|
(Mark one)
|
|
ý
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For the fiscal year ended December 31, 2017
|
|
OR
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
|
Delaware
|
|
23-2259884
|
(State or other jurisdiction
of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
|
|
|
1095 Avenue of the Americas
New York, New York
|
|
10036
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Title of each class
|
|
Name of each exchange on which registered
|
Common Stock, $.10 par value
|
|
New York Stock Exchange
The NASDAQ Global Select Market
|
Large accelerated filer
ü
|
|
|
|
Accelerated filer __
|
|
Emerging growth company__
|
Non-accelerated filer __
|
|
(Do not check if a smaller reporting company)
|
|
Smaller reporting company__
|
|
|
Item No.
|
|
Page
|
|
|
|
PART I
|
|
|
|
|
|
Item 1.
|
||
|
|
|
Item 1A.
|
||
|
|
|
Item 1B.
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 3.
|
||
|
|
|
Item 4.
|
||
|
|
|
PART II
|
|
|
|
|
|
Item 5.
|
||
|
|
|
Item 6.
|
||
|
|
|
Item 7.
|
||
|
|
|
Item 7A.
|
||
|
|
|
Item 8.
|
||
|
|
|
Item 9.
|
||
|
|
|
Item 9A.
|
||
|
|
|
Item 9B.
|
||
|
|
|
PART III
|
|
|
|
|
|
Item 10.
|
||
|
|
|
Item 11.
|
||
|
|
|
Item 12.
|
||
|
|
|
Item 13.
|
||
|
|
|
Item 14.
|
||
|
|
|
PART IV
|
|
|
|
|
|
Item 15.
|
||
|
|
|
|
|
|
Certifications
|
|
PART I
|
Item 1. Business
|
General
|
Wireless
|
Wireless’ communications products and services include wireless voice and data services and equipment sales, which are provided to
consumer, business and government customers across the
United States (U.S.).
|
Wireline
|
Wireline’s
voice, data and video communications products and enhanced services include broadband video and data services, corporate networking solutions, security and managed network services and local and long distance voice services. We provide these products and services to consumers in the U.S., as well as to carriers, businesses and government customers both in the U.S. and around the world.
|
Wireless
|
•
|
Network reliability, capacity and coverage.
We consider a wireless network that consistently provides high-quality and reliable service to be a key differentiator in the U.S. market and driver of customer satisfaction. Lower prices, improved service quality and new wireless service offerings, which in many cases include video content, have led to increased customer usage of wireless services, which, in turn, puts pressure on network capacity. In order to compete effectively, wireless service providers must keep pace with network capacity needs and offer highly reliable national coverage through their networks. We believe that the depth and breadth of our network provides our fundamental strength and is the basis for our competitive advantage in the wireless marketplace. We expect that our investments in our 4G LTE network to increase network capacity will enable us to meet consumer demand.
|
•
|
Pricing.
Service and equipment pricing play an important role in the wireless competitive landscape, with plans that address both the postpaid and prepaid customer. As the demand for wireless services continues to grow, we and other wireless service providers are offering service plans at competitive prices that include unlimited data access, voice minutes and text messages, and we also offer plans with data access in varying megabyte or gigabyte sizes. We and many other wireless service providers also allow customers on certain plans to carry over unused data allowances to the next billing period, or to stay online at a reduced data speed after using all of a data allowance for a billing period. In addition, some wireless service providers have bundled wireless service offerings with other products while others offer promotional pricing and incentives targeted specifically to customers of Verizon Wireless.
|
•
|
Customer service.
We believe that high-quality customer service is a key factor in retaining customers and attracting new customers, including those of other wireless providers. Our customer service, retention and satisfaction programs are based on providing customers with convenient and easy-to-use products and services and focusing on their needs in order to promote long-term relationships and minimize churn. Our competitors also recognize the importance of customer service and are also focused on improving in this area. As part of our effort to transform and simplify the customer experience, we developed the My Verizon app, which enables customers to manage their price plan, data usage, account and billing from their devices. To promote long-term relationships with our customers, we launched the Verizon Up program, which offers a variety of rewards to customers in exchange for points they earn in connection with their account-related transactions with Verizon Wireless. The program offers customers discounts on products, services and access to experiences, such as sporting events, shows and concerts.
|
•
|
Product and service development.
As wireless technologies develop and wireless broadband networks proliferate, continued customer and revenue growth will be increasingly dependent on the development of new and enhanced data products and services. We continue to pursue the development and rapid deployment of new and innovative wireless products and services both independently and in collaboration with application and content providers. We also collaborate with various device manufacturers in the development of distinctive smartphones and other wireless devices that can access the growing array of data applications and content available over the Internet. We continue to focus on increasing the penetration of smartphones, tablets and other connected devices throughout our customer base.
|
•
|
Sales and distribution.
The key to achieving sales success in the wireless industry is the reach and quality of sales channels and distribution points. We believe that attaining the optimal combination of varying distribution channels is important to achieving industry-leading profitability, as measured by operating income. We endeavor to increase sales through our company-operated stores, outside sales teams and telemarketing, web-based sales and fulfillment capabilities, our extensive indirect distribution network of retail outlets and prepaid replenishment locations, and through manufacturers of laptops and netbooks with embedded 4G LTE and 3G modules that can access the Internet on our network at broadband speeds. In addition, we sell network access to both traditional resellers, which resell network services to their end-users, and to various companies to enable wireless communications for their IoT devices or services.
|
•
|
Capital resources.
In order to expand the capacity and coverage of their networks and introduce new products and services, wireless service providers require significant capital resources. We generate significant cash flow from operations, as do some of our competitors.
|
Wireline
|
•
|
Fios Custom TV,
which provides customers with seven distinct package offerings. The seven choices are: Kids and Pop, Sports and News, Action and Entertainment, News and Variety, Home and Family, Lifestyle and Reality, and Infotainment and Drama. Each package includes the local versions of the major broadcast stations and other similar local content and then adds on 45 + specialty channels driven by popular viewership choices;
|
•
|
Fios on Demand,
which gives Fios customers the ability to watch content virtually anytime and anywhere, on any compatible device. Customers who subscribe to Fios Internet and video services also have the ability to upload their photos, music and videos to their personal Fios on Demand Library, which gives them access to this content via various data-capable devices. With the Fios Mobile App, programming can be streamed to a customer’s tablet or other mobile device; and
|
•
|
Fios Multi-Room DVR,
which provides customers the ability to record up to 12 shows at once and control live TV from any room in their home.
|
•
|
Networks.
We offer a robust portfolio of network connectivity products to help our enterprise and business customers connect with their employees, partners, vendors, customers and, for our government customers, their constituents.
|
◦
|
Internet.
We offer our enterprise and business customers the ability to connect to the Internet via our Fios Internet and our dedicated Internet access services, which provide extensive bandwidth, configuration and billing options designed to address specific business needs.
|
◦
|
Private Networks.
Our private networking services connect multiple business locations securely through our Private IP (MPLS) and Ethernet services, generally via fiber optic based connectivity. Point to point connectivity via Ethernet or Wavelength is also available.
|
◦
|
Virtual and Software Defined Networks.
We provide our enterprise and business customers with the ability to leverage the power of Software Defined Networking technologies, such as SD-WAN or Virtual Network Services (VNS), with easily
|
•
|
Advanced Communications Services.
We offer a suite of services to our enterprise and business customers to help them communicate with their employees, partners, vendors, constituents and customers.
|
◦
|
Voice over IP (VoIP).
Our VoIP services enable communications via our cost-effective and simple-to-operate managed IP based communications services for enterprise and business customers that seek a hosted IP communications/phone system or an IP based telephony service for on-premise phone systems or private branch exchanges (PBX).
|
◦
|
Unified Communications & Collaboration (UC&C).
Our UC&C services, an expansion of our VoIP services, provide our business customers with unified tools for communications and collaboration such as instant messaging, video, collaboration, presence, etc.
|
◦
|
Customer Experience/Contact Center.
We offer our business customers the ability to deliver integrated support services to their own customers, employees or constituents. Hosted and on-premise versions are available, which include the ability to support remote agents and integration with our business customer’s back office systems and tools.
|
•
|
Security services.
We offer a suite of management and data security services to help enterprise, business and governments protect, detect and respond to security threats spanning their networks, data, applications and infrastructure, which enable them to maintain customer trust and confidence.
|
•
|
Core services.
Core services include core voice and data services, which consist of a comprehensive portfolio of domestic and global solutions utilizing traditional telecommunications technology. Voice services include local exchange, regional, long distance and toll-free calling along with voice messaging services, conferencing and contact center solutions. Core data includes private line and data access networks. Core services also include the provision of customer premises equipment, and installation, maintenance and site services. We continue to transition customers out of copper-based legacy voice and data services to fiber services, including IP and Ethernet.
|
•
|
Data services.
We offer a robust portfolio of data services with varying speeds and options to enhance our wholesale customers’ networks and provide connections to their end-users and subscribers. Our data services include high-speed digital data offerings, such as Ethernet and Wavelength services, as well as core time-division multiplexing (TDM) data circuits, such as DS1s and DS3s. In addition, we receive revenue from data services that is generated from carriers that buy dedicated local exchange capacity to support their private networks. We have also launched a dark fiber product for wireless carriers as demand for wireless data continues to grow and dark fiber plays a larger role in their network architecture.
|
•
|
Voice services.
We provide switched access services that allow carriers to complete their end-user calls that originate or terminate within our territory. In addition, we provide originating and terminating voice services throughout the U.S. and globally utilizing our TDM and VoIP networks.
|
•
|
Local services.
We offer an array of local dial tone and broadband services to competitive local exchange carriers, some of which are offered to comply with telecommunications regulations. In addition, we offer services such as colocation, resale and unbundled network elements in compliance with applicable regulations.
|
•
|
Fios.
