Verizon Delivers Sixth Consecutive Quarter of Double-Digit Operating Income and Earnings Growth

PR Newswire

NEW YORK, July 22, 2014 /PRNewswire/ --

2Q 2014 HIGHLIGHTS

Consolidated

  • $1.01 in earnings per share (EPS), compared with 78 cents per share in 2Q 2013.
  • 91 cents in adjusted EPS (non-GAAP), compared with 73 cents in adjusted EPS in 2Q 2013, excluding non-operational gains in both periods.

Wireless

  • Added 1.4 million net retail connections; low retail postpaid churn of 0.94 percent; 104.6 million total retail connections; 98.6 million total retail postpaid connections.
  • 5.9 percent year-over-year increase in service revenues; 5.3 percent year-over-year increase in retail service revenues; 32.5 percent operating income margin; 50.3 percent segment EBITDA margin on service revenues (non-GAAP).

Wireline

  • 5.3 percent year-over-year increase in consumer revenues, the eighth consecutive quarter of more than 4 percent growth; consumer ARPU (average revenue per user) up 11.0 percent.
  • 14.4 percent year-over-year increase in FiOS revenues; 139,000 FiOS Internet and 100,000 FiOS Video net additions.

Verizon Communications Inc. (NYSE, Nasdaq: VZ) today reported its sixth consecutive quarter of double-digit percentage growth in operating income and earnings per share. In second-quarter 2014, the company delivered consolidated top-line growth, driven by strong wireless and FiOS revenues, and continued margin expansion.

Chairman and CEO Lowell McAdam said: "Verizon's second-quarter results continue to demonstrate our ability to deliver strong customer growth, with equally strong financial performance, in a dynamic and competitive environment. We have great momentum heading into the second half of the year. We remain focused on profitable growth and on meaningful network investments that provide our customers with the best, and with a continuously improving, overall experience."

Verizon has posted double-digit year-over-year percentage growth in reported and adjusted EPS in nine of the last 10 quarters.

Verizon reported $1.01 in EPS in second-quarter 2014, compared with 78 cents per share in second-quarter 2013. Second-quarter 2014 results included an after-tax gain of $434 million (10 cents per share) related to the sale of 700 MHz A Block spectrum licenses.

On an adjusted basis (non-GAAP), Verizon posted EPS of 91 cents in second-quarter 2014, a 24.7 percent increase compared with 73 cents per share in second-quarter 2013.

Consolidated Highlights

  • Verizon recorded its highest quarterly revenue growth rate in the past six quarters. Total operating revenues in second-quarter 2014 were $31.5 billion, a 5.7 percent increase compared with second-quarter 2013.
  • Continued effective cost management drove second-quarter 2014 operating income to $7.7 billion, a 17.2 percent increase compared with second-quarter 2013.
  • Consolidated operating income margin was 24.4 percent for second-quarter 2014, compared with 22.0 percent for second-quarter 2013.
  • Consolidated EBITDA margin (non-GAAP, based on earnings before interest, taxes, depreciation and amortization) was 37.6 percent for second-quarter 2014, compared with 35.9 percent for second-quarter 2013.

Verizon Wireless Delivers Strong Customer Additions, Revenue Growth and Profitability

In second-quarter 2014, Verizon Wireless delivered strong growth in retail postpaid net connections and revenues, company-record tablet additions, an increase in smartphone penetration, and continued high segment EBITDA margin on service revenues (non-GAAP).

Wireless Financial Highlights

  • Total revenues were $21.5 billion in second-quarter 2014, up 7.5 percent year over year. Service revenues in the quarter totaled $18.1 billion, up 5.9 percent year over year. Retail service revenues grew 5.3 percent year over year, to $17.3 billion.
  • Retail postpaid ARPA (average revenue per account) increased 4.7 percent over second-quarter 2013, to $159.73 per month. 
  • In second-quarter 2014, wireless operating income margin was 32.5 percent and segment EBITDA margin on service revenues was 50.3 percent. This compares with 32.4 percent and 49.8 percent, respectively, in second-quarter 2013.

