Exhibit 99
NEWS RELEASE
| FOR IMMEDIATE RELEASE | Media contact: | |
| April 21, 2016 | Bob Varettoni | |
| 908.559.6388 | ||
| robert.a.varettoni@verizon.com |
Verizon delivers continued earnings and operational growth in 1Q
Strong results demonstrate ability to compete effectively as company remains
focused on network leadership and developing new markets
1Q 2016 highlights
| • | Consolidated: $1.06 in earnings per share (EPS), compared with $1.02 per share in 1Q 2015. |
| • | Wireless: 640,000 retail postpaid net additions; continued low 0.96 percent retail postpaid churn. |
| • | Wireline: 5.0 percent Fios revenue growth; 98,000 Fios internet and 36,000 Fios video net additions. |
NEW YORK – As Verizon Communications Inc. (NYSE, Nasdaq: VZ) continues to grow its customer base and gain revenues in new markets, the company today reported first-quarter 2016 earnings of $1.06 per share, an increase of 3.9 percent compared with first-quarter 2015.
“Verizon’s strong first-quarter results demonstrate our capacity to compete effectively, while executing on our plan of continued network leadership and seeding new growth markets in mobile video and the Internet of Things,” said Chairman and CEO Lowell McAdam.
Since the beginning of the year, Verizon has moved to strengthen America’s best networks by announcing its intention to acquire XO Communications’ fiber-optic network business and an agreement to deploy a new fiber platform in Boston. Both will support a mix of new technologies, including 5G wireless services.
Verizon also completed its sale of local landline businesses in California, Florida and Texas on April 1. The company used the proceeds to pay down debt in second-quarter 2016. In addition, Verizon recently announced plans to expand its video platform by adding unique content from Hearst and AwesomenessTV, and through a joint venture with Hearst to acquire Complex Media.
Consolidated results
| • | Total operating revenues in first-quarter 2016 were $32.2 billion, a 0.6 percent increase compared with first-quarter 2015. Excluding AOL (non-GAAP), which was not part of Verizon a year ago, total operating revenues declined 1.5 percent. AOL had its highest first-quarter revenues in the last five years. |
| • | New revenue streams from IoT (Internet of Things) are growing, with revenues of approximately $195 million in first-quarter 2016, a year-over-year increase of about 25 percent. |
| • | Cash flows from operating activities totaled $7.4 billion in first-quarter 2016. This compares with $10.2 billion in last year’s first quarter, which included $2.4 billion related to a one-time transaction to monetize wireless tower assets. With capital expenditures totaling $3.4 billion in first-quarter 2016, free cash flow (non-GAAP, cash flow from operations less capital expenditures) totaled $4.0 billion. Verizon continues to anticipate consolidated capital expenditures of between $17.2 billion and $17.7 billion in 2016. |
| • | Operating income was $7.9 billion, and operating income margin was 24.7 percent. Consistent with last year’s first quarter, EBITDA (non-GAAP, earnings before interest, taxes, depreciation and amortization) totaled $12.0 billion and the consolidated EBITDA margin (non-GAAP) was 37.2 percent in first-quarter 2016. |
Verizon Wireless posts another quarter of profitable growth
In first-quarter 2016, Verizon Wireless posted a balance of quality connections growth and margin expansion.
