retail prepaid | (236 | ) | 19 | * | (571 | ) | 2 | * | ||||||||||||||
Total retail | 295 | 633 | (53.4 | ) | 220 | 309 | (28.8 | ) | ||||||||||||||
Account Statistics | ||||||||||||||||||||||
Retail postpaid accounts (‘000) (2) | 35,309 | 35,334 | (0.1 | ) | ||||||||||||||||||
Retail postpaid connections per account (2) | 3.16 | 3.09 | 2.3 | |||||||||||||||||||
Retail postpaid ARPA (3) (5) | $ | 134.56 | $ | 134.89 | (0.2 | ) | $ | 133.13 | $ | 135.93 | (2.1 | ) | ||||||||||
Retail postpaid I-ARPA (4) (5) | $ | 168.30 | $ | 164.94 | 2.0 | $ | 166.51 | $ | 165.47 | 0.6 | ||||||||||||
Churn Detail | ||||||||||||||||||||||
Retail postpaid | 0.97 | % | 0.94 | % | 1.01 | % | 1.04 | % | ||||||||||||||
Retail | 1.18 | % | 1.18 | % | 1.23 | % | 1.28 | % | ||||||||||||||
Retail Postpaid Connection Statistics (2) | ||||||||||||||||||||||
Total smartphone postpaid phone base | 91.2 | % | 88.8 | % | ||||||||||||||||||
Total Internet postpaid base | 19.4 | % | 18.4 | % | ||||||||||||||||||
Other Operating Statistics | ||||||||||||||||||||||
Capital expenditures (in millions) | $ | 1,650 | $ | 2,444 | (32.5 | ) | $ | 4,017 | $ | 4,275 | (6.0 | ) | ||||||||||
Footnotes:
(1) | Connection net additions exclude acquisitions and adjustments. |
(2) | Statistics presented as of end of period. |
(3) | Retail postpaid ARPA - average service revenue per account from retail postpaid accounts. |
(4) | Retail postpaid I-ARPA - average service revenue per account from retail postpaid account plus recurring device installment billings. |
(5) | ARPA and I-ARPA for periods beginning after January 1, 2018 reflect the adoption of Accounting Standard Update 2014-09, “Revenue from Contracts with Customers (Topic 606)”. ARPA and I-ARPA for periods ending prior to January 1, 2018 were calculated based on the guidance per ASC Topic 605, "Revenue Recognition". Accordingly, amounts are not calculated on a comparative basis. |
The segment financial results and metrics above are adjusted to exclude the effects of special items, as the Company’s chief operating decision maker excludes these items in assessing business unit performance.
Intersegment transactions have not been eliminated.
* | Not meaningful |
Verizon Communications Inc.
Wireline – Selected Financial Results
(dollars in millions)
Unaudited | 3 Mos. Ended 6/30/18 | 3 Mos. Ended 6/30/17 | % Change | 6 Mos. Ended 6/30/18 | 6 Mos. Ended 6/30/17 | % Change | ||||||||||||||||
Operating Revenues | ||||||||||||||||||||||
Consumer Markets | $ | 3,132 | $ | 3,184 | (1.6 | ) | $ | 6,282 | $ | 6,385 | (1.6 | ) | ||||||||||
Enterprise Solutions | 2,211 | 2,309 | (4.2 | ) | 4,451 | 4,620 | (3.7 | ) | ||||||||||||||
Partner Solutions | 1,200 | 1,235 | (2.8 | ) | 2,428 | 2,464 | (1.5 | ) | ||||||||||||||
Business Markets | 850 | 918 | (7.4 | ) | 1,721 | 1,797 | (4.2 | ) | ||||||||||||||
Other | 66 | 73 | (9.6 | ) | 134 | 135 | (0.7 | ) | ||||||||||||||
Total Operating Revenues | 7,459 | 7,719 | (3.4 | ) | 15,016 | 15,401 | (2.5 | ) | ||||||||||||||
Operating Expenses | ||||||||||||||||||||||
Cost of services | 4,377 | 4,542 | (3.6 | ) | 8,852 | 8,961 | (1.2 | ) | ||||||||||||||
