VERIZON COMMUNICATIONS NEW YORK, Jan. 24, 2017 /PRNewswire/ --
4Q 2016 highlights
-- Consolidated: $1.10 in earnings per share (EPS); adjusted EPS (non-GAAP)
of 86 cents, excluding non-operational items related to mark-to-market
pension and benefits adjustments and severance-related costs.
-- Wireless: 591,000 retail postpaid net additions, including 552,000 new
4G LTE smartphones; retail postpaid churn at 1.10 percent, with strong
customer loyalty demonstrated by retail postpaid phone churn of less
than 0.90 percent for the seventh consecutive quarter.
-- Wireline: 68,000 Fios Internet net additions, 21,000 Fios Video net
additions; Fios total revenue growth of 4.4 percent.
As Verizon Communications Inc. (NYSE, Nasdaq: VZ) continues to transform its business and enter new markets, the company today reported another strong quarter of wireless profitability and customer loyalty, and customer and revenue growth for Fios fiber-optic services.
Verizon reported fourth-quarter 2016 EPS of $1.10, and full-year EPS of $3.21. Adjusted fourth-quarter 2016 EPS (non-GAAP) of 86 cents excluded 24 cents in net gains related to mark-to-market pension and OPEB (other post-employment benefits) adjustments and severance-related costs. This compares with adjusted fourth-quarter 2015 earnings of 89 cents per share, which primarily excluded pension and OPEB adjustments and severance-related costs.
"We are positioning Verizon for future growth and continued sustainable shareholder value," said Chairman and CEO Lowell McAdam. "In the fourth quarter we expanded our customer base in highly competitive wireless and broadband markets. This capped a year in which we delivered solid results and returned value to shareholders, including $9.3 billion in dividends. We enter 2017 with confidence, based on our investments in next-generation networks and the new capabilities we have acquired. Our goal is to continue to earn our customers' loyalty every day in a rapidly expanding mobile-first digital world."
Consolidated results
Total consolidated operating revenues in fourth-quarter 2016 were $32.3 billion, a 5.6 percent decrease compared with fourth-quarter 2015. Full-year 2016 revenues were nearly $126.0 billion, a 4.3 percent decline. Excluding revenues from since-divested local landline businesses and AOL, adjusted full-year total operating revenues on a comparable basis (non-GAAP) would have declined approximately 2.4 percent.
Net income was $4.6 billion in fourth-quarter 2016, and net income margin was 14.2 percent. EBITDA (non-GAAP, earnings before interest, taxes, depreciation and amortization) totaled $12.0 billion, and the consolidated EBITDA margin (non-GAAP) was 37.1 percent in fourth-quarter 2016.
During 2016, Verizon invested in its networks with $17.1 billion in capital expenditures, completed wireline divestitures of three markets, negotiated new labor contracts, executed successful technical trials of 5G wireless service and expanded its new growth businesses.
In these new markets the digital media business, led by AOL, generated $532 million in revenues net of traffic acquisition costs (non-GAAP) in fourth-quarter 2016. This declined about 5 percent year-over-year due to a revenue lift in fourth-quarter 2015 related to AOL's Microsoft deal, but increased around 10 percent compared with third-quarter 2016.
IoT (Internet of Things) revenues, led by telematics, increased 21 percent on a comparable basis to fourth-quarter 2015, to $243 million. Verizon expects to sustain this trend in strong IoT revenue growth. Including acquisitions, IoT revenues increased more than 60 percent in fourth-quarter 2016.
Verizon Wireless highlights
-- Verizon reported 591,000 retail postpaid net additions in fourth-quarter
2016. These net additions exclude wholesale device and wholesale IoT
connections. At year-end 2016, Verizon had 114.2 million retail
connections, a 1.9 percent year-over-year increase. Verizon's
industry-leading retail postpaid connections base grew 2.1 percent to
108.8 million, and retail prepaid connections totaled 5.4 million.
Full-year postpaid net additions of 2.3 million included 1.8 million 4G
smartphones and 1.4 million 4G tablets, offset primarily by declines in
basic phones and 3G smartphones.
-- Total revenues were $23.4 billion in fourth-quarter 2016, a decline of
1.5 percent compared with fourth-quarter 2015, as more customers
continued to choose unsubsidized device payment plans. For the full
year, revenues totaled $89.2 billion, a decline of 2.7 percent. Service
revenues plus device payment plan billings increased 1.7 percent in
fourth-quarter 2016, compared with fourth-quarter 2015.