Wireless highlights
| • | Verizon reported 640,000 retail postpaid net additions in first-quarter 2016, a seasonally low-volume quarter. These net adds exclude all wholesale connections, including IoT. At the end of first-quarter 2016, Verizon had 112.6 million retail connections, a 3.7 percent year-over-year increase, and 107.2 million retail postpaid connections, a 4.4 percent year-over-year increase. |
| • | Customer retention remained high, with retail postpaid churn at a low 0.96 percent in first-quarter 2016, a year-over-year improvement of 7 basis points. |
| • | Segment operating income was $7.9 billion, and segment operating income margin was 35.8 percent. In first-quarter 2016, Verizon Wireless generated $10.2 billion in EBITDA (non-GAAP), a year-over-year increase of 1.7 percent. Segment EBITDA margin (non-GAAP) was 46.2 percent, compared with 44.8 percent in first-quarter 2015. |
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| • | Total revenues were $22.0 billion in first-quarter 2016, a decline of 1.5 percent compared with first-quarter 2015 as more customers continued to choose unsubsidized device payment plans. Service revenues plus installment billings increased 1.6 percent, comparing first-quarter 2016 with first-quarter 2015. |
| • | The percentage of phone activations on installment plans grew to 68 percent in first-quarter 2016, compared with 67 percent in fourth-quarter 2015. The company expects this percentage to grow to 70 percent in second-quarter 2016. About 48 percent of postpaid phone customers are on an unsubsidized pricing plan, and service revenue declines are expected to flatten when this base exceeds 50 percent. Verizon expects the decline in service revenues to slow throughout the year and ultimately turn positive by the end of 2017. |
| • | The composition of the 640,000 retail postpaid net adds was strong: Verizon added 452,000 4G smartphones to its postpaid base in first-quarter 2016. Due to declines in 3G and basic phones, postpaid phone net adds were a negative 8,000. Tablet net adds totaled 507,000 in the quarter. |
| • | Verizon ended first-quarter 2016 with a total of 73.8 million smartphones. This is 85 percent of the total phone base, with 4G devices more than 81 percent of the retail postpaid connections base. |
| • | Growth in 4G device adoption is driving increased data and video usage. Approximately 92 percent of Verizon’s total data traffic is on the LTE network. Overall data traffic on LTE has increased by approximately 50 percent year over year. |
| • | Wireless capital expenditures totaled $2.2 billion in first-quarter 2016 and are expected to ramp up throughout the year. |
Fios remains the growth driver in wireline segment
In the wireline segment, Fios fiber-optic-based services remain the driver of revenue growth and now represent about 81 percent of consumer revenues.
Wireline highlights
| • | Verizon added 98,000 net new Fios internet connections and 36,000 net new Fios video connections in first-quarter 2016. Total Fios revenues grew 5.0 percent, to $3.5 billion, comparing first-quarter 2016 with first-quarter 2015, including consumer Fios revenue growth of 4.7 percent. |
| • | In first-quarter 2016, consumer revenues were $4.0 billion, an increase of 0.8 percent compared with first-quarter 2015. |
| • | Segment operating income was $0.6 billion, and segment operating income margin was 6.3 percent. In first-quarter 2016, wireline generated $2.2 billion in EBITDA (non-GAAP), a year-over-year increase of 1.2 percent. Segment EBITDA margin (non-GAAP) was 23.4 percent, compared with 22.7 percent in first-quarter 2015. |
| • | By the end of first-quarter 2016, about 78 percent of consumer Fios internet customers subscribed to data speeds of 50 megabits per second or higher. Customer demand remained strong for Custom TV, which represented about 38 percent of Fios video sales in the quarter. |
| • | During the first quarter, Verizon Enterprise Solutions entered into new agreements with or began servicing a number of clients, including 1-800-Flowers, the Commonwealth of Virginia, Dana Holding Corporation, the Florida Sheriffs Association, Promeditec, PSE&G, South Australia Health & Medical Research Institute, and Wyndham Worldwide. |
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Details of non-operational items and other impacts
Verizon’s first-quarter 2016 earnings of $1.06 per share included a non-cash pre-tax loss of $165 million for a pension mark-to-market adjustment. Verizon expects settlement accounting to impact each of the remaining quarters in 2016. Additionally, the company recognized a pre-tax gain of $142 million on a spectrum license transaction.
On an after-tax basis, the loss on settlement accounting and the gain on the spectrum transaction each amounted to approximately 2 cents per share, effectively offsetting each other in first-quarter 2016. For comparability, there were no special items of a non-operational nature in first-quarter 2015.
Wireline results for first-quarter 2016 included the operations sold to Frontier on April 1. Verizon recognized a full-quarter benefit of about 3 cents per share due to these assets being classified as held for sale in first-quarter 2016, compared with 2 cents per share recognized in first-quarter 2015.
For illustrative purposes on a preliminary basis, excluding operations sold to Frontier, recast total wireline revenues (non-GAAP) were approximately $8.0 billion in first-quarter 2016. This is comparable to first-quarter 2015. Recast wireline segment EBITDA margin (non-GAAP) for first-quarter 2016 was approximately 19 percent without these operations, which were more profitable than the remaining properties.
Verizon will provide nine quarters of historical financials for the wireline segment, excluding these properties, later in second-quarter 2016.
In early April 2016, Verizon used proceeds from the Frontier transaction together with cash on hand to complete tender offers and early redemptions for $10.7 billion in debt, which enabled the company to retire higher-cost debt and achieve lower borrowing costs. Verizon reiterates that by 2018-2019 the company expects to return to its credit-rating profile prior to the acquisition of Vodafone’s indirect 45 percent interest in Verizon Wireless in early 2014.