Selling, general and administrative expense | 1,577 | 1,582 | (0.3 | ) | 3,056 | 3,164 | (3.4 | ) | ||||||||||||||
Depreciation and amortization expense | 1,524 | 1,548 | (1.6 | ) | 3,058 | 3,023 | 1.2 | |||||||||||||||
Total Operating Expenses | 7,478 | 7,672 | (2.5 | ) | 14,966 | 15,148 | (1.2 | ) | ||||||||||||||
Operating Income (Loss) | $ | (19 | ) | $ | 47 | * | $ | 50 | $ | 253 | (80.2 | ) | ||||||||||
Operating Income (Loss) Margin | (0.3 | )% | 0.6 | % | 0.3 | % | 1.6 | % | ||||||||||||||
Segment EBITDA | $ | 1,505 | $ | 1,595 | (5.6 | ) | $ | 3,108 | $ | 3,276 | (5.1 | ) | ||||||||||
Segment EBITDA Margin | 20.2 | % | 20.7 | % | 20.7 | % | 21.3 | % | ||||||||||||||
Footnotes:
The segment financial results and metrics above are adjusted to exclude the effects of special items, as the Company’s chief operating decision maker excludes these items in assessing business unit performance.
Intersegment transactions have not been eliminated.
* | Not meaningful |
Verizon Communications Inc.
Wireline – Selected Operating Statistics
Unaudited | 06/30/18 | 06/30/17 | % Change | |||||||||||||||||||
Connections (‘000) | ||||||||||||||||||||||
Fios video connections | 4,560 | 4,666 | (2.3 | ) | ||||||||||||||||||
Fios Internet connections | 5,959 | 5,737 | 3.9 | |||||||||||||||||||
Fios digital voice residence connections | 3,863 | 3,909 | (1.2 | ) | ||||||||||||||||||
Fios digital connections | 14,382 | 14,312 | 0.5 | |||||||||||||||||||
High-speed Internet (HSI) connections | 997 | 1,251 | (20.3 | ) | ||||||||||||||||||
Total broadband connections | 6,956 | 6,988 | (0.5 | ) | ||||||||||||||||||
Total voice connections | 12,270 | 13,352 | (8.1 | ) | ||||||||||||||||||
Unaudited | 3 Mos. Ended 6/30/18 | 3 Mos. Ended 6/30/17 | % Change | 6 Mos. Ended 6/30/18 | 6 Mos. Ended 6/30/17 | % Change | ||||||||||||||||
Net Add Detail (‘000) | ||||||||||||||||||||||
Fios video connections | (37 | ) | (15 | ) | * | (59 | ) | (28 | ) | * | ||||||||||||
Fios Internet connections | 43 | 49 | (12.2 | ) | 109 | 84 | 29.8 | |||||||||||||||
Fios digital voice residence connections | (28 | ) | 22 | * | (42 | ) | 14 | * | ||||||||||||||
Fios digital connections | (22 | ) | 56 | * | 8 | 70 | (88.6 | ) | ||||||||||||||
High-speed Internet (HSI) connections | (53 | ) | (72 | ) | 26.4 | (112 | ) | (134 | ) | 16.4 | ||||||||||||
Total broadband connections | (10 | ) | (23 | ) | 56.5 | (3 | ) | (50 | ) | 94.0 | ||||||||||||
Total voice connections | (285 | ) | (282 | ) | (1.1 | ) | (551 | ) | (587 | ) | 6.1 | |||||||||||
Revenue Statistics | ||||||||||||||||||||||
Fios revenues (in millions) | $ | 2,956 | $ | 2,899 | 2.0 | $ | 5,907 | $ | 5,790 | 2.0 | ||||||||||||
Other Operating Statistics | ||||||||||||||||||||||
Capital expenditures (in millions) | $ | 1,176 | $ | 1,190 | (1.2 | ) | $ | 2,849 | $ | 2,150 | 32.5 | |||||||||||
Wireline employees (‘000) | 56.9 | 58.6 | ||||||||||||||||||||
Footnotes:
The segment financial results and metrics above are adjusted to exclude the effects of special items, as the Company’s chief operating decision maker excludes these items in assessing business unit performance.
