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Verizon Communications$53.55($.87)(1.60%)

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 Verizon caps transformational year with strong, balanced 4Q results
   Thursday, January 21, 2016 7:00:00 AM ET

4Q 2015 highlights

Consolidated

-- $1.32 in earnings per share (EPS), compared with a loss of 54 cents per share in 4Q 2014, including impacts in both quarters related to the annual actuarial valuation of benefit plans and mark-to-market pension adjustments.

-- 89 cents in adjusted EPS (non-GAAP), a 25.4 percent increase compared with adjusted EPS of 71 cents in 4Q 2014.

Wireless

-- 1.5 million net retail postpaid connections added in the quarter; 112.1 million total retail connections; 106.5 million total retail postpaid connections.

-- 0.96 percent retail postpaid churn, demonstrating continued high customer loyalty.

Wireline

-- 6.8 percent Fios revenue growth; 99,000 Fios internet and 20,000 Fios video net additions.

Capping a year of transformational change, Verizon Communications Inc. (NYSE, Nasdaq: VZ) today reported fourth-quarter 2015 earnings of $1.32 per share, or 89 cents per share on an adjusted basis (non-GAAP).

"In 2015, Verizon delivered strong and balanced results in a dynamic competitive environment while returning more than $13.5 billion to shareholders. At the same time, Verizon built and acquired next-generation network capabilities that position the company to be an innovator in the digital-first mobile world in 2016 and beyond," said Chairman and CEO Lowell McAdam.

Fourth-quarter 2015 EPS results compare with a loss of 54 cents per share in fourth-quarter 2014. Earnings were impacted by non-operational items in both quarters, primarily related to the annual actuarial valuation of benefit plans and mark-to-market pension adjustments (see details below). Verizon’s adjusted EPS (non-GAAP) of 89 cents in fourth-quarter 2015 increased 25.4 percent compared with adjusted EPS of 71 cents in fourth-quarter 2014.

For the full year, Verizon reported $4.37 in EPS in 2015, compared with $2.42 in EPS in 2014. On an adjusted basis (non-GAAP), Verizon’s $3.99 in EPS in 2015 was an increase of 19.1 percent compared with $3.35 in adjusted EPS in 2014.

In 2015, Verizon invested approximately $28 billion in spectrum licenses and capital for future network capacity, in addition to the more than $4 billion acquisition of AOL Inc. in June. Over that same time, the company reduced its leverage ratio and returned more than $13.5 billion to shareholders in the form of dividends and share repurchases. Verizon’s Board of Directors increased the dividend for the ninth consecutive year in September.

Acquisitions of AOL and Millennial Media added capabilities that significantly bolster Verizon’s strategy with strong cross-platform consumer and advertising offerings, particularly in mobile and video. In 2015, the company launched the go90tm mobile-first social entertainment platform, Custom TV options for Fios customers, the humtm direct-to-consumer telematics product, and the Thingspace suite of developer tools to advance the Internet of Things market. Verizon’s investments have also positioned the company to lead in the deployment of 5G wireless broadband.

"Verizon embraced transformational change in 2015, and in 2016 the company has a huge opportunity to drive a new era of growth in our industry," McAdam said.

Consolidated results

-- Total operating revenues in fourth-quarter 2015 were $34.3 billion, a 3.2 percent increase compared with fourth-quarter 2014. For the full year, Verizon reported total consolidated revenues of $131.6 billion. Full-year 2015 revenues grew 3.6 percent, compared with full-year 2014. Current-quarter and third-quarter revenues include results from AOL.

-- New revenue streams from IoT are growing, with revenues of approximately $200 million in fourth-quarter 2015 and about $690 million for the full year. This is a year-over-year increase of 18 percent.

-- Cash flows from operating activities totaled $38.9 billion in 2015, compared with $30.6 billion in 2014. Cash flows in 2015 included a non-recurring $2.4 billion related to the monetization of tower assets.

-- Excluding the tower transaction, free cash flow (non-GAAP, cash flow from operations less capital expenditures) totaled $18.8 billion in 2015. Capital expenditures totaled $17.8 billion, up 3.4 percent from 2014.

-- Consolidated operating income margin was 25.1 percent for 2015. EBITDA (earnings before interest, taxes, depreciation and amortization) margin (non-GAAP) was 37.3 percent for full-year 2015. Adjusted consolidated EBITDA margin (non-GAAP) for 2015 was 35.4 percent, an expansion of 130 basis points from 2014.

Verizon Wireless delivers continued profitable, quality growth

In fourth-quarter 2015, Verizon Wireless continued to deliver profitable, quality postpaid connections growth and low customer churn.

Wireless financial highlights

-- Total revenues were $23.7 billion in fourth-quarter 2015, up 1.2 percent compared with fourth-quarter 2014. Service revenues totaled $17.2 billion, down 5.6 percent year over year. Over the same period, equipment revenues increased to $5.4 billion, up from $4.2 billion, as more customers chose to buy new devices with installment pricing.

