Form 8-K VERIZON COMMUNICATIONS For: Apr 23

April 23, 2019 7:32 AM
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 _____________________________________________________________________________
FORM 8-K
 
 ______________________________________________________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: April 23, 2019
(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 April 23, 2019 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 in the United States (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.
EBITDA and EBITDA Margin Related Non-GAAP Measures
Consolidated earnings before interest, taxes, depreciation and amortization (Consolidated EBITDA), Consolidated EBITDA Margin, Segment EBITDA and 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.
Consolidated EBITDA is calculated by adding back interest, taxes and depreciation and amortization expense 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.
Consolidated Adjusted EBITDA and Consolidated Adjusted EBITDA Margin Related Non-GAAP Measures
Consolidated Adjusted EBITDA and 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 and 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 non-operational items and special items enables comparability to prior period performance and trend analysis.
Consolidated Adjusted EBITDA is calculated by excluding from Consolidated EBITDA the effect of the following non-operational items: equity in losses and earnings of unconsolidated businesses and other income and expense, net, and the following special items: Oath goodwill impairment, severance charges, product realignment charges and acquisition and integration related charges. Oath goodwill impairment relates to impairment charges recognized in the fourth quarter of 2018 as a result of the Company's annual goodwill impairment testing of its Media business, Verizon Media, which operated in 2018 under the "Oath" brand. Severance charges recorded during 2018 are primarily related to the voluntary separation program and other headcount reduction initiatives. Product realignment charges primarily relate to the discontinuation of the go90 platform and associated content. 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.
Consolidated Adjusted EBITDA Margin is calculated by dividing Consolidated Adjusted EBITDA by 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. For



 

purposes of Net Debt to Consolidated Adjusted EBITDA Ratio, Consolidated Adjusted EBITDA is calculated for the last twelve months.
Net Unsecured Debt and Net Unsecured Debt to Consolidated Adjusted EBITDA Ratio
Net Unsecured Debt and Net Unsecured 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 unsecured debt from continuing operations.
Net Unsecured Debt is calculated by subtracting secured debt and cash and cash equivalents from the sum of debt maturing within one year and long-term debt. Net Unsecured Debt to Consolidated Adjusted EBITDA Ratio is calculated by dividing Net Unsecured Debt by Consolidated Adjusted EBITDA. For purposes of Net Unsecured Debt to Consolidated Adjusted EBITDA Ratio, Consolidated Adjusted EBITDA 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: a pension remeasurement credit, early debt redemption costs and acquisition and integration related charges, from the calculation of reported EPS.
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 April 23, 2019, 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:
 
April 23, 2019
 
 
 
/s/ Anthony T. Skiadas
 
 
 
 
 
 
     Anthony T. Skiadas
 
 
 
 
 
 
     Senior Vice President and Controller




 


EXHIBIT INDEX
 
 
 
Exhibit
Number
  
Description
 
 
  
Press release and financial tables, dated April 23, 2019, issued by Verizon Communications Inc.


Exhibit 99
vzlogo.jpg


News Release




FOR IMMEDIATE RELEASE
Media contacts:
April 23, 2019
Bob Varettoni
 
908.559.6388
 
robert.a.varettoni@verizon.com
 
 
 
Eric Wilkens
 
908.559.3063
 
eric.wilkens@verizon.com




Verizon reports strong 1Q operational performance, while
raising earnings guidance for full-year 2019

1Q 2019 highlights
Consolidated:
$1.22 in earnings per share (EPS), compared with $1.11 in 1Q 2018; adjusted EPS (non-GAAP) of $1.20, excluding a special item, compared with $1.17 in 1Q 2018.
Total consolidated revenue growth of 1.1 percent year over year, to $32.1 billion.
Wireless:
61,000 retail postpaid net additions, including 174,000 postpaid smartphone net additions.
Retail postpaid churn of 1.12 percent, and retail postpaid phone churn of 0.84 percent.
Service revenue growth of 4.4 percent year over year.
Total revenue growth of 3.7 percent year over year to $22.7 billion.
Wireline:
52,000 Fios Internet net additions; Fios total revenue growth of 3.6 percent year over year.