Intersegment transactions have not been eliminated.
* | Not meaningful |
Verizon Communications Inc.
Supplemental Information - Impact of Topic 606
We adopted Accounting Standard Update 2014-09, “Revenue from Contracts with Customers (Topic 606)” on January 1, 2018, using the modified retrospective application. This method does not impact the prior periods, which continue to reflect the accounting treatment prior to the adoption of Topic 606. As a result, for items that were affected by our adoption of Topic 606, financial results of periods prior to January 1, 2018 are not comparable to the current period financial results. To provide comparability to our results, we provide the following supplemental schedule which contains certain financial information on a pre adoption of Topic 606 basis.
Consolidated
3 Mos. Ended 6/30/18 | 3 Mos. Ended 6/30/17 | YoY | |||||||||||||||||||||
Unaudited | As reported | Balances without adoption of Topic 606 | Adjustments | As reported | $ Change | % Change | |||||||||||||||||
Operating Revenues | |||||||||||||||||||||||
Service revenues and other | $ | 27,159 | $ | 27,469 | $ | (310 | ) | $ | 26,250 | $ | 1,219 | 4.6 | |||||||||||
Wireless equipment revenues | 5,044 | 4,590 | 454 | 4,298 | 292 | 6.8 | |||||||||||||||||
Total Operating Revenues | 32,203 | 32,059 | 144 | 30,548 | 1,511 | 4.9 | |||||||||||||||||
Operating Expenses | |||||||||||||||||||||||
Cost of services | 8,234 | 8,251 | (17 | ) | 7,449 | 802 | 10.8 | ||||||||||||||||
Wireless cost of equipment | 5,397 | 5,351 | 46 | 5,035 | 316 | 6.3 | |||||||||||||||||
Selling, general and administrative expense | 7,605 | 7,948 | (343 | ) | 5,883 | 2,065 | 35.1 | ||||||||||||||||
Depreciation and amortization expense | 4,350 | 4,350 | — | 4,167 | 183 | 4.4 | |||||||||||||||||
Total Operating Expenses | 25,586 | 25,900 | (314 | ) | 22,534 | 3,366 | 14.9 | ||||||||||||||||
Operating Income | $ | 6,617 | $ | 6,159 | $ | 458 | $ | 8,014 | $ | (1,855 | ) | (23.1 | ) | ||||||||||
6 Mos. Ended 6/30/18 | 6 Mos. Ended 6/30/17 | YoY | |||||||||||||||||||||
Unaudited | As reported | Balances without adoption of Topic 606 | Adjustments | As reported | $ Change | % Change | |||||||||||||||||
Operating Revenues | |||||||||||||||||||||||
Service revenues and other | $ | 53,891 | $ | 54,602 | $ | (711 | ) | $ | 52,300 | $ | 2,302 | 4.4 | |||||||||||
Wireless equipment revenues | 10,084 | 9,184 | 900 | 8,062 | 1,122 | 13.9 | |||||||||||||||||
Total Operating Revenues | 63,975 | 63,786 | 189 | 60,362 | 3,424 | 5.7 | |||||||||||||||||
Operating Expenses | |||||||||||||||||||||||
Cost of services | 16,180 | 16,207 | (27 | ) | 14,688 | 1,519 | 10.3 | ||||||||||||||||
Wireless cost of equipment | 10,706 | 10,638 | 68 | 9,843 | 795 | 8.1 | |||||||||||||||||
Selling, general and administrative expense | 14,449 | 15,182 | (733 | ) | 12,629 | 2,553 | 20.2 | ||||||||||||||||
Depreciation and amortization expense | 8,674 | 8,674 | — | 8,226 | 448 | 5.4 | |||||||||||||||||
Total Operating Expenses | 50,009 | 50,701 | (692 | ) | 45,386 | 5,315 | 11.7 | ||||||||||||||||
Operating Income | $ | 13,966 | $ | 13,085 | $ | 881 | $ | 14,976 | $ | (1,891 | ) | (12.6 | ) | ||||||||||
Verizon Communications Inc.