Our fiber-to-the-home network through which we provide our Fios residential broadband service has passed over 17.3 million premises in the U.S. as of December 31, 2017. Residential broadband service has seen significant growth in bandwidth demand over the past several years, and we believe that demand will continue to grow. The continued emergence of new video services, new data applications and the proliferation of IP devices in the home will continue to drive new network requirements for increased data speeds and throughput. We believe that the Passive Optical Network (PON) technology underpinning Fios makes us well positioned to meet these demands in a cost-effective and efficient manner. Our PON technology provides the flexibility to adapt our network to deliver increased data speeds and new services without major overhauls or replacements to the fiber-optic infrastructure.
|
•
|
Global IP
. Verizon owns and operates one of the largest global fiber networks in the world, providing connectivity to business customers in more than 150 countries. Our global IP network includes long-haul, metro and submarine assets that span over 900,000 route miles and enable and support far reaching international operations.
|
•
|
Bandwidth (speed) and network reliability.
Consumers and small business customers are seeking to leverage fast and reliable connections for entertainment, communications and productivity. As online and online-enabled activities increase, so will bandwidth requirements, both downstream and upstream. To succeed, we and other network-based providers must ensure that our networks can meet these increasing bandwidth requirements.
In addition, network reliability and security are increasingly important competitive factors for our Enterprise Solutions and Business Markets customers, which include State, Local and Education (SLED), and Small and Medium Business (SMB) customers. We continue to invest in our network to be able to meet growing bandwidth demand and provide reliable and secure networks.
|
•
|
Pricing.
Cable operators, telecommunications companies and integrated service providers use pricing to capture market share from incumbents. Pricing is also a significant factor as non-traditional modes of providing communication services emerge and new entrants compete for customers. For example, VoIP and portal-based calling is free or nearly free to customers and is often supported by advertising revenues.
|
•
|
Customer service.
Customers expect industry-leading service from their service providers. As technologies and services evolve, the ability to excel in this area is important for customer acquisition and retention. For our Consumer Markets and Business Markets customers, we compete in this area through our service representatives and online support. We provide our Enterprise Solutions customers with ready access to their system and performance information and we conduct proactive testing of our network to identify issues before they affect their customers. In the Partner Solutions business, we believe service improvement can be achieved through continued system automation initiatives.
|
•
|
Product differentiation.
As a result of pricing pressures, providers need to differentiate their products and services. Customers are shifting their focus from access to applications and are seeking ways to leverage their broadband and video connections. Converged features, such as integrated wireless and wireline functionality, are becoming similarly important, driven by both customer demand and technological advancement.
|
•
|
Innovation.
The delivery of new and innovative products and services has been accelerating. To compete effectively, providers need to continuously review, improve and refine their product portfolio and customer service experience and develop and rapidly deploy new products and services tailored to the needs of the customer.
|
Media and Telematics
|
•
|
In June 2015, we completed our acquisition of AOL Inc. (AOL), a leader in digital content and advertising. AOL’s business model aligns with our approach, and we believe that its combination of owned and operated content properties plus a digital advertising platform enhances our ability to further develop future revenue streams.
|
•
|
In June 2017, we completed our acquisition of the operating business of Yahoo! Inc. (Yahoo), a leader in search, communications, digital content and advertising. Yahoo informs, connects and entertains through its search, communications and digital content products. Yahoo also connects advertisers with target audiences through a streamlined advertising technology stack that utilizes a combination of data, content and technology. Verizon has combined Yahoo's operating business with our existing Media business, which included AOL's operations and the content delivery platform of Verizon Digital Media Services (VDMS), to create a new organization named Oath, which
|
•
|
We continue to invest in VDMS, which offers a scalable platform for delivering content, including live broadcasts, video on demand, games, software and websites, to our customers on their devices at any time. As the digital platform reshapes the delivery of media and entertainment content, there is an increasing need for a stable, high-quality video delivery platform. We are focused on providing a simple end-to-end global platform for the delivery of media to consumers, which we believe will be superior to that offered by the existing and highly fragmented media delivery ecosystem. This platform is targeted at media and entertainment companies and other businesses focused on delivering their digital products and services through the Internet. We also expect, through the VDMS platform, to support video initiatives and offerings, such as Fios and wireless, across the business.
|
•
|
We have established relationships with leading sports leagues to bring compelling content to our customers across our digital platforms. We recently announced a multi-year partnership with the National Football League (NFL) in which Verizon’s portfolio of premium digital and mobile media properties, such as Yahoo Sports, will stream in-market and national games, including national pre-season, regular season and playoff games, and the Super Bowl to mobile phones. We also recently announced an innovative, multi-year partnership with the National Basketball Association (NBA) that will deliver one of the most comprehensive video streaming offerings of NBA content - from live out-of-market games via NBA League Pass to highlights, fantasy basketball, original programming and more via Yahoo Sports, Yahoo Fantasy and across Verizon’s family of media brands. As part of the partnership, the NBA and Verizon will unveil a series of innovative collaborations leveraging Verizon's leading network and technology to deliver premium NBA content and unique fan experiences. Verizon also has rights to deliver leading soccer games, including La Liga and Liga MX, to its customers.
|
•
|
We have made investments in converging technologies and services involving content delivery networks (CDNs), video streaming and related consumer hardware to leverage new content models. Our wireless network enables us to move towards a unified video strategy that positions us to take advantage of this growth opportunity. We began using Multimedia Broadcast Multicast Service (MBMS) technology to develop our LTE Multicast service. MBMS has the potential to enhance our network efficiency and provide our customers with access to live streaming video content with virtually no buffering, regardless of the number of devices using the service.
|
•
|
During 2016, we established Verizon Hearst Media Partners, LLC, a content joint venture with Hearst Entertainment & Syndication (Hearst), to build new multiplatform digital video channels targeted to the mobile millennial audience. In partnership with Hearst, we have also invested in two media companies, AwesomenessTV Holdings, LLC and Complex Media, Inc., which are leaders in producing content targeted at key demographics, in order to further diversify our content and distribution businesses within our digital media portfolio.
|
•
|
Fleet management and telematics.
We provide in-vehicle solutions that enable vehicle navigation, GPS tracking, engine diagnostic monitoring and maintenance alerts;
|
•
|
Energy.
We offer solutions targeted to providing the energy sector with greater visibility into energy usage and the ability to remotely monitor devices used to track energy usage; and
|
•
|
Smart Communities.
Our solutions enable localities to collect data from IoT and connected machine technologies with the goal of improving public safety, managing traffic, reducing pollution, identifying revenue generation opportunities, making efficient use of limited resources and attracting businesses, residents and workers.
|
Patents, Trademarks and Licenses
|
Acquisitions and Divestitures
|
Regulatory and Competitive Trends
|
Environmental Matters
|
Executive Officers
|
Employees
|
Information on Our Internet Website
|
Cautionary Statement Concerning 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.
|
Item 1A. Risk Factors
|
•
|
requiring Verizon to dedicate significant cash flow from operations to the payment of principal, interest and other amounts payable on its debt and the preferred stock issued by an entity acquired in a transaction with Vodafone, which would reduce the funds Verizon has available for other purposes, such as working capital, capital expenditures and acquisitions;
|
•
|
making it more difficult or expensive for Verizon to obtain any necessary future financing for working capital, capital expenditures, debt service requirements, debt refinancing, acquisitions or other purposes;
|
•
|
reducing Verizon’s flexibility in planning for or reacting to changes in its industry and market conditions;
|
•
|
making Verizon more vulnerable in the event of a downturn in its business; and
|
•
|
exposing Verizon to increased interest rate risk to the extent that its debt obligations are at variable interest rates.
|
Item 1B. Unresolved Staff Comments
|
Item 2. Properties
|
At December 31,
|
2017
|
|
|
2016
|
|
Network equipment
|
78.3
|
%
|
|
78.5
|
%
|
Land, buildings and building equipment
|
12.1
|
%
|
|
12.0
|
%
|
Furniture and other
|
9.6
|
%
|
|
9.5
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
|
|
||
Our properties as a percentage of total properties are as follows:
|
|
|
|
||
|
|
|
|
||
At December 31,
|
2017
|
|
|
2016
|
|
Wireline
|
50.7
|
%
|
|
51.7
|
%
|
Wireless
|
47.1
|
%
|
|
46.8
|
%
|
Other
|
2.2
|
%
|
|
1.5
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Item 3. Legal Proceedings
|
Item 4. Mine Safety Disclosures
|
PART II
|
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
|
|
Market Price
|
Cash Dividend
Declared
|
|
||||||||
|
|
High
|
|
|
Low
|
|
|
|||||
2017
|
Fourth Quarter
|
$
|
53.69
|
|
|
$
|
43.97
|
|
|
$
|
.5900
|
|
|
Third Quarter
|
50.32
|
|
|
42.80
|
|
|
.5900
|
|
|||
|
Second Quarter
|
49.55
|
|
|
44.36
|
|
|
.5775
|
|
|||
|
First Quarter
|
54.83
|
|
|
47.80
|
|
|
.5775
|
|
|||
|
|
|
|
|
|
|
||||||
2016
|
Fourth Quarter
|
$
|
53.90
|
|
|
$
|
46.01
|
|
|
$
|
.5775
|
|
|
Third Quarter
|
56.95
|
|
|
51.02
|
|
|
.5775
|
|
|||
|
Second Quarter
|
55.92
|
|
|
49.05
|
|
|
.5650
|
|
|||
|
First Quarter
|
54.37
|
|
|
43.79
|
|
|
.5650
|
|
Item 6. Selected Financial Data
|
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
|
Item 8. Financial Statements and Supplementary Data
|
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
Item 9A. Controls and Procedures
|
Item 9B. Other Information
|
PART III
|
Item 10. Directors, Executive Officers and Corporate Governance
|
Name
|
|
Age
|
|
|
Office
|
|
Held Since
|
Lowell C. McAdam
|
|
63
|
|
|
Chairman and Chief Executive Officer
|
|
2011
|
Timothy M. Armstrong
|
|
47
|
|
|
Executive Vice President and President and CEO - Oath
|
|
2018
|
Matthew D. Ellis
|
|
46
|
|
|
Executive Vice President and Chief Financial Officer
|
|
2016
|
Rima Qureshi
|
|
53
|
|
|
Executive Vice President and Chief Strategy Officer
|
|
2017
|
Marc C. Reed
|
|
59
|
|
|
Executive Vice President and Chief Administrative Officer
|
|
2012
|
Craig L. Silliman
|
|
50
|
|
|
Executive Vice President of Public Policy and General Counsel
|
|
2015
|
Anthony T. Skiadas
|
|
49
|
|
|
Senior Vice President and Controller
|
|
2013
|
John G. Stratton
|
|
56
|
|
|
Executive Vice President and President - Global Operations
|
|
2015
|
Hans E. Vestberg
|
|
52
|
|
|
Executive Vice President, President - Global Networks and Chief Technology Officer
|
|
2017
|
Item 11. Executive Compensation
|
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
Plan Category
|
Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)
|
|
Weighted-average exercise price of outstanding options, warrants and rights (b)
|
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
|
|
||||
Equity compensation plans approved by security holders
|
12,612,515
|
|
(1)
|
$
|
—
|
|
(2)
|
90,595,679
|
|
(3)
|
Equity compensation plans not approved by security holders
|
163,484
|
|
(4)
|
—
|
|
|
—
|
|
|
|
Total
|
12,775,999
|
|
|
$
|
—
|
|
|
90,595,679
|
|
|
(1)
|
This amount includes: 12,608,707 shares of common stock subject to outstanding restricted stock units and performance stock units, and 3,808 shares subject to outstanding deferred stock units, in each case including dividend equivalents accrued on such awards through December 31, 2017. This does not include performance stock units, deferred stock units and deferred share equivalents payable solely in cash.