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NEW YORK - As the 5G mobility era begins, Verizon Communications Inc. (NYSE, Nasdaq: VZ) today reported first-quarter 2019 results highlighted by continued wireless service revenue growth and strong earnings per share.
“Verizon began 2019 by extending our leadership position in 4G, driving innovation in 5G and expanding our high-valued customer relationships,” said Chairman and CEO Hans Vestberg. “2019 is shaping up to be an exciting year for Verizon. We are leading the world in the development of new technologies with the launch of our 5G Ultra Wideband network. Our ambition remains unchanged to provide the most advanced next-generation networks in the world.”
For first-quarter 2019, Verizon reported EPS of $1.22, compared with $1.11 in first-quarter 2018. On an adjusted basis (non-GAAP), first-quarter 2019 EPS was $1.20, excluding a special item, compared with adjusted EPS of $1.17 in first-quarter 2018. Verizon’s first-quarter 2019 EPS included a 2 cent benefit due to a pension re-measurement triggered by the company's Voluntary Separation Program.
In first-quarter 2019, Verizon faced headwinds as a result of a reduction in benefits from the adoption of a revenue recognition standard, primarily due to the deferral of commission expense, and the adoption of a lease accounting standard. The combined impact was a 4 cent year-over-year headwind to EPS.

Consolidated results
Total consolidated operating revenues in first-quarter 2019 were $32.1 billion, up 1.1 percent from first-quarter 2018, primarily driven by strong wireless service revenue growth.
Cash flow from operations totaled $7.1 billion in first-quarter 2019, an increase of approximately $400 million year over year. This increase was driven by the continued momentum in Verizon's operating businesses and lower discretionary employee benefits contributions, partially offset by the first -- and largest -- of three payments related to the Voluntary Separation Program.
First-quarter 2019 capital expenditures totaled $4.3 billion. Verizon's capital expenditures continue to support the launch and continued build-out of its 5G Ultra Wideband network, the growth in data and video traffic on the company's 4G LTE network, the deployment of significant fiber in markets nationwide and the upgrade to Verizon's Intelligent Edge Network.

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In 2018, Verizon announced a goal to achieve $10 billion in cumulative cash savings by 2021. This initiative has yielded approximately $3.0 billion of cumulative cash savings since this program began. By the end of first-quarter 2019, Verizon completed the first two phases of its Voluntary Separation Program and realized approximately $180 million of expense savings. These savings are expected to contribute to the company's cumulative cash savings goal.
For first-quarter 2019, Verizon Media revenues were $1.8 billion, down 7.2 percent year over year. Declines in desktop advertising continue to more than offset growth in mobile and native advertising.
Net income was $5.2 billion in first-quarter 2019. EBITDA (non-GAAP, earnings before interest, taxes, depreciation and amortization) totaled approximately $12.2 billion. Consolidated operating income margin was 24.0 percent. Consolidated EBITDA margin (non-GAAP) was 38.1 percent in first-quarter 2019, compared with 36.4 percent in first-quarter 2018. Adjusted EBITDA margin (non-GAAP) in first-quarter 2019 was 37.2 percent.