-- For the year, total revenues were $91.7 billion, a 4.6 percent increase compared with 2014.

-- Service revenues plus installment billings increased 1.4 percent in fourth-quarter 2015, and 2.0 percent for the full year, compared with 2014. The percentage of phone activations on installment plans grew to 67 percent in fourth-quarter 2015, compared with 58 percent in third-quarter 2015. Verizon expects the percentage of phone activations on installment plans to increase to above 70 percent in first-quarter 2016.

-- In fourth-quarter 2015, wireless operating income margin was 28.6 percent, up from 23.5 percent in fourth-quarter 2014. Segment EBITDA margin on service revenues (non-GAAP) was 52.9 percent, compared with 42.0 percent in fourth-quarter 2014. Segment EBITDA margin on total revenues (non-GAAP) was 38.4 percent, compared with 32.6 percent in fourth-quarter 2014.

Wireless operational highlights

-- Verizon Wireless reported 1.5 million retail postpaid net additions in fourth-quarter 2015 and 4.5 million for the full year. These net additions do not include any wholesale or IoT connections.

-- Customer retention remained high, with retail postpaid churn at a low 0.96 percent in fourth-quarter 2015, a year-over-year improvement of 18 basis points. Churn was also 0.96 percent for the year, an improvement of 8 basis points from full-year 2014.

-- Verizon added 906,000 4G smartphones to its postpaid customer base in fourth-quarter 2015. Postpaid phone net adds totaled 449,000 as net smartphone adds of 713,000 were partially offset by a net decline of basic phones. Tablet net adds totaled 960,000 in the quarter, and net prepaid devices declined by 157,000.

-- During fourth-quarter 2015, 7.6 million phones were activated on device payment plans. Verizon has about 25 million device payment phone connections in total, representing approximately 29 percent of its postpaid phone base. Overall, more than 40 percent of Verizon’s postpaid phone customers are on unsubsidized service pricing.

-- At year-end 2015, the company had 112.1 million retail connections, a 3.6 percent year-over-year increase, and 106.5 million retail postpaid connections, a 4.4 percent year-over-year increase.

-- 4G devices now constitute more than 79 percent of the retail postpaid connections base, with the LTE network handling approximately 90 percent of total wireless data traffic in fourth-quarter 2015. Overall traffic on LTE increased by approximately 60 percent in fourth-quarter 2015, compared with fourth-quarter 2014.

-- About 8.4 percent of Verizon’s retail postpaid base upgraded to a new device in fourth-quarter 2015. At year-end, there were 73 million smartphones in Verizon’s customer base.

-- Wireless capital investment totaled $3.3 billion in fourth-quarter 2015 and $11.7 billion for the year, up 11.5 percent from 2014. Verizon continues to expand capacity and optimize its network, as the company prepares to pilot 5G technology in 2016.

Fios revenues continue to grow in wireline segment

In the wireline segment, Verizon’s results were once again highlighted by continued revenue and customer growth for Fios fiber-optic-based services.

Wireline financial highlights

-- In fourth-quarter 2015, consumer revenues were $4.1 billion, an increase of 2.6 percent compared with fourth-quarter 2014. Fios revenues represented 80.4 percent of the total.

-- Comparing fourth-quarter 2015 with fourth-quarter 2014, total Fios revenues grew 6.8 percent, to $3.5 billion, and consumer Fios revenues grew 6.6 percent.

-- Wireline operating income margin was 7.3 percent in fourth-quarter 2015, up from 4.4 percent in fourth-quarter 2014. Segment EBITDA margin (non-GAAP) was 24.2 percent in fourth-quarter 2015, compared with 23.9 percent in fourth-quarter 2014.

Wireline operational highlights

-- Verizon added 99,000 net new Fios internet connections and 20,000 net new Fios video connections in fourth-quarter 2015. Connections totaled 7.0 million for Fios internet and 5.8 million for Fios video at the end of 2015, representing year-over-year increases of 6.3 percent and 3.2 percent, respectively.

-- Fios internet penetration (subscribers as a percentage of potential subscribers) was 41.8 percent at the end of 2015, compared with 41.1 percent at the end of 2014. In the same periods, Fios video penetration was 35.3 percent, compared with 35.8 percent.

-- By year-end 2015, more than 70 percent of consumer Fios internet customers subscribed to data speeds of 50 megabits per second or higher. In addition, customer interest continues to grow for Custom TV, which represented about one-third of Fios video sales in fourth-quarter 2015.

-- During the fourth quarter, Verizon Enterprise Solutions helped global clients provide better customer experiences and produce better business results through services such as global networking and security, business communications, IT solutions and managed services. The company worked behind the scenes to help its clients serve their customers. These clients include retailers The Kroger Company and Advance Auto Parts; energy companies Sunoco and FirstEnergy; vehicle manufacturer Yamaha Motor; as well as global brands like General Electric, Albertsons Companies, thyssenkrupp, Tennis Australia, Deluxe Corporation, Apollo Global Management and IXcellerate; and government organizations Defense Information Systems Agency and the City of Houston (Texas).

