Verizon Communications Reports Second-Quarter Earnings $2.1 Billion

Verizon Communications Reports Second-Quarter Earnings of $2.1 Billion, With $18.6 Billion in Revenues - Jul 26, 2005 07:25 AM (PR Newswire) -

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Wireless Nets Record 1.9 Million New Customers, Maintains Margins, Yields Record-Low Churn; Wireline Broadband, LD, Data Revenues Continue Growth


Consolidated Results

- 75 cents in diluted earnings per share; 63 cents per share before special items (non-GAAP measure)


- Industry-record 1.9 million net customer additions, up 25.1 percent; 47.4 million total customers, up 17.1 percent; record-low churn (customer turnover) of 1.2 percent

- Total quarterly revenues of $7.8 billion, up $1.0 billion, or 14.6 percent -- the 12th consecutive quarter of double-digit year-over-year revenue growth increases

- Continued strong operating income margin of 22.7 percent


- 4.1 million total broadband connections (DSL and Verizon Fios data lines), including 278,000 net new broadband connections

- Improving revenue trends: Total quarterly revenues of $9.4 billion include a year-over-year gain in the consumer business, and gains from first quarter 2005 in all major lines of business

- Data revenues up 10.9 percent; long-distance (LD) revenues up 6.7 percent

Notes: Reclassifications of prior-period amounts have been made to reflect comparable results excluding Verizon's Hawaii wireline and directory operations, which were sold in the second quarter 2005. Growth percentages cited above compare second quarter 2005 with second quarter 2004. See the schedules accompanying this news release and

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for reconciliations to generally accepted accounting principles (GAAP) for the non-GAAP financial measures included in this announcement. Discontinued operations in the prior-year periods presented include the operations of Verizon Information Services Canada.

NEW YORK, July 26 /PRNewswire/ -- Verizon Communications Inc. (NYSE:VZ) today reported second-quarter 2005 earnings of $2.1 billion, or 75 cents per diluted share, highlighted by another record-breaking quarter at Verizon Wireless and continued strong consolidated cash flows and revenue growth.

Second-quarter earnings included $336 million, or 12 cents per share, from the sale of wireline and directory operations in Hawaii, as well as tax benefits of $242 million recognized on prior-year investment losses, partially offset by net tax expense of $232 million for the repatriation of foreign earnings. Earnings before these special items (non-GAAP measure) were $1.8 billion, or 63 cents per share. This compares with $1.8 billion, or 64 cents per share, in earnings before special items in the second quarter 2004.

The tax on repatriated foreign earnings relates primarily to the more than $2 billion that Verizon expects to receive in 2005 from share buybacks initiated by Italian wireless provider Vodafone Omnitel. Verizon received $1.2 billion in proceeds in the second quarter 2005 and anticipates receiving the final amount in the second half of 2005.

Record Quarterly Revenues

Consolidated operating revenues of $18.6 billion in the second quarter

2005 set a company record, increasing 4.6 percent compared with the second quarter 2004. Consolidated operating revenues on a comparable basis (non-GAAP measure, excluding revenues from Verizon's Hawaii operations in both periods) were $18.5 billion in the second quarter 2005. This is an increase of 5.1 percent, or $0.9 billion, compared with the second quarter 2004.

Second-quarter total revenues at Verizon Wireless increased 14.6 percent, or $1.0 billion, to $7.8 billion when compared with the second quarter 2004, marking the 12th consecutive quarter of more than

10 percent year-over-year increases.

Operating revenues on a comparable basis at Domestic Telecom were $9.4 billion in the second quarter 2005. This 0.5 percent decrease, compared with the second quarter 2004, was the segment's lowest rate of revenue decline in four years. Domestic Telecom revenues in the second quarter 2005 increased $78 million over the first quarter 2005 on a comparable basis.

In the second quarter 2005, consolidated operating expenses increased

3.0 percent to $14.5 billion, compared with second-quarter 2004 operating expenses of $14.1 billion.
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Monty Solomon
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