Supplemental Information - Impact of Topic 606
Wireless(1)(2)
3 Mos. Ended 6/30/18 | 3 Mos. Ended 6/30/17 | YoY | |||||||||||||||||||||
Unaudited | As reported | Balances without adoption of Topic 606 | Adjustments | As reported | $ Change | % Change | |||||||||||||||||
Operating Revenues | |||||||||||||||||||||||
Service | $ | 15,754 | $ | 16,012 | $ | (258 | ) | $ | 15,622 | $ | 390 | 2.5 | |||||||||||
Equipment | 5,044 | 4,590 | 454 | 4,298 | 292 | 6.8 | |||||||||||||||||
Other | 1,651 | 1,689 | (38 | ) | 1,362 | 327 | 24.0 | ||||||||||||||||
Total Operating Revenues | 22,449 | 22,291 | 158 | 21,282 | 1,009 | 4.7 | |||||||||||||||||
Operating Expenses | |||||||||||||||||||||||
Cost of services | 2,335 | 2,335 | — | 2,219 | 116 | 5.2 | |||||||||||||||||
Cost of equipment | 5,397 | 5,351 | 46 | 5,035 | 316 | 6.3 | |||||||||||||||||
Selling, general and administrative expense | 3,984 | 4,310 | (326 | ) | 4,271 | 39 | 0.9 | ||||||||||||||||
Depreciation and amortization expense | 2,459 | 2,459 | — | 2,347 | 112 | 4.8 | |||||||||||||||||
Total Operating Expenses | 14,175 | 14,455 | (280 | ) | 13,872 | 583 | 4.2 | ||||||||||||||||
Operating Income | $ | 8,274 | $ | 7,836 | $ | 438 | $ | 7,410 | $ | 426 | 5.7 | ||||||||||||
6 Mos. Ended 6/30/18 | 6 Mos. Ended 6/30/17 | YoY | |||||||||||||||||||||
Unaudited | As reported | Balances without adoption of Topic 606 | Adjustments | As reported | $ Change | % Change | |||||||||||||||||
Operating Revenues | |||||||||||||||||||||||
Service | $ | 31,156 | $ | 31,794 | $ | (638 | ) | $ | 31,400 | $ | 394 | 1.3 | |||||||||||
Equipment | 10,084 | 9,184 | 900 | 8,062 | 1,122 | 13.9 | |||||||||||||||||
Other | 3,109 | 3,178 | (69 | ) | 2,698 | 480 | 17.8 | ||||||||||||||||
Total Operating Revenues | 44,349 | 44,156 | 193 | 42,160 | 1,996 | 4.7 | |||||||||||||||||
Operating Expenses | |||||||||||||||||||||||
Cost of services | 4,550 | 4,550 | — | 4,406 | 144 | 3.3 | |||||||||||||||||
Cost of equipment | 10,706 | 10,638 | 68 | 9,843 | 795 | 8.1 | |||||||||||||||||
Selling, general and administrative expense | 7,883 | 8,558 | (675 | ) | 8,740 | (182 | ) | (2.1 | ) | ||||||||||||||
Depreciation and amortization expense | 4,887 | 4,887 | — | 4,685 | 202 | 4.3 | |||||||||||||||||
Total Operating Expenses | 28,026 | 28,633 | (607 | ) | 27,674 | 959 | 3.5 | ||||||||||||||||
Operating Income | $ | 16,323 | $ | 15,523 | $ | 800 | $ | 14,486 | $ | 1,037 | 7.2 | ||||||||||||
Footnotes:
(1) The financial results above are adjusted to exclude the effects of special items, as the Company’s chief operating decision maker excludes these items in assessing business unit performance.
