Form 8-K VERIZON COMMUNICATIONS For: Jun 18

June 18, 2019 4:10 PM



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: June 18, 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))





Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
 
Trading Symbol(s)
 
Name of Exchange on Which Registered
Common Stock, par value $0.10
 
VZ
 
New York Stock Exchange
The NASDAQ Global Select Market
2.375% Notes due 2022
 
VZ22A
 
New York Stock Exchange
0.500% Notes due 2022
 
VZ22B
 
New York Stock Exchange
1.625% Notes due 2024
 
VZ24B
 
New York Stock Exchange
4.073% Notes due 2024
 
VZ24C
 
New York Stock Exchange
0.875% Notes due 2025
 
VZ25
 
New York Stock Exchange
3.25% Notes due 2026
 
VZ26
 
New York Stock Exchange
1.375% Notes due 2026
 
VZ26B
 
New York Stock Exchange
0.875% Notes due 2027
 
VZ27E
 
New York Stock Exchange
1.375% Notes due 2028
 
VZ28
 
New York Stock Exchange
1.875% Notes due 2029
 
VZ29B
 
New York Stock Exchange
1.250% Notes due 2030
 
VZ30
 
New York Stock Exchange
2.625% Notes due 2031
 
VZ31
 
New York Stock Exchange
2.500% Notes due 2031
 
VZ31A
 
New York Stock Exchange
4.75% Notes due 2034
 
VZ34
 
New York Stock Exchange
3.125% Notes due 2035
 
VZ35
 
New York Stock Exchange
3.375% Notes due 2036
 
VZ36A
 
New York Stock Exchange
2.875% Notes due 2038
 
VZ38B
 
New York Stock Exchange
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 7.01. Regulation FD Disclosure.

On April 1, 2019, Verizon Communications Inc. (Verizon or the Company) reorganized its operating structure into two new reportable segments, which we refer to as Verizon 2.0. Previously, the reportable segments consisted of Wireless and Wireline. Pursuant to the reorganization, the new reportable segments are the Verizon Consumer Group and the Verizon Business Group, which we operate and manage as strategic business units that provide communications, information and entertainment products and services to our customers.

Verizon Consumer Group provides consumer-focused wireless and wireline communications services and products. Our wireless services are provided across one of the most extensive United States (U.S.) wireless networks under the Verizon Wireless brand and through wholesale and other arrangements. Our wireline services are provided in nine states in the Mid-Atlantic and Northeastern U.S., as well as Washington D.C., over our 100% fiber-optic network under the Fios brand and over a traditional copper-based network to customers who are not served by Fios.

Verizon Business Group provides wireless communications services and products, video and data services, corporate networking solutions, security and managed network services, local and long distance voice services and network access to deliver various Internet of Things services and products. The Verizon Business Group’s service and product offerings are organized by the four primary customer groups targeted by these offerings:

Global Enterprise offers a broad portfolio of connectivity, security and professional services to large businesses, which are identified based on their size and volume of business with Verizon, as well as non-U.S. public sector customers.

Small and Medium Business offers wireless services and equipment, tailored voice and networking products, Fios services, IP Networking, advanced voice solutions, security, and managed information technology services to U.S.-based customers that do not meet the requirements to be categorized as Global Enterprise.

Public Sector and Other offers services and products similar to the wireless and wireline communications services and products offered by the Consumer Group, as well as the connectivity, security and professional services offered by the Global Enterprise group, to U.S. federal, state and local governments and educational institutions.

Wholesale offers communications services including data, voice, local dial tone and broadband services primarily to local, long distance and wireless carriers that use our facilities to provide services to their customers.

As a convenience to investors, we are providing unaudited historical information that recasts the financial and operating results for these reorganized reportable segments for each of the nine consecutive quarters ended March 31, 2019, and financial information for each of the three consecutive fiscal years ended December 31, 2018. In addition, we are providing a reconciliation of results from Verizon 2.0 to our historical results. Consolidated Verizon results remain unchanged from previously reported historical results.

This information is provided in Exhibits 99.1, 99.2 and 99.3, which are attached hereto and are incorporated herein by reference, and is also posted to the Verizon Investor website at www.verizon.com/about/investors.

The information provided pursuant to this Item 7.01 is “furnished” and shall not be deemed to be “filed” with the Securities and Exchange Commission or incorporated by reference in any filing under the Securities Exchange Act of 1934, as amended, or the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in any such filings.