|
(2)
|
Verizon’s outstanding restricted stock units, performance stock units and deferred stock units do not have exercise prices associated with the settlement of these awards.
|
(3)
|
This number reflects the number of shares of common stock that remained available for future issuance under the 2017 LTIP.
|
(4)
|
This number reflects shares subject to deferred stock units credited to the Verizon Income Deferral Plan, which were awarded in 2002 under the Verizon Communications Broad-Based Incentive Plan. No new awards are permitted to be issued under this plan.
|
Item 13. Certain Relationships and Related Transactions, and Director Independence
|
Item 14. Principal Accounting Fees and Services
|
|
|
|
|
|
|
|
|
|
|
|
Page
|
|
|
|
|
|
|
(1
|
)
|
|
Report of Management on Internal Control Over Financial Reporting
|
|
*
|
|
|
|
|
|
|
(2
|
)
|
|
Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting
|
|
*
|
|
|
|
|
|
|
(3
|
)
|
|
Report of Independent Registered Public Accounting Firm on Financial Statements
|
|
*
|
|
|
|
|
|
|
|
|
Financial Statements covered by Report of Independent Registered Public Accounting Firm:
|
|
|
|
|
|
Consolidated Statements of Income
|
|
*
|
|
|
|
Consolidated Statements of Comprehensive Income
|
|
*
|
|
|
|
Consolidated Balance Sheets
|
|
*
|
|
|
|
Consolidated Statements of Cash Flows
|
|
*
|
|
|
|
Consolidated Statements of Changes in Equity
|
|
*
|
|
|
|
Notes to Consolidated Financial Statements
|
|
*
|
|
|
|
|
|
|
|
|
|
* Incorporated herein by reference to the appropriate portions of the registrant’s Annual Report to Shareowners for the fiscal year ended December 31, 2017. (See Part II.)
|
|
|
|
|
|
|
|
|
|
(4
|
)
|
|
Financial Statement Schedule
|
|
|
|
|
|
|
|
|
|
|
II – Valuation and Qualifying Accounts
|
|
29
|
|
|
|
|
|
|
|
(5
|
)
|
|
Exhibits
Exhibits identified in parentheses below, on file with the SEC, are incorporated herein by reference as exhibits hereto. Unless otherwise indicated, all exhibits so incorporated are from File No. 1-8606.
|
|
|
Exhibit
Number
|
|
Description
|
||
|
|
|
|
|
|
Restated Certificate of Incorporation of Verizon Communications Inc. (Verizon) (filed as Exhibit 3a to Form 10-Q for the period ended June 30, 2014 and incorporated herein by reference).
|
|||
|
|
|
|
|
|
Bylaws of Verizon, as amended and restated, effective as of November 3, 2016 (filed as Exhibit 3b to Form 8-K filed on November 4, 2016 and incorporated herein by reference).
|
|||
|
|
|
|
|
|
Indenture between Verizon, both individually and as successor in interest to Verizon Global Funding Corp., and U.S. Bank National Association, as successor trustee to Wachovia Bank, National Association, formerly known as First Union National Bank, as Trustee, dated as of December 1, 2000 (incorporated by reference to Verizon Global Funding Corp.’s Registration Statement on Form S-4, Registration No. 333-64792, Exhibit 4.1).
|
|||
|
|
|
|
|
|
First Supplemental Indenture between Verizon, both individually and as successor in interest to Verizon Global Funding Corp., and U.S. Bank National Association, as successor trustee to Wachovia Bank, National Association, formerly known as First Union National Bank, as Trustee, dated as of May 15, 2001 (incorporated by reference to Verizon Global Funding Corp.’s Registration Statement on Form S-3, Registration No. 333-67412, Exhibit 4.2).
|
|||
|
|
|
|
|
|
Second Supplemental Indenture between Verizon, both individually and as successor in interest to Verizon Global Funding Corp., and U.S. Bank National Association, as successor trustee to Wachovia Bank, National Association, formerly known as First Union National Bank, as Trustee, dated as of September 29, 2004 (incorporated by reference to Form 8-K filed on February 9, 2006, Exhibit 4.1).
|
|||
|
|
|
|
|
|
Third Supplemental Indenture between Verizon, both individually and as successor in interest to Verizon Global Funding Corp., and U.S. Bank National Association, as successor trustee to Wachovia Bank, National Association, formerly known as First Union National Bank, as Trustee, dated as of February 1, 2006 (incorporated by reference to Form 8-K filed on February 9, 2006, Exhibit 4.2).
|
|||
|
|
|
|
|
|
Fourth Supplemental Indenture between Verizon, both individually and as successor in interest to Verizon Global Funding Corp., and U.S. Bank National Association, as successor trustee to Wachovia Bank, National Association, formerly known as First Union National Bank, as Trustee, dated as of April 4, 2016 (incorporated by reference to Verizon Communications Inc.’s Registration Statement on Form S-4, Registration No. 333-212307, Exhibit 4.5).
|
|||
|
|
|
|
|
|
|
Except for Exhibits 4a – 4e above, no other instrument which defines the rights of holders of long-term debt of Verizon and its consolidated subsidiaries is filed herewith pursuant to Regulation S-K, Item 601(b)(4)(iii)(A). Pursuant to this regulation, Verizon hereby agrees to furnish a copy of any such instrument to the SEC upon request.
|
||
|
|
|
|
|
|
NYNEX Directors’ Charitable Award Program (filed as Exhibit 10i to Form 10-K for the year ended December 31, 2000 and incorporated herein by reference).**
|
|||
|
|
|
|
|
|
2009 Verizon Long-Term Incentive Plan, As Amended and Restated (incorporated by reference to Appendix D of the Registrant’s Proxy Statement included in Schedule 14A filed on March 18, 2013).**
|
|||
|
|
|
|
|
|
|
|
Performance Stock Unit Agreement 2015-2017 Award Cycle (filed as Exhibit 10a to Form 10-Q for the period ended March 31, 2015 and incorporated herein by reference).**
|
|
|
|
|
|
|
|
|
|
Restricted Stock Unit Agreement 2015-2017 Award Cycle (filed as Exhibit 10b to Form 10-Q for the period ended March 31, 2015 and incorporated herein by reference).**
|
|
|
|
|
|
|
|
|
|
Performance Stock Unit Agreement 2016-2018 Award Cycle (filed as Exhibit 10a to Form 10-Q for the period ended March 31, 2016 and incorporated herein by reference).**
|
|
|
|
|
|
|
|
|
|
Restricted Stock Unit Agreement 2016-2018 Award Cycle (filed as Exhibit 10b to Form 10-Q for the period ended March 31, 2016 and incorporated herein by reference).**
|
|
|
|
|
|
|
|
|
|
Form of 2017 Performance Stock Unit Agreement pursuant to the 2009 Verizon Communications Inc. Long-Term Incentive Plan. (filed as Exhibit 10a to Form 10-Q for the period ended March 31, 2017 and incorporated herein by reference).**
|
|
|
|
|
|
|
|
|
|
Form of 2017 Restricted Stock Unit Agreement pursuant to the 2009 Verizon Communications Inc. Long-Term Incentive Plan (filed as Exhibit 10b to Form 10-Q for the period ended March 31, 2017 and incorporated herein by reference).**
|
|
|
|
|
|
|
|
|
|
2017 Special Performance Stock Unit Agreement pursuant to the 2009 Verizon Communications Inc. Long-Term Incentive Plan for J. Stratton (filed as Exhibit 10c to Form 10-Q for the period ended March 31, 2017 and incorporated herein by reference).**
|
|
|
|
|
|
|
|
2017 Verizon Communications Inc. Long-Term Incentive Plan (incorporated by reference to Appendix B of the Registrant’s Proxy Statement included in Schedule 14A filed on March 20, 2017).**
|
|||
|
|
|
|
|
|
|
|
Form of 2017 Performance Stock Unit Agreement pursuant to the 2017 Verizon Communications Inc. Long-Term Incentive Plan. (filed as Exhibit 10a to Form 10-Q for the period ended June 30, 2017 and incorporated herein by reference).**
|
|
|
|
|
|
|
|
|
|
Form of 2017 Restricted Stock Unit Agreement pursuant to the 2017 Verizon Communications Inc. Long-Term Incentive Plan (filed as Exhibit 10b to Form 10-Q for the period ended June 30, 2017 and incorporated herein by reference).**
|
|
|
|
|
|
|
|
|
|
2017 Special Restricted Stock Unit Agreement pursuant to the 2017 Verizon Communications Inc. Long-Term Incentive Plan (filed as Exhibit 10c to Form 10-Q for the period ended June 30, 2017 and incorporated herein by reference).**
|
|
|
|
|
|
|
|
|
|
Form of 2017 Restricted Stock Unit Agreement (cash-settled) pursuant to the 2017 Verizon Communications Inc. Long-Term Incentive Plan, filed herewith.