Earnings outlook
Verizon continues to expect full-year 2016 adjusted earnings to be at a level comparable to the company’s strong full-year 2015 adjusted earnings. However, given the status of labor contract negotiations, there will be pressure on second-quarter earnings due to the timing of cost reductions.
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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 nearly $132 billion in 2015 revenues. Verizon operates America’s most reliable wireless network, with 112.6 million retail connections nationwide. The company also provides communications and entertainment services over America’s most advanced fiber-optic network, and delivers integrated business solutions to customers worldwide.
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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,” “hopes” or similar expressions. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The following important factors, along with those discussed in our filings with the Securities and Exchange Commission (the “SEC”), could affect future results and could cause those results to differ materially from those expressed in the forward-looking statements: adverse conditions in the U.S. and international economies; the effects of competition in the markets in which we operate; material changes in technology or technology substitution; disruption of our key suppliers’ provisioning of products or services; changes in the regulatory environment in which we operate, including any increase in restrictions on our ability to operate our networks; breaches of network or information technology security, natural disasters, terrorist attacks or acts of war or significant litigation and any resulting financial impact not covered by insurance; our high level of indebtedness; an adverse change in the ratings afforded our debt securities by nationally accredited ratings organizations or adverse conditions in the credit markets affecting the cost, including interest rates, and/or availability of further financing; material adverse changes in labor matters, including labor negotiations, and any resulting financial and/or operational impact; significant increases in benefit plan costs or lower investment returns on plan assets; changes in tax laws or treaties, or in their interpretation; changes in accounting assumptions that regulatory agencies, including the SEC, may require or that result from changes in the accounting rules or their application, which could result in an impact on earnings; and the inability to implement our business strategies.
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Verizon Communications Inc.
Condensed Consolidated Statements of Income
(dollars in millions, except per share amounts)
Unaudited | 3 Mos. Ended 3/31/16 | 3 Mos. Ended 3/31/15 | % Change | |||||||||
Operating Revenues | ||||||||||||
Service revenues and other | $ 28,217 | $ 28,611 | (1.4 | ) | ||||||||
Wireless equipment revenues | 3,954 | 3,373 | 17.2 | |||||||||
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Total Operating Revenues | 32,171 | 31,984 | 0.6 | |||||||||
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Operating Expenses | ||||||||||||
Cost of services | 7,614 | 6,988 | 9.0 | |||||||||
Wireless cost of equipment | 4,998 | 5,108 | (2.2 | ) | ||||||||
Selling, general and administrative expense | 7,600 | 7,939 | (4.3 | ) | ||||||||
Depreciation and amortization expense | 4,017 | 3,989 | 0.7 | |||||||||
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Total Operating Expenses | 24,229 | 24,024 | 0.9 | |||||||||
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Operating Income | 7,942 | 7,960 | (0.2 | ) | ||||||||
Equity in losses of unconsolidated businesses | (20 | ) | (34 | ) | (41.2 | ) | ||||||
Other income, net | 32 | 75 | (57.3 | ) | ||||||||
Interest expense | (1,188 | ) | (1,332 | ) | (10.8 | ) | ||||||
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Income Before Provision for Income Taxes | 6,766 | 6,669 | 1.5 | |||||||||
Provision for income taxes | (2,336 | ) | (2,331 | ) | 0.2 | |||||||
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Net Income | $ 4,430 | $ 4,338 | 2.1 | |||||||||
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Net income attributable to noncontrolling interests | $ 120 | $ 119 | 0.8 | |||||||||
Net income attributable to Verizon | 4,310 | 4,219 | 2.2 | |||||||||
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Net income | $ 4,430 | $ 4,338 | 2.1 | |||||||||
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Basic Earnings per Common Share | ||||||||||||
Net income attributable to Verizon | $ 1.06 | $ 1.03 | 2.9 | |||||||||
Weighted average number of common shares (in millions) | 4,080 | 4,116 | ||||||||||
Diluted Earnings per Common Share(1) | ||||||||||||
Net income attributable to Verizon | $ 1.06 | $ 1.02 | 3.9 | |||||||||
Weighted average number of common shares-assuming dilution (in millions) | 4,085 | 4,121 | ||||||||||
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. |
Certain reclassifications have been made, where appropriate, to reflect comparable operating results.
Verizon Communications Inc.