Item 9.01. Financial Statements and Exhibits.

(d)  Exhibits

 
 
 
Exhibit
Number
  
Description
 
 
99.1
 
Press release, dated June 18, 2019, issued by Verizon Communications Inc.
 
 
 
99.2
 
Updated unaudited historical information for the reorganized Verizon reportable segments for each of the nine consecutive quarters ended March 31, 2019, and financial information for each of the three consecutive fiscal years ended December 31, 2018.
 
 
 
99.3
 
Slides to be used in investor presentation on June 18, 2019.






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:
 
June 18, 2019
 
 
 
/s/ Anthony T. Skiadas
 
 
 
 
 
 
     Anthony T. Skiadas
 
 
 
 
 
 
     Senior Vice President and Controller






EXHIBIT INDEX
 
 
 
Exhibit
Number
  
Description
 
 

Press release, dated June 18, 2019, issued by Verizon Communications Inc.
 
 
 
 
Updated unaudited historical information for the reorganized Verizon reportable segments for each of the nine consecutive quarters ended March 31, 2019, and financial information for each of the three consecutive fiscal years ended December 31, 2018.
 
 
 
 
Slides to be used in investor presentation on June 18, 2019.




Exhibit 99.1
vzlogoa05.jpg

News Release




FOR IMMEDIATE RELEASE
Media contacts:
June 18, 2019
Bob Varettoni
 
908.559.6388
 
robert.a.varettoni@verizon.com
 
 
 
Eric Wilkens
 
908.559.3063
 
eric.wilkens@verizon.com

Verizon releases recast segment results in alignment with its new operating model

NEW YORK - Verizon Communications Inc. (NYSE, Nasdaq: VZ) today released recast historical financial and operational results in connection with its new operating model, Verizon 2.0, which was announced in November 2018 and implemented beginning in April 2019.
As previously disclosed, the new structure aligns the company around two customer-facing reportable segments: Consumer and Business. This reflects Verizon’s customer-centric approach to address evolving customer needs, deliver best-in-class customer experiences and drive continued leadership in 5G. Results for Verizon Media, the company’s third operating group, were not impacted by the new operating model.
“Verizon 2.0 is a transformation of our business that creates the right platform to better serve our customers and capture long-term growth opportunities,” said Chairman and CEO Hans Vestberg. “As we evolve our networks and organization, we are positioning Verizon to win in the 5G era.”




The recast financial information and selected operating metrics -- available on Verizon’s Investor Relations website at www.verizon.com/about/investors -- present the company’s historical results for its new reportable segments, providing transparency into the performance of each business. Verizon formerly reported results under Wireless and Wireline segments.
There are no changes to previously reported consolidated results as a result of the recast.
Verizon will webcast an analyst meeting today at 5 p.m. ET to discuss its new financial reporting structure. The webcast and presentation materials can be accessed on its Investor Relations site.
The company expects to report second-quarter 2019 results on August 1.


####

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/.





Page 2

Exhibit 99.2

foi01.jpg

























On April 1, 2019, Verizon Communications Inc. (Verizon or the Company) reorganized its operating structure into two new reportable segments, which we refer to as Verizon 2.0. Previously, the reportable segments consisted of Wireless and Wireline. Pursuant to the reorganization, the new reportable segments are the Verizon Consumer Group and the Verizon Business Group, which we operate and manage as strategic business units that provide communications, information and entertainment products and services to our customers.

As a convenience to investors, we are providing unaudited historical information that recasts the financial and operating results for these reorganized reportable segments for each of the nine consecutive quarters ended March 31, 2019, and financial information for each of the three consecutive fiscal years ended December 31, 2018. In addition, we are providing a reconciliation of results from Verizon 2.0 to our historical results. Consolidated Verizon results remain unchanged from previously reported historical results.

foi02.jpg



Verizon Communications Inc.


Table of Contents
 
 
 
Consumer - Selected Financial Results
3

 
 
Consumer - Selected Operating Statistics
4

 
 
Business - Selected Financial Results
5

 
 
Business - Selected Operating Statistics
6

 
 
Supplemental Information
7

 
 
Non-GAAP Reconciliations and Notes
12





Verizon Communications Inc.


