Verizon Communications Inc. (NYSE:VZ) Files An 8-K Results of Operations and Financial Condition

Verizon Communications Inc. (NYSE:VZ) Files An 8-K Results of Operations and Financial Condition
Item 2.02. Results of Operations and Financial Condition

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Attached as an exhibit hereto are a press release and financial tables dated January23, 2018 issued by Verizon Communications Inc. (Verizon).

NON-GAAP MEASURES

Verizon’s press release and financial tables include financial information prepared in conformity with generally accepted accounting principles (GAAP) as well as non-GAAP financial information. It is management's intent to provide non-GAAP financial information to enhance the understanding of Verizon's GAAP financial information and it should be considered by the reader in addition to, but not instead of, the financial statements prepared in accordance with GAAP. Each non-GAAP financial measure is presented along with the corresponding GAAP measure so as not to imply that more emphasis should be placed on the non-GAAP measure. We believe that non-GAAP measures provide relevant and useful information, which is used by management, investors and other users of our financial information in assessing both consolidated and segment performance. The non-GAAP financial information presented may be determined or calculated differently by other companies and may not be directly comparable to that of other companies.

Consolidated Operating Revenues Excluding Divested Businesses and Acquisitions

Consolidated Operating Revenues Excluding Divested Businesses and Acquisitions is a non-GAAP financial measure that we believe is useful to management, investors and other users of our financial information in evaluating our revenue growth and trends on a comparable basis.

For the twelve months ended December31, 2016, Consolidated Operating Revenues Excluding Divested Businesses and Acquisitions excludes operating revenues from (i) the local landline businesses in California, Florida and Texas divested on April 1, 2016, (ii) the data center businesses divested on May 1, 2017 and (iii) insignificant divestitures completed in the third quarter of 2017.For the twelve months ended December31, 2017, Consolidated Operating Revenues Excluding Divested Businesses and Acquisitions excludes operating revenues from (i) the data center businesses divested on May 1, 2017, (ii) insignificant divestitures completed in the third quarter of 2017, (iii) Yahoo!, Inc.’s (Yahoo) operating business (acquired on June 13, 2017), (iv) XO Holdings' wireline business (XO) (acquired on February 1, 2017), (v) Fleetmatics Group PLC (Fleetmatics) (acquired on November 7, 2016) and (vi) Telogis, Inc. (Telogis) (acquired on July 29, 2016).

Consolidated Operating Revenues Excluding Divested Businesses and Acquisitions is calculated by subtracting operating revenues from divested businesses and acquisitions from our consolidated operating revenues.

Organic IoT Revenues

Organic IoT Revenues (IoT Revenues Excluding Acquisition) is a non-GAAP financial measure that we believe is useful to management, investors and other users of our financial information in evaluating our IoT revenue growth and trends on a comparable basis. For the three months ended December31, 2017, IoT Revenues Excluding Acquisition excludes operating revenues from Fleetmatics (acquired on November 7, 2016) for a one month period.

IoT Revenues Excluding Acquisition is calculated by subtracting operating revenues from Fleetmatics from IoT revenues.

Wireline Operating Revenues Excluding Acquisition

Wireline Operating Revenues Excluding Acquisition is a non-GAAP financial measure that we believe is useful to management, investors and other users of our financial information in evaluating our Wireline revenue growth and trends on a comparable basis. For the three months ended December 31, 2017, Wireline Operating Revenues Excluding Acquisition excludes operating revenues from XO (acquired on February 1, 2017).

Wireline Operating Revenues Excluding Acquisition is calculated by subtracting operating revenues from XO from Wireline operating revenues.

Consolidated EBITDA and Consolidated EBITDA Margin

Consolidated earnings before interest, taxes, depreciation and amortization (Consolidated EBITDA), Consolidated EBITDA Margin, Segment EBITDA, and Segment EBITDA Margin are non-GAAP financial measures that we believe are useful to management, investors and other users of our financial information in evaluating operating profitability on a more variable cost basis as they exclude depreciation and amortization expense related primarily to capital expenditures and acquisitions that occurred in prior periods, as well as in evaluating operating performance in relation to Verizon’s competitors.

Consolidated EBITDA is calculated by adding back interest, taxes, depreciation and amortization expense, equity in losses of unconsolidated businesses and other (income) and expense, net to net income. Consolidated EBITDA Margin is calculated by dividing Consolidated EBITDA by consolidated operating revenues.

Segment EBITDA is calculated by adding back depreciation and amortization expense to segment operating income. Segment EBITDA Margin is calculated by dividing Segment EBITDA by segment total operating revenues.