Condensed Consolidated Balance Sheets
(dollars in millions)
Unaudited | 3/31/16 | 12/31/15 | $ Change | |||||||||
Assets | ||||||||||||
Current assets | ||||||||||||
Cash and cash equivalents | $ 5,846 | $ 4,470 | $ 1,376 | |||||||||
Short-term investments | — | 350 | (350 | ) | ||||||||
Accounts receivable, net | 12,485 | 13,457 | (972 | ) | ||||||||
Inventories | 1,142 | 1,252 | (110 | ) | ||||||||
Assets held for sale | 720 | 792 | (72 | ) | ||||||||
Prepaid expenses and other | 3,422 | 1,959 | 1,463 | |||||||||
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Total current assets | 23,615 | 22,280 | 1,335 | |||||||||
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Plant, property and equipment | 222,669 | 220,163 | 2,506 | |||||||||
Less accumulated depreciation | 139,658 | 136,622 | 3,036 | |||||||||
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| 83,011 | 83,541 | (530 | ) | |||||||||
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Investments in unconsolidated businesses | 821 | 796 | 25 | |||||||||
Wireless licenses | 86,830 | 86,575 | 255 | |||||||||
Goodwill | 25,364 | 25,331 | 33 | |||||||||
Other intangible assets, net | 8,216 | 8,338 | (122 | ) | ||||||||
Non-current assets held for sale | 10,432 | 10,267 | 165 | |||||||||
Other assets | 6,298 | 7,047 | (749 | ) | ||||||||
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Total Assets | $ 244,587 | $ 244,175 | $ 412 | |||||||||
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Liabilities and Equity | ||||||||||||
Current liabilities | ||||||||||||
Debt maturing within one year | $ 6,265 | $ 6,489 | $ (224 | ) | ||||||||
Accounts payable and accrued liabilities | 18,118 | 19,362 | (1,244 | ) | ||||||||
Liabilities related to assets held for sale | 452 | 463 | (11 | ) | ||||||||
Other | 8,477 | 8,738 | (261 | ) | ||||||||
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Total current liabilities | 33,312 | 35,052 | (1,740 | ) | ||||||||
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Long-term debt | 103,615 | 103,240 | 375 | |||||||||
Employee benefit obligations | 29,665 | 29,957 | (292 | ) | ||||||||
Deferred income taxes | 45,568 | 45,484 | 84 | |||||||||
Non-current liabilities related to assets held for sale | 974 | 959 | 15 | |||||||||
Other liabilities | 11,350 | 11,641 | (291 | ) | ||||||||
Equity | ||||||||||||
Common stock | 424 | 424 | — | |||||||||
Contributed capital | 11,191 | 11,196 | (5 | ) | ||||||||
Reinvested earnings | 13,253 | 11,246 | 2,007 | |||||||||
Accumulated other comprehensive income | 459 | 550 | (91 | ) | ||||||||
Common stock in treasury, at cost | (7,279 | ) | (7,416 | ) | 137 | |||||||
Deferred compensation – employee stock ownership plans and other | 593 | 428 | 165 | |||||||||
Noncontrolling interests | 1,462 | 1,414 | 48 | |||||||||
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Total equity | 20,103 | 17,842 | 2,261 | |||||||||
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Total Liabilities and Equity | $ 244,587 | $ 244,175 | $ 412 | |||||||||
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Verizon – Selected Financial and Operating Statistics
Unaudited | 3/31/16 | 12/31/15 | ||||||
Total debt (in millions) | $ 109,880 | $ 109,729 | ||||||
Net debt (in millions) | $ 104,034 | $ 105,259 | ||||||
Net debt / Adjusted EBITDA (1) | 2.2x | 2.3x | ||||||
Common shares outstanding end of period (in millions) | 4,076 | 4,073 | ||||||
Total employees | 173,300 | 177,700 | ||||||
Quarterly cash dividends declared per common share | $ 0.565 | $ 0.565 | ||||||
Footnotes:
| (1) | Adjusted EBITDA excludes the effects of non-operational items. |
Certain reclassifications have been made, where appropriate, to conform to the current period’s presentation.
Verizon Communications Inc.