Consumer - Selected Financial Results
(dollars in millions)
 
 
2016
2017
2018
2019
Unaudited
Full Year
1Q
2Q
3Q
4Q
Full Year
1Q
2Q
3Q
4Q
Full Year
1Q
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Revenues
 
 
 
 
 
 
 
 
 
 
 
 
Service
$
67,485

$
15,980

$
15,844

$
16,012

$
15,997

$
63,833

$
15,824

$
16,049

$
16,193

$
16,157

$
64,223

$
16,259

Wireless equipment
16,372

3,472

3,950

3,990

5,880

17,292

4,270

4,251

4,508

5,846

18,875

4,166

Other
5,644

1,451

1,479

1,482

1,517

5,929

1,533

1,703

1,698

1,730

6,664

1,723

Total Operating Revenues
89,501

20,903

21,273

21,484

23,394

87,054

21,627

22,003

22,399

23,733

89,762

22,148

 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Expenses
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services
15,101

3,717

3,764

3,814

3,686

14,981

3,773

3,842

3,850

3,870

15,335

3,879

Cost of wireless equipment
18,247

3,831

3,942

3,905

6,035

17,713

4,273

4,296

4,379

5,815

18,763

4,142

Selling, general and administrative expense
18,832

4,315

4,136

4,191

4,650

17,292

3,671

3,808

3,947

4,275

15,701

3,983

Depreciation and amortization expense
10,792

2,781

2,842

2,857

2,828

11,308

2,975

2,997

3,010

2,970

11,952

2,894

Total Operating Expenses
62,972

14,644

14,684

14,767

17,199

61,294

14,692

14,943

15,186

16,930

61,751

14,898

 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Income
$
26,529

$
6,259

$
6,589

$
6,717

$
6,195

$
25,760

$
6,935

$
7,060

$
7,213

$
6,803

$
28,011

$
7,250

Operating Income Margin
29.6
%
29.9
%
31.0
%
31.3
%
26.5
%
29.6
%
32.1
%
32.1
%
32.2
%
28.7
%
31.2
%
32.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment EBITDA
$
37,321

$
9,040

$
9,431

$
9,574

$
9,023

$
37,068

$
9,910

$
10,057

$
10,223

$
9,773

$
39,963

$
10,144

Segment EBITDA Margin
41.7
%
43.2
%
44.3
%
44.6
%
38.6
%
42.6
%
45.8
%
45.7
%
45.6
%
41.2
%
44.5
%
45.8
%

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 segment performance.

Certain intersegment transactions with corporate entities have not been eliminated.


3

Verizon Communications Inc.


Consumer - Selected Operating Statistics
 
2017
2018
2019
Unaudited
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
Connections (‘000):
 
 
 
 
 
 
 
 
 
Wireless retail postpaid connections
87,988

88,210

88,380

89,068

88,924

88,984

89,062

89,861

89,580

Wireless retail prepaid connections
5,430

5,448

5,588

5,403

5,068

4,832

4,736

4,646

4,479

Total wireless retail connections
93,418

93,658

93,968

94,471

93,992

93,816

93,798

94,507

94,059

 
 
 
 
 
 
 
 
 
 
Fios video connections
4,612

4,596

4,577

4,548

4,525

4,487

4,423

4,377

4,322

Fios Internet connections
5,417

5,460

5,521

5,565

5,627

5,663

5,711

5,760

5,808

Fios digital voice residence connections
3,887

3,909

3,920

3,905

3,891

3,863

3,833

3,803

3,758

Fios digital connections
13,916

13,965

14,018

14,018

14,043

14,013

13,967

13,940

13,888

Broadband connections
6,475

6,457

6,453

6,441

6,454

6,447

6,452

6,460

6,476

Voice connections
7,340

7,213

7,078

6,928

6,786

6,631

6,480

6,332

6,184

 
 
 
 
 
 
 
 
 
 
Gross Additions (‘000):
 
 
 
 
 
 
 
 
 
Wireless retail postpaid
2,467

2,650

2,733

3,356

2,634

2,617

2,850

3,643

2,714

 
 
 
 
 
 
 
 
 
 
Net Additions Detail (‘000) (1) :
 
 
 
 
 
 
 
 
 
Wireless retail postpaid
(523
)
280

237

768

(55
)
147

151

886

(201
)
Wireless retail prepaid
(17
)
19

139

(184
)
(335
)
(236
)
(96
)
(90
)
(176
)
Total wireless retail
(540
)
299

376

584

(390
)
(89
)
55

796

(377
)
 
 
 
 
 
 
 
 
 