Wireless Operational Highlights

  • Verizon Wireless added 1.4 million retail net connections, all of which were postpaid, in the second quarter. These additions exclude acquisitions and adjustments.
  • At the end of the second quarter, the company had 104.6 million retail connections. This includes 98.6 million retail postpaid connections, a 4.6 percent increase year over year.
  • Verizon Wireless had 35.2 million retail postpaid accounts at the end of the second quarter, up 0.7 percent over second-quarter 2013, and 2.80 connections per account, up 3.7 percent year over year.
  • During second-quarter 2014, the company added 304,000 postpaid phone net additions and 1.15 million postpaid tablets. At the end of the quarter, smartphones accounted for nearly 75 percent of the Verizon Wireless retail postpaid customer phone base, up from 72 percent in first-quarter 2014. This was also the third straight quarter of company-record net additions for tablets.
  • Retail postpaid churn was 0.94 percent in the second quarter, down 13 basis points sequentially and up 1 basis point year over year. Retail churn was 1.25 percent in the second quarter, down 12 basis points sequentially and up 2 basis points year over year.
  • The company continued to enhance its 4G LTE smartphone lineup. In the second quarter, Verizon Wireless launched the Samsung Galaxy S 5 and ATIV SE, the Lucid 3 by LG and the HTC One (M8). The company also launched the Samsung Galaxy Tab 4 8.0 tablet and announced the Samsung Galaxy Tab 4 10.1 and Galaxy Tab S. Earlier this month, Verizon Wireless launched the Sony Xperia Z2 tablet and the LG G3 smartphone. 
  • During the second quarter, Verizon Wireless continued to add capacity to its 4G LTE network, the largest in the United States, using AWS spectrum. The additional bandwidth, called XLTE, is now available in more than 350 markets across the country.

Wireline Consumer Revenue Growth Remains Strong

Verizon's wireline segment reported continued strong results for consumer services, where year-over-year quarterly revenues now have grown by more than 4 percent for eight consecutive quarters.

Wireline Financial Highlights

  • Total revenues were $9.8 billion in second-quarter 2014, up 0.3 percent year over year. This is the first quarterly year-over-year increase in total wireline revenues in more than seven years.
  • In second-quarter 2014, consumer revenues were $3.9 billion, up 5.3 percent compared with second-quarter 2013, with FiOS revenues representing 75 percent of the total. Consumer ARPU for wireline services increased to $122.57 in second-quarter 2014, up 11.0 percent compared with second-quarter 2013.
  • Total FiOS revenues grew 14.4 percent, to $3.1 billion, comparing second-quarter 2014 with second-quarter 2013.
  • Wireline operating income margin was 2.7 percent in second-quarter 2014, up from 0.8 percent in second-quarter 2013. Segment EBITDA margin (non-GAAP) was 23.2 percent in second-quarter 2014, compared with 22.2 percent in second-quarter 2013.
  • Sales of strategic services to enterprise customers increased 3.0 percent compared with second-quarter 2013. Strategic services include private IP, Ethernet, data center, cloud, security and managed services.

Wireline Operational Highlights

  • In second-quarter 2014, Verizon added 139,000 net new FiOS Internet connections and 100,000 net new FiOS Video connections. Verizon had totals of 6.3 million FiOS Internet and 5.4 million FiOS Video connections at the end of the second quarter, representing year-over-year increases of 9.3 percent and 7.6 percent, respectively.
  • FiOS Internet penetration (subscribers as a percentage of potential subscribers) was 40.1 percent at the end of second-quarter 2014, compared with 38.6 percent at the end of second-quarter 2013. In the same periods, FiOS Video penetration was 35.3 percent, compared with 34.5 percent. The FiOS network passed 19.3 million premises by the end of second-quarter 2014.
  • By the end of second-quarter 2014, 55 percent of consumer FiOS Internet customers subscribed to FiOS Quantum, which provides speeds ranging from 50 to 500 megabits per second, up from 51 percent at the end of first-quarter 2014.
  • Beginning this week, existing and new FiOS customers are receiving upload speeds that mirror download speeds. Verizon is the first provider to offer symmetrical broadband speeds at no additional charge, enhancing the ability of FiOS customers to upload to the cloud, share videos and photos, and video chat.
  • Broadband connections totaled 9.1 million at the end of second-quarter 2014, a 1.5 percent year-over-year increase. Net broadband connections increased by 46,000 in second-quarter 2014, as FiOS Internet net additions more than offset declines in DSL-based High Speed Internet connections.
  • Verizon has been replacing high-maintenance portions of its residential copper network with fiber optics to provide customers with more resilient infrastructure and reduce repairs, which improves customer satisfaction and reduces costs.  In second-quarter 2014, Verizon migrated an additional 70,000 customers to fiber.
  • In the second quarter, Verizon Enterprise Solutions began deploying innovative cloud, security, M2M (machine-to-machine), networking and other technology solutions for a variety of clients around the globe, including healthcare clients Avera, Cardinal Health, Cerner, iCare and Molina Healthcare; as well as 1-800-Flowers, Anadarko Petroleum Corporation, Commonwealth Bank of Australia, Ferrellgas, Johnson Controls, KG Inicis, Northgate Information Solutions, Peninsula Light Corporation and the state of Colorado's Statewide Internet Portal Authority.