|
|
|
|
|
|
|
|
Verizon Short-Term Incentive Plan, As Amended and Restated (incorporated by reference to Appendix C of the Registrant’s Proxy Statement included in Schedule 14A filed on March 23, 2009).**
|
|||
|
|
|
|
|
|
Verizon Executive Deferral Plan, filed herewith.**
|
|||
|
|
|
|
|
|
Verizon Income Deferral Plan (filed as Exhibit 10f to Form 10-Q for the period ended June 30, 2002 and incorporated herein by reference).**
|
|||
|
|
|
|
|
|
|
|
Description of Amendment to Plan (filed as Exhibit 10o(i) to Form 10-K for the year ended December 31, 2004 and incorporated herein by reference).**
|
|
|
|
|
|
|
|
Verizon Excess Pension Plan (filed as Exhibit 10p to Form 10-K for the year ended December 31, 2004 and incorporated herein by reference).**
|
|||
|
|
|
|
|
|
|
|
Description of Amendment to Plan (filed as Exhibit 10p(i) to Form 10-K for the year ended December 31, 2004 and incorporated herein by reference).**
|
|
|
|
|
|
|
|
GTE’s Executive Salary Deferral Plan, as amended (filed as Exhibit 10.10 to GTE’s Form 10-K for the year ended December 31, 1998, File No. 1-2755 and incorporated herein by reference).**
|
|||
|
|
|
|
|
|
Bell Atlantic Senior Management Long-Term Disability and Survivor Protection Plan, as amended (filed as Exhibit 10h to Form SE filed on March 27, 1986 and Exhibit 10b(ii) to Form 10-K for the year ended December 31, 1997 and incorporated herein by reference).**
|
|||
|
|
|
|
|
|
fGTE Executive Retiree Life Insurance Plan (filed as Exhibit 10q to Form 10-K for the year ended December 31, 2010 and incorporated herein by reference).**
|
|||
|
|
|
|
|
|
Verizon Executive Life Insurance Plan, As Amended and Restated September 2009 (filed as Exhibit 10s to Form 10-K for the year ended December 31, 2010 and incorporated herein by reference).**
|
|||
|
|
|
|
|
|
Form of Aircraft Time Sharing Agreement, filed herewith.**
|
|||
|
|
|
|
|
|
NYNEX Deferred Compensation Plan for Non-Employee Directors (filed as Exhibit 10iii 5a to NYNEX’s Quarterly Report on Form 10-Q for the period ended June 30, 1996, File No. 1-8608 and incorporated herein by reference).**
|
|||
|
|
|
|
|
|
Verizon Senior Manager Severance Plan (filed as Exhibit 10d to Form 10-Q for the period ended March 31, 2010 and incorporated herein by reference).**
|
|||
|
|
|
|
|
|
Computation of Ratio of Earnings to Fixed Charges filed herewith.
|
|||
|
|
|
|
|
|
Portions of Verizon’s Annual Report to Shareowners for the fiscal year ended December 31, 2017, filed herewith. Only the information incorporated by reference into this Form 10-K is included in the exhibit.
|
|||
|
|
|
|
|
|
List of principal subsidiaries of Verizon, filed herewith.
|
|||
|
|
|
|
|
|
Consent of Ernst & Young LLP, filed herewith.
|
|||
|
|
|
|
|
|
Powers of Attorney, filed herewith.
|
|||
|
|
|
|
|
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
|
|||
|
|
|
|
|
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
|
|||
|
|
|
|
|
|
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
|
|||
|
|
|
|
|
|
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
|
|||
|
|
|
|
|
101.INS
|
|
XBRL Instance Document.
|
||
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
||
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Presentation Linkbase Document.
|
||
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Calculation Linkbase Document.
|
||
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Label Linkbase Document.
|
||
|
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
||
|
|
|
|
|
**
|
|
Indicates management contract or compensatory plan or arrangement.
|
|
|
|
|
|
|
|
|
(dollars in millions)
|
|
|||||||||||
|
|
|
|
Additions
|
|
|
|
|
||||||||||||
Description
|
|
Balance at
Beginning of Period |
|
|
Charged to
Expenses |
|
|
Charged to Other Accounts Note (a)
|
|
|
Deductions
Note (b) |
|
|
Balance at End of Period (c)
|
|
|||||
Allowance for Uncollectible Accounts Receivable:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Year 2017
|
|
$
|
1,146
|
|
|
$
|
1,167
|
|
|
$
|
205
|
|
|
$
|
1,319
|
|
|
$
|
1,199
|
|
Year 2016
|
|
1,037
|
|
|
1,420
|
|
|
150
|
|
|
1,461
|
|
|
1,146
|
|
|||||
Year 2015
|
|
739
|
|
|
1,610
|
|
|
146
|
|
|
1,458
|
|
|
1,037
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
|
Additions
|
|
|
|
|
||||||||||||
Description
|
|
Balance at
Beginning of Period |
|
|
Charged to
Expenses |
|
|
Charged to Other Accounts Note (d)
|
|
|
Deductions
Note (e) |
|
|
Balance at End of Period
|
|
|||||
Valuation Allowance for Deferred Tax Assets:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Year 2017
|
|
$
|
2,473
|
|
|
$
|
765
|
|
|
$
|
273
|
|
|
$
|
218
|
|
|
$
|
3,293
|
|
Year 2016
|
|
3,414
|
|
|
146
|
|
|
47
|
|
|
1,134
|
|
|
2,473
|
|
|||||
Year 2015
|
|
1,841
|
|
|
237
|
|
|
1,701
|
|
|
365
|
|
|
3,414
|
|
(a)
|
Allowance for Uncollectible Accounts Receivable primarily includes amounts previously written off which were credited directly to this account when recovered.
|
(b)
|
Amounts written off as uncollectible or transferred to other accounts or utilized.
|
(c)
|
Allowance for Uncollectible Accounts Receivable includes approximately
$260 million
,
$301 million
and
$155 million
at
December 31, 2017
,
2016
, and
2015
, respectively, related to long-term device payment plan receivables.
|
(d)
|
Valuation Allowance for Deferred Tax Assets includes an increase to the valuation allowance as a result of the acquisition of AOL in 2015 and amounts charged to equity and reclassifications from other balance sheet accounts.
|
(e)
|
Reductions to valuation allowances related to deferred tax assets.
|
Signatures
|
VERIZON COMMUNICATIONS INC.
|
|
|
|
|
|
By:
|
/s/ Anthony T. Skiadas
|
Date: February 23, 2018
|
|
Anthony T. Skiadas
Senior Vice President and Controller
|
|
Principal Executive Officer:
|
|
|
|
|
|
/s/ Lowell C. McAdam
|
Chairman and Chief
Executive Officer
|
February 23, 2018
|
Lowell C. McAdam
|
|
|
|
|
|
Principal Financial Officer:
|
|
|
|
|
|
/s/ Matthew D. Ellis
|
Executive Vice President and
Chief Financial Officer
|
February 23, 2018
|
Matthew D. Ellis
|
|
|
|
|
|
Principal Accounting Officer:
|
|
|
|
|
|
/s/ Anthony T. Skiadas
|
Senior Vice President and
Controller
|
February 23, 2018
|
Anthony T. Skiadas
|
|
/s/ Lowell C. McAdam
|
Director
|
February 23, 2018
|
Lowell C. McAdam
|
|
|
|
|
|
*
|
Director
|
February 23, 2018
|
Shellye L. Archambeau
|
|
|
|
|
|
*
|
Director
|
February 23, 2018
|
Mark T. Bertolini
|
|
|
|
|
|
*
|
Director
|
February 23, 2018
|
Richard L. Carrión
|
|
|
|
|
|
*
|
Director
|
February 23, 2018
|
Melanie L. Healey
|
|
|
|
|
|
*
|
Director
|
February 23, 2018
|
M. Frances Keeth
|
|
|
|
|
|
*
|
Director
|
February 23, 2018
|
Karl-Ludwig Kley
|
|
|
|
|
|
*
|
Director
|
February 23, 2018
|
Clarence Otis, Jr.
|
|
|
|
|
|
*
|
Director
|
February 23, 2018
|
Rodney E. Slater
|
|
|
|
|
|
*
|
Director
|
February 23, 2018
|
Kathryn A. Tesija
|
|
|
|
|
|
*
|
Director
|
February 23, 2018
|
Gregory D. Wasson
|
|
|
|
|
|
*
|
Director
|
February 23, 2018
|
Gregory G. Weaver
|
|
|
|
|
|
* By: /s/ Anthony T. Skiadas
|
|
|
Anthony T. Skiadas
|
|
|
(as attorney-in-fact)
|
|
|
Exhibit A – Participant’s Obligations
|
Exhibit B – Non-Competition, Non-Solicitation, Confidentiality and Other Obligations
|
•
|
The EDP allows you to defer a portion of your annual base salary and short-term incentive award or non-employee director annual retainer and associated meeting fees; and
|
•
|
The EDP also allows you to receive a Company match on the amounts you defer up to 6% of your eligible base salary and short-term incentive award, without any limitations imposed by the Internal Revenue Code. However, non-employee members of the board of directors are not eligible for a Company match.
|
Nature of Plan and Benefit
|
Your Plan benefit is based on an account balance and will equal the vested value of that account balance when you receive payments from the Plan. The value of your account balance will increase or decrease based upon the performance of the hypothetical investment options you elect. The Plan is an unfunded, nonqualified benefit plan.
|
Deferrals for Active Participants
|
•
You can defer up to 100% of the portion of your base salary that exceeds the limit that the Internal Revenue Code imposes on funded, tax-qualified plans ($275,000 in 2018) (your “eligible base salary”).
•
You can defer up to 100% of your short-term incentive award or directors’ cash retainer and associated meeting fees (“directors’ fees”).Generally, deferral elections for your eligible base salary, short-term incentive award (or annual cash bonus), and directors’ fees for a year must be submitted during an enrollment period in November or December of the preceding year and cannot be changed after December 31 of that preceding year (or the last business day in December if earlier than the 31
st
).
•
If you were not eligible to participate in the EDP and are promoted or hired into an eligible position, you will generally be provided a 30-day window in which to submit your salary and/or incentive deferral elections, if appropriate. A similar rule applies to newly-appointed non-employee members of the board of directors.
|
Company Match and Profit Sharing
|
•
The Company will add a “Matching Credit” to your account if you defer eligible base salary and short-term incentive under the Plan and if, in the case of deferrals of short-term incentive, you are employed by the Company on the date the short-term incentive awards for the applicable year are paid to employees generally.