-- Retail postpaid churn was 1.10 percent in fourth-quarter 2016, a
year-over-year increase of 14 basis points, as strong retention in the
phone base was offset by increased churn in tablets. Phone customer
loyalty remained high. In fourth-quarter 2016, retail postpaid phone
churn remained below 0.90 percent for the seventh consecutive quarter.
-- At year-end 2016, approximately 67 percent of postpaid phone customers
were on a non-subsidized service pricing plan, ahead of target due to
high volumes in fourth-quarter 2016.
-- The percentage of phone activations on device payment plans increased to
about 77 percent in fourth-quarter 2016, compared with about 70 percent
in third-quarter 2016 and 67 percent in fourth-quarter 2015. Verizon
expects the first-quarter 2017 take rate for device payment plans to be
similar to fourth-quarter 2016. At year-end, approximately 46 percent of
postpaid phone customers had a device payment plan.
-- The 591,000 retail postpaid net additions in fourth-quarter 2016
included 552,000 4G LTE smartphones. With declines in basic and 3G
phones, net phone additions were 167,000 in fourth-quarter 2016,
compared to a net decrease of 36,000 in third-quarter 2016. Tablet net
additions totaled 196,000 in fourth-quarter 2016.
-- Segment operating income in fourth-quarter 2016 was $6.3 billion, and
segment operating income margin was 27.0 percent. In fourth-quarter
2016, Verizon Wireless generated $8.6 billion in segment EBITDA
(non-GAAP), a year-over-year decrease of 5.2 percent. Segment EBITDA
margin on total revenues (non-GAAP) was 36.9 percent, compared with 38.4
percent in fourth-quarter 2015.
-- In fourth-quarter 2016, overall traffic on LTE increased by
approximately 49 percent compared with fourth-quarter 2015, while
Verizon extended its lead in the industry's third-party network
performance studies across the country.
Wireline highlights
-- Total wireline revenues decreased 3.1 percent, to $7.8 billion,
comparing fourth-quarter 2016 with fourth-quarter 2015. Retail consumer
revenues grew 0.2 percent, to $3.2 billion, supported by consumer Fios
revenue growth.
-- Total Fios revenues grew 4.4 percent, to $2.9 billion, comparing
fourth-quarter 2016 with fourth-quarter 2015. Full-year Fios revenues
were $11.2 billion in 2016, a 4.6 percent increase compared with 2015.
-- In fourth-quarter 2016, Verizon added a net of 68,000 Fios Internet
connections and 21,000 Fios Video connections. Customer demand for
Custom TV continues to remain strong. At year-end, Verizon had 5.7
million Fios Internet connections and 4.7 million Fios Video
connections.
-- In the fourth quarter, Verizon began offering consumer and business
fiber-based services to customers in Boston, as part of the company's
One Fiber initiative.
-- Wireline operating income was $414 million in fourth-quarter 2016,
compared with $7 million in fourth-quarter 2015. Segment operating
income margin was 5.3 percent in fourth-quarter 2016. Segment EBITDA
(non-GAAP) was $1.9 billion in fourth-quarter 2016, up 17.7 percent from
fourth-quarter 2015. Segment EBITDA margin (non-GAAP) was 24.1 percent
in fourth-quarter 2016, compared with 19.8 percent in fourth-quarter
2015.
-- During the fourth quarter, Verizon Enterprise Solutions entered into new
agreements, continued or completed work with a number of clients,
including AECOM, ICICI Bank, LBC Tank Terminals Group, Nanyang
Technological University and Target Corporation.
Outlook and forward-looking items
Verizon expects the following:
-- Full-year 2017 consolidated revenues, on an organic basis, to be fairly
consistent with 2016, with improvement in wireless service revenue and
equipment revenue trends; also, full-year 2017 consolidated adjusted EPS
trends to be similar to consolidated revenue trends;
-- Consolidated capital spending for 2017 in the range of $16.8 billion to
$17.5 billion;
-- Minimum pension funding requirements of approximately $600 million in
2017;
-- The 2017 effective tax rate to be in the range of 34 percent to 36
percent, excluding impacts from potential tax reform;
-- On track for a return by the 2018-2019 timeframe to the company's
credit-rating profile prior to the acquisition of Vodafone's indirect 45
percent interest in Verizon Wireless in early 2014.