Details of non-operational earnings impacts

Verizon’s fourth-quarter 2015 earnings of $1.32 per share included a year-end mark-to-market adjustment of pension and Other Post-Employment Benefits liabilities. A pre-tax $3.2 billion credit decreased the company’s pension and OPEB liability. This adjustment, which was primarily non-cash, was caused by an increase in the discount rate, the adoption of new mortality assumption tables and the execution of a new prescription drug contract during 2015. The company also incurred pre-tax expenses primarily related to severance costs. On an after-tax basis, these items amounted to a net of $1.6 billion, or a gain of 40 cents per share.

Additionally, Verizon recognized an after-tax gain of $158 million, or 4 cents per share, on a spectrum license transaction.

Excluding the effect of these non-operational gains, Verizon’s adjusted EPS of 89 cents in fourth-quarter 2015 compared with 71 cents in fourth-quarter 2014, when charges totaled $1.25 per share. Fourth-quarter 2014 results included a negative year-end mark-to-market pension and OPEB adjustment, plus severance costs, of $1.12 per share, in addition to 13 cents per share primarily related to the early retirement of debt.

In February 2014 Verizon completed the acquisition of Vodafone Group PLC’s indirect 45 percent interest in Verizon Wireless. On a non-GAAP illustrative basis, assuming Verizon had 100 percent ownership for Verizon Wireless all of 2014, Verizon’s adjusted earnings per share growth rate on a more comparable basis was 16.7 percent, comparing 2015 with 2014.

2016 outlook

Verizon, on a consolidated basis, expects to mitigate 2016 earnings pressures resulting from the sale of high-margin wireline operations to Frontier Communications Corp. (expected to close at the end of the first quarter), from the continued shift of the wireless customer base to device payment plans and from the ramping of new business models. As previously stated, Verizon expects full-year 2016 adjusted earnings to plateau at a level comparable to its strong full-year 2015 adjusted earnings. Additionally, for 2016, the company expects:

-- Consolidated adjusted EBITDA margin consistent with full-year 2015.

-- Consolidated capital spending of between $17.2 billion and $17.7 billion. This includes approximately $150 million for the properties to be sold to Frontier.

-- A minimum pension funding requirement of approximately $550 million.

-- An effective tax rate for financial reporting purposes in the range of 35 to 36 percent.

-- The use of Frontier proceeds to pay down debt, as the company remains committed to returning to its pre-Vodafone transaction credit rating profile in the 2018 to 2019 timeframe.

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) employs a diverse workforce of 177,700 and generated nearly $132 billion in 2015 revenues. Verizon operates America’s most reliable wireless network, with more than 112 million retail connections nationwide. Headquartered in New York, the company also provides communications and entertainment services over America’s most advanced fiber-optic network, and delivers integrated business solutions to customers worldwide.

VERIZON’S ONLINE NEWS CENTER: Verizon news releases, executive speeches and biographies, media contacts and other information are available at Verizon’s online News Center at www.verizon.com/news/. 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," "hopes" or similar expressions. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The following important factors, along with those discussed in our filings with the Securities and Exchange Commission (the "SEC"), could affect future results and could cause those results to differ materially from those expressed in the forward-looking statements: adverse conditions in the U.S. and international economies; the effects of competition in the markets in which we operate; material changes in technology or technology substitution; disruption of our key suppliers’ provisioning of products or services; changes in the regulatory environment in which we operate, including any increase in restrictions on our ability to operate our networks; breaches of network or information technology security, natural disasters, terrorist attacks or acts of war or significant litigation and any resulting financial impact not covered by insurance; our high level of indebtedness; an adverse change in the ratings afforded our debt securities by nationally accredited ratings organizations or adverse conditions in the credit markets affecting the cost, including interest rates, and/or availability of further financing; material adverse changes in labor matters, including labor negotiations, and any resulting financial and/or operational impact; significant increases in benefit plan costs or lower investment returns on plan assets; changes in tax laws or treaties, or in their interpretation; changes in accounting assumptions that regulatory agencies, including the SEC, may require or that result from changes in the accounting rules or their application, which could result in an impact on earnings; and the inability to implement our business strategies.