•
You will receive a matching credit of $1.00 for every $1.00 of the first 6% of your eligible base salary and short-term incentive that you defer.
•
Matching Credits for base salary deferrals are made with each applicable pay period. Matching Credits for short-term incentive deferrals are credited to your account on the date that short-term incentive awards for the applicable year are paid to employees generally.
•
The Company may, in its sole discretion, decide to make a Profit Sharing contribution (“Profit Sharing Credit”) to your EDP account if you would be eligible for such a contribution under the Savings Plan.
•
All Matching Credits and Profit Sharing Credits are allocated to the Verizon Stock Fund, a hypothetical unitized investment option in which the values of units of the Verizon Stock Fund are based primarily on the price of Verizon common stock, but a small portion is invested in cash or cash equivalents and other short-term investments.
•
No Matching Credits will be allocated to the Profit Sharing Credits.
•
Non-employee members of the board of directors are not eligible for any Company Matching Credits or Profit Sharing Credits.
|
The Company will add a “Matching Credit” to your account if you defer eligible base salary and/or short-term incentive under the Plan and if, in the case of deferrals from the short-term incentive, you are employed by the Company on the date the short-term incentive awards for the applicable year are paid to employees generally. You will automatically receive $1.00 for every $1.00 of the first 6% of your eligible base salary and short-term incentive that you defer.
EXAMPLE -
You have $50,000 in eligible base salary and receive a $100,000 short-term incentive in 2018. You defer 100% of your eligible base salary and 75% of your short-term incentive into your EDP account. You remain an employee of the Company through the date the short-term incentive is paid (in February of 2018). For the year, you will have $134,000 credited to your EDP account (before crediting earnings and losses), calculated as follows:
Personal Deferral Credits:
$125,000 (100% of $50,000 plus 75% of $100,000); and
Matching Credits:
$9,000 (Because you have deferred 6% of your total eligible base salary plus short-term incentive into your EDP account).
|
•
|
2023: ½ of your remaining account balance associated with the 2018 base salary deferral
|
•
|
At your “separation from service” within the meaning of Section 409A (subject to a six-month delay if you are a specified employee) or
|
EXAMPLE -
You have elected to receive your eligible base salary deferred in 2018 in two annual installments beginning on January 1, 2021. On December 1, 2020, you submit a new election to receive your eligible base salary deferred in 2018 in a lump sum on January 1, 2022. Because you did not submit this new election at least 12 months prior to the date the distributions were scheduled to begin and because you have attempted to change from installments to a lump sum, your new election is invalid, and you will receive your first installment in January 2021. You will receive your second installment in January 2022 because you cannot change your distribution election once your benefit is in pay status and because you cannot change from installments to a lump sum.
|
•
|
If you elect to receive all or part of your Plan benefit in a single lump sum on a specific date and the date you elect is more than 20 years after the date your employment with the Company (and its affiliates) ends, you will be deemed to have elected to receive the lump sum 20 years from the date your employment ends;
|
•
|
If you elect to receive all or part of your Plan benefit in annual installments and the date you elect to commence installments is more than 20 years after the date your employment with the Company (and its affiliates) ends, you will be deemed to have elected to commence installments 20 years from the date your employment ends
.
|
1)
|
fuel, oil, lubricants and other additives;
|
2)
|
travel expenses of the crew, including food, lodging and ground transportation;
|
3)
|
hangar and tie down costs away from the Aircraft's base of operation;
|
4)
|
insurance obtained for the specific flight;
|
5)
|
landing fees, airport taxes and similar assessments;
|
6)
|
customs, foreign permit, and similar fees directly related to the flight;
|
7)
|
in-flight food and beverages;
|
8)
|
passenger ground transportation;
|
9)
|
flight planning and weather contract services; and
|
10)
|
an additional charge equal to one hundred percent (100%) of the expenses listed in item 1) above.
|
a)
|
proposed departure point;
|
b)
|
destination;
|
c)
|
date and time of flight;
|
d)
|
names of all passengers;
|
e)
|
nature and extent of luggage;
|
f)
|
date and time of a return flight, if any; and
|
g)
|
any other information concerning the proposed flight that may be pertinent or required by Lessor or Lessor’s flight crew.
|
A.
|
This Agreement and all the rights of the parties shall be construed and enforced in accordance with the laws of the State of New York, without giving effect to its conflicts of laws principles.
|
B.
|
This Agreement supersedes all prior written agreements and understandings between the parties with respect to the subject matter hereof, and no modification, termination or attempted waiver shall be valid unless in writing and signed by both parties.
|
C.
|
The Aircraft is and at all times shall remain the property of the Lessor, and Lessee shall have no right, title or interest therein or in the proceeds thereof except as expressly permitted under this Agreement.
|
D.
|
If action is instituted to enforce any of the terms and conditions of this Agreement, the prevailing party shall be entitled to recovery of its reasonable attorney's fees and costs incurred in such action.
|
E.
|
If any clause or provision in this Agreement shall be adjudged to be invalid or unenforceable by a court of competent jurisdiction or by operation of any applicable law, such adjudication shall not affect the validity of any other clause or provision, which shall remain in full force and effect.
|
F.
|
All notices, requests, demands and other communications required or desired to be given under this Agreement shall be in writing and shall be deemed to be given: (i) if personally delivered, upon such delivery; or (ii) if sent by regularly scheduled overnight delivery carrier upon the earlier to occur of actual receipt or the next business day after being sent by such delivery:
|
G.
|
Notices given by other means shall be deemed to be given only upon actual receipt. Addresses may be changed by written notice given as provided in this Agreement and signed by the party giving the notice.
|
H.
|
Neither this Agreement nor Lessee's interest herein shall be assignable by Lessee to any other person or entity whatsoever. This Agreement shall inure to the benefit of and be binding upon the parties, their heirs, representatives and successors.
|
I.
|
If any provision of this Agreement is held to be invalid, illegal, or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired.
|
J.
|
The failure of a party to require performance of any provision of this Agreement shall in no way affect that party's right thereafter to enforce such a provision nor shall the waiver by a party of any breach of any provision of this Agreement be taken or held to be a waiver of any further breach of the same provision or any other provision.
|
THE UNDERSIGNED HEREBY CERTIFIES THAT VERIZON CORPORATE SERVICES GROUP INC. IS RESPONSIBLE FOR OPERATIONAL CONTROL OF THE AIRCRAFT AND UNDERSTANDS ITS RESPONSIBILITIES FOR COMPLIANCE WITH APPLICABLE FEDERAL AVIATION REGULATIONS.
|
||
|
|
|
VERIZON CORPORATE SERVICES GROUP INC. (Lessor)
|
|
|
|
|
|
|
|
|
By: __________________________________
|
___________________________
|
|
|
Date and time of execution
|
|
|
|
|
|
|
|
(Lessee)
|
|
|
|
|
|
|
|
|
By: __________________________________
|
___________________________
|
|
Individually
|
Date and time of execution
|
1)
|
Mail a copy of this Agreement to the following address via certified mail, return receipt requested, immediately upon execution of the Agreement. (14 C.F.R. § 91.23 requires that the copy be sent within twenty-four hours after it is signed):
|
2)
|
Telephone or send a facsimile message to the nearest Flight Standards District Office at least forty-eight hours prior to first flight under this Agreement and inform them of the following:
|
a.)
|
location of the airport of departure;
|
b.)
|
departure time; and
|
c.)
|
registration number of the aircraft involved.
|
3)
|
Carry a copy of this Agreement in the Aircraft at all times.
|
SCHEDULE A
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operator
|
Manufacturer/Model
|
Serial No.
|
Tail No.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in millions)
|
|
|||||||||||||||||
Years Ended December 31,
|
2017
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
|||||
Earnings:
|
|
|
|
|
|
|
|
|
|
||||||||||
Income before income taxes
|
$
|
20,594
|
|
|
$
|
20,986
|
|
|
$
|
28,240
|
|
|
$
|
15,270
|
|
|
$
|
29,277
|
|
Equity in losses (earnings) of unconsolidated businesses
|
77
|
|
|
98
|
|
|
86
|
|
|
(1,780
|
)
|
|
(142
|
)
|
|||||
Dividends from unconsolidated businesses
|
40
|
|
|
40
|
|
|
41
|
|
|
37
|
|
|
40
|
|
|||||
Interest expense
(1)
|
4,733
|
|
|
4,376
|
|
|
4,920
|
|
|
4,915
|
|
|
2,667
|
|
|||||
Portion of rent expense representing interest
|
1,250
|
|
|
1,201
|
|
|
1,051
|
|
|
912
|
|
|
851
|
|
|||||
Amortization of capitalized interest
|
187
|
|
|
187
|
|
|
191
|
|
|
191
|
|
|
177
|
|
|||||
Earnings, as adjusted
|
$
|
26,881
|
|
|
$
|
26,888
|
|
|
$
|
34,529
|
|
|
$
|
19,545
|
|
|
$
|
32,870
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed Charges:
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
(1)
|
$
|
4,733
|
|
|
$
|
4,376
|
|
|
$
|
4,920
|
|
|
$
|
4,915
|
|
|
$
|
2,667
|
|
Portion of rent expense representing interest
|
1,250
|
|
|
1,201
|
|
|
1,051
|
|
|
912
|
|
|
851
|
|
|||||
Capitalized interest
|
678
|
|
|
704
|
|
|
584
|
|
|
376
|
|
|
754
|
|
|||||
Fixed charges
|
$
|
6,661
|
|
|
$
|
6,281
|
|
|
$
|
6,555
|
|
|
$
|
6,203
|
|
|
$
|
4,272
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Ratio of earnings to fixed charges
|
4.04
|
|
|
4.28
|
|
|
5.27
|
|
|
3.15
|
|
|
7.69
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
(1)
We classify interest expense recognized on uncertain tax positions as income tax expense and therefore such interest expense is not included in the Ratio of Earnings to Fixed Charges.