Regarding pending transactions, Verizon expects its acquisition of XO Communications to close in first-quarter 2017 and its sale of data centers to Equinix to close in second-quarter 2017. Regarding the Yahoo acquisition, Verizon continues to work with Yahoo to assess the impact of data breaches.
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, has a diverse workforce of 160,900 and generated nearly $126 billion in 2016 revenues. Verizon operates America's most reliable wireless network, with 114.2 million retail connections nationwide. The company also provides communications and entertainment services over mobile broadband and the nation's premier all-fiber network, and delivers integrated business solutions to customers worldwide.
VERIZON'S ONLINE MEDIA CENTER: News releases, media contacts and other resources are available at www.verizon.com/about/news/. News releases are also available through an RSS feed. To subscribe, visit www.verizon.com/about/rss-feeds/.
Forward-looking statements
In this communication we have made forward-looking statements. These statements are based on our estimates and assumptions and are subject to risks and uncertainties. Forward-looking statements include the information concerning our possible or assumed future results of operations. Forward-looking statements also include those preceded or followed by the words "anticipates," "believes," "estimates," "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; the inability to implement our business strategies; and the inability to realize the expected benefits of strategic transactions.
Important additional information and where to find it
On September 9, 2016, Yahoo! Inc. ("Yahoo") filed with the Securities and Exchange Commission (the "SEC") a preliminary proxy statement regarding the proposed sale of Yahoo's operating business to Verizon Communications Inc. ("Verizon") and related transactions, and the definitive version of which will be sent or provided to Yahoo stockholders. BEFORE MAKING ANY VOTING DECISION, YAHOO'S STOCKHOLDERS ARE STRONGLY ADVISED TO READ YAHOO'S PROXY STATEMENT IN ITS ENTIRETY (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO WHEN THEY BECOME AVAILABLE) AND ANY OTHER DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTIONS OR INCORPORATED BY REFERENCE THEREIN BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTIONS. Investors and stockholders can obtain a free copy of Yahoo's proxy statement, any amendments or supplements to the proxy statement, and other documents filed by Yahoo with the SEC in connection with the proposed transactions for no charge at the SEC's website at www.sec.gov, on the Investor Relations page of Yahoo's website investor.yahoo.net or by writing to Investor Relations, Yahoo! Inc., 701 First Avenue, Sunnyvale, CA 94089.
Yahoo and its directors and executive officers, as well as Verizon and its directors and executive officers, may be deemed participants in the solicitation of proxies from Yahoo's investors and stockholders in connection with the proposed transactions. Information concerning the ownership of Yahoo securities by Yahoo's directors and executive officers is included in their SEC filings on Forms 3, 4 and 5, and additional information is also available in Yahoo's annual report on Form 10-K for the year ended December 31, 2015, as amended, and Yahoo's proxy statement for its 2016 annual meeting of stockholders filed with the SEC on May 23, 2016. Information about Verizon's directors and executive officers is set forth in Verizon's annual report on Form 10-K for the year ended December 31, 2015 and Verizon's proxy statement for its 2016 annual meeting of stockholders filed with the SEC on March 21, 2016. Information regarding Yahoo's directors, executive officers and other persons who may, under the rules of the SEC, be considered participants in the solicitation of proxies in connection with the proposed transactions, including their respective interests by security holdings or otherwise, also will be set forth in the definitive proxy statement relating to the proposed transactions when it is filed with the SEC. These documents may be obtained free of charge from the sources indicated above.