Verizon Communications Inc.
Condensed Consolidated Statements of Income
                                                                                                                  (dollars in millions, except per share amounts)
                                                                    3 Mos. Ended     3 Mos. Ended                 12 Mos. Ended      12 Mos. Ended
Unaudited                                                           12/31/15         12/31/14           % Change  12/31/15           12/31/14           % Change
Operating Revenues
Service revenues and other                                          $     28,856     $     28,970       (0.4)     $     114,696      $     116,122      (1.2)
Wireless equipment revenues                                         5,398            4,222              27.9      16,924             10,957             54.5
Total Operating Revenues                                            34,254           33,192             3.2       131,620            127,079            3.6
Operating Expenses
Cost of services                                                    7,867            7,076              11.2      29,438             28,306             4.0
Wireless cost of equipment                                          6,840            7,327              (6.6)     23,119             21,625             6.9
Selling, general and administrative expense                         5,764            16,857             (65.8)    29,986             41,016             (26.9)
Depreciation and amortization expense                               4,039            4,068              (0.7)     16,017             16,533             (3.1)
Total Operating Expenses                                            24,510           35,328             (30.6)    98,560             107,480            (8.3)
Operating Income (Loss)                                             9,744            (2,136)            *         33,060             19,599             68.7
Equity in earnings (losses) of unconsolidated businesses            (16)             (31)               (48.4)    (86)               1,780              *
Other income and (expense), net                                     28               (437)              *         186                (1,194)            *
Interest expense                                                    (1,178)          (1,282)            (8.1)     (4,920)            (4,915)            0.1
Income (Loss) Before (Provision) Benefit for Income Taxes           8,578            (3,886)            *         28,240             15,270             84.9
(Provision) Benefit for income taxes                                (3,065)          1,738              *         (9,865)            (3,314)            *
Net Income (Loss)                                                   $        5,513   $      (2,148)     *         $       18,375     $       11,956     53.7
Net income attributable to noncontrolling interests                 $           122  $             83   47.0      $             496  $          2,331   (78.7)
Net income (loss) attributable to Verizon                           5,391            (2,231)            *         17,879             9,625              85.8
Net income (Loss)                                                   $        5,513   $      (2,148)     *         $       18,375     $       11,956     53.7
Basic Earnings (Loss) per Common Share
Net income (loss) attributable to Verizon                           $           1.32 $            (.54) *         $             4.38 $             2.42 81.0
Weighted average number of common shares (in millions)              4,076            4,157                        4,085              3,974
Diluted Earnings (Loss) per Common Share (1)
Net income (loss) attributable to Verizon                           $           1.32 $            (.54) *         $             4.37 $             2.42 80.6
Weighted average number of common
                             shares-assuming dilution (in millions) 4,083            4,157                        4,093              3,981
Footnotes:
(1) If there is a net loss, diluted EPS is the same as basic EPS. 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.
*   Not meaningful
Verizon Communications Inc.
Condensed Consolidated Balance Sheets
                                                                                                                        (dollars in millions)
Unaudited                                                               12/31/15                12/31/14                $ Change
Assets
Current assets
                            Cash and cash equivalents                   $               4,470   $             10,598    $         (6,128)
                            Short-term investments                      350                     555                     (205)
                            Accounts receivable, net                    13,457                  13,993                  (536)
                            Inventories                                 1,252                   1,153                   99
                            Assets held for sale                        792                     552                     240
                            Prepaid expenses and other                  1,959                   2,648                   (689)
Total current assets                                                    22,280                  29,499                  (7,219)
Plant, property and equipment                                           220,163                 230,508                 (10,345)
                            Less accumulated depreciation               136,622                 140,561                 (3,939)
                                                                        83,541                  89,947                  (6,406)
Investments in unconsolidated businesses                                796                     802                     (6)
Wireless licenses                                                       86,575                  75,341                  11,234
Goodwill                                                                25,331                  24,639                  692
Other intangible assets, net                                            8,338                   5,728                   2,610
Non-current assets held for sale                                        10,267                  -                       10,267
Deposit for wireless licenses                                           -                       921                     (921)
Other assets                                                            7,512                   5,739                   1,773
Total Assets                                                            $           244,640     $           232,616     $        12,024
Liabilities and Equity
Current liabilities
                            Debt maturing within one year               $               6,489   $               2,735   $           3,754
                            Accounts payable and accrued liabilities    19,362                  16,680                  2,682
                            Liabilities related to assets held for sale 463                     -                       463
                            Other                                       8,738                   8,572                   166
Total current liabilities                                               35,052                  27,987                  7,065
Long-term debt                                                          103,705                 110,536                 (6,831)
Employee benefit obligations                                            29,957                  33,280                  (3,323)
Deferred income taxes                                                   45,484                  41,563                  3,921
Non-current liabilities related to assets held for sale                 959                     -                       959
Other liabilities                                                       11,641                  5,574                   6,067
Equity