|
Selected Financial Data Verizon Communications Inc. and Subsidiaries
|
|
(dollars in millions, except per share amounts)
|
|
|||||||||||||||||
|
2017
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
|
|
2013
|
|
|||||
Results of Operations
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating revenues
|
$
|
126,034
|
|
|
$
|
125,980
|
|
|
$
|
131,620
|
|
|
$
|
127,079
|
|
|
$
|
120,550
|
|
Operating income
|
27,414
|
|
|
27,059
|
|
|
33,060
|
|
|
19,599
|
|
|
31,968
|
|
|||||
Net income attributable to Verizon
|
30,101
|
|
|
13,127
|
|
|
17,879
|
|
|
9,625
|
|
|
11,497
|
|
|||||
Per common share – basic
|
7.37
|
|
|
3.22
|
|
|
4.38
|
|
|
2.42
|
|
|
4.01
|
|
|||||
Per common share – diluted
|
7.36
|
|
|
3.21
|
|
|
4.37
|
|
|
2.42
|
|
|
4.00
|
|
|||||
Cash dividends declared per common share
|
2.335
|
|
|
2.285
|
|
|
2.230
|
|
|
2.160
|
|
|
2.090
|
|
|||||
Net income attributable to noncontrolling interests
|
449
|
|
|
481
|
|
|
496
|
|
|
2,331
|
|
|
12,050
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Financial Position
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets
|
$
|
257,143
|
|
|
$
|
244,180
|
|
|
$
|
244,175
|
|
|
$
|
232,109
|
|
|
$
|
273,184
|
|
Debt maturing within one year
|
3,453
|
|
|
2,645
|
|
|
6,489
|
|
|
2,735
|
|
|
3,933
|
|
|||||
Long-term debt
|
113,642
|
|
|
105,433
|
|
|
103,240
|
|
|
110,029
|
|
|
89,188
|
|
|||||
Employee benefit obligations
|
22,112
|
|
|
26,166
|
|
|
29,957
|
|
|
33,280
|
|
|
27,682
|
|
|||||
Noncontrolling interests
|
1,591
|
|
|
1,508
|
|
|
1,414
|
|
|
1,378
|
|
|
56,580
|
|
|||||
Equity attributable to Verizon
|
43,096
|
|
|
22,524
|
|
|
16,428
|
|
|
12,298
|
|
|
38,836
|
|
•
|
Significant events affecting our historical earnings trends in
2015
through
2017
are described in "Special Items" in the "Management’s Discussion and Analysis of Financial Condition and Results of Operations" section.
|
•
|
2014 data includes severance, pension and benefit charges, early debt redemption and other costs, gain on spectrum license transactions and wireless transaction costs. 2013 data includes severance, pension and benefit credits, gain on spectrum license transactions and wireless transaction costs.
|
Stock Performance Graph
|
|
At December 31,
|
||||||||||
Data Points in Dollars
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
Verizon
|
100.0
|
|
118.4
|
|
117.8
|
|
121.9
|
|
147.2
|
|
153.2
|
S&P 500 Telecom Services
|
100.0
|
|
111.3
|
|
114.7
|
|
118.5
|
|
146.3
|
|
144.5
|
S&P 500
|
100.0
|
|
132.4
|
|
150.4
|
|
152.5
|
|
170.7
|
|
207.9
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
Overview
|
•
|
Full year earnings of
$7.37
per share on a United States (U.S.) generally accepted accounting principles (GAAP) basis.
|
•
|
Total operating revenue for the year was
$126.0 billion
.
|
•
|
Total operating income for the year was
$27.4 billion
, with an operating margin of 21.8%.
|
•
|
Net income for the year was
$30.6 billion
.
|
•
|
In 2017, cash flow from operations totaled
$25.3 billion
.
|
•
|
Capital expenditures for the year were
$17.2 billion
.
|
•
|
Total Wireless segment operating revenues for the year ended December 31, 2017 totaled
$87.5 billion
, a decline of 1.9%.
|
•
|
Total Wireline segment operating revenues for the year ended December 31, 2017 totaled
$30.7 billion
, an increase of 0.6%.
|
•
|
Our Media business, branded Oath, had an increase in operating revenues of 89.7% to $6.0 billion during the year ended December 31, 2017 primarily due to the acquisition of Yahoo! Inc.'s (Yahoo) operating business in June of 2017.
|
Consolidated Results of Operations
|
Consolidated Revenues
|
|
|
|
|
|
|
|
(dollars in millions)
|
|
|||||||||||||||||
|
|
|
|
|
|
|
(Decrease)/Increase
|
|
|||||||||||||||||
Years Ended December 31,
|
2017
|
|
|
2016
|
|
|
2015
|
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
|||||||||||||
Wireless
|
$
|
87,511
|
|
|
$
|
89,186
|
|
|
$
|
91,680
|
|
|
$
|
(1,675
|
)
|
|
(1.9
|
)%
|
|
$
|
(2,494
|
)
|
|
(2.7
|
)%
|
Wireline
|
30,680
|
|
|
30,510
|
|
|
31,150
|
|
|
170
|
|
|
0.6
|
|
|
(640
|
)
|
|
(2.1
|
)
|
|||||
Corporate and other
|
9,387
|
|
|
7,778
|
|
|
9,962
|
|
|
1,609
|
|
|
20.7
|
|
|
(2,184
|
)
|
|
(21.9
|
)
|
|||||
Eliminations
|
(1,544
|
)
|
|
(1,494
|
)
|
|
(1,172
|
)
|
|
(50
|
)
|
|
(3.3
|
)
|
|
(322
|
)
|
|
(27.5
|
)
|
|||||
Consolidated Revenues
|
$
|
126,034
|
|
|
$
|
125,980
|
|
|
$
|
131,620
|
|
|
$
|
54
|
|
|
—
|
|
|
$
|
(5,640
|
)
|
|
(4.3
|
)
|
Consolidated Operating Expenses
|
|
|
|
|
|
|
|
(dollars in millions)
|
|
|||||||||||||||||
|
|
|
|
|
|
|
Increase/(Decrease)
|
|
|||||||||||||||||
Years Ended December 31,
|
2017
|
|
|
2016
|
|
|
2015
|
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
|||||||||||||
Cost of services
|
$
|
29,409
|
|
|
$
|
29,186
|
|
|
$
|
29,438
|
|
|
$
|
223
|
|
|
0.8
|
%
|
|
$
|
(252
|
)
|
|
(0.9
|
)%
|
Wireless cost of equipment
|
22,147
|
|
|
22,238
|
|
|
23,119
|
|
|
(91
|
)
|
|
(0.4
|
)
|
|
(881
|
)
|
|
(3.8
|
)
|
|||||
Selling, general and administrative expense
|
30,110
|
|
|
31,569
|
|
|
29,986
|
|
|
(1,459
|
)
|
|
(4.6
|
)
|
|
1,583
|
|
|
5.3
|
|
|||||
Depreciation and amortization expense
|
16,954
|
|
|
15,928
|
|
|
16,017
|
|
|
1,026
|
|
|
6.4
|
|
|
(89
|
)
|
|
(0.6
|
)
|
|||||
Consolidated Operating Expenses
|
$
|
98,620
|
|
|
$
|
98,921
|
|
|
$
|
98,560
|
|
|
$
|
(301
|
)
|
|
(0.3
|
)
|
|
$
|
361
|
|
|
0.4
|
|
|
(dollars in millions)
|
|
|||||||||
Years Ended December 31,
|
2017
|
|
|
2016
|
|
|
2015
|
|
|||
Severance, Pension and Benefit Charges (Credits)
|
|
|
|
|
|
||||||
Selling, general and administrative expense
|
$
|
1,391
|
|
|
$
|
2,923
|
|
|
$
|
(2,256
|
)
|
Acquisition and Integration Related Charges
|
|
|
|
|
|
||||||
Selling, general and administrative expense
|
879
|
|
|
—
|
|
|
—
|
|
|||
Depreciation and amortization
|
5
|
|
|
—
|
|
|
—
|
|
|||
Product Realignment
|
|
|
|
|
|
||||||
Cost of services and sales
|
171
|
|
|
—
|
|
|
—
|
|
|||
Selling, general and administrative expense
|
292
|
|
|
—
|
|
|
—
|
|
|||
Depreciation and amortization
|
219
|
|
|
—
|
|
|
—
|
|
|||
Net Gain on Sale of Divested Businesses
|
|
|
|
|
|
||||||
Selling, general and administrative expense
|
(1,774
|
)
|
|
(1,007
|
)
|
|
—
|
|
|||
Gain on Spectrum License Transactions
|
|
|
|
|
|
||||||
Selling, general and administrative expense
|
(270
|
)
|
|
(142
|
)
|
|
(254
|
)
|
|||
Total Special Items
|
$
|
913
|
|
|
$
|
1,774
|
|
|
$
|
(2,510
|
)
|
Other Consolidated Results
|
|
|
|
|
|
|
|
(dollars in millions)
|
|
|||||||||||||||||
|
|
|
|
|
|
|
Increase/(Decrease)
|
|
|||||||||||||||||
Years Ended December 31,
|
2017
|
|
|
2016
|
|
|
2015
|
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
|||||||||||||
Interest income
|
$
|
82
|
|
|
$
|
59
|
|
|
$
|
115
|
|
|
$
|
23
|
|
|
39.0
|
%
|
|
$
|
(56
|
)
|
|
(48.7
|
)%
|
Other, net
|
(2,092
|
)
|
|
(1,658
|
)
|
|
71
|
|
|
(434
|
)
|
|
(26.2
|
)
|
|
(1,729
|
)
|
|
nm
|
|
|||||
Total
|
$
|
(2,010
|
)
|
|
$
|
(1,599
|
)
|
|
$
|
186
|
|
|
$
|
(411
|
)
|
|
(25.7
|
)
|
|
$
|
(1,785
|
)
|
|
nm
|
|
|
(dollars in millions)
|
|
|||||||||
Years Ended December 31,
|
2017
|
|
|
2016
|
|
|
2015
|
|
|||
Early debt redemption costs
|
$
|
1,983
|
|
|
$
|
1,822
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
(dollars in millions)
|
|
|||||||||||||||||
|
|
|
|
|
|
|
Increase/(Decrease)
|
|
|||||||||||||||||
Years Ended December 31,
|
2017
|
|
|
2016
|
|
|
2015
|
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
|||||||||||||
Total interest costs on debt balances
|
$
|
5,411
|
|
|
$
|
5,080
|
|
|
$
|
5,504
|
|
|
$
|
331
|
|
|
6.5
|
%
|
|
$
|
(424
|
)
|
|
(7.7
|
)%
|
Less capitalized interest costs
|
678
|
|
|
704
|
|
|
584
|
|
|
(26
|
)
|
|
(3.7
|
)
|
|
120
|
|
|
20.5
|
|
|||||
Total
|
$
|
4,733
|
|
|
$
|
4,376
|
|
|
$
|
4,920
|
|