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 12/31/16 12/31/15 % Change 12/31/16 12/31/15 % Change
--------- -------- -------- -------- -------- -------- --------
Operating Revenues
Service revenues and other $26,610 $28,856 (7.8) $108,468 $114,696 (5.4)
Wireless equipment revenues 5,730 5,398 6.2 17,512 16,924 3.5
----- ----- ------ ------
Total Operating Revenues 32,340 34,254 (5.6) 125,980 131,620 (4.3)
------ ------ ------- -------
Operating Expenses
Cost of services 7,006 7,867 (10.9) 29,186 29,438 (0.9)
Wireless cost of equipment 7,356 6,840 7.5 22,238 23,119 (3.8)
Selling, general and administrative expense 5,968 5,764 3.5 31,569 29,986 5.3
Depreciation and amortization expense 3,987 4,039 (1.3) 15,928 16,017 (0.6)
----- ----- ------ ------
Total Operating Expenses 24,317 24,510 (0.8) 98,921 98,560 0.4
------ ------ ------ ------
Operating Income 8,023 9,744 (17.7) 27,059 33,060 (18.2)
Equity in losses of unconsolidated businesses (35) (16) * (98) (86) 14.0
Other income and (expense), net 98 28 * (1,599) 186 *
Interest expense (1,137) (1,178) (3.5) (4,376) (4,920) (11.1)
------ ------ ------ ------
Income Before Provision for Income Taxes 6,949 8,578 (19.0) 20,986 28,240 (25.7)
Provision for income taxes (2,349) (3,065) (23.4) (7,378) (9,865) (25.2)
------ ------ ------ ------
Net Income $4,600 $5,513 (16.6) $13,608 $18,375 (25.9)
====== ====== ======= =======
Net income attributable to noncontrolling interests $105 $122 (13.9) $481 $496 (3.0)
Net income attributable to Verizon 4,495 5,391 (16.6) 13,127 17,879 (26.6)
----- ----- ------ ------
Net Income $4,600 $5,513 (16.6) $13,608 $18,375 (25.9)
====== ====== ======= =======
Basic Earnings per Common Share
Net income attributable to Verizon $1.10 $1.32 (16.7) $3.22 $4.38 (26.5)
Weighted average number of common shares (in millions) 4,081 4,076 4,080 4,085
Diluted Earnings per Common Share (1)
Net income attributable to Verizon $1.10 $1.32 (16.7) $3.21 $4.37 (26.5)
Weighted average number of common
shares-assuming dilution (in millions) 4,087 4,083 4,086 4,093
Footnotes:
(1) Diluted Earnings per Common Share includes the dilutive effect of shares issuable under our stock-based
compensation plans, which represents the only potential dilution.
* Not meaningful
Verizon Communications Inc.
Condensed Consolidated Balance Sheets
(dollars in millions)
Unaudited 12/31/16 12/31/15 $ Change
--------- -------- -------- --------
Assets
Current assets
Cash and cash equivalents $2,880 $4,470 $(1,590)
Short-term investments - 350 (350)
Accounts receivable, net 17,513 13,457 4,056
Inventories 1,202 1,252 (50)
Assets held for sale 882 792 90
Prepaid expenses and other 3,918 2,034 1,884
-----
Total current assets 26,395 22,355 4,040
------ ------ -----
Plant, property and
equipment 232,215 220,163 12,052
Less accumulated depreciation 147,464 136,622 10,842
-------
84,751 83,541 1,210
------ ------ -----
Investments in
unconsolidated
businesses 1,110 796 314
Wireless licenses 86,673 86,575 98
Goodwill 27,205 25,331 1,874
Other intangible
assets, net 8,897 7,592 1,305
Non-current assets
held for sale 613 10,267 (9,654)
Other assets 8,536 7,718 818
----- ----- ---
Total Assets $244,180 $244,175 $5
======== ======== ===
Liabilities and
Equity
Current liabilities
Debt maturing within one year $2,645 $6,489 $(3,844)
Accounts payable and accrued
liabilities 19,593 19,362 231
Liabilities related to assets held
for sale 24 463 (439)
Other 8,078 8,738 (660)
-----
Total current
liabilities 30,340 35,052 (4,712)
------ ------ ------
Long-term debt 105,433 103,240 2,193
Employee benefit
obligations 26,166 29,957 (3,791)
Deferred income
taxes 45,964 45,484 480
Non-current
liabilities related
to assets held for
sale 6 959 (953)
Other liabilities 12,239 11,641 598
Equity
Common stock 424 424 -
Contributed capital 11,182 11,196 (14)
Reinvested earnings 15,059 11,246 3,813
Accumulated other comprehensive
income 2,673 550 2,123
Common stock in treasury, at cost (7,263) (7,416) 153
Deferred compensation - employee
stock ownership plans and other 449 428 21
Noncontrolling interests 1,508 1,414 94
-----
Total equity 24,032 17,842 6,190
------ ------ -----
Total Liabilities
and Equity $244,180 $244,175 $5
======== ======== ===
Verizon - Selected Financial and Operating Statistics
Unaudited 12/31/16 12/31/15
--------- -------- ---------
Total
debt
(in
millions) $108,078 $109,729
Net
debt
(in
millions) $105,198 $105,259
Net
debt
/
Adjusted
EBITDA(1) 2.4x 2.4x
Common
shares
outstanding
end
of
period
(in
millions) 4,077 4,073
Total
employees
('000) 160.9 177.7
Quarterly
cash
dividends
declared
per
common
share $0.5775 $0.5650
Footnotes:
(1) Adjusted EBITDA excludes the effects of non-operational
items and Divested Businesses.