Guidance Reiterated

Verizon continues to target 2014 investments in the range of $16.5 billion to $17 billion, with a decrease in capital spending as a percentage of total revenues for the full year.

Verizon continues to target consolidated top-line growth of 4 percent and adjusted consolidated EBITDA margin expansion in 2014, with positive contributions to profitable growth from both wireless and wireline.

NOTE: See the accompanying schedules and www.verizon.com/investor  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, is a global leader in delivering broadband and other wireless and wireline communications services to consumer, business, government and wholesale customers. Verizon Wireless operates America's most reliable wireless network, with 104.6 million retail connections nationwide. Verizon also provides converged communications, information and entertainment services over America's most advanced fiber-optic network, and delivers integrated business solutions to customers in more than 150 countries. A Dow 30 company with more than $120 billion in 2013 revenues, Verizon employs a diverse workforce of 177,800. For more information, visit www.verizon.com.

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 newscenter.verizon.com. The news releases are available through an RSS feed. To subscribe, visit newscenter.verizon.com/corporate/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: the ability to realize the expected benefits of our transaction with Vodafone in the timeframe expected or at all; 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; significantly increased levels of indebtedness as a result of the Vodafone transaction; changes in tax laws or treaties, or in their interpretation; adverse conditions in the U.S. and international economies; material adverse changes in labor matters, including labor negotiations, and any resulting financial and/or operational impact; 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; the effects of competition in the markets in which we operate; 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; significant increases in benefit plan costs or lower investment returns on plan assets; 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 



 6 Mos. Ended 

 6 Mos. Ended 



Unaudited

6/30/14

6/30/13

 % Change 


6/30/14

6/30/13

 % Change 












Operating Revenues

$     31,483

$     29,786

5.7


$       62,301

$       59,206

5.2












Operating Expenses









Cost of services and sales

12,087

11,033

9.6


23,276

21,965

6.0


Selling, general and administrative expense

7,550

8,047

(6.2)


15,882

16,195

(1.9)


Depreciation and amortization expense

4,161

4,151

0.2


8,298

8,269

0.4


Total Operating Expenses

23,798

23,231

2.4


47,456

46,429

2.2












Operating Income

7,685

6,555

17.2


14,845

12,777

16.2


Equity in earnings (losses) of unconsolidated businesses

(43)

120

 * 


1,859

115

 * 


Other income and (expense), net

66

25

 * 


(828)

64

 * 


Interest expense

(1,164)

(514)

 * 


(2,378)

(1,051)

 * 


Income Before Provision for Income Taxes

6,544

6,186

5.8


13,498

11,905

13.4


Provision for income taxes

(2,220)

(988)

 * 


(3,188)

(1,852)

72.1


Net Income

$        4,324

$        5,198

(16.8)


$       10,310

$       10,053

2.6












Net income attributable to noncontrolling interests

$           110

$        2,952

(96.3)


$          2,149

$          5,855

(63.3)


Net income attributable to Verizon

4,214

2,246

87.6


8,161

4,198

94.4


Net Income

$        4,324

$        5,198

(16.8)


$       10,310

$       10,053

2.6












Basic Earnings per Common Share 









Net income attributable to Verizon

$           1.02

$             .78

30.8


$             2.15

$             1.46

47.3











Weighted average number of common shares (in millions)

4,147

2,865



3,789

2,866












Diluted Earnings per Common Share (1)









Net income attributable to Verizon

$           1.01

$             .78

29.5


$             2.15

$             1.46

47.3











Weighted average number of common 










shares-assuming dilution (in millions)

4,153

2,872



3,795

2,873























Footnotes:









(1)

Diluted Earnings per Common Share includes the dilutive effect of shares issuable under our stock-based compensation plans, which represents the only potential dilution.