                            Common stock                                424                     424                     -
                            Contributed capital                         11,196                  11,155                  41
                            Reinvested earnings                         11,246                  2,447                   8,799
                            Accumulated other comprehensive income      550                     1,111                   (561)
                            Common stock in treasury, at cost           (7,416)                 (3,263)                 (4,153)
                            Deferred compensation - employee
                            stock ownership plans and other             428                     424                     4
                            Noncontrolling interests                    1,414                   1,378                   36
Total equity                                                            17,842                  13,676                  4,166
Total Liabilities and Equity                                            $           244,640     $           232,616     $        12,024
Verizon - Selected Financial and Operating Statistics
Unaudited                                                               12/31/15                12/31/14
Total debt (in millions)                                                $            110,194    $            113,271
Net debt (in millions)                                                  $            105,724    $            102,673
Net debt / Adjusted EBITDA(1)                                           2.3x                    2.4x
Common shares outstanding end of period (in millions)                   4,073                   4,155
Total employees                                                         177,700                 177,300
Quarterly cash dividends declared per common share                      $                0.565  $                0.550
Footnotes:
(1)                         Adjusted EBITDA excludes the effects of non-operational items.
                            The unaudited condensed consolidated balance sheets are based on preliminary information.
Verizon Communications Inc.
Condensed Consolidated Statements of Cash Flows
                                                                                                                               (dollars in millions)
                                                                                                            12 Mos. Ended      12 Mos. Ended
Unaudited                                                                                                   12/31/15           12/31/14           $ Change
Cash Flows from Operating Activities
Net Income                                                                                                  $         18,375   $         11,956   $        6,419
Adjustments to reconcile net income to net cash provided by
operating activities:
                                 Depreciation and amortization expense                                      16,017             16,533             (516)
                                 Employee retirement benefits                                               (1,747)            8,130              (9,877)
                                 Deferred income taxes                                                      3,516              (92)               3,608
                                 Provision for uncollectible accounts                                       1,610              1,095              515
                                 Equity in earnings (losses) of unconsolidated businesses, net of dividends 127                (1,743)            1,870
                                 received
                                 Changes in current assets and liabilities, net of effects from
                                 acquisition/disposition of businesses                                      2,443              (2,160)            4,603
                                 Other, net                                                                 (1,411)            (3,088)            1,677
Net cash provided by operating activities                                                                   38,930             30,631             8,299
Cash Flows from Investing Activities
Capital expenditures (including capitalized software)                                                       (17,775)           (17,191)           (584)
Acquisitions of investments and businesses, net of cash acquired                                            (3,545)            (182)              (3,363)
Acquisitions of wireless licenses                                                                           (9,942)            (354)              (9,588)
Proceeds from dispositions of wireless licenses                                                             -                  2,367              (2,367)
Proceeds from dispositions of businesses                                                                    48                 120                (72)
Other, net                                                                                                  1,171              (616)              1,787
Net cash used in investing activities                                                                       (30,043)           (15,856)           (14,187)
Cash Flows from Financing Activities
Proceeds from long-term borrowings                                                                          6,667              30,967             (24,300)
Repayments of long-term borrowings and capital lease obligations                                            (9,340)            (17,669)           8,329
Decrease in short-term obligations, excluding current maturities                                            (344)              (475)              131
Dividends paid                                                                                              (8,538)            (7,803)            (735)
Proceeds from sale of common stock                                                                          40                 34                 6
Purchase of common stock for treasury                                                                       (5,134)            -                  (5,134)
Acquisition of noncontrolling interest                                                                      -                  (58,886)           58,886
Other, net                                                                                                  1,634              (3,873)            5,507
Net cash used in financing activities                                                                       (15,015)           (57,705)           42,690
Decrease in cash and cash equivalents                                                                       (6,128)            (42,930)           36,802
Cash and cash equivalents, beginning of period                                                              10,598             53,528             (42,930)
Cash and cash equivalents, end of period                                                                    $           4,470  $         10,598   $       (6,128)
Footnotes:
Certain reclassifications of prior period amounts have been made, where appropriate, to reflect comparable operating results.
Verizon Communications Inc.
Wireless - Selected Financial Results
                                                                                                   (dollars in millions)
                                            3 Mos. Ended   3 Mos. Ended             12 Mos. Ended  12 Mos. Ended
Unaudited                                   12/31/15       12/31/14       % Change  12/31/15       12/31/14       % Change
Operating Revenues
                      Service               $     17,195   $     18,209   (5.6)     $       70,396 $       72,630 (3.1)
                      Equipment             5,398          4,222          27.9      16,924         10,959         54.4
                      Other                 1,141          1,018          12.1      4,360          4,057          7.5