Verizon Communications Inc.
Condensed Consolidated Statements of Cash Flows
(dollars in millions)
12 Mos. Ended 12 Mos. Ended
Unaudited 12/31/16 12/31/15 $ Change
--------- -------- -------- --------
Cash Flows from Operating Activities
Net Income $13,608 $18,375 $(4,767)
Adjustments to reconcile net income to net
cash provided by
operating activities:
Depreciation and amortization expense 15,928 16,017 (89)
Employee retirement benefits 2,705 (1,747) 4,452
Deferred income taxes (1,063) 3,516 (4,579)
Provision for uncollectible accounts 1,420 1,610 (190)
Equity in losses of unconsolidated businesses, net
of dividends received 138 127 11
Changes in current assets and liabilities, net of
effects from
acquisition/disposition of businesses (5,636) 2,443 (8,079)
Other, net (4,385) (1,411) (2,974)
Net cash provided by operating activities 22,715 38,930 (16,215)
------ ------ -------
Cash Flows from Investing Activities
Capital expenditures (including capitalized
software) (17,059) (17,775) 716
Acquisitions of businesses, net of cash
acquired (3,765) (3,545) (220)
Acquisitions of wireless licenses (534) (9,942) 9,408
Proceeds from dispositions of businesses 9,882 48 9,834
Other, net 493 1,171 (678)
Net cash used in investing activities (10,983) (30,043) 19,060
------- ------- ------
Cash Flows from Financing Activities
Proceeds from long-term borrowings 12,964 6,667 6,297
Proceeds from asset-backed long-term
borrowings 4,986 - 4,986
Repayments of long-term borrowings and
capital lease obligations (19,159) (9,340) (9,819)
Decrease in short-term obligations, excluding
current maturities (149) (344) 195
Dividends paid (9,262) (8,538) (724)
Proceeds from sale of common stock 3 40 (37)
Purchase of common stock for treasury - (5,134) 5,134
Other, net (2,705) 1,634 (4,339)
Net cash used in financing activities (13,322) (15,015) 1,693
------- ------- -----
Decrease in cash and cash equivalents (1,590) (6,128) 4,538
Cash and cash equivalents, beginning of period 4,470 10,598 (6,128)
Cash and cash equivalents, end of period $2,880 $4,470 $(1,590)
====== ====== =======
Verizon Communications Inc.
Wireless - Selected Financial Results
(dollars in millions)
3 Mos. Ended 3 Mos. Ended 12 Mos. Ended 12 Mos. Ended
Unaudited 12/31/16 12/31/15 % Change 12/31/16 12/31/15 % Change
--------- -------- -------- -------- -------- -------- --------
Operating Revenues
Service $16,346 $17,195 (4.9) $66,580 $70,396 (5.4)
Equipment 5,733 5,398 6.2 17,515 16,924 3.5
Other 1,298 1,141 13.8 5,091 4,360 16.8
----- ----- -----
Total Operating Revenues 23,377 23,734 (1.5) 89,186 91,680 (2.7)
------ ------ ------ ------
Operating Expenses
Cost of services 2,056 1,994 3.1 7,988 7,803 2.4
Cost of equipment 7,356 6,840 7.5 22,238 23,119 (3.8)
Selling, general and administrative expense 5,335 5,796 (8.0) 19,924 21,805 (8.6)
Depreciation and amortization expense 2,321 2,305 0.7 9,183 8,980 2.3
----- ----- ----- -----
Total Operating Expenses 17,068 16,935 0.8 59,333 61,707 (3.8)
------ ------ ------ ------
Operating Income $6,309 $6,799 (7.2) $29,853 $29,973 (0.4)
Operating Income Margin 27.0% 28.6% 33.5% 32.7%
Segment EBITDA $8,630 $9,104 (5.2) $39,036 $38,953 0.2
Segment EBITDA Margin 36.9% 38.4% 43.8% 42.5%
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.
Verizon Communications Inc.