Certain reclassifications have been made, where appropriate, to reflect comparable operating results.













*

Not meaningful



















 

Verizon Communications Inc.



Condensed Consolidated Balance Sheets
















(dollars in millions)








Unaudited

6/30/14


12/31/13


$ Change








Assets






Current assets







Cash and cash equivalents 

$               5,776


$             53,528


$       (47,752)


Short-term investments

648


601


47


Accounts receivable, net

12,966


12,439


527


Inventories

1,073


1,020


53


Prepaid expenses and other

2,424


3,406


(982)

Total current assets

22,887


70,994


(48,107)

Plant, property and equipment

227,475


220,865


6,610


Less accumulated depreciation

137,763


131,909


5,854



89,712


88,956


756

Investments in unconsolidated businesses

852


3,432


(2,580)

Wireless licenses

75,270


75,747


(477)

Goodwill

24,663


24,634


29

Other intangible assets, net

5,781


5,800


(19)

Other assets

5,262


4,535


727

Total Assets

$           224,427


$           274,098


$       (49,671)








Liabilities and Equity






Current liabilities 







Debt maturing within one year

$               2,283


$               3,933


$         (1,650)


Accounts payable and accrued liabilities

16,521


16,453


68


Other

7,689


6,664


1,025

Total current liabilities

26,493


27,050


(557)

Long-term debt

107,696


89,658


18,038

Employee benefit obligations

26,342


27,682


(1,340)

Deferred income taxes

42,027


28,639


13,388

Other liabilities

5,857


5,653


204








Equity







Common stock

424


297


127


Contributed capital

11,038


37,939


(26,901)


Reinvested earnings

5,551


1,782


3,769


Accumulated other comprehensive income

1,188


2,358


(1,170)


Common stock in treasury, at cost

(3,638)


(3,961)


323


Deferred compensation – employee 







stock ownership plans and other

338


421


(83)


Noncontrolling interests

1,111


56,580


(55,469)

Total equity

16,012


95,416


(79,404)

Total Liabilities and Equity

$           224,427


$           274,098


$       (49,671)















Verizon - Selected Financial and Operating Statistics










Unaudited

6/30/14


12/31/13










Total debt (in millions)

$            109,979


$              93,591



Net debt (in millions)

$            104,203


$              40,063



Net debt / Adjusted EBITDA(1)

2.4x


1.0x



Common shares outstanding end of period (in millions)

4,145


2,862



Total employees

177,800


176,800



Quarterly cash dividends declared per common share

$                0.530


$                0.530










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)










6 Mos. Ended


6 Mos. Ended



Unaudited

6/30/14


6/30/13


$ Change








Cash Flows from Operating Activities






Net Income

$         10,310


$         10,053


$            257

Adjustments to reconcile net income to net cash provided by 






operating activities:







Depreciation and amortization expense

8,298


8,269


29


Employee retirement benefits

562


354


208


Deferred income taxes

253


1,812


(1,559)


Provision for uncollectible accounts

473


507


(34)


Equity in earnings of unconsolidated businesses, net of dividends received

(1,841)


(95)


(1,746)


Changes in current assets and liabilities, net of effects from 







acquisition/disposition of businesses

(847)


(1,660)


813


Other, net

(2,404)


(2,092)


(312)

Net cash provided by operating activities

14,804


17,148


(2,344)








Cash Flows from Investing Activities






Capital expenditures (including capitalized software)

(8,494)


(7,616)


(878)

Acquisitions of investments and businesses, net of cash acquired

(179)


(76)


(103)

Acquisitions of wireless licenses

(271)


(264)


(7)

Proceeds from dispositions of wireless licenses

2,367


-


2,367

Other, net

231


121


110

Net cash used in investing activities

(6,346)


(7,835)