Total Operating Revenues                    23,734         23,449         1.2       91,680         87,646         4.6
Operating Expenses
Cost of services                            1,994          1,857          7.4       7,803          7,200          8.4
Cost of equipment                           6,840          7,327          (6.6)     23,119         21,625         6.9
Selling, general and administrative expense 5,796          6,611          (12.3)    21,805         23,602         (7.6)
Depreciation and amortization expense       2,305          2,152          7.1       8,980          8,459          6.2
Total Operating Expenses                    16,935         17,947         (5.6)     61,707         60,886         1.3
Operating Income                            $        6,799 $        5,502 23.6      $       29,973 $       26,760 12.0
Operating Income Margin                     28.6%          23.5%                    32.7%          30.5%
Segment EBITDA                              $        9,104 $        7,654 18.9      $       38,953 $       35,219 10.6
Segment EBITDA Margin                       38.4%          32.6%                    42.5%          40.2%
Segment EBITDA Service Margin               52.9%          42.0%                    55.3%          48.5%
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.
  Certain reclassifications have been made, where appropriate, to reflect comparable operating results.
Verizon Communications Inc.
Wireless - Selected Operating Statistics
Unaudited                                                                               12/31/15       12/31/14       % Change
Connections (’000)
                        Retail postpaid                                                 106,528        102,079        4.4
                        Retail prepaid                                                  5,580          6,132          (9.0)
Retail                                                                                  112,108        108,211        3.6
                                                3 Mos. Ended   3 Mos. Ended             12 Mos. Ended  12 Mos. Ended
Unaudited                                       12/31/15       12/31/14       % Change  12/31/15       12/31/14       % Change
Net Add Detail (’000) (1)
                        Retail postpaid         1,519          1,986          (23.5)    4,507          5,482          (17.8)
                        Retail prepaid          (157)          81             *         (551)          86             *
Retail                                          1,362          2,067          (34.1)    3,956          5,568          (29.0)
Account Statistics
Retail Postpaid Accounts (’000) (2)                                                     35,736         35,616         0.3
Retail postpaid ARPA                            $     148.30   $     158.82   (6.6)     $       152.63 $       159.86 (4.5)
Retail postpaid connections per account (2)                                             2.98           2.87           3.8
Churn Detail
Retail postpaid                                 0.96%          1.14%                    0.96%          1.04%
Retail                                          1.23%          1.39%                    1.24%          1.33%
Retail Postpaid Connection Statistics
Total Smartphone postpaid % of phones activated 93.7%          93.6%                    92.1%          91.6%
Total Smartphone postpaid phone base (2)                                                83.7%          78.6%
Total Internet postpaid base (2)                                                        16.8%          14.1%
Other Operating Statistics
Capital expenditures (in millions)              $        3,259 $        2,707 20.4      $       11,725 $       10,515 11.5
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.
    Certain reclassifications have been made, where appropriate, to reflect comparable operating results.
*   Not meaningful
Verizon Communications Inc.
Wireline - Selected Financial Results
                                                                                                       (dollars in millions)
                                            3 Mos. Ended    3 Mos. Ended              12 Mos. Ended    12 Mos. Ended
Unaudited                                   12/31/15        12/31/14        % Change  12/31/15         12/31/14         % Change
Operating Revenues
                      Consumer retail       $        4,082  $        3,977  2.6       $       16,123   $       15,583   3.5
                      Small business        572             606             (5.6)     2,350            2,464            (4.6)
Mass Markets                                4,654           4,583           1.5       18,473           18,047           2.4
                      Strategic services    2,075           2,111           (1.7)     8,165            8,324            (1.9)
                      Core                  1,172           1,248           (6.1)     4,778            5,325            (10.3)
Global Enterprise                           3,247           3,359           (3.3)     12,943           13,649           (5.2)
Global Wholesale                            1,498           1,501           (0.2)     5,979            6,190            (3.4)
Other                                       74              117             (36.8)    325              543              (40.1)
Total Operating Revenues                    9,473           9,560           (0.9)     37,720           38,429           (1.8)
Operating Expenses
Cost of services                            5,182           5,326           (2.7)     20,878           21,332           (2.1)
Selling, general and administrative expense 1,999           1,952           2.4       7,989            8,180            (2.3)
Depreciation and amortization expense       1,603           1,866           (14.1)    6,678            7,882            (15.3)
Total Operating Expenses                    8,784           9,144           (3.9)     35,545           37,394           (4.9)
Operating Income                            $           689 $           416 65.6      $          2,175 $          1,035 *
Operating Income Margin                     7.3%            4.4%                      5.8%             2.7%
Segment EBITDA                              $        2,292  $        2,282  0.4       $          8,853 $          8,917 (0.7)
Segment EBITDA Margin                       24.2%           23.9%                     23.5%            23.2%
Footnotes:
  The segment financial results and metrics above are adjusted to exclude the effects of non-operational items,  as the Company’s chief operating decision maker excludes these items in assessing business unit performance.
  Intersegment transactions have not been eliminated.
  Certain reclassifications have been made, where appropriate, to reflect comparable operating results.
* Not meaningful
Verizon Communications Inc.
Wireline - Selected Operating Statistics
Unaudited                                                                                                         12/31/15         12/31/14         % Change
Connections (’000)
                            Fios Video Subscribers                                                                5,827            5,649            3.2
                            Fios Internet Subscribers                                                             7,034            6,616            6.3
                            Fios Digital voice residence connections                                              4,754            4,602            3.3
Fios Digital connections                                                                                          17,615           16,867           4.4
                            HSI                                                                                   2,194            2,589            (15.3)
Total Broadband connections                                                                                       9,228            9,205            0.2
                            Primary residence switched access connections                                         4,784            5,596            (14.5)