Consolidated Adjusted EBITDA and Consolidated Adjusted EBITDA Margin

Consolidated Adjusted EBITDA and Consolidated Adjusted EBITDA Margin are non-GAAP financial measures that we believe provide relevant and useful information to management, investors and other users of our financial information in evaluating the effectiveness of our operations and underlying business trends in a manner that is consistent with management’s evaluation of business performance. We believe Consolidated Adjusted EBITDA and Consolidated Adjusted EBITDA Margin are widely used by investors to compare a company’s operating performance to its competitors by minimizing impacts caused by differences in capital structure, taxes and depreciation policies. Further, the exclusion of special items enables comparability to prior period performance and trend analysis.

Consolidated Adjusted EBITDA is calculated by excluding from Consolidated EBITDA the effect of the following special items: actuarial gains or losses arising from the re-measurements of pension and other postretirement benefits, severance costs, net gain on sale of divested businesses, gain on spectrum license transactions, product realignment costs and acquisition and integration related costs. Actuarial gains or losses as a result of the re-measurements of pension and other postretirement benefits are included in our operating expenses and are measured based on projected discount rates and estimated returns on plan assets. Such estimates are updated at least annually at the end of the fiscal year to reflect actual discount rates and returns on plan assets or more frequently if significant events arise which require an interim re-measurement. Product realignment costs primarily relate to charges taken against certain early-stage developmental technologies. Product realignment costs primarily result in a reduction to goodwill, software and current assets. Acquisition and integration related costs represent transaction expenses related to business acquisitions and incremental expenses directly incurred to integrate the acquired businesses into our operations. We believe the exclusion of the above-noted special items enables management, investors and other users of our financial information to assess our sequential and year-over-year performance on a more comparable basis and is consistent with management’s own evaluation of performance.

Consolidated Adjusted EBITDA Margin is calculated by dividing Consolidated Adjusted EBITDA by Consolidated Operating Revenues.

Consolidated Adjusted EBITDA excluding Operating Results from Divested Businesses is calculated by excluding the operating results from divested businesses from Consolidated Adjusted EBITDA. Management uses this measure to assess our ability to repay debt and we believe this measure is also useful to rating agencies, lenders and other parties in evaluating our creditworthiness.

Net Debt and Net Debt to Consolidated Adjusted EBITDA Ratio

Net Debt and Net Debt to Consolidated Adjusted EBITDA Ratio are non-GAAP financial measures that we believe are useful to management, investors and other users of our financial information in evaluating Verizon’s ability to service its debt.

Net Debt is calculated by subtracting cash and cash equivalents from the sum of debt maturing within one year and long-term debt. Net Debt to Consolidated Adjusted EBITDA Ratio is calculated by dividing Net Debt by Consolidated Adjusted EBITDA excluding Operating Results from Divested Businesses. For purposes of Net Debt to Consolidated Adjusted EBITDA Ratio, Consolidated Adjusted EBITDA excluding Operating Results from Divested Businesses is calculated for the last twelve months.

Adjusted Earnings per Common Share

Adjusted Earnings per Common Share (Adjusted EPS) is a non-GAAP financial measure that we believe is useful to management, investors and other users of our financial information in evaluating our operating results and understanding our operating trends without the effect of special items. We believe excluding special items provides more comparable assessment of our financial results from period to period.

Adjusted EPS is calculated by excluding the effect of the following special items: actuarial gains or losses arising from the re-measurement of pension and other postretirement benefits, severance costs, gain on spectrum license transactions, product realignment costs, acquisition and integration related costs, early debt redemption costs, and the provisional estimate of the impact of the Tax Cuts and Jobs Act (Impact of tax reform) from the calculation of reported EPS.

See the accompanying schedules for reconciliations of non-GAAP financial measures to GAAP.

Item 2.02. Financial Statements and Exhibits

(d) Exhibits.

Exhibit

Number

Description

Press release and financial tables, dated January 23, 2018, issued by Verizon Communications Inc.


VERIZON COMMUNICATIONS INC Exhibit
EX-99 2 a2017q4exhibit99.htm EX-99 Exhibit Exhibit 99News ReleaseFOR IMMEDIATE RELEASEMedia contact:January 23,…
To view the full exhibit click here

About Verizon Communications Inc. (NYSE:VZ)

Verizon Communications Inc. (Verizon) is a holding company. The Company, through its subsidiaries, provides communications, information and entertainment products and services to consumers, businesses and governmental agencies. The Company offers voice, data and video services and solutions on its wireless and wireline networks. The Company’s segments include Wireless and Wireline. The Wireless segment offers communications products and services, including wireless voice and data services and equipment sales that are provided to consumer, business and government customers across the United States. The Wireline’s segment offers voice, data and video communications products and services, such as broadband video and data, corporate networking solutions, data center and cloud services, security and managed network services and local and long distance voice services. The Company provides these products and services to consumers as well as to carriers, businesses and government customers.

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