 
Wireless retail postpaid phones
(379
)
190

108

279

(153
)
17

112

522

(163
)
 
 
 
 
 
 
 
 
 
 
Fios video
(14
)
(16
)
(19
)
(29
)
(23
)
(38
)
(64
)
(46
)
(55
)
Fios Internet
31

43

61

44

62

36

48

49

48

Fios digital voice residence
(8
)
22

11

(15
)
(14
)
(28
)
(30
)
(30
)
(45
)
Fios digital
9

49

53


25

(30
)
(46
)
(27
)
(52
)
Broadband
(23
)
(18
)
(4
)
(12
)
13

(7
)
5

8

16

Voice
(160
)
(127
)
(135
)
(150
)
(142
)
(155
)
(151
)
(148
)
(148
)
 
 
 
 
 
 
 
 
 
 
Churn Rate:
 
 
 
 
 
 
 
 
 
Wireless retail postpaid
1.13
%
0.90
%
0.94
%
0.97
%
1.01
%
0.93
%
1.01
%
1.03
%
1.08
%
Wireless retail postpaid phones
0.86
%
0.67
%
0.73
%
0.75
%
0.77
%
0.71
%
0.77
%
0.77
%
0.81
%
Wireless retail
1.42
%
1.19
%
1.22
%
1.27
%
1.31
%
1.19
%
1.24
%
1.24
%
1.32
%
 
 
 
 
 
 
 
 
 
 
Revenue Statistics (in millions) :
 
 
 
 
 
 
 
 
 
Wireless service revenue
$
13,009

$
12,881

$
13,034

$
13,030

$
12,881

$
13,122

$
13,257

$
13,199

$
13,357

Fios revenues
$
2,700

$
2,706

$
2,746

$
2,751

$
2,734

$
2,738

$
2,764

$
2,820

$
2,764

 
 
 
 
 
 
 
 
 
 
Other Wireless Statistics :
 
 
 
 
 
 
 
 
 
Wireless retail postpaid ARPA (2) (3)
$
115.72

$
114.05

$
115.07

$
114.33

$
113.44

$
115.53

$
117.06

$
115.87

$
117.45

Wireless retail postpaid accounts ('000) (4)
34,201

34,222

34,215

34,220

34,109

34,045

34,005

34,086

33,958

Wireless retail postpaid connections per account (4)
2.57

2.58

2.58

2.60

2.61

2.61

2.62

2.64

2.64

Wireless retail postpaid upgrade rate (4)
5.1
%
5.6
%
5.5
%
7.5
%
5.0
%
5.1
%
5.1
%
6.6
%
4.4
%
Total wireless Internet postpaid base (4)
15.1
%
15.2
%
15.3
%
15.7
%
15.8
%
15.9
%
15.9
%
16.1
%
16.1
%

Footnotes:
(1) Connection net additions exclude acquisitions and adjustments.

(2) Wireless retail postpaid ARPA - average service revenue per account from retail postpaid accounts.

(3) 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 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.

(4) Statistics presented as of end of period.

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 segment performance.

Certain Intersegment transactions with corporate entities have not been eliminated.

4

Verizon Communications Inc.


Business - Selected Financial Results
 
 
 
 
 
 
 
 
 
 
(dollars in millions)
 
 
2016
2017
2018
2019
Unaudited
Full Year
1Q
2Q
3Q
4Q
Full Year
1Q
2Q
3Q
4Q
Full Year
1Q
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Revenues
 
 
 
 
 
 
 
 
 
 
 
 
Global Enterprise
$
11,364

$
2,865

$
2,859

$
2,827

$
2,898

$
11,449

$
2,826

$
2,808

$
2,782

$
2,785

$
11,201

$
2,691

Small and Medium Business
9,034

2,322

2,400

2,450

2,639

9,811

2,534

2,642

2,729

2,847

10,752

2,708

Public Sector and Other
5,118

1,391

1,397

1,421

1,446

5,655

1,430

1,437

1,455

1,511

5,833

1,471

Wholesale
4,021

1,002

1,021

1,001

974

3,998

993

964

927

864

3,748

849

Total Operating Revenues
29,537

7,580

7,677

7,699

7,957

30,913

7,783

7,851

7,893

8,007

31,534

7,719

 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Expenses
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services
11,436