Wireless results
Verizon reported 61,000 retail postpaid net additions in first-quarter 2019, consisting of 44,000 phone net losses and tablet net losses of 156,000, offset by 261,000 other connected device net additions, primarily wearables. Postpaid smartphone net additions were 174,000.
Total revenues were $22.7 billion, an increase of 3.7 percent year over year, primarily driven by continued strong service revenue performance.
Service revenues increased 4.4 percent in first-quarter 2019, driven by customer step-ups to higher-priced plans, contributions from strong retail postpaid net additions in fourth-quarter 2018 and an increase in connections per account.
Total retail postpaid churn was 1.12 percent in first-quarter 2019, and retail postpaid phone churn was 0.84 percent.
Segment operating income was $8.5 billion, an increase of 5.2 percent year over year. Segment EBITDA (non-GAAP) totaled $10.8 billion in first-quarter 2019, an increase of 2.7 percent year over year. Segment EBITDA margin (non-GAAP) was 47.4 percent, including approximately 85 basis points in headwinds primarily from the deferral of commission expense and the new lease accounting standard.
Wireline results
Total wireline revenues decreased 3.9 percent year over year in first-quarter 2019 to $7.3 billion, as growth in high-quality fiber products was offset by pricing pressures on legacy products and technology shifts.

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Total Fios revenues grew 3.6 percent year over year to $3.1 billion. In first-quarter 2019, Verizon added a net of 52,000 Fios Internet connections and lost a net of 53,000 Fios Video connections, continuing to reflect the shift from traditional linear video to over-the-top offerings.
Wireline operating loss was $88 million in first-quarter 2019, and segment operating loss margin was 1.2 percent. Segment EBITDA (non-GAAP) was $1.5 billion in first-quarter 2019. Segment EBITDA margin (non-GAAP) was 20.3 percent in first-quarter 2019, compared with 21.2 percent in first-quarter 2018.

Outlook and guidance
Based on the strength of the operational trends in the underlying business, Verizon is raising earnings guidance for full-year 2019:
The company expects low single-digit percentage growth in adjusted EPS, excluding the impact of the new lease accounting standard. This is an increase from prior guidance for 2019 adjusted EPS to be similar to 2018, excluding the impact of the new lease accounting standard.
Verizon also expects the following:
Low single-digit percentage growth in full-year consolidated revenues on a GAAP reported basis.
The effective tax rate for full-year 2019 to be in the range of 24 percent to 26 percent.
Cash taxes to be $2 billion to $3 billion higher than in 2018 due to benefits that were realized in 2018 that are not expected to repeat in 2019.
Capital spending for 2019 to be in the range of $17 billion to $18 billion, including the expanded commercial launch of 5G.
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 revenues of $130.9 billion in 2018. The company operates America’s most reliable wireless network and the nation’s premier all-fiber network, and delivers integrated solutions to businesses worldwide. With brands like Yahoo, TechCrunch and HuffPost, the company’s media group helps consumers stay informed and entertained, communicate and transact, while creating new ways for advertisers and partners to connect. Verizon’s corporate responsibility prioritizes the environmental, social and governance issues most relevant to its business and impact to society.


####

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/.

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

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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 3/31/19

 
3 Mos. Ended 3/31/18

 
%
Change
 
 
 
 
 
 
 
Operating Revenues
 
 
 
 
 
 
Service revenues and other
 
$
27,197

 
$
26,732

 
1.7

Wireless equipment revenues
 
4,931

 
5,040

 
(2.2
)
Total Operating Revenues
 
32,128

 
31,772

 
1.1

 
 
 
 
 
 
 
Operating Expenses
 
 
 
 
 


Cost of services
 
7,792

 
7,946

 
(1.9
)
Wireless cost of equipment
 
5,198

 
5,309

 
(2.1
)
Selling, general and administrative expense
 
7,198

 
6,844

 
5.2

Depreciation and amortization expense
 
4,231

 
4,324

 
(2.2
)
Total Operating Expenses
 
24,419

 
24,423

 

 
 
 
 
 
 
 
Operating Income
 
7,709

 
7,349

 
4.9

Equity in losses of unconsolidated businesses
 
(6
)
 
(19
)
 
(68.4
)
Other income (expense), net
 
295

 
(75
)
 
*

Interest expense
 
(1,210
)
 
(1,201
)
 
0.7

Income Before Provision For Income Taxes
 
6,788

 
6,054

 
12.1

Provision for income taxes
 
(1,628
)
 