(2) Intersegment transactions have not been eliminated.
Verizon Communications Inc.
Supplemental Information - Impact of Topic 606
Wireline(1)(2)
3 Mos. Ended 6/30/18 | 3 Mos. Ended 6/30/17 | YoY | |||||||||||||||||||||
Unaudited | As reported | Balances without adoption of Topic 606 | Adjustments | As reported | $ Change | % Change | |||||||||||||||||
Operating Revenues | |||||||||||||||||||||||
Consumer Markets | $ | 3,132 | $ | 3,140 | $ | (8 | ) | $ | 3,184 | $ | (44 | ) | (1.4 | ) | |||||||||
Enterprise Solutions | 2,211 | 2,211 | — | 2,309 | (98 | ) | (4.2 | ) | |||||||||||||||
Partner Solutions | 1,200 | 1,200 | — | 1,235 | (35 | ) | (2.8 | ) | |||||||||||||||
Business Markets | 850 | 850 | — | 918 | (68 | ) | (7.4 | ) | |||||||||||||||
Other | 66 | 52 | 14 | 73 | (21 | ) | (28.8 | ) | |||||||||||||||
Total Operating Revenues | 7,459 | 7,453 | 6 | 7,719 | (266 | ) | (3.4 | ) | |||||||||||||||
Operating Expenses | |||||||||||||||||||||||
Cost of services | 4,377 | 4,390 | (13 | ) | 4,542 | (152 | ) | (3.3 | ) | ||||||||||||||
Selling, general and administrative expense | 1,577 | 1,600 | (23 | ) | 1,582 | 18 | 1.1 | ||||||||||||||||
Depreciation and amortization expense | 1,524 | 1,524 | — | 1,548 | (24 | ) | (1.6 | ) | |||||||||||||||
Total Operating Expenses | 7,478 | 7,514 | (36 | ) | 7,672 | (158 | ) | (2.1 | ) | ||||||||||||||
Operating Income (Loss) | $ | (19 | ) | $ | (61 | ) | $ | 42 | $ | 47 | $ | (108 | ) | * | |||||||||
6 Mos. Ended 6/30/18 | 6 Mos. Ended 6/30/17 | YoY | |||||||||||||||||||||
Unaudited | As reported | Balances without adoption of Topic 606 | Adjustments | As reported | $ Change | % Change | |||||||||||||||||
Operating Revenues | |||||||||||||||||||||||
Consumer Markets | $ | 6,282 | $ | 6,286 | $ | (4 | ) | $ | 6,385 | $ | (99 | ) | (1.6 | ) | |||||||||
Enterprise Solutions | 4,451 | 4,451 | — | 4,620 | (169 | ) | (3.7 | ) | |||||||||||||||
Partner Solutions | 2,428 | 2,428 | — | 2,464 | (36 | ) | (1.5 | ) | |||||||||||||||
Business Markets | 1,721 | 1,720 | 1 | 1,797 | (77 | ) | (4.3 | ) | |||||||||||||||
Other | 134 | 108 | 26 | 135 | (27 | ) | (20.0 | ) | |||||||||||||||
Total Operating Revenues | 15,016 | 14,993 | 23 | 15,401 | (408 | ) | (2.6 | ) | |||||||||||||||
Operating Expenses | |||||||||||||||||||||||
Cost of services | 8,852 | 8,875 | (23 | ) | 8,961 | (86 | ) | (1.0 | ) | ||||||||||||||
Selling, general and administrative expense | 3,056 | 3,116 | (60 | ) | 3,164 | (48 | ) | (1.5 | ) | ||||||||||||||
Depreciation and amortization expense | 3,058 | 3,058 | — | 3,023 | 35 | 1.2 | |||||||||||||||||
Total Operating Expenses | 14,966 | 15,049 | (83 | ) | 15,148 | (99 | ) | (0.7 | ) | ||||||||||||||
Operating Income (Loss) | $ | 50 | $ | (56 | ) | $ | 106 | $ | 253 | $ | (309 | ) | * | ||||||||||
Footnotes:
(1) The financial results above are adjusted to exclude the effects of special items, as the Company’s chief operating decision maker excludes these items in assessing business unit performance.