Primary residence connections                                                                                     9,538            10,198           (6.5)
Total retail residence voice connections                                                                          9,885            10,615           (6.9)
Total voice connections                                                                                           18,387           19,795           (7.1)
                                                                          3 Mos. Ended   3 Mos. Ended             12 Mos. Ended    12 Mos. Ended
Unaudited                                                                 12/31/15       12/31/14       % Change  12/31/15         12/31/14         % Change
Net Add Detail (’000)
                            Fios Video Subscribers                        20             116            (82.8)    178              387              (54.0)
                            Fios Internet Subscribers                     99             145            (31.7)    418              544              (23.2)
                            Fios Digital voice residence connections      51             88             (42.0)    152              354              (57.1)
Fios Digital connections                                                  170            349            (51.3)    748              1,285            (41.8)
                            HSI                                           (94)           (86)           9.3       (395)            (354)            11.6
Total Broadband connections                                               5              59             (91.5)    23               190              (87.9)
                            Primary residence switched access connections (198)          (198)          -         (812)            (885)            (8.2)
Primary residence connections                                             (147)          (110)          33.6      (660)            (531)            24.3
Total retail residence voice connections                                  (166)          (128)          29.7      (730)            (614)            18.9
Total voice connections                                                   (353)          (294)          20.1      (1,408)          (1,290)          9.1
Revenue Statistics
Fios revenues (in millions)                                               $        3,534 $        3,308 6.8       $       13,763   $       12,674   8.6
Strategic services as a % of total Enterprise revenues                    63.9%          62.8%                    63.1%            61.0%
Other Operating Statistics
Capital expenditures (in millions)                                        $        1,636 $        1,556 5.1       $          5,049 $          5,750 (12.2)
Wireline employees (’000)                                                                                         70.9             76.8
Fios Video Open for Sale (’000)                                                                                   16,492           15,776
Fios Video penetration                                                                                            35.3%            35.8%
Fios Internet Open for Sale (’000)                                                                                16,832           16,109
Fios Internet penetration                                                                                         41.8%            41.1%
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.
Reconciliations - Consolidated Verizon
Adjusted Operating Revenues
                                                                                                                                                                                                     (dollars in millions)
                                                                                                                                                                                 12 Mos. Ended       12 Mos. Ended
Unaudited                                                                                                                                                                        12/31/15            12/31/14
Consolidated Operating Revenues                                                                                                                                                  $        131,620    $        127,079
Less Impact of divested operations                                                                                                                                               -                   256
Consolidated Adjusted Operating Revenues                                                                                                                                         131,620             126,823
Adjusted EBITDA
                                                                                                                                                                                                     (dollars in millions)
                                                         3 Mos.              3 Mos.              3 Mos.              3 Mos.              3 Mos.              3 Mos.              3 Mos.              3 Mos.
                                                         Ended               Ended               Ended               Ended               Ended               Ended               Ended               Ended
Unaudited                                                12/31/15            9/30/15             6/30/15             3/31/15             12/31/14            9/30/14             6/30/14             3/31/14
Verizon Consolidated EBITDA
Consolidated net income (loss)                           $           5,513   $        4,171      $        4,353      $        4,338      $          (2,148)  $           3,794   $             4,324 $             5,986
Add/(Subtract):
Provision (benefit) for income taxes                     3,065               2,195               2,274               2,331               (1,738)             1,864               2,220               968
Interest expense                                         1,178               1,202               1,208               1,332               1,282               1,255               1,164               1,214
Other (income) and expense, net                          (28)                (51)                (32)                (75)                437                 (71)                (66)                894
Equity in (earnings) losses of unconsolidated businesses 16                  18                  18                  34                  31                  48                  43                  (1,902)
Operating income (loss)                                  9,744               7,535               7,821               7,960               (2,136)             6,890               7,685               7,160
Add Depreciation and amortization expense                4,039               4,009               3,980               3,989               4,068               4,167               4,161               4,137
Consolidated EBITDA                                      $        13,783     $      11,544       $      11,801       $      11,949       $            1,932  $         11,057    $           11,846  $           11,297
Other Items (Before Tax)
Severance, Pension, and Benefit (Credits)/Charges        (2,598)             342                 -                   -                   7,507               -                   -                   -
Gain on Spectrum License Transactions                    (254)               -                   -                   -                   -                   -                   (707)               -
Impact of Divested Operations                                                -                   -                   -                   -                   -                   (6)                 (6)
Other                                                                        -                   -                   -                   334                 -                   -                   -