(1,388
)
 
17.3

Net Income
 
$
5,160

 
$
4,666

 
10.6

 
 
 
 
 
 
 
Net income attributable to noncontrolling interests
 
$
128

 
$
121

 
5.8

Net income attributable to Verizon
 
5,032

 
4,545

 
10.7

Net Income
 
$
5,160

 
$
4,666

 
10.6

 
 
 
 
 
 
 
Basic Earnings Per Common Share
 
 
 
 
 


Net income attributable to Verizon
 
$
1.22

 
$
1.11

 
9.9

Weighted average number of common shares (in millions)
 
4,138

 
4,104

 


 
 
 
 
 
 
 
Diluted Earnings Per Common Share (1)
 
 
 
 
 


Net income attributable to Verizon
 
$
1.22

 
$
1.11

 
9.9

Weighted average number of common shares-assuming dilution (in millions)
 
4,140

 
4,107

 


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
 
3/31/19

 
12/31/18

 
$ Change
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
Current assets
 
 
 
 
 
 
Cash and cash equivalents
 
$
2,322

 
$
2,745

 
$
(423
)
Accounts receivable, net
 
24,469

 
25,102

 
(633
)
Inventories
 
1,417

 
1,336

 
81

Prepaid expenses and other
 
5,189

 
5,453

 
(264
)
Total current assets
 
33,397

 
34,636

 
(1,239
)
 
 
 
 
 
 
 
Property, plant and equipment
 
254,457

 
252,835

 
1,622

Less accumulated depreciation
 
166,608

 
163,549

 
3,059

Property, plant and equipment, net
 
87,849


89,286


(1,437
)
Investments in unconsolidated businesses
 
674

 
671

 
3

Wireless licenses
 
94,237

 
94,130

 
107

Goodwill
 
24,635

 
24,614

 
21

Other intangible assets, net
 
9,608

 
9,775

 
(167
)
Operating lease right-of-use assets
 
23,105

 

 
23,105

Other assets
 
10,442

 
11,717

 
(1,275
)
Total assets
 
$
283,947


$
264,829


$
19,118

 
 
 
 
 
 
 
Liabilities and Equity
 
 
 
 
 
 
Current liabilities
 
 
 
 
 
 
Debt maturing within one year
 
$
8,614

 
$
7,190

 
$
1,424

Accounts payable and accrued liabilities
 
18,664

 
22,501

 
(3,837
)
Current operating lease liabilities
 
2,997

 

 
2,997

Other current liabilities
 
8,332

 
8,239

 
93

Total current liabilities
 
38,607

 
37,930

 
677

 
 
 
 
 
 
 
Long-term debt
 
105,045

 
105,873

 
(828
)
Employee benefit obligations
 
17,888

 
18,599

 
(711
)
Deferred income taxes
 
34,344

 
33,795

 
549

Non-current operating lease liabilities
 
18,971

 

 
18,971

Other liabilities
 
11,632

 
13,922

 
(2,290
)
Total long-term liabilities
 
187,880

 
172,189

 
15,691

 
 
 
 
 
 
 
Equity
 
 
 
 
 


Common stock
 
429

 
429

 

Additional paid in capital
 
13,418

 
13,437

 
(19
)
Retained earnings
 
46,493

 
43,542

 
2,951

Accumulated other comprehensive income
 
2,216

 
2,370

 
(154
)
Common stock in treasury, at cost
 
(6,825
)
 
(6,986
)
 
161

Deferred compensation – employee stock ownership plans and other
 
125

 
353

 
(228
)
Noncontrolling interests
 
1,604

 
1,565

 
39

Total equity
 
57,460

 
54,710

 
2,750

Total liabilities and equity
 
$
283,947

 
$
264,829

 
$
19,118




Verizon Communications Inc.
Selected Financial and Operating Statistics
Unaudited
 
3/31/19

 
12/31/18

 
 