(2) Intersegment transactions have not been eliminated.
* | Not meaningful |
Verizon Communications Inc.
Supplemental Information - Impact of Topic 606
Fios Revenues
3 Mos. Ended 6/30/18 | 3 Mos. Ended 6/30/17 | YoY | |||||||||||||||||||||
Unaudited | As reported | Balances without adoption of Topic 606 | Adjustments | As reported | $ Change | % Change | |||||||||||||||||
Fios Revenues | $ | 2,956 | $ | 2,967 | $ | (11 | ) | $ | 2,899 | $ | 68 | 2.3 | |||||||||||
Verizon Communications Inc.
Non-GAAP Reconciliations - Consolidated Verizon
Consolidated Operating Revenues Excluding Oath, Divested Businesses and the Revenue Recognition Standard
(dollars in millions)
Unaudited | 3 Mos. Ended 6/30/18 | 3 Mos. Ended 6/30/17 | ||||||
Consolidated Operating Revenues | $ | 32,203 | $ | 30,548 | ||||
Less Oath operating revenues | 1,874 | 994 | ||||||
Less Operating revenues from divested businesses | — | 120 | ||||||
Less Impact of Topic 606 | 144 | — | ||||||
Consolidated Operating Revenues Excluding Oath, Divested Businesses and the Revenue Recognition Standard | $ | 30,185 | $ | 29,434 | ||||
Year over year change | 2.6 | % | ||||||
Consolidated EBITDA, Consolidated EBITDA Margin, Consolidated Adjusted EBITDA, Consolidated Adjusted EBITDA Margin and Consolidated Adjusted EBITDA Excluding Operating Results from Divested Businesses
(dollars in millions)
Unaudited | 3 Mos. Ended 6/30/18 | 3 Mos. Ended 3/31/18 | 3 Mos. Ended 12/31/17 | 3 Mos. Ended 9/30/17 | 3 Mos. Ended 6/30/17 | 3 Mos. Ended 3/31/17 | ||||||||||||||||||
Consolidated Net Income | $ | 4,246 | $ | 4,666 | $ | 18,783 | $ | 3,736 | $ | 4,478 | $ | 3,553 | ||||||||||||
Add/(subtract): | ||||||||||||||||||||||||
Provision (benefit) for income taxes | 1,281 | 1,388 | (15,849 | ) | 1,775 | 2,489 | 1,629 | |||||||||||||||||
Interest expense | 1,222 | 1,201 | 1,219 | 1,164 | 1,218 | 1,132 | ||||||||||||||||||
Other (income) expense, net | (360 | ) | 75 | 1,302 | 291 | (199 | ) | 627 | ||||||||||||||||
Equity in losses of unconsolidated businesses | 228 | 19 | 6 | 22 | 28 | 21 | ||||||||||||||||||
Operating Income | 6,617 | 7,349 | 5,461 | 6,988 | 8,014 | 6,962 | ||||||||||||||||||
Add Depreciation and amortization expense | 4,350 | 4,324 | 4,456 | 4,272 | 4,167 | 4,059 | ||||||||||||||||||
Consolidated EBITDA | 10,967 | 11,673 | 9,917 | 11,260 | 12,181 | $ | 11,021 | |||||||||||||||||
Add/subtract special items (before tax): | ||||||||||||||||||||||||
Severance charges | 339 | — | 302 | — | 195 | — | ||||||||||||||||||
Product realignment charges | 450 | — | 463 | — | — | — | ||||||||||||||||||