|
$
|
357
|
|
|
8.2
|
|
|
$
|
(544
|
)
|
|
(11.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Average debt outstanding
|
$
|
115,693
|
|
|
$
|
106,113
|
|
|
$
|
112,838
|
|
|
|
|
|
|
|
|
|
||||||
Effective interest rate
|
4.7
|
%
|
|
4.8
|
%
|
|
4.9
|
%
|
|
|
|
|
|
|
|
|
Consolidated Net Income, Operating Income and EBITDA
|
Segment Results of Operations
|
Wireless
|
|
|
|
|
|
(dollars in millions, except ARPA and I-ARPA)
|
|
|||||||||||||||||||
|
|
|
|
|
|
|
(Decrease)/Increase
|
|
|||||||||||||||||
Years Ended December 31,
|
2017
|
|
|
2016
|
|
|
2015
|
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
|||||||||||||
Service
|
$
|
63,121
|
|
|
$
|
66,580
|
|
|
$
|
70,396
|
|
|
$
|
(3,459
|
)
|
|
(5.2
|
)%
|
|
$
|
(3,816
|
)
|
|
(5.4
|
)%
|
Equipment
|
18,889
|
|
|
17,515
|
|
|
16,924
|
|
|
1,374
|
|
|
7.8
|
|
|
591
|
|
|
3.5
|
|
|||||
Other
|
5,501
|
|
|
5,091
|
|
|
4,360
|
|
|
410
|
|
|
8.1
|
|
|
731
|
|
|
16.8
|
|
|||||
Total Operating Revenues
|
$
|
87,511
|
|
|
$
|
89,186
|
|
|
$
|
91,680
|
|
|
$
|
(1,675
|
)
|
|
(1.9
|
)
|
|
$
|
(2,494
|
)
|
|
(2.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Connections (‘000):
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Retail connections
|
116,257
|
|
|
114,243
|
|
|
112,108
|
|
|
2,014
|
|
|
1.8
|
|
|
2,135
|
|
|
1.9
|
|
|||||
Retail postpaid connections
|
110,854
|
|
|
108,796
|
|
|
106,528
|
|
|
2,058
|
|
|
1.9
|
|
|
2,268
|
|
|
2.1
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net additions in period (‘000):
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Retail connections
|
2,041
|
|
|
2,155
|
|
|
3,956
|
|
|
(114
|
)
|
|
(5.3
|
)
|
|
(1,801
|
)
|
|
(45.5
|
)
|
|||||
Retail postpaid connections
|
2,084
|
|
|
2,288
|
|
|
4,507
|
|
|
(204
|
)
|
|
(8.9
|
)
|
|
(2,219
|
)
|
|
(49.2
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Churn Rate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Retail connections
|
1.25
|
%
|
|
1.26
|
%
|
|
1.24
|
%
|
|
|
|
|
|
|
|
|
|||||||||
Retail postpaid connections
|
1.01
|
%
|
|
1.01
|
%
|
|
0.96
|
%
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Account Statistics:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Retail postpaid ARPA
|
$
|
135.99
|
|
|
$
|
144.32
|
|
|
$
|
152.63
|
|
|
$
|
(8.33
|
)
|
|
(5.8
|
)
|
|
$
|
(8.31
|
)
|
|
(5.4
|
)
|
Retail postpaid I-ARPA
|
$
|
166.28
|
|
|
$
|
167.70
|
|
|
$
|
163.63
|
|
|
$
|
(1.42
|
)
|
|
(0.8
|
)
|
|
$
|
4.07
|
|
|
2.5
|
|
Retail postpaid accounts (‘000)
(1)
|
35,404
|
|
|
35,410
|
|
|
35,736
|
|
|
(6
|
)
|
|
—
|
|
|
(326
|
)
|
|
(0.9
|
)
|
|||||
Retail postpaid connections per account
(1)
|
3.13
|
|
|
3.07
|
|
|
2.98
|
|
|
0.06
|
|
|
2.0
|
|
|
0.09
|
|
|
3.0
|
|
(1)
|
As of end of period
|
(2)
|
Excluding acquisitions and adjustments
|
|
|
|
|
|
|
|
(dollars in millions)
|
|
|||||||||||||||||
|
|
|
|
|
|
|
Increase/(Decrease)
|
|
|||||||||||||||||
Years Ended December 31,
|
2017
|
|
|
2016
|
|
|
2015
|
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
|||||||||||||
Cost of services
|
$
|
7,990
|
|
|
$
|
7,988
|
|
|
$
|
7,803
|
|
|
$
|
2
|
|
|
—
|
%
|
|
$
|
185
|
|
|
2.4
|
%
|
Cost of equipment
|
22,147
|
|
|
22,238
|
|
|
23,119
|
|
|
(91
|
)
|
|
(0.4
|
)
|
|
(881
|
)
|
|
(3.8
|
)
|
|||||
Selling, general and administrative expense
|
18,772
|
|
|
19,924
|
|
|
21,805
|
|
|
(1,152
|
)
|
|
(5.8
|
)
|
|
(1,881
|
)
|
|
(8.6
|
)
|
|||||
Depreciation and amortization expense
|
9,395
|
|
|
9,183
|
|
|
8,980
|
|
|
212
|
|
|
2.3
|
|
|
203
|
|
|
2.3
|
|
|||||
Total Operating Expenses
|
$
|
58,304
|
|
|
$
|
59,333
|
|
|
$
|
61,707
|
|
|
$
|
(1,029
|
)
|
|
(1.7
|
)
|
|
$
|
(2,374
|
)
|
|
(3.8
|
)
|
|
|
|
|
|
|
|
(dollars in millions)
|
|
|||||||||||||||||
|
|
|
|
|
|
|
(Decrease)/Increase
|
|
|||||||||||||||||
Years Ended December 31,
|
2017
|
|
|
2016
|
|
|
2015
|
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
|||||||||||||
Segment Operating Income
|
$
|
29,207
|
|
|
$
|
29,853
|
|
|
$
|
29,973
|
|
|
$
|
(646
|
)
|
|
(2.2
|
)%
|
|
$
|
(120
|
)
|
|
(0.4
|
)%
|
Add Depreciation and amortization expense
|
9,395
|
|
|
9,183
|
|
|
8,980
|
|
|
212
|
|
|
2.3
|
|
|
203
|
|
|
2.3
|
|
|||||
Segment EBITDA
|
$
|
38,602
|
|
|
$
|
39,036
|
|
|
$
|
38,953
|
|
|
$
|
(434
|
)
|
|
(1.1
|
)
|
|
$
|
83
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Segment operating income margin
|
33.4
|
%
|
|
33.5
|
%
|
|
32.7
|
%
|
|
|
|
|
|
|
|
|
|||||||||
Segment EBITDA margin
|
44.1
|
%
|
|
43.8
|
%
|
|
42.5
|
%
|
|
|
|
|
|
|
|
|
Wireline
|
|
|
|
|
|
|
|
(dollars in millions)
|
|
|||||||||||||||||
|
|
|
|
|
|
|
Increase/(Decrease)
|
|
|||||||||||||||||
Years Ended December 31,
|
2017
|
|
|
2016
|
|
|
2015
|
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
|||||||||||||
Consumer Markets
|
$
|
12,777
|
|
|
$
|
12,751
|
|
|
$
|
12,696
|
|
|
$
|
26
|
|
|
0.2
|
%
|
|
$
|
55
|
|
|
0.4
|
%
|
Enterprise Solutions
|
9,167
|
|
|
9,164
|
|
|
9,378
|
|
|
3
|
|
|
—
|
|
|
(214
|
)
|
|
(2.3
|
)
|
|||||
Partner Solutions
|
4,917
|
|
|
4,927
|
|
|
5,189
|
|
|
(10
|
)
|
|
(0.2
|
)
|
|
(262
|
)
|
|
(5.0
|
)
|
|||||
Business Markets
|
3,585
|
|
|
3,356
|
|
|
3,553
|
|
|
229
|
|
|
6.8
|
|
|
(197
|
)
|
|
(5.5
|
)
|
|||||
Other
|
234
|
|
|
312
|
|
|
334
|
|
|
(78
|
)
|
|
(25.0
|
)
|
|
(22
|
)
|
|
(6.6
|
)
|
|||||
Total Operating Revenues
|
$
|
30,680
|
|
|
$
|
30,510
|
|
|
$
|
31,150
|
|
|
$
|
170
|
|
|
0.6
|
|
|
$
|
(640
|
)
|
|
(2.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Connections (‘000):
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total voice connections
|
12,821
|
|
|
13,939
|
|
|
15,035
|
|
|
(1,118
|
)
|
|
(8.0
|
)
|
|
(1,096
|
)
|
|
(7.3
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total Broadband connections
|
6,959
|
|
|
7,038
|
|
|
7,085
|
|
|
(79
|
)
|
|
(1.1
|
)
|
|
(47
|
)
|
|
(0.7
|
)
|
|||||
Fios Internet subscribers
|
5,850
|
|
|
5,653
|
|
|
5,418
|
|
|
197
|
|
|
3.5
|
|
|
235
|
|
|
4.3
|
|
|||||
Fios video subscribers
|
4,619
|
|
|
4,694
|
|
|
4,635
|
|
|
(75
|
)
|
|
(1.6
|
)
|
|
59
|
|
|
1.3
|
|
(1)
|
As of end of period
|
|
|
|
|
|
|
|
(dollars in millions)
|
|
|||||||||||||||||
|
|
|
|
|
|
|
(Decrease)/Increase
|
|
|||||||||||||||||
Years Ended December 31,
|
2017
|
|
|
2016
|
|
|
2015
|
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
|||||||||||||
Cost of services
|
$
|
17,922
|
|
|
$
|
18,353
|
|
|
$
|
18,483
|
|
|
$
|
(431
|
)
|
|
(2.3
|
)%
|
|
$
|
(130
|
)
|
|
(0.7
|
)%
|
Selling, general and administrative expense
|
6,274
|
|
|
6,476
|
|
|
7,140
|
|
|
(202
|
)
|
|
(3.1
|
)
|
|
(664
|
)
|
|
(9.3
|
)
|
|||||
Depreciation and amortization expense
|
6,104
|
|
|
5,975
|
|
|
6,353
|
|
|
129
|
|
|
2.2
|
|
|
(378
|
)
|
|
(5.9
|
)
|
|||||
Total Operating Expenses
|
$
|
30,300
|
|
|
$
|
30,804
|
|
|
$
|
31,976
|
|
|
$
|
(504
|
)
|
|
(1.6
|
)
|
|
$
|
(1,172
|
)
|
|
(3.7
|
)
|
|
|
|
|
|
|
|
(dollars in millions)
|
|
|||||||||||||||||
|
|
|
|
|
|
|
Increase/(Decrease)
|
|
|||||||||||||||||
Years Ended December 31,
|
2017
|
|
|
2016
|
|
|
2015
|
|
|
2017 vs. 2016
|
|
2016 vs. 2015
|
|||||||||||||
Segment Operating Income (Loss)
|
$
|
380
|
|
|
$
|
(294
|
)
|
|
$
|
(826
|
)
|
|
$
|
674
|
|
|
nm
|
|
|
$
|
532
|
|
|
64.4
|
%
|
Add Depreciation and amortization expense
|
6,104
|
|
|
5,975
|
|
|
6,353
|
|
|
129
|
|
|
2.2
|
%
|
|
(378
|
)
|
|
(5.9
|
)
|
|||||
Segment EBITDA
|
$
|
6,484
|
|
|
$
|
5,681
|
|
|
$
|
5,527
|
|
|
$
|
803
|
|
|
14.1
|
|
|
$
|
154
|
|
|
2.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Segment operating income (loss) margin
|
1.2
|
%
|
|
(1.0
|
)%
|
|
(2.7
|
)%
|
|
|
|
|
|
|
|
|
|||||||||
Segment EBITDA margin
|
21.1
|
%
|
|
18.6
|
%
|
|
17.7
|
%
|
|
|
|
|
|
|
|
|
Special Items
|
Severance, Pension and Benefit Charges (Credits)
|
Early Debt Redemptions
|
Net Gain on Sale of Divested Businesses
|
Gain on Spectrum License Transactions