Condensed Consolidated Statements of Cash Flows
(dollars in millions)
Unaudited | 3 Mos. Ended 3/31/16 | 3 Mos. Ended 3/31/15 | $ Change | |||||||||
Cash Flows from Operating Activities | ||||||||||||
Net Income | $ 4,430 | $ 4,338 | $ 92 | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization expense | 4,017 | 3,989 | 28 | |||||||||
Employee retirement benefits | 356 | 284 | 72 | |||||||||
Deferred income taxes | 167 | 823 | (656 | ) | ||||||||
Provision for uncollectible accounts | 353 | 383 | (30 | ) | ||||||||
Equity in losses of unconsolidated businesses, net of dividends received | 29 | 44 | (15 | ) | ||||||||
Changes in current assets and liabilities, net of effects from acquisition/disposition of businesses | (1,162 | ) | (888 | ) | (274 | ) | ||||||
Other, net | (771 | ) | 1,196 | (1,967 | ) | |||||||
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Net cash provided by operating activities | 7,419 | 10,169 | (2,750 | ) | ||||||||
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Cash Flows from Investing Activities | ||||||||||||
Capital expenditures (including capitalized software) | (3,387 | ) | (3,665 | ) | 278 | |||||||
Acquisitions of investments and businesses, net of cash acquired | (161 | ) | (2 | ) | (159 | ) | ||||||
Acquisitions of wireless licenses | (131 | ) | (9,555 | ) | 9,424 | |||||||
Other, net | 243 | 46 | 197 | |||||||||
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Net cash used in investing activities | (3,436 | ) | (13,176 | ) | 9,740 | |||||||
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Cash Flows from Financing Activities | ||||||||||||
Proceeds from long-term borrowings | — | 6,497 | (6,497 | ) | ||||||||
Repayments of long-term borrowings and capital lease obligations | (376 | ) | (5,576 | ) | 5,200 | |||||||
Increase (decrease) in short-term obligations, excluding current maturities | (40 | ) | 482 | (522 | ) | |||||||
Dividends paid | (2,302 | ) | (2,153 | ) | (149 | ) | ||||||
Proceeds from sale of common stock | 3 | — | 3 | |||||||||
Purchase of common stock for treasury | — | (5,000 | ) | 5,000 | ||||||||
Other, net | 108 | 2,545 | (2,437 | ) | ||||||||
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Net cash used in financing activities | (2,607 | ) | (3,205 | ) | 598 | |||||||
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Increase (decrease) in cash and cash equivalents | 1,376 | (6,212 | ) | 7,588 | ||||||||
Cash and cash equivalents, beginning of period | 4,470 | 10,598 | (6,128 | ) | ||||||||
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Cash and cash equivalents, end of period | $ 5,846 | $ 4,386 | $ 1,460 | |||||||||
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Verizon Communications Inc.
Wireless – Selected Financial Results
(dollars in millions)
Unaudited | 3 Mos. Ended 3/31/16 | 3 Mos. Ended 3/31/15 | % Change | |||||||||
Operating Revenues | ||||||||||||
Service | $ 16,809 | $ 17,914 | (6.2 | ) | ||||||||
Equipment | 3,954 | 3,373 | 17.2 | |||||||||
Other | 1,241 | 1,041 | 19.2 | |||||||||
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Total Operating Revenues | 22,004 | 22,328 | (1.5 | ) | ||||||||
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Operating Expenses | ||||||||||||
Cost of services | 1,942 | 1,851 | 4.9 | |||||||||
Cost of equipment | 4,998 | 5,108 | (2.2 | ) | ||||||||
Selling, general and administrative expense | 4,891 | 5,369 | (8.9 | ) | ||||||||
Depreciation and amortization expense | 2,293 | 2,190 | 4.7 | |||||||||
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Total Operating Expenses | 14,124 | 14,518 | (2.7 | ) | ||||||||
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Operating Income | $ 7,880 | $ 7,810 | 0.9 | |||||||||
Operating Income Margin | 35.8 | % | 35.0 | % | ||||||||
Segment EBITDA | $ 10,173 | $ 10,000 | 1.7 | |||||||||
Segment EBITDA Margin | 46.2 | % | 44.8 | % | ||||||||
Footnotes:
The segment financial results and metrics above are adjusted to exclude the effects of non-operational items, as the Company’s chief operating decision maker excludes these items in assessing business unit performance.
Intersegment transactions have not been eliminated.
Certain reclassifications have been made, where appropriate, to reflect comparable operating results.
Verizon Communications Inc.