Gain on spectrum license transactions | — | — | (144 | ) | — | — | (126 | ) | ||||||||||||||||
Net gain on sale of divested businesses | — | — | — | — | (1,774 | ) | — | |||||||||||||||||
Acquisition and integration related charges(1) | 109 | 105 | 154 | 166 | 559 | — | ||||||||||||||||||
898 | 105 | 775 | 166 | (1,020 | ) | (126 | ) | |||||||||||||||||
Consolidated Adjusted EBITDA | 11,865 | 11,778 | 10,692 | 11,426 | 11,161 | $ | 10,895 | |||||||||||||||||
Operating results from divested businesses(1) | — | — | — | (17 | ) | (50 | ) | (104 | ) | |||||||||||||||
Consolidated Adjusted EBITDA Excluding Operating Results from Divested Businesses | $ | 11,865 | $ | 11,778 | $ | 10,692 | $ | 11,409 | $ | 11,111 | $ | 10,791 | ||||||||||||
Consolidated Operating Revenues - Quarter to Date | $ | 32,203 | $ | 30,548 | ||||||||||||||||||||
Consolidated Operating Income Margin - Quarter to Date | 20.5 | % | ||||||||||||||||||||||
Consolidated EBITDA Margin - Quarter to Date | 34.1 | % | 39.9 | % | ||||||||||||||||||||
Consolidated Adjusted EBITDA Margin - Quarter to Date | 36.8 | % | 36.5 | % | ||||||||||||||||||||
(1) Excludes depreciation and amortization expense.
Verizon Communications Inc.
Non-GAAP Reconciliations - Consolidated Verizon
Net Debt and Net Debt to Consolidated Adjusted EBITDA Ratio
(dollars in millions)
Unaudited | 6/30/18 | 12/31/17 | ||||||
Net Debt | ||||||||
Debt maturing within one year | $ | 5,466 | $ | 3,453 | ||||
Long-term debt | 109,174 | 113,642 | ||||||
Total Debt | 114,640 | 117,095 | ||||||
Less Cash and cash equivalents | 1,750 | 2,079 | ||||||
Net Debt | $ | 112,890 | $ | 115,016 | ||||
Net Debt to Consolidated Adjusted EBITDA Ratio | 2.5x | 2.6x | ||||||
Adjusted Earnings per Common Share (Adjusted EPS)(1)
Unaudited | 3 Mos. Ended 6/30/18 | 3 Mos. Ended 6/30/17 | ||||||||||||||||||||||
Pre-tax | Tax | After-Tax | Pre-tax | Tax | After-Tax | |||||||||||||||||||
EPS | $ | 1.00 | $ | 1.07 | ||||||||||||||||||||
Net gain on sale of divested businesses | $ | — | $ | — | $ | — | — | $ | (1,774 | ) | $ | 843 | $ | (931 | ) | (0.23 | ) | |||||||
Severance charges | 339 | (89 | ) | 250 | 0.06 | 195 | (77 | ) | 118 | 0.03 | ||||||||||||||
Product realignment charges | 658 | (149 | ) | 509 | 0.12 | — | — | — | — | |||||||||||||||
Acquisition and integration related charges | 120 | (28 | ) | 92 | 0.02 | 564 | (209 | ) | 355 | 0.09 | ||||||||||||||
$ | 1,117 | $ | (266 | ) | $ | 851 | 0.20 | $ | (1,015 | ) | $ | 557 | $ | (458 | ) | (0.11 | ) | |||||||
Adjusted EPS | $ | 1.20 | $ | 0.96 | ||||||||||||||||||||
(1) | Adjusted EPS may not add due to rounding. |
Verizon Communications Inc.