 
 
 
Total debt (in millions)
 
$
113,659

 
$
113,063

Net debt (in millions)
 
$
111,337

 
$
110,318

Net unsecured debt (in millions)
 
$
100,951

 
$
100,242

Net debt / Consolidated Adjusted EBITDA(1)
 
2.3x

 
2.3x

Net unsecured debt / Consolidated Adjusted EBITDA(1)
 
2.1x

 
2.1x

Common shares outstanding end of period (in millions)
 
4,136

 
4,132

Total employees (‘000)
 
139.4

 
144.5

Quarterly cash dividends declared per common share
 
$
0.6025

 
$
0.6025

Footnotes: 
(1)
Consolidated adjusted EBITDA excludes the effects of non-operational items and special items.


Verizon Communications Inc.
Condensed Consolidated Statements of Cash Flows


(dollars in millions)
Unaudited
 
3 Mos. Ended 3/31/19

 
3 Mos. Ended 3/31/18

 
$ Change
 
 
 
 
 
 
 
Cash Flows from Operating Activities
 
 
 
 
 
 
Net Income
 
$
5,160

 
$
4,666

 
$
494

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
 
 
Depreciation and amortization expense
 
4,231

 
4,324

 
(93
)
Employee retirement benefits
 
(195
)
 
(151
)
 
(44
)
Deferred income taxes
 
459

 
702

 
(243
)
Provision for uncollectible accounts
 
319

 
239

 
80

Equity in losses of unconsolidated businesses, net of dividends received
 
21

 
30

 
(9
)
Changes in current assets and liabilities, net of effects from acquisition/disposition of businesses
 
(2,702
)
 
(2,033
)
 
(669
)
Discretionary employee benefits contributions
 
(300
)
 
(1,000
)
 
700

Other, net
 
88

 
(129
)
 
217

Net cash provided by operating activities
 
7,081

 
6,648

 
433

 
 
 
 
 
 
 
Cash Flows from Investing Activities
 
 
 
 
 
 
Capital expenditures (including capitalized software)
 
(4,268
)
 
(4,552
)
 
284

Acquisitions of businesses, net of cash acquired
 
(25
)
 
(32
)
 
7

Acquisitions of wireless licenses
 
(104
)
 
(970
)
 
866

Other, net
 
(406
)
 
269

 
(675
)
Net cash used in investing activities
 
(4,803
)
 
(5,285
)
 
482

 
 
 
 
 
 
 
Cash Flows from Financing Activities
 
 
 
 
 
 
Proceeds from long-term borrowings
 
2,131

 
1,956

 
175

Proceeds from asset-backed long-term borrowings
 
1,117

 
1,178

 
(61
)
Repayments of long-term borrowings and finance lease obligations
 
(2,963
)
 
(2,984
)
 
21

Repayments of asset-backed long-term borrowings
 
(813
)
 

 
(813
)
Dividends paid
 
(2,489
)
 
(2,407
)
 
(82
)
Other, net
 
360

 
941

 
(581
)
Net cash used in financing activities
 
(2,657
)
 
(1,316
)
 
(1,341
)
 
 
 
 
 
 
 
Increase (decrease) in cash, cash equivalents and restricted cash
 
(379
)
 
47

 
(426
)
Cash, cash equivalents and restricted cash, beginning of period
 
3,916

 
2,888

 
1,028

Cash, cash equivalents and restricted cash, end of period
 
$
3,537

 
$
2,935

 
$
602





Verizon Communications Inc.
Wireless – Selected Financial Results


(dollars in millions)
Unaudited
 
3 Mos. Ended 3/31/19

 
3 Mos. Ended 3/31/18

 
%
Change
 
 
 
 
 
 
 
Operating Revenues
 
 
 
 
 
 
Service
 
$
16,072

 
$
15,402

 
4.4

Equipment
 
4,931

 
5,040

 
(2.2
)
Other
 
1,697

 
1,458

 
16.4

Total Operating Revenues
 
22,700

 
21,900

 
3.7

 
 