                                                         (2,852)             342                 -                   -                   7,841               -                   (713)               (6)
Consolidated Adjusted EBITDA                             $        10,931     $      11,886       $      11,801       $      11,949       $            9,773  $         11,057    $           11,133  $           11,291
Consolidated Operating Income Margin - YTD(1)            25.1%                                                                           15.4%
Consolidated EBITDA Margin - YTD(1)                      37.3%
Consolidated Adjusted EBITDA Margin - YTD(1)             35.4%                                                                           34.1%
(1) Year-to-date Consolidated Operating Income Margin, Consolidated EBITDA Margin and Consolidated Adjusted EBITDA Margin are calculated using the sum of the quarterly results.
Net Debt to Adjusted EBITDA Ratio
                                                                                                                                                                                                     (dollars in millions)
Unaudited                                                                                                                                                                        12/31/15            12/31/14
Verizon Net Debt
Debt maturing within one year                                                                                                                                                    $             6,489 $             2,735
Long-term debt                                                                                                                                                                   103,705             110,536
Total Debt                                                                                                                                                                       110,194             113,271
Less Cash and cash equivalents                                                                                                                                                   4,470               10,598
Net Debt                                                                                                                                                                         $        105,724    $        102,673
Net Debt to Adjusted EBITDA Ratio                                                                                                                                                2.3x                2.4x
Verizon Communications Inc.
Reconciliations - Consolidated Verizon
Adjusted and Illustrative EPS
                                                   3 Mos. Ended        3 Mos. Ended        12 Mos. Ended        12 Mos. Ended
Unaudited                                          12/31/15            12/31/14            12/31/15             12/31/14
Earnings Per Common Share, Reported                $              1.32 $            (0.54) $               4.37 $               2.42
Severance, Pension, and Benefit (Credits)/Charges  (0.40)              1.12                (0.34)               1.17
Gain on Spectrum License Transactions              (0.04)              -                   (0.04)               (0.11)
Early Debt Redemption and Other Costs              -                   0.13                -                    0.28
Gain on Sale of Omnitel Interest                   -                   -                   -                    (0.47)
Wireless Transaction Costs                         -                   -                   -                    0.07
Adjusted EPS                                       $              0.89 $             0.71  3.99                 3.35
Income from Vodafone noncontrolling interest                                               -                    0.29
Wireless transaction costs                                                                 -                    (0.06)
Elimination of Omnitel equity income                                                       -                    (0.01)
Dilutive effect of share issuance                                                          -                    (0.14)
Illustrative EPS                                                                           $               3.99 $               3.42
Note: EPS may not add due to rounding.
Free Cash Flow                                                                                                  (dollars in millions)
                                                                                                                12 Mos. Ended
Unaudited                                                                                                       12/31/15
Net cash provided by operating activities                                                                       $           38,930
Less Capital expenditures                                                                                       17,775
Free Cash Flow                                                                                                  $           21,155
Less Proceeds from monetization of tower assets                                                                 2,346
Free Cash Flow Adjusted for Tower Transaction                                                                   $           18,809
Verizon Communications Inc.
Reconciliations - Segments
Wireless
                                                                                                         (dollars in millions)
                                           3 Mos. Ended         3 Mos. Ended         12 Mos. Ended       12 Mos. Ended
Unaudited                                  12/31/15             12/31/14             12/31/15            12/31/14
Wireless Segment EBITDA
Operating income                           $             6,799  $             5,502  $           29,973  $         26,760
Add Depreciation and amortization expense  2,305                2,152                8,980               8,459
Wireless Segment EBITDA                    $             9,104  $             7,654  $           38,953  $         35,219
Wireless total operating revenues          $           23,734   $           23,449   $           91,680  $         87,646
Wireless service revenues                  $           17,195   $           18,209   $           70,396  $         72,630
Wireless operating income margin           28.6%                23.5%                32.7%               30.5%
Wireless Segment EBITDA margin             38.4%                32.6%                42.5%               40.2%
Wireless Segment EBITDA service margin     52.9%                42.0%                55.3%               48.5%
Wireline
                                                                                                         (dollars in millions)
                                           3 Mos. Ended         3 Mos. Ended         12 Mos. Ended       12 Mos. Ended
Unaudited                                  12/31/15             12/31/14             12/31/15            12/31/14
Wireline Segment EBITDA
Operating income                           $                689 $                416 $             2,175 $           1,035
Add Depreciation and amortization expense  1,603                1,866                6,678               7,882
Wireline Segment EBITDA                    $             2,292  $             2,282  $             8,853 $           8,917
Wireline total operating revenues          $             9,473  $             9,560  $           37,720  $         38,429
Wireline operating income margin           7.3%                 4.4%                 5.8%                2.7%
Wireline Segment EBITDA margin             24.2%                23.9%                23.5%               23.2%

Media contact: Bob Varettoni908.559.6388robert.a.varettoni@verizon.com

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/verizon-caps-transformational-year-with-strong-balanced-4q-results-300207540.html

SOURCE Verizon

http://rt.prnewswire.com/rt.gif?NewsItemId=NY03613&Transmission_Id=201601210700PR_NEWS_USPR_____NY03613&DateId=20160121



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