2,701

2,815

2,782

2,796

11,094

2,710

2,660

2,657

2,832

10,859

2,591

Cost of wireless equipment
3,991

977

1,093

1,060

1,304

4,434

1,036

1,101

1,110

1,313

4,560

1,057

Selling, general and administrative expense
6,827

1,894

1,848

1,868

1,838

7,448

1,864

1,930

1,900

1,995

7,689

1,981

Depreciation and amortization expense
4,472

1,102

1,126

1,131

1,124

4,483

1,059

1,059

1,072

1,068

4,258

1,042

Total Operating Expenses
26,726

6,674

6,882

6,841

7,062

27,459

6,669

6,750

6,739

7,208

27,366

6,671

 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Income
$
2,811

$
906

$
795

$
858

$
895

$
3,454

$
1,114

$
1,101

$
1,154

$
799

$
4,168

$
1,048

Operating Income Margin
9.5
%
12.0
%
10.4
%
11.1
%
11.2
%
11.2
%
14.3
%
14.0
%
14.6
%
10.0
%
13.2
%
13.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment EBITDA
$
7,283

$
2,008

$
1,921

$
1,989

$
2,019

$
7,937

$
2,173

$
2,160

$
2,226

$
1,867

$
8,426

$
2,090

Segment EBITDA Margin
24.7
%
26.5
%
25.0
%
25.8
%
25.4
%
25.7
%
27.9
%
27.5
%
28.2
%
23.3
%
26.7
%
27.1
%

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 segment performance.

Certain intersegment transactions with corporate entities have not been eliminated.


5

Verizon Communications Inc.


Business - Selected Operating Statistics
 
2017
2018
2019
Unaudited
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
 
 
 
 
 
 
 
 
 
 
Connections (‘000) :
 
 
 
 
 
 
 
 
 
Wireless retail postpaid connections
20,495

20,878

21,306

21,786

22,190

22,638

23,073

23,492

23,827

 
 
 
 
 
 
 
 
 
 
   Fios video connections
69

70

71

71

72

73

74

74

76

   Fios Internet connections
271

277

282

285

289

296

302

307

311

Fios digital connections
340

347

353

356

361

369

376

381

387

Broadband connections
536

531

525

518

512

509

506

501

497

Voice connections
6,294

6,139

6,022

5,893

5,769

5,639

5,529

5,400

5,269

 
 
 
 
 
 
 
 
 
 
Gross Additions (‘000) :
 
 
 
 
 
 
 
 
 
Wireless retail postpaid
958

1,028

1,038

1,111

1,080

1,162

1,163

1,211

1,143

 
 
 
 
 
 
 
 
 
 
Net Additions Detail (‘000) (1) :
 
 
 
 
 
 
 
 
 
Wireless retail postpaid
216

334

366

406

315

384

364

334

262

Wireless retail postpaid phones
90

168

166

152

129

182

183

131

119

 
 
 
 
 
 
 
 
 
 
   Fios video
1

1

1


1

1

1


2

   Fios Internet
4

6

5

3

4

7

6

5

4

Fios digital
5

7

6

3

5

8

7

5

6

Broadband
(4
)
(5
)
(6
)
(7
)
(6
)
(3
)
(3
)
(5
)
(4
)
Voice
(145
)
(155
)
(117
)
(129
)
(124
)
(130
)
(110
)
(129
)
(131
)
 
 
 
 
 
 
 
 
 
 
Churn Rate :
 
 
 
 
 
 
 
 
 
Wireless retail postpaid
1.22
%
1.12
%
1.06
%
1.09
%
1.16
%
1.16
%
1.17
%
1.26
%
1.24
%
Wireless retail postpaid phones
1.01
%
0.90
%
0.87
%
0.89
%
0.95
%
0.96
%
0.95
%
1.07
%
1.02
%
 
 
 
 
 
 
 
 
 
 
Revenue Statistics (in millions):
 
 
 
 
 
 
 
 
 
Wireless service revenue
$
2,753

$
2,717

$
2,790

$
2,833

$
2,501

$
2,615

$
2,687

$
2,681

$
2,694

Fios revenues
$
191

$
193

$
196

$
208

$
217

$
218

$
222

$
226

$
243

 
 
 
 
 
 
 
 
 
 
Other Wireless Statistics:
 
 
 
 
 
 
 
 
 
Wireless retail postpaid upgrade rate (2)
5.5
%
5.8
%
5.4
%
6.0
%
4.9
%
4.6
%
4.8
%
5.3
%
4.4
%
Total wireless Internet postpaid base (2)
32.0
%
32.1
%
32.4
%
32.8
%
32.9
%
33.1
%
33.1
%
33.4
%
33.4
%

Footnotes:
(1) Connection net additions exclude acquisitions and adjustments.