Wireless – Selected Operating Statistics
Unaudited | 3/31/16 | 3/31/15 | % Change | |||||||||
Connections (‘000) | ||||||||||||
Retail postpaid | 107,171 | 102,637 | 4.4 | |||||||||
Retail prepaid | 5,402 | 5,945 | (9.1 | ) | ||||||||
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Retail | 112,573 | 108,582 | 3.7 | |||||||||
Unaudited | 3 Mos. Ended 3/31/16 | 3 Mos. Ended 3/31/15 | % Change | |||||||||
Net Add Detail (‘000)(1) | ||||||||||||
Retail postpaid | 640 | 565 | 13.3 | |||||||||
Retail prepaid | (177 | ) | (188 | ) | (5.9 | ) | ||||||
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Retail | 463 | 377 | 22.8 | |||||||||
Account Statistics | ||||||||||||
Retail Postpaid Accounts (‘000)(2) | 35,720 | 35,516 | 0.6 | |||||||||
Retail postpaid connections per account(2) | 3.00 | 2.89 | 3.8 | |||||||||
Churn Detail | ||||||||||||
Retail postpaid | 0.96 | % | 1.03 | % | ||||||||
Retail | 1.23 | % | 1.33 | % | ||||||||
Retail Postpaid Connection Statistics | ||||||||||||
Total Smartphone postpaid % of phones activated | 92.5 | % | 91.4 | % | ||||||||
Total Smartphone postpaid phone base(2) | 84.7 | % | 79.9 | % | ||||||||
Total Internet postpaid base(2) | 17.3 | % | 14.8 | % | ||||||||
4G LTE devices as % of retail postpaid connections | 81.1 | % | 69.9 | % | ||||||||
Other Operating Statistics | ||||||||||||
Capital expenditures (in millions) | $ 2,190 | $ 2,419 | (9.5 | ) | ||||||||
Footnotes:
| (1) | Connection net additions exclude acquisitions and adjustments. |
| (2) | Statistics presented as of end of period. |
The segment financial results and metrics above are adjusted to exclude the effects of non-operational items, as the Company’s chief operating decision maker excludes these items in assessing business unit performance.
Intersegment transactions have not been eliminated.
Verizon Communications Inc.
Wireline – Selected Financial Results
(dollars in millions)
Unaudited | 3 Mos. Ended 3/31/16 | 3 Mos. Ended 3/31/15 | % Change | |||||||||
Operating Revenues | ||||||||||||
Consumer retail | $ 4,022 | $ 3,992 | 0.8 | |||||||||
Small business | 568 | 600 | (5.3 | ) | ||||||||
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Mass Markets | 4,590 | 4,592 | — | |||||||||
Global Enterprise | 3,161 | 3,263 | (3.1 | ) | ||||||||
Global Wholesale | 1,463 | 1,524 | (4.0 | ) | ||||||||
Other | 76 | 90 | (15.6 | ) | ||||||||
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Total Operating Revenues | 9,290 | 9,469 | (1.9 | ) | ||||||||
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Operating Expenses | ||||||||||||
Cost of services | 5,163 | 5,287 | (2.3 | ) | ||||||||
Selling, general and administrative expense | 1,950 | 2,031 | (4.0 | ) | ||||||||
Depreciation and amortization expense | 1,588 | 1,746 | (9.0 | ) | ||||||||
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Total Operating Expenses | 8,701 | 9,064 | (4.0 | ) | ||||||||
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Operating Income | $ 589 | $ 405 | 45.4 | |||||||||
Operating Income Margin | 6.3 | % | 4.3 | % | ||||||||
Segment EBITDA | $ 2,177 | $ 2,151 | 1.2 | |||||||||
Segment EBITDA Margin | 23.4 | % | 22.7 | % | ||||||||
Footnotes:
The segment financial results and metrics above are adjusted to exclude the effects of non-operational items, as the Company’s chief operating decision maker excludes these items in assessing business unit performance.
Intersegment transactions have not been eliminated.
Certain reclassifications have been made, where appropriate, to reflect comparable operating results.
Verizon Communications Inc.