Non-GAAP Reconciliations - Segments
Segment EBITDA and Segment EBITDA Margin
Wireless
(dollars in millions) | ||||||||
Unaudited | 3 Mos. Ended 6/30/18 | 3 Mos. Ended 6/30/17 | ||||||
Operating Income | $ | 8,274 | $ | 7,410 | ||||
Add Depreciation and amortization expense | 2,459 | 2,347 | ||||||
Segment EBITDA | $ | 10,733 | $ | 9,757 | ||||
Total operating revenues | $ | 22,449 | $ | 21,282 | ||||
Operating Income Margin | 36.9 | % | 34.8 | % | ||||
Segment EBITDA Margin | 47.8 | % | 45.8 | % | ||||
Wireline
(dollars in millions) | ||||||||
Unaudited | 3 Mos. Ended 6/30/18 | 3 Mos. Ended 6/30/17 | ||||||
Operating Income (Loss) | $ | (19 | ) | $ | 47 | |||
Add Depreciation and amortization expense | 1,524 | 1,548 | ||||||
Segment EBITDA | $ | 1,505 | $ | 1,595 | ||||
Total operating revenues | $ | 7,459 | $ | 7,719 | ||||
Operating Income (Loss) Margin | (0.3 | )% | 0.6 | % | ||||
Segment EBITDA Margin | 20.2 | % | 20.7 | % | ||||
Verizon Communications Inc.
EBITDA Excluding Impact of Topic 606(1)
Consolidated
(dollars in millions) | ||||
Unaudited | 3 Mos. Ended 6/30/18 | |||
Consolidated Net Income | $ | 4,246 | ||
Add/(subtract): | ||||
Provision for income taxes | 1,281 | |||
Interest expense | 1,222 | |||
Other (income) expense, net | (360 | ) | ||
Equity in losses of unconsolidated businesses | 228 | |||
Operating Income | 6,617 | |||
Add Depreciation and amortization expense | 4,350 | |||
Consolidated EBITDA | 10,967 | |||
Add/subtract special items (before tax): | ||||
Severance charges | 339 | |||
Product realignment charges | 450 | |||
Acquisition and integration related charges | 109 | |||
898 | ||||
Consolidated Adjusted EBITDA | 11,865 | |||
Less Impact of Topic 606 to Operating Income | 458 | |||
Consolidated Adjusted EBITDA Excluding Impact of Topic 606 | $ | 11,407 | ||
Total operating revenues | $ | 32,059 | ||
Consolidated Adjusted EBITDA Margin | 35.6 | % | ||
Wireless
(dollars in millions) | ||||||||
Unaudited | 3 Mos. Ended 6/30/18 | 3 Mos. Ended 6/30/17 | ||||||
Operating Income | $ | 7,836 | $ | 7,410 | ||||
Add Depreciation and amortization expense | 2,459 | 2,347 | ||||||
Segment EBITDA | $ | 10,295 | $ | 9,757 | ||||
Total operating revenues | $ | 22,291 | $ | 21,282 | ||||
Segment EBITDA Margin | 46.2 | % | 45.8 | % | ||||
Year over year change in Segment EBITDA Margin | 40 | bps | ||||||
(1) Amounts for the three months ended June 30, 2018 exclude the impact of Accounting Standard Update 2014-09, “Revenue from Contracts with Customers (Topic 606)”, which we adopted on January 1, 2018.
Verizon Communications Inc.
EBITDA Excluding Impact of Topic 606(1)
Wireline
(dollars in millions) | ||||
Unaudited | 3 Mos. Ended 6/30/18 | |||
Operating Loss | $ | (61 | ) | |
Add Depreciation and amortization expense | 1,524 | |||
Segment EBITDA | $ | 1,463 | ||
Total operating revenues | $ | 7,453 | ||
Segment EBITDA Margin | 19.6 | % | ||
(1) Amounts for the three months ended June 30, 2018 exclude the impact of Accounting Standard Update 2014-09, “Revenue from Contracts with Customers (Topic 606)”, which we adopted on January 1, 2018.
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