Wireless - Selected Operating Statistics
Unaudited 12/31/16 12/31/15 % Change
--------- -------- -------- --------
Connections ('000)
Retail postpaid 108,796 106,528 2.1
Retail prepaid 5,447 5,580 (2.4)
-----
Total retail 114,243 112,108 1.9
3 Mos. Ended 3 Mos. Ended 12 Mos. Ended 12 Mos. Ended
Unaudited 12/31/16 12/31/15 % Change 12/31/16 12/31/15 % Change
--------- -------- -------- -------- -------- -------- --------
Net Add Detail ('000) (1)
Retail postpaid 591 1,519 (61.1) 2,288 4,507 (49.2)
Retail prepaid (9) (157) (94.3) (133) (551) (75.9)
--- --- ----
Total retail 582 1,362 (57.3) 2,155 3,956 (45.5)
Account Statistics
Retail Postpaid Accounts ('000) (2) 35,410 35,736 (0.9)
Retail postpaid connections per account (2) 3.07 2.98 3.0
Retail Postpaid ARPA (3) 141.89 148.30 (4.3) 144.32 152.63 (5.4)
Retail Postpaid I-ARPA(4) 169.10 164.40 2.9 167.70 163.63 2.5
Churn Detail
Retail postpaid 1.10% 0.96% 1.01% 0.96%
Retail 1.34% 1.23% 1.26% 1.24%
Retail Postpaid Connection Statistics
Total Smartphone postpaid % of phones activated 95.2% 93.7% 93.4% 92.1%
Total Smartphone postpaid phone base (2) 87.3% 83.7%
Total Internet postpaid base (2) 18.3% 16.8%
4G LTE devices as % of retails postpaid connections 85.0% 79.2%
Other Operating Statistics
Capital expenditures (in millions) $3,464 $3,259 6.3 $11,240 $11,725 (4.1)
Footnotes:
(1) Connection net additions exclude acquisitions and adjustments.
(2) Statistics presented as of end of period.
(3) Retail postpaid ARPA - average service revenue per account from retail postpaid accounts.
(4) Retail postpaid I-ARPA - average service revenue per account from retail postpaid account plus recurring device
installment billings.
The segment financial results and metrics above are adjusted to exclude the effects of 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.
Wireline - Selected Financial Results
(dollars in millions)
3 Mos. Ended 3 Mos. Ended 12 Mos. Ended 12 Mos. Ended
Unaudited 12/31/16 12/31/15 % Change 12/31/16 12/31/15 % Change
--------- -------- -------- -------- -------- -------- --------
Operating Revenues
Consumer retail $3,232 $3,226 0.2 $12,751 $12,696 0.4
Small business 410 424 (3.3) 1,651 1,744 (5.3)
--- --- -----
Mass Markets 3,642 3,650 (0.2) 14,402 14,440 (0.3)
Global Enterprise 2,872 3,008 (4.5) 11,621 12,050 (3.6)
Global Wholesale 1,225 1,325 (7.5) 5,003 5,263 (4.9)
Other 73 81 (9.9) 319 341 (6.5)
--- --- --- ---
Total Operating Revenues 7,812 8,064 (3.1) 31,345 32,094 (2.3)
----- ----- ------ ------
Operating Expenses
Cost of services 4,428 4,632 (4.4) 18,619 18,816 (1.0)
Selling, general and administrative expense 1,505 1,835 (18.0) 6,585 7,256 (9.2)
Depreciation and amortization expense 1,465 1,590 (7.9) 6,101 6,543 (6.8)
----- ----- ----- -----
Total Operating Expenses 7,398 8,057 (8.2) 31,305 32,615 (4.0)
----- ----- ------ ------
Operating Income (Loss) $414 $7 * $40 $(521) *
Operating Income (Loss) Margin 5.3% 0.1% 0.1% (1.6)%
Segment EBITDA $1,879 $1,597 17.7 $6,141 $6,022 2.0
Segment EBITDA Margin 24.1% 19.8% 19.6% 18.8%
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 to prior period to reflect comparable operating
results in the current period.
* Not meaningful
Verizon Communications Inc.