 
 
 
 
 
Operating Expenses
 
 
 
 
 


Cost of services
 
2,456

 
2,215

 
10.9

Cost of equipment
 
5,198

 
5,309

 
(2.1
)
Selling, general and administrative expense
 
4,281

 
3,899

 
9.8

Depreciation and amortization expense
 
2,299

 
2,428

 
(5.3
)
Total Operating Expenses
 
14,234

 
13,851

 
2.8

 
 
 
 
 
 
 
Operating Income
 
$
8,466

 
$
8,049

 
5.2

Operating Income Margin
 
37.3
%
 
36.8
%
 


 
 
 
 
 
 
 
Segment EBITDA
 
$
10,765

 
$
10,477

 
2.7

Segment EBITDA Margin
 
47.4
%
 
47.8
%
 
 
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
3/31/19

 
3/31/18

 
% Change
Connections (‘000)
 
 
 
 
 
 
Retail postpaid
 
113,407

 
111,114

 
2.1

Retail prepaid
 
4,479

 
5,068

 
(11.6
)
Total retail
 
117,886

 
116,182

 
1.5

 
 
 
 
 
 
 
Unaudited
 
3 Mos. Ended 3/31/19

 
3 Mos. Ended 3/31/18

 
%
Change
Net Add Detail (‘000) (1)
 
 
 
 
 
 
Retail postpaid
 
61

 
260

 
(76.5
)
Retail prepaid
 
(176
)
 
(335
)
 
47.5

Total retail
 
(115
)
 
(75
)
 
(53.3
)
Account Statistics
 
 
 
 
 


Retail postpaid accounts (‘000) (2)
 
35,338

 
35,333

 

Retail postpaid connections per account (2)
 
3.21

 
3.14

 
2.2

Retail postpaid ARPA (3)
 
$
136.68

 
$
131.71

 
3.8

Retail postpaid I-ARPA (4)
 
$
172.09

 
$
164.72

 
4.5

Churn Detail
 
 
 
 
 


Retail postpaid
 
1.12
%
 
1.04
%
 


Retail
 
1.31
%
 
1.28
%
 


Retail Postpaid Connection Statistics (2)
 
 
 
 
 


Total smartphone postpaid phone base
 
92.7
%
 
90.7
%
 


Total Internet postpaid base
 
19.7
%
 
19.2
%
 


Other Operating Statistics
 
 
 
 
 


Capital expenditures (in millions)
 
$
2,044

 
$
2,367

 
(13.6
)
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.
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 3/31/19

 
3 Mos. Ended 3/31/18

 
%
Change
 
 
 
 
 
 
 
Operating Revenues
 
 
 
 
 
 
Consumer Markets
 
$
3,153

 
$
3,150

 
0.1

Enterprise Solutions
 
2,140

 
2,240

 
(4.5
)
Partner Solutions
 
1,075

 
1,228

 
(12.5
)
Business Markets
 
828

 
871

 
(4.9
)
Other
 
68

 
68

 

Total Operating Revenues
 
7,264

 
7,557

 
(3.9
)
 
 
 
 
 
 
 
Operating Expenses
 
 
 
 
 


Cost of services
 
4,186

 
4,475

 
(6.5
)
Selling, general and administrative expense
 
1,606

 
1,479

 
8.6

Depreciation and amortization expense
 
1,560

 
1,534

 
1.7

Total Operating Expenses
 
7,352

 
7,488

 
(1.8
)
 
 
 
 
 
 
 
Operating Income (Loss)
 
$
(88
)
 
$
69

 
*

Operating Income (Loss) Margin
 
(1.2
)%
 
0.9
%
 


 
 
 
 
 
 
 
Segment EBITDA
 
$
1,472

 
$
1,603

 
(8.2
)
Segment EBITDA Margin
 
20.3
 %
 
21.2
%
 
 
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
 
03/31/19

 
03/31/18

 
%
Change
Connections (‘000)
 