(2) Statistics presented as of end of period.

The segment financial results and metrics above are adjusted to exclude the effects of special items, as the Company’s chief operating decision maker excludes these items in assessing segment performance.

Certain Intersegment transactions with corporate entities have not been eliminated.

6

Verizon Communications Inc.


Supplemental Information - Wireless Historical Financial Results


To assist investors and users in understanding trends in our new segment results, we provide the following supplemental schedule which contains historical Wireless segment results.
 
 
 
 
 
 
 
 
 
 
(dollars in millions)
 
 
2016
2017
 
2018
2019
Unaudited
Full Year
1Q
2Q
3Q
4Q
Full Year
1Q
2Q
3Q
4Q
Full Year
1Q
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Revenues
 
 
 
 
 
 
 
 
 
 
 
 
Service
$
66,580

$
15,778

$
15,622

$
15,841

$
15,880

$
63,121

$
15,402

$
15,754

$
15,966

$
15,898

$
63,020

$
16,072

Equipment
17,515

3,764

4,298

4,352

6,475

18,889

5,040

5,044

5,353

6,821

22,258

4,931

Other
5,091

1,336

1,362

1,387

1,416

5,501

1,458

1,651

1,654

1,693

6,456

1,697

Total Operating Revenues
89,186

20,878

21,282

21,580

23,771

87,511

21,900

22,449

22,973

24,412

91,734

22,700

 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Expenses
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services
9,031

2,187

2,219

2,270

2,210

8,886

2,215

2,335

2,350

2,351

9,251

2,456

Cost of equipment
22,238

4,808

5,035

4,965

7,339

22,147

5,309

5,397

5,489

7,128

23,323

5,198

Selling, general and administrative expense
18,881

4,469

4,271

4,376

4,760

17,876

3,899

3,984

4,169

4,552

16,604

4,281

Depreciation and amortization expense
9,183

2,338

2,347

2,366

2,344

9,395

2,428

2,459

2,454

2,395

9,736

2,299

Total Operating Expenses
59,333

13,802

13,872

13,977

16,653

58,304

13,851

14,175

14,462

16,426

58,914

14,234

 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Income
$
29,853

$
7,076

$
7,410

$
7,603

$
7,118

$
29,207

$
8,049

$
8,274

$
8,511

$
7,986

$
32,820

$
8,466

Operating Income Margin
33.5
%
33.9
%
34.8
%
35.2
%
29.9
%
33.4
%
36.8
%
36.9
%
37.0
%
32.7
%
35.8
%
37.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment EBITDA
$
39,036

$
9,414

$
9,757

$
9,969

$
9,462

$
38,602

$
10,477

$
10,733

$
10,965

$
10,381

$
42,556

$
10,765

Segment EBITDA Margin
43.8
%
45.1
%
45.8
%
46.2
%
39.8
%
44.1
%
47.8
%
47.8
%
47.7
%
42.5
%
46.4
%
47.4
%

Footnotes:
The segment financial results and metrics above are adjusted to exclude the effects of special items.

Certain Intersegment transactions with corporate entities have not been eliminated.


7

Verizon Communications Inc.


Supplemental Information - Wireless Historical Operating Statistics

To assist investors and users in understanding trends in our new segment results, we provide the following supplemental schedule which contains historical Wireless segment results.
 
2017
2018
2019
Unaudited
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
 
 
 
 
 
 
 
 
 
 
Connections (‘000)
 
 
 
 
 
 
 
 
 
Retail postpaid
108,483

109,088

109,686

110,854

111,114

111,622

112,135

113,353

113,407

Retail prepaid
5,430

5,448

5,588

5,403

5,068

4,832

4,736

4,646

4,479

Total retail
113,913

114,536

115,274

116,257

116,182

116,454

116,871

117,999

117,886

 
 
 
 
 
 
 
 
 
 
Net Add Detail (‘000) (1)
 
 
 
 
 
 
 
 
 
Retail postpaid
(307
)
614

603

1,174

260

531

515

1,220

61

Retail prepaid
(17
)
19

139

(184
)
(335
)
(236
)
(96
)
(90
)
(176
)
Total retail
(324
)
633

742

990

(75
)
295

419

1,130

(115
)
 