Wireline - Selected Operating Statistics
Unaudited 12/31/16 12/31/15 % Change
--------- -------- -------- --------
Connections ('000)
Fios Video Subscribers 4,694 4,635 1.3
Fios Internet Subscribers 5,653 5,418 4.3
Fios Digital voice residence connections 3,895 3,872 0.6
-----
Fios Digital connections 14,242 13,925 2.3
HSI 1,385 1,667 (16.9)
Total Broadband connections 7,038 7,085 (0.7)
Primary residence switched access connections 3,230 3,799 (15.0)
Primary residence connections 7,125 7,671 (7.1)
Total retail residence voice connections 7,355 7,949 (7.5)
Total voice connections 13,939 15,035 (7.3)
3 Mos. Ended 3 Mos. Ended 12 Mos. Ended 12 Mos. Ended
Unaudited 12/31/16 12/31/15 % Change 12/31/16 12/31/15 % Change
--------- -------- -------- -------- -------- -------- --------
Net Add Detail ('000)
Fios Video Subscribers 21 25 (16.0) 59 182 (67.6)
Fios Internet Subscribers 68 82 (17.1) 235 350 (32.9)
Fios Digital voice residence connections 13 43 (69.8) 23 145 (84.1)
--- --- ---
Fios Digital connections 102 150 (32.0) 317 677 (53.2)
HSI (68) (71) (4.2) (282) (289) (2.4)
Total Broadband connections - 11 * (47) 61 *
Primary residence switched access connections (129) (152) (15.1) (569) (616) (7.6)
Primary residence connections (116) (109) 6.4 (546) (471) 15.9
Total retail residence voice connections (127) (123) 3.3 (594) (526) 12.9
Total voice connections (255) (289) (11.8) (1,096) (1,105) (0.8)
Revenue Statistics
Fios revenues (in millions) $2,892 $2,770 4.4 $11,236 $10,739 4.6
Other Operating Statistics
Capital expenditures (in millions) $1,648 $1,636 0.7 $4,504 $5,049 (10.8)
Wireline employees ('000) 58.9 61.0
Fios Video Open for Sale ('000) 13,693 13,196
Fios Video penetration 34.3% 35.1%
Fios Internet Open for Sale ('000) 13,982 13,491
Fios Internet penetration 40.4% 40.2%
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.
Non-GAAP Reconciliations - Consolidated
Consolidated Operating Revenues Excluding Divested Businesses and AOL
(dollars in millions)
12 Mos. Ended 12 Mos. Ended
Unaudited 12/31/16 12/31/15
--------- -------- --------
Consolidated Operating Revenues $125,980 $131,620
Less Operating revenues from Divested Businesses 1,280 5,280
Less Operating revenues from AOL 2,880 1,471
Consolidated Operating Revenues Excluding Divested Businesses and AOL $121,820 $124,869
======== ========
Year over Year Change (2.4)%
Operating Revenues from Digital Media Business net of Traffic Acquisition Costs
(dollars in millions)
3 Mos. Ended 3 Mos. Ended 3 Mos. Ended
Unaudited 12/31/16 9/30/16 12/31/15
--------- -------- ------- --------
Operating Revenues from Digital Media Business $886 $790 $949
Less TAC 354 304 390
Operating Revenues from Digital Media Business net of TAC $532 $486 $559
==== ==== ====
Year over Year change (4.8)%
Sequential change 9.5%
Consolidated EBITDA, Consolidated EBITDA Margin and Consolidated Adjusted EBITDA
(dollars in millions)
3 Mos. Ended 3 Mos. Ended 3 Mos. Ended 3 Mos. Ended 3 Mos. Ended 3 Mos. Ended 3 Mos. Ended 3 Mos. Ended
Unaudited 12/31/16 9/30/16 6/30/16 3/31/16 12/31/15 9/30/15 6/30/15 3/31/15
--------- -------- ------- ------- ------- -------- ------- ------- -------
Consolidated Net Income $4,600 $3,747 $831 $4,430 $5,513 $4,171 $4,353 $4,338
Add/subtract:
Provision for income taxes 2,349 1,829 864 2,336 3,065 2,195 2,274 2,331
Interest expense 1,137 1,038 1,013 1,188 1,178 1,202 1,208 1,332
Other (income) and expense, net (98) (97) 1,826 (32) (28) (51) (32) (75)
Equity in losses of unconsolidated businesses 35 23 20 20 16 18 18 34
--- --- --- --- --- --- --- ---
Operating Income 8,023 6,540 4,554 7,942 9,744 7,535 7,821 7,960
Add Depreciation and amortization expense 3,987 3,942 3,982 4,017 4,039 4,009 3,980 3,989
----- ----- ----- ----- ----- ----- ----- -----
Consolidated EBITDA $12,010 $10,482 $8,536 $11,959 $13,783 $11,544 $11,801 $11,949
======= ======= ====== ======= ======= ======= ======= =======
Add/subtract non-operational items (before tax):
Severance, pension and benefit charges/(credits) (1,589) 797 3,550 165 (2,598) 342 - -
Gain on spectrum license transactions - - - (142) (254) - - -
Gain on sale of Divested Businesses - - (1,007) - - - - -
Divested Businesses - - - (661) (709) (717) (741) (739)
(1,589) 797 2,543 (638) (3,561) (375) (741) (739)
------ --- ----- ---- ------ ---- ---- ----
Consolidated Adjusted EBITDA $10,421 $11,279 $11,079 $11,321 $10,222 $11,169 $11,060 $11,210
======= ======= ======= ======= ======= ======= ======= =======
Consolidated Operating Revenues $32,340
Consolidated Net Income Margin 14.2%
Consolidated EBITDA Margin 37.1%
Verizon Communications Inc.