 
 
 
 
 
Fios video connections
 
4,398

 
4,597

 
(4.3
)
Fios Internet connections
 
6,119

 
5,916

 
3.4

Fios digital voice residence connections
 
3,758

 
3,891

 
(3.4
)
Fios digital connections
 
14,275

 
14,404

 
(0.9
)
High-speed Internet (HSI) connections
 
854

 
1,050

 
(18.7
)
Total broadband connections
 
6,973

 
6,966

 
0.1

Total voice connections
 
11,453

 
12,555

 
(8.8
)
 
 
 
 
 
 
 
Unaudited
 
3 Mos. Ended 3/31/19

 
3 Mos. Ended 3/31/18

 
%
Change
Net Add Detail (‘000)
 
 
 
 
 
 
Fios video connections
 
(53
)
 
(22
)
 
*

Fios Internet connections
 
52

 
66

 
(21.2
)
Fios digital voice residence connections
 
(45
)
 
(14
)
 
*

Fios digital connections
 
(46
)
 
30

 
*

High-speed Internet (HSI) connections
 
(40
)
 
(59
)
 
32.2

Total broadband connections
 
12

 
7

 
71.4

Total voice connections
 
(279
)
 
(266
)
 
(4.9
)
Revenue Statistics
 
 
 
 
 


Fios revenues (in millions)
 
$
3,057

 
$
2,951

 
3.6

Other Operating Statistics
 
 
 
 
 


Capital expenditures (in millions)
 
$
1,733

 
$
1,673

 
3.6

Wireline employees (‘000)
 
53.2

 
57.2

 
 
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.
Non-GAAP Reconciliations - Consolidated Verizon


 
Consolidated EBITDA, Consolidated EBITDA Margin, Consolidated Adjusted EBITDA and Consolidated Adjusted EBITDA Margin
(dollars in millions)
Unaudited
 
3 Mos. Ended 3/31/19

 
3 Mos. Ended 12/31/18

 
3 Mos. Ended 9/30/18

 
3 Mos. Ended 6/30/18

 
3 Mos. Ended 3/31/18

 
 
 
 
 
 
 
 
 
 
 
Consolidated Net Income
 
$
5,160

 
$
2,065

 
$
5,062

 
$
4,246

 
$
4,666

  Add/(subtract):
 
 
 
 
 
 
 
 
 
 
Provision (benefit) for income taxes
 
1,628

 
(698
)
 
1,613

 
1,281

 
1,388

Interest expense
 
1,210

 
1,199

 
1,211

 
1,222

 
1,201

Depreciation and amortization expense
 
4,231

 
4,352

 
4,377

 
4,350

 
4,324

Consolidated EBITDA
 
$
12,229

 
$
6,918

 
$
12,263

 
$
11,099

 
$
11,579

 
 
 
 
 
 
 
 
 
 
 
  Add/subtract:
 
 
 
 
 
 
 
 
 
 
Other (income) expense, net*
 
$
(295
)
 
$
(1,865
)
 
$
(214
)
 
$
(360
)
 
$
75

Equity in losses (earnings) of unconsolidated businesses†
 
6

 
(64
)
 
3

 
228

 
19

Oath goodwill impairment
 

 
4,591

 

 

 

Severance charges
 

 
1,818

 

 
339

 

Product realignment charges‡
 

 

 

 
450

 

Acquisition and integration related charges‡
 

 
187

 
130

 
109

 
105

 
 
(289
)
 
4,667

 
(81
)
 
766

 
199

 
 
 
 
 
 
 
 
 
 
 
Consolidated Adjusted EBITDA
 
$
11,940


$
11,585


$
12,182

 
$
11,865

 
$
11,778

Consolidated Operating Revenues - Quarter to Date
 
$
32,128

 
 
 
 
 
 
 
$
31,772

Operating Income Margin - Quarter to Date
 
24.0
%
 
 
 
 
 
 

23.1
%
Consolidated EBITDA Margin - Quarter to Date
 
38.1
%

 
 
 
 
 

36.4
%
Consolidated Adjusted EBITDA Margin - Quarter to Date
 
37.2
%
 
 
 
 
 
 

37.1
%
*
Includes Pension and benefits mark-to-market adjustments and Early debt redemption costs, where applicable.
Includes Product realignment charges, where applicable.
Excludes depreciation and amortization expense, where applicable.