 
 
 
 
 
 
 
 
 
Account Statistics
 
 
 
 
 
 
 
 
 
Retail postpaid accounts (‘000) (2)
35,270

35,334

35,364

35,404

35,333

35,309

35,309

35,427

35,338

Retail postpaid connections per account (2)
3.08

3.09

3.10

3.13

3.14

3.16

3.18

3.20

3.21

Retail postpaid ARPA (3)(4)
$
136.98

$
134.89

$
136.31

$
135.78

$
131.71

$
134.56

$
136.58

$
135.11

$
136.68

 
 
 
 
 
 
 
 
 
 
Churn Detail
 
 
 
 
 
 
 
 
 
Retail postpaid
1.15
%
0.94
%
0.97
%
1.00
%
1.04
%
0.97
%
1.04
%
1.08
%
1.12
%
Retail
1.39
%
1.18
%
1.19
%
1.24
%
1.28
%
1.18
%
1.22
%
1.24
%
1.31
%
 
 
 
 
 
 
 
 
 
 
Retail Postpaid Connection Statistics (2)
 
 
 
 
 
 
 
 
 
Total smartphone postpaid phone base
88.1
%
88.8
%
89.4
%
90.1
%
90.7
%
91.2
%
91.7
%
92.2
%
92.7
%
Total Internet postpaid base
18.3
%
18.4
%
18.6
%
19.0
%
19.2
%
19.4
%
19.4
%
19.7
%
19.7
%

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) 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 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.

Certain Intersegment transactions with corporate entities have not been eliminated.

8

Verizon Communications Inc.


Supplemental Information - Wireline Historical Financial Results

To assist investors and users in understanding trends in our new segment results, we provide the following supplemental schedule which contains historical Wireline segment results.
 
 
 
 
 
 
 
 
 
 
(dollars in millions)
 
 
2016
2017
2018
2019
Unaudited
Full Year
1Q
2Q
3Q
4Q
Full Year
1Q
2Q
3Q
4Q
Full Year
1Q
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Revenues
 
 
 
 
 
 
 
 
 
 
 
 
Consumer Markets
$
12,751

$
3,201

$
3,184

$
3,204

$
3,188

$
12,777

$
3,150

$
3,132

$
3,138

$
3,169

$
12,589

$
3,153

Enterprise Solutions
9,164

2,311

2,309

2,262

2,285

9,167

2,240

2,211

2,172

2,217

8,840

2,140

Partner Solutions
4,927

1,229

1,235

1,244

1,209

4,917

1,228

1,200

1,166

1,098

4,692

1,075

Business Markets
3,356

879

918

903

885

3,585

871

850

840

836

3,397

828

Other
312

62

73

49

50

234

68

66

55

53

242

68

Total Operating Revenues
30,510

7,682

7,719

7,662

7,617

30,680

7,557

7,459

7,371

7,373

29,760

7,264

 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Expenses
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services
18,353

4,419

4,542

4,496

4,465

17,922

4,475

4,377

4,371

4,478

17,701

4,186

Selling, general and administrative expense
6,476

1,582

1,582

1,552

1,558

6,274

1,479

1,577

1,498

1,597

6,151

1,606

Depreciation and amortization expense
5,975

1,475

1,548

1,549

1,532

6,104

1,534

1,524

1,552

1,571

6,181

1,560

Total Operating Expenses
30,804

7,476

7,672

7,597

7,555

30,300

7,488

7,478

7,421

7,646

30,033

7,352

 
 
 
 
 
 
 
 
 
 
 
 
 
Operating Income (Loss)
$
(294
)
$
206

$
47

$
65

$
62

$
380

$
69

$
(19
)
$
(50
)
$
(273
)
$
(273
)
$
(88
)
Operating Income (Loss) Margin
(1.0
)%
2.7
%
0.6
%
0.8
%
0.8
%
1.2
%
0.9
%
(0.3
)%
(0.7
)%
(3.7
)%
(0.9
)%
(1.2
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment EBITDA
$
5,681

$
1,681

$
1,595

$
1,614

$
1,594

$
6,484

$
1,603

$
1,505

$
1,502

$
1,298

$
5,908

$
1,472

Segment EBITDA Margin
18.6
 %
21.9
%
20.7
%
21.1
%
20.9
%
21.1
%
21.2
%
20.2
 %
20.4
 %
17.6
 %
19.9
 %
20.3
 %

Footnotes:
The segment financial results and metrics above are adjusted to exclude the effects of special items.