Non-GAAP Reconciliations - Consolidated
Net Debt and Net Debt to Consolidated Adjusted EBITDA Ratio
(dollars in millions)
Unaudited 12/31/16 12/31/15
--------- -------- --------
Net Debt
Debt maturing within one year $2,645 $6,489
Long-term debt 105,433 103,240
------- -------
Total Debt 108,078 109,729
Less Cash and cash equivalents 2,880 4,470
----- -----
Net Debt $105,198 $105,259
======== ========
Net Debt to Consolidated Adjusted EBITDA Ratio 2.4x 2.4x
==== ====
Adjusted Earnings per Common Share (Adjusted EPS)
(dollars in millions except
EPS)
3 Mos. Ended 3 Mos. Ended
Unaudited 12/31/16 12/31/15
--------- -------- --------
. Pre-tax Tax After-Tax Pre-tax Tax After-Tax
EPS $1.10 $1.32
Pension and benefit (credits) $(1,772) $672 $(1,100) (0.27) $(3,154) $1,191 $(1,963) (0.48)
Severance costs 183 (68) 115 0.03 556 (209) 347 0.08
Gain on spectrum license transaction (254) 96 (158) (0.04)
$(1,589) $604 $(985) (0.24) $(2,852) $1,078 $(1,774) (0.43)
----- -----
Adjusted EPS (1) $0.86 $0.89
===== =====
(1) EPS may not add due to rounding.
Verizon Communications Inc.
Non-GAAP Reconciliations - Segments
Wireless
(dollars in millions)
3 Mos. Ended 3 Mos. Ended 12 Mos. Ended 12 Mos. Ended
Unaudited 12/31/16 12/31/15 12/31/16 12/31/15
--------- -------- -------- -------- --------
Segment EBITDA and Segment EBITDA Margin
Operating Income $6,309 $6,799 $29,853 $29,973
Add Depreciation and amortization expense 2,321 2,305 9,183 8,980
----- ----- ----- -----
Segment EBITDA $8,630 $9,104 $39,036 $38,953
====== ====== ======= =======
Total operating revenues $23,377 $23,734 $89,186 $91,680
======= ======= ======= =======
Operating Income Margin 27.0% 28.6% 33.5% 32.7%
==== ==== ==== ====
Segment EBITDA Margin 36.9% 38.4% 43.8% 42.5%
==== ==== ==== ====
Wireline
(dollars in millions)
3 Mos. Ended 3 Mos. Ended 12 Mos. Ended 12 Mos. Ended
Unaudited 12/31/16 12/31/15 12/31/16 12/31/15
--------- -------- -------- -------- --------
Segment EBITDA and Segment EBITDA Margin
Operating Income (Loss) $414 $7 $40 $(521)
Add Depreciation and amortization expense 1,465 1,590 6,101 6,543
----- -----
Segment EBITDA $1,879 $1,597 $6,141 $6,022
====== ====== ====== ======
Total operating revenues $7,812 $8,064 $31,345 $32,094
====== ====== ======= =======
Operating Income (Loss) Margin 5.3% 0.1% 0.1% (1.6)%
=== === === =====
Segment EBITDA Margin 24.1% 19.8% 19.6% 18.8%
==== ==== ==== ====
Media contact:
Bob Varettoni
908.559.6388
robert.a.varettoni@verizon.com
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/verizon-grows-its-strong-customer-base-profitably-in-4q-300395201.html
SOURCE Verizon Communications Inc.