Net Debt and Net Debt to Consolidated Adjusted EBITDA Ratio
(dollars in millions)
Unaudited
 
3/31/19

 
12/31/18


 
 
 
 
Debt maturing within one year
 
$
8,614

 
$
7,190

Long-term debt
 
105,045

 
105,873

Total Debt
 
113,659

 
113,063

Less Cash and cash equivalents
 
2,322

 
2,745

Net Debt
 
$
111,337

 
$
110,318

Net Debt to Consolidated Adjusted EBITDA Ratio
 
2.3x

 
2.3x









Verizon Communications Inc.
Non-GAAP Reconciliations - Consolidated Verizon


Net Unsecured Debt and Net Unsecured Debt to Consolidated Adjusted EBITDA Ratio
(dollars in millions)
Unaudited
 
3/31/19

 
12/31/18


 
 
 
 
Total Debt
 
$
113,659

 
$
113,063

Less Secured debt
 
10,386

 
10,076

Unsecured debt
 
103,273

 
102,987

Less Cash and cash equivalents
 
2,322

 
2,745

Net Unsecured Debt
 
$
100,951

 
$
100,242

Net Unsecured Debt to Consolidated Adjusted EBITDA Ratio
 
2.1x

 
2.1x


Adjusted Earnings per Common Share (Adjusted EPS)(1) 
(dollars in millions, except per share amounts)
Unaudited
 
3 Mos. Ended 3/31/19

 
3 Mos. Ended 3/31/18

 
Pre-tax
Tax
After-Tax
 
Pre-tax
Tax
After-Tax
 
EPS
 
 
 
$
1.22

 
 
 
$
1.11

Pension remeasurement credit
$
(96
)
$
25

$
(71
)
(0.02
)
$

$

$


Acquisition and integration related charges




107

(25
)
82

0.02

Early debt redemption costs




249

(65
)
184

0.04

 
$
(96
)
$
25

$
(71
)
(0.02
)
$
356

$
(90
)
$
266

0.06

Adjusted EPS
 
 
 
$
1.20

 
 
 
$
1.17

 
 
 
 
 
 
 
 
 


(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 3/31/19

 
3 Mos. Ended 3/31/18

 
 
 
 
 
Operating Income
 
$
8,466

 
$
8,049

Add Depreciation and amortization expense
 
2,299

 
2,428

Segment EBITDA
 
$
10,765

 
$
10,477

Year over year change
 
2.7
%
 
 
 
 
 
 
 
Total operating revenues
 
$
22,700

 
$
21,900

Operating Income Margin
 
37.3
%
 
36.8
%
Segment EBITDA Margin
 
47.4
%
 
47.8
%
 
 


 
 

Wireline
 
 
 
(dollars in millions)
 
 
 
 
 
Unaudited
 
3 Mos. Ended 3/31/19

 
3 Mos. Ended 3/31/18

 
 
 
 
 
Operating Income (Loss)
 
$
(88
)
 
$
69

Add Depreciation and amortization expense
 
1,560

 
1,534

Segment EBITDA
 
$
1,472

 
$
1,603

 
 
 
 
 
Total operating revenues
 
$
7,264

 
$
7,557

Operating Income (Loss) Margin
 
(1.2
)%
 
0.9
%
Segment EBITDA Margin
 
20.3
 %
 
21.2
%


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