Certain Intersegment transactions with corporate entities have not been eliminated.


9

Verizon Communications Inc.


Supplemental Information - Wireline Historical Operating Statistics

To assist investors and users in understanding trends in our new segment results, we provide the following supplemental schedule which contains historical Wireline segment results.
 
2017
2018
2019
Unaudited
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
 
 
 
 
 
 
 
 
 
 
Connections (‘000)
 
 
 
 
 
 
 
 
 
Fios video connections
4,681

4,666

4,648

4,619

4,597

4,560

4,497

4,451

4,398

Fios Internet connections
5,688

5,737

5,803

5,850

5,916

5,959

6,013

6,067

6,119

Fios digital voice residence connections
3,887

3,909

3,920

3,905

3,891

3,863

3,833

3,803

3,758

Fios digital connections
14,256

14,312

14,371

14,374

14,404

14,382

14,343

14,321

14,275

Broadband connections
7,011

6,988

6,978

6,959

6,966

6,956

6,958

6,961

6,973

Voice connections
13,634

13,352

13,100

12,821

12,555

12,270

12,009

11,732

11,453

 
 
 
 
 
 
 
 
 
 
Net Add Detail (‘000)
 
 
 
 
 
 
 
 
 
Fios video connections
(13
)
(15
)
(18
)
(29
)
(22
)
(37
)
(63
)
(46
)
(53
)
Fios Internet connections
35

49

66

47

66

43

54

54

52

Fios digital voice residence connections
(8
)
22

11

(15
)
(14
)
(28
)
(30
)
(30
)
(45
)
Fios digital connections
14

56

59

3

30

(22
)
(39
)
(22
)
(46
)
Broadband connections
(27
)
(23
)
(10
)
(19
)
7

(10
)
2

3

12

Voice connections
(305
)
(282
)
(252
)
(279
)
(266
)
(285
)
(261
)
(277
)
(279
)
 
 
 
 
 
 
 
 
 
 
Revenue Statistics
 
 
 
 
 
 
 
 
 
Fios revenues (in millions)
$
2,891

$
2,899

$
2,942

$
2,959

$
2,951

$
2,956

$
2,986

$
3,046

$
3,057


Footnotes:
The segment financial results and metrics above are adjusted to exclude the effects of special items.

Certain Intersegment transactions with corporate entities have not been eliminated.


10

Verizon Communications Inc.


Supplemental Information - Wireless Service Revenue

We adopted Accounting Standard Update 2014-09, "Revenue from Contracts with Customers (Topic 606)" on January 1, 2018, using the modified retrospective application. This adoption method does not impact periods prior to January 1, 2018, which continue to reflect the accounting treatment prior to the adoption of Topic 606. As a result, financial results for periods prior to January 1, 2018 are not comparable with financial results subsequent to such date. 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 under the operating structure that was effective on April 1, 2019.

Consumer - Wireless Service Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(dollars in millions)
 
 
12 Months

3 Months

3 Months

3 Months

3 Months

12 Months

3 Months

3 Months

3 Months

3 Months

12 Months

 
Ended

Ended

Ended

Ended

Ended

Ended

Ended

Ended

Ended

Ended

Ended

Unaudited
12/31/16

3/31/17

6/30/17

9/30/17

12/31/17

12/31/17

3/31/18

6/30/18

9/30/18

12/31/18

12/31/18

Wireless Service Revenue
$
55,649

$
13,009

$
12,881

$
13,034

$
13,030

$
51,954

$
12,881

$
13,122

$
13,257

$
13,199

$
52,458

Adjustments






67

(17
)
(7
)
(10
)
33

Wireless Service Revenue without adoption of Topic 606
$
55,649

$
13,009

$
12,881

$
13,034

$
13,030

$
51,954

$
12,948

$
13,105

$
13,250

$
13,189

$
52,491

YoY % Growth
 
 
 
 
 
(6.6
)%
(0.5
)%
1.7
%
1.7
%
1.2
%
1.0
%


Business - Wireless Service Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(dollars in millions)
 
 
12 Months

3 Months

3 Months

3 Months

3 Months

12 Months

3 Months

3 Months

3 Months

3 Months

12 Months

 
Ended

Ended

Ended

Ended

Ended

Ended

Ended

Ended

Ended

Ended

Ended