Wireline – Selected Operating Statistics
Unaudited | 3/31/16 | 3/31/15 | % Change | |||||||||
Connections (‘000) | ||||||||||||
Fios Video Subscribers | 5,863 | 5,739 | 2.2 | |||||||||
Fios Internet Subscribers | 7,132 | 6,749 | 5.7 | |||||||||
Fios Digital voice residence connections | 4,800 | 4,661 | 3.0 | |||||||||
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Fios Digital connections | 17,795 | 17,149 | 3.8 | |||||||||
HSI | 2,086 | 2,497 | (16.5 | ) | ||||||||
Total Broadband connections | 9,218 | 9,246 | (0.3 | ) | ||||||||
Primary residence switched access connections | 4,573 | 5,397 | (15.3 | ) | ||||||||
Primary residence connections | 9,373 | 10,058 | (6.8 | ) | ||||||||
Total retail residence voice connections | 9,702 | 10,457 | (7.2 | ) | ||||||||
Total voice connections | 18,037 | 19,475 | (7.4 | ) | ||||||||
Unaudited | 3 Mos. Ended 3/31/16 | 3 Mos. Ended 3/31/15 | % Change | |||||||||
Net Add Detail (‘000) | ||||||||||||
Fios Video Subscribers | 36 | 90 | (60.0 | ) | ||||||||
Fios Internet Subscribers | 98 | 133 | (26.3 | ) | ||||||||
Fios Digital voice residence connections | 46 | 59 | (22.0 | ) | ||||||||
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Fios Digital connections | 180 | 282 | (36.2 | ) | ||||||||
HSI | (108 | ) | (92 | ) | 17.4 | |||||||
Total Broadband connections | (10 | ) | 41 | * | ||||||||
Primary residence switched access connections | (211 | ) | (199 | ) | 6.0 | |||||||
Primary residence connections | (165 | ) | (140 | ) | 17.9 | |||||||
Total retail residence voice connections | (183 | ) | (158 | ) | 15.8 | |||||||
Total voice connections | (350 | ) | (320 | ) | 9.4 | |||||||
Revenue Statistics | ||||||||||||
Fios revenues (in millions) | $ 3,521 | $ 3,352 | 5.0 | |||||||||
Other Operating Statistics | ||||||||||||
Capital expenditures (in millions) | $ 1,006 | $ 1,077 | (6.6 | ) | ||||||||
Wireline employees (‘000) | 69.2 | 75.5 | ||||||||||
Fios Video Open for Sale (‘000) | 16,677 | 15,931 | ||||||||||
Fios Video penetration | 35.2 | % | 36.0 | % | ||||||||
Fios Internet Open for Sale (‘000) | 17,018 | 16,264 | ||||||||||
Fios Internet penetration | 41.9 | % | 41.5 | % | ||||||||
Footnotes:
The segment financial results and metrics above are adjusted to exclude the effects of non-operational items, as the Company’s chief operating decision maker excludes these items in assessing business unit performance.
Intersegment transactions have not been eliminated.
| * | Not meaningful |
Verizon Communications Inc.
Non-GAAP Reconciliations – Consolidated Verizon
Consolidated Operating Revenues Excluding AOL
(dollars in millions)
Unaudited | 3 Mos. Ended 3/31/16 | 3 Mos. Ended 3/31/15 | ||||||
Consolidated Operating Revenues | $ 32,171 | $ 31,984 | ||||||
Less: AOL operating revenues | 669 | — | ||||||
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Consolidated Operating Revenues Excluding AOL | $ 31,502 | $ 31,984 | ||||||
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Consolidated EBITDA, EBITDA Margin and Adjusted EBITDA
(dollars in millions)
Unaudited | 3 Mos. Ended 3/31/16 | 3 Mos. Ended 12/31/15 | 3 Mos. Ended 9/30/15 | 3 Mos. Ended 6/30/15 | 3 Mos. Ended 3/31/15 | |||||||||||||||
Verizon Consolidated EBITDA | ||||||||||||||||||||
Consolidated net income | $ 4,430 | $ 5,513 | $ 4,171 | $ 4,353 | $ 4,338 | |||||||||||||||
Add/(Subtract): | ||||||||||||||||||||
Provision for income taxes | 2,336 | 3,065 | 2,195 | 2,274 | 2,331 | |||||||||||||||
Interest expense | 1,188 | 1,178 | 1,202 | 1,208 | 1,332 | |||||||||||||||
Other income, net | (32 | ) | (28 | ) | (51 | ) | (32 | ) | (75 | ) | ||||||||||
Equity in losses of unconsolidated businesses | 20 | 16 | 18 | 18 | 34 | |||||||||||||||
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Operating income | 7,942 | 9,744 | 7,535 | 7,821 | 7,960 | |||||||||||||||
Add Depreciation and amortization expense | 4,017 | 4,039 | 4,009 | 3,980 | 3,989 | |||||||||||||||
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Consolidated EBITDA | $ 11,959 | $ 13,783 | $ 11,544 | $ 11,801 | $ 11,949 | |||||||||||||||
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Other Items (Before Tax) | ||||||||||||||||||||
Severance, Pension, and Benefit (Credits)/Charges | 165 | (2,598 | ) | 342 | — | — | ||||||||||||||
Gain on Spectrum License Transactions | (142 | ) | (254 | ) | — | — | — | |||||||||||||
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| 23 | (2,852 | ) | 342 | — | — | |||||||||||||||
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Consolidated Adjusted EBITDA | $ 11,982 | $ 10,931 | $ 11,886 | $ 11,801 | $ 11,949 | |||||||||||||||
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Consolidated Operating Income Margin | 24.7 | % | 24.9 | % | ||||||||||||||||
Consolidated EBITDA Margin | 37.2 | % | 37.4 | % | ||||||||||||||||
Net Debt and Net Debt to Consolidated Adjusted EBITDA Ratio
(dollars in millions)
Unaudited | 3/31/16 | 12/31/15 | ||||||
Verizon Net Debt | ||||||||
Debt maturing within one year | $ 6,265 | $ 6,489 | ||||||
Long-term debt | 103,615 | 103,240 | ||||||
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Total Debt | 109,880 | 109,729 | ||||||
Less Cash and cash equivalents | 5,846 | 4,470 | ||||||
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Net Debt | $ 104,034 | $ 105,259 | ||||||
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Net Debt to Consolidated Adjusted EBITDA Ratio | 2.2x | 2.3x | ||||||
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Verizon Communications Inc.