1,489








Cash Flows from Financing Activities






Proceeds from long-term borrowings

20,245


499


19,746

Repayments of long-term borrowings and capital
   lease obligations

(11,317)


(2,330)


(8,987)

Increase (decrease) in short-term obligations, excluding
   current maturities

279


(432)


711

Dividends paid

(3,583)


(2,946)


(637)

Proceeds from sale of common stock

34


74


(40)

Purchase of common stock for treasury

-


(153)


153

Special distribution to noncontrolling interest

-


(3,150)


3,150

Acquisition of noncontrolling interest

(58,886)


-


(58,886)

Other, net

(2,982)


(2,180)


(802)

Net cash used in financing activities

(56,210)


(10,618)


(45,592)








Decrease in cash and cash equivalents

(47,752)


(1,305)


(46,447)

Cash and cash equivalents, beginning of period

53,528


3,093


50,435

Cash and cash equivalents, end of period

$           5,776


$           1,788


$        3,988








Footnotes:







Certain reclassifications 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 



 6 Mos. Ended 

 6 Mos. Ended 


Unaudited

6/30/14

6/30/13

 % Change 


6/30/14

6/30/13

 % Change 










Operating Revenues









Retail service

$     17,288

$     16,422

5.3


$       34,534

$       32,591

6.0


Other service

790

656

20.4


1,531

1,215

26.0

Service

18,078

17,078

5.9


36,065

33,806

6.7










Equipment

2,387

1,953

22.2


4,257

3,766

13.0

Other

1,018

945

7.7


2,040

1,927

5.9

Total Operating Revenues

21,483

19,976

7.5


42,362

39,499

7.2










Operating Expenses








Cost of services and sales

6,742

5,799

16.3


12,598

11,450

10.0

Selling, general and administrative expense

5,649

5,666

(0.3)


11,293

11,114

1.6

Depreciation and amortization expense

2,107

2,047

2.9


4,168

4,053

2.8

Total Operating Expenses

14,498

13,512

7.3


28,059

26,617

5.4










Operating Income

$        6,985

$        6,464

8.1


$       14,303

$       12,882

11.0

Operating Income Margin

32.5%

32.4%



33.8%

32.6%











Segment EBITDA

$        9,092

$        8,511

6.8


$       18,471

$       16,935

9.1

Segment EBITDA Service Margin

50.3%

49.8%



51.2%

50.1%




















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.








Wireless - Selected Operating Statistics
































Unaudited





6/30/14

6/30/13

 % Change 










Connections ('000)









Retail postpaid





98,593

94,271

4.6


Retail prepaid





6,044

5,853

3.3

Retail





104,637

100,124

4.5







































 3 Mos. Ended 

 3 Mos. Ended 



 6 Mos. Ended 

 6 Mos. Ended 


Unaudited

6/30/14

6/30/13

 % Change 


6/30/14

6/30/13

 % Change 










Net Add Detail ('000) (1)









Retail postpaid

1,441

941

53.1


1,980

1,618

22.4


Retail prepaid

(14)

97

 * 


(4)

140

 * 

Retail

1,427

1,038

37.5


1,976

1,758

12.4



















Account Statistics








Retail Postpaid Accounts ('000) (2)





35,186

34,958

0.7

Retail postpaid ARPA

$     159.73

$     152.50

4.7


$       159.70

$       151.39

5.5

Retail postpaid connections per account (2)





2.80

2.70

3.7










Churn Detail








Retail postpaid

0.94%

0.93%



1.00%

0.97%


Retail

1.25%

1.23%



1.31%

1.27%











Retail Postpaid Connection Statistics








Total Smartphone postpaid % of phones activated

90.8%

84.4%



90.4%

84.3%


Total Smartphone postpaid phone base (2)





74.6%

64.4%


Total Internet postpaid base (2)





12.3%

9.9%










Other Operating Statistics








Capital expenditures (in millions)

$        2,771

$        2,278

21.6


$         5,325

$         4,270

24.7



















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 



 6 Mos. Ended 

 6 Mos. Ended 


Unaudited

6/30/14

6/30/13

 % Change 


6/30/14

6/30/13

 % Change 










Operating Revenues









Consumer retail

$        3,864

$        3,669

5.3


$          7,704

$          7,285

5.8


Small business

621

635

(2.2)