Non-GAAP Reconciliations – Consolidated Verizon
Adjusted Earnings per Common Share (Adjusted EPS)
Unaudited | 3 Mos. Ended 3/31/16 | 3 Mos. Ended 3/31/15 | ||||||
EPS | $ 1.06 | $ 1.02 | ||||||
Pension remeasurement | 0.02 | — | ||||||
Gain on spectrum license transaction | (0.02 | ) | — | |||||
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Adjusted EPS | $ 1.06 | $ 1.02 | ||||||
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Free Cash Flow
(dollars in millions)
Unaudited | 3 Mos. Ended 3/31/16 | |||
Net cash provided by operating activities | $ 7,419 | |||
Less Capital expenditures | 3,387 | |||
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Free Cash Flow | $ 4,032 | |||
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Verizon Communications Inc.
Non-GAAP Reconciliations – Segments
Wireless
(dollars in millions)
Unaudited | 3 Mos. Ended 3/31/16 | 3 Mos. Ended 3/31/15 | ||||||
Wireless Segment EBITDA and EBITDA Margin | ||||||||
Operating Income | $ 7,880 | $ 7,810 | ||||||
Add Depreciation and amortization expense | 2,293 | 2,190 | ||||||
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Wireless Segment EBITDA | $ 10,173 | 10,000 | ||||||
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Wireless total operating revenues | $ 22,004 | 22,328 | ||||||
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Wireless Operating Income Margin | 35.8 | % | 35.0 | % | ||||
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Wireless Segment EBITDA Margin | 46.2 | % | 44.8 | % | ||||
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Wireline
(dollars in millions)
Unaudited | 3 Mos. Ended 3/31/16 | 3 Mos. Ended 3/31/15 | ||||||
Wireline Segment EBITDA and EBITDA Margin | ||||||||
Operating Income | $ 589 | $ 405 | ||||||
Add Depreciation and amortization expense | 1,588 | 1,746 | ||||||
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Wireline Segment EBITDA | $ 2,177 | 2,151 | ||||||
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Wireline total operating revenues | $ 9,290 | $ 9,469 | ||||||
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Wireline Operating Income Margin | 6.3 | % | 4.3 | % | ||||
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Wireline Segment EBITDA Margin | 23.4 | % | 22.7 | % | ||||
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(dollars in billions)
Unaudited and preliminary | 3 Mos. Ended 3/31/16 | 3 Mos. Ended 3/31/15 | ||||||
Recast Wireline Segment Total Operating Revenues and EBITDA Margin | ||||||||
Total operating revenues | $ 9.3 | $ 9.5 | ||||||
Less Excluded Businesses | 1.3 | 1.4 | ||||||
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Recast Wireline Segment Total Operating Revenues | $ 8.0 | $ 8.1 | ||||||
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Operating Income | $ 0.6 | |||||||
Add Depreciation and amortization expense | 1.6 | |||||||
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Wireline Segment EBITDA | $ 2.2 | |||||||
Less Excluded Businesses | 0.7 | |||||||
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Recast Wireline Segment EBITDA | $ 1.5 | |||||||
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Recast Wireline Segment EBITDA Margin | 19 | % | ||||||
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