1,245

1,273

(2.2)

Mass Markets

4,485

4,304

4.2


8,949

8,558

4.6











Strategic services

2,120

2,059

3.0


4,230

4,132

2.4


Core

1,459

1,590

(8.2)


2,955

3,287

(10.1)

Global Enterprise

3,579

3,649

(1.9)


7,185

7,419

(3.2)










Global Wholesale

1,570

1,662

(5.5)


3,161

3,361

(6.0)

Other

125

119

5.0


254

226

12.4

Total Operating Revenues

9,759

9,734

0.3


19,549

19,564

(0.1)










Operating Expenses








Cost of services and sales

5,461

5,407

1.0


10,920

10,864

0.5

Selling, general and administrative expense

2,034

2,168

(6.2)


4,185

4,433

(5.6)

Depreciation and amortization expense

2,005

2,085

(3.8)


4,038

4,180

(3.4)

Total Operating Expenses

9,500

9,660

(1.7)


19,143

19,477

(1.7)










Operating Income

$           259

$             74

 * 


$             406

$               87

 * 

Operating Income Margin

2.7%

0.8%



2.1%

0.4%











Segment EBITDA

$        2,264

$        2,159

4.9


$          4,444

$          4,267

4.1

Segment EBITDA Margin

23.2%

22.2%



22.7%

21.8%




















Footnotes:









The segment financial results and metrics above are adjusted to exclude the effects of non-operational items,  as the Company's chief operating decision maker excludes these items in assessing business unit performance.











Intersegment transactions have not been eliminated.














Certain reclassifications have been made, where appropriate, to reflect comparable operating results.










*

Not meaningful








Verizon Communications Inc.








Wireline - Selected Operating Statistics
































Unaudited





6/30/14

6/30/13

 % Change 










Connections ('000)









FiOS Video Subscribers





5,419

5,035

7.6


FiOS Internet Subscribers





6,309

5,773

9.3


FiOS Digital Voice residence connections





4,440

3,817

16.3

FiOS Digital connections





16,168

14,625

10.6











HSI





2,768

3,166

(12.6)

Total Broadband connections





9,077

8,939

1.5


Primary residence switched access connections





6,007

7,200

(16.6)

Primary residence connections





10,447

11,017

(5.2)










Total retail residence voice connections





10,903

11,583

(5.9)

Total voice connections





20,391

21,828

(6.6)






























 3 Mos. Ended 

 3 Mos. Ended 



 6 Mos. Ended 

 6 Mos. Ended 


Unaudited

6/30/14

6/30/13

 % Change 


6/30/14

6/30/13

 % Change 










Net Add Detail ('000)









FiOS Video Subscribers

100

140

(28.6)


157

309

(49.2)


FiOS Internet Subscribers

139

161

(13.7)


237

349

(32.1)


FiOS Digital Voice residence connections

90

286

(68.5)


192

590

(67.5)

FiOS Digital connections

329

587

(44.0)


586

1,248

(53.0)











HSI

(93)

(116)

(19.8)


(175)

(205)

(14.6)

Total Broadband connections

46

45

2.2


62

144

(56.9)


Primary residence switched access connections

(217)

(393)

(44.8)


(474)

(782)

(39.4)

Primary residence connections

(127)

(107)

18.7


(282)

(192)

46.9










Total retail residence voice connections

(145)

(142)

2.1


(326)

(266)

22.6

Total voice connections

(342)

(363)

(5.8)


(694)

(675)

2.8










Revenue and ARPU Statistics








Consumer ARPU

$     122.57

$     110.46

11.0


$       121.28

$       109.26

11.0

FiOS revenues (in millions)

$        3,125

$        2,731

14.4


$          6,166

$          5,364

15.0

Strategic services as a % of total Enterprise revenues

59.2%

56.4%



58.9%

55.7%











Other Operating Statistics








Capital expenditures (in millions)

$        1,345

$        1,515

(11.2)


$          2,730

$          2,949

(7.4)










Wireline employees ('000)





80.6

84.7


FiOS Video Open for Sale ('000)





15,372

14,607


FiOS Video penetration





35.3%

34.5%


FiOS Internet Open for Sale ('000)





15,722

14,943


FiOS Internet penetration





40.1%

38.6%




















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.

 

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