|
Acquisition and Integration Related Charges
|
Product Realignment
|
Impact of Tax Reform
|
Operating Environment and Trends
|
Consolidated Financial Condition
|
|
(dollars in millions)
|
|
|||||||||
Years Ended December 31,
|
2017
|
|
|
2016
|
|
|
2015
|
|
|||
Cash flows provided by (used in)
|
|
|
|
|
|
||||||
Operating activities
|
$
|
25,305
|
|
|
$
|
22,810
|
|
|
$
|
39,027
|
|
Investing activities
|
(19,372
|
)
|
|
(10,983
|
)
|
|
(30,043
|
)
|
|||
Financing activities
|
(6,734
|
)
|
|
(13,417
|
)
|
|
(15,112
|
)
|
|||
Decrease in cash and cash equivalents
|
$
|
(801
|
)
|
|
$
|
(1,590
|
)
|
|
$
|
(6,128
|
)
|
Cash Flows Provided By Operating Activities
|
Cash Flows Used In Investing Activities
|
Cash Flows Used In Financing Activities
|
•
|
$24.2 billion
used for repayments of long-term borrowings and capital lease obligations, which included
$0.4 billion
used for repayments of asset-backed long-term borrowings; and
|
•
|
$9.5 billion
used for dividend payments.
|
•
|
$19.2 billion
used for repayments of long-term borrowings and capital lease obligations; and
|
•
|
$9.3 billion
used for dividend payments.
|
•
|
$9.3 billion used for repayments of long-term borrowings and capital lease obligations, including the repayment of $6.5 billion of borrowings under a term loan agreement;
|
•
|
$8.5 billion used for dividend payments; and
|
•
|
$5.0 billion payment for our accelerated share repurchase agreement.
|
Change In Cash and Cash Equivalents
|
Employee Benefit Plan Funded Status and Contributions
|
Leasing Arrangements
|
Contractual Obligations
|
|
(dollars in millions)
|
|
|||||||||||||||||
|
Payments Due By Period
|
||||||||||||||||||
Contractual Obligations
|
Total
|
|
|
Less than
1 year
|
|
|
1-3 years
|
|
|
3-5 years
|
|
|
More than
5 years
|
|
|||||
Long-term debt
(1)
|
$
|
116,459
|
|
|
$
|
2,926
|
|
|
$
|
12,482
|
|
|
$
|
15,805
|
|
|
$
|
85,246
|
|
Capital lease obligations
(2)
|
1,020
|
|
|
382
|
|
|
411
|
|
|
118
|
|
|
109
|
|
|||||
Total long-term debt, including current maturities
|
117,479
|
|
|
3,308
|
|
|
12,893
|
|
|
15,923
|
|
|
85,355
|
|
|||||
Interest on long-term debt
(1)
|
89,691
|
|
|
5,021
|
|
|
9,765
|
|
|
9,032
|
|
|
65,873
|
|
|||||
Operating leases
(2)
|
20,734
|
|
|
3,290
|
|
|
5,729
|
|
|
4,253
|
|
|
7,462
|
|
|||||
Purchase obligations
(3)
|
20,984
|
|
|
7,558
|
|
|
8,960
|
|
|
2,128
|
|
|
2,338
|
|
|||||
Other long-term liabilities
(4)
|
1,366
|
|
|
1,075
|
|
|
291
|
|
|
—
|
|
|
—
|
|
|||||
Finance obligations
(5)
|
2,093
|
|
|
271
|
|
|
559
|
|
|
582
|
|
|
681
|
|
|||||
Total contractual obligations
|
$
|
252,347
|
|
|
$
|
20,523
|
|
|
$
|
38,197
|
|
|
$
|
31,918
|
|
|
$
|
161,709
|
|
(1)
|
Items included in long-term debt with variable coupon rates exclude unamortized debt issuance costs, and are described in Note 6 to the consolidated financial statements.
|
(2)
|
See Note 5 to the consolidated financial statements for additional information.
|
(3)
|
Items included in purchase obligations are primarily commitments to purchase content and network services, equipment, software and marketing services, which will be used or sold in the ordinary course of business. These amounts do not represent our entire anticipated purchases in the future, but represent only those items that are the subject of contractual obligations. We also purchase products and services as needed with no firm commitment. For this reason, the amounts presented in this table alone do not provide a reliable indicator of our expected future cash outflows or changes in our expected cash position. See Note 15 to the consolidated financial statements for additional information.
|
(4)
|
Other long-term liabilities include estimated postretirement benefit and qualified pension plan contributions. See Note 10 to the consolidated financial statements for additional information.
|
(5)
|
Represents future minimum payments under the sublease arrangement for our tower transaction. See Note 5 to the consolidated financial statements for additional information.
|
Guarantees
|
Market Risk
|
Interest Rate Risk
|
Foreign Currency Translation
|
Critical Accounting Estimates and Recently Issued Accounting Standards
|
Critical Accounting Estimates
|
•
|
Wireless licenses and Goodwill are a significant component of our consolidated assets. Both our wireless licenses and goodwill are treated as indefinite-lived intangible assets and, therefore are not amortized, but rather are tested for impairment annually in the fourth fiscal quarter, unless there are events requiring an earlier assessment or changes in circumstances during an interim period that indicate these assets may not be recoverable. We believe our estimates and assumptions are reasonable and represent appropriate marketplace considerations as of the valuation date. Although we use consistent methodologies in developing the assumptions and estimates underlying the fair value calculations used in our impairment tests, these estimates and assumptions are uncertain by nature, may change over time and can vary from actual results. It is possible that in the future there may be changes in our estimates and assumptions, including the timing and amount of future cash flows, margins, growth rates, market participant assumptions, comparable benchmark companies and related multiples and discount rates, which could result in different fair value estimates. Significant and adverse changes to any one or more of the above-noted estimates and assumptions could result in a goodwill impairment for one or more of our reporting units.
|
•
|
We maintain benefit plans for most of our employees, including, for certain employees, pension and other postretirement benefit plans. At
December 31, 2017
, in the aggregate, pension plan benefit obligations exceeded the fair value of pension plan assets, which will result in higher future pension plan expense. Other postretirement benefit plans have larger benefit obligations than plan assets, resulting in expense. Significant benefit plan assumptions, including the discount rate used, the long-term rate of return on plan assets, the determination of the substantive plan and health care trend rates are periodically updated and impact the amount of benefit plan income, expense, assets and obligations. Changes to one or more of these assumptions could significantly impact our accounting for pension and other postretirement benefits. A sensitivity analysis of the impact of changes in these assumptions on the benefit obligations and expense (income) recorded, as well as on the funded status due to an increase or a decrease in the actual versus expected return on plan assets as of
December 31, 2017
and for the year then ended pertaining to Verizon’s pension and postretirement benefit plans, is provided in the table below.
|
(dollars in millions)
|
Percentage point
change
|
Increase (decrease) at
December 31, 2017*
|
|
|
Pension plans discount rate
|
+0.50
|
$
|
(1,149
|
)
|
|
-0.50
|
1,282
|
|
|
Rate of return on pension plan assets
|
+1.00
|
(165
|
)
|
|
|
-1.00
|
165
|
|
|
Postretirement plans discount rate
|
+0.50
|
(995
|
)
|
|
|
-0.50
|
1,098
|
|
|
Rate of return on postretirement plan assets
|
+1.00
|
(12
|
)
|
|
|
-1.00
|
12
|
|
|
Health care trend rates
|
+1.00
|
532
|
|
|
|
-1.00
|
(516
|
)
|
•
|
Our current and deferred income taxes and associated valuation allowances are impacted by events and transactions arising in the normal course of business as well as in connection with the adoption of new accounting standards, changes in tax laws and rates, acquisitions and dispositions of businesses and non-recurring items. As a global commercial enterprise, our income tax rate and the classification of income taxes can be affected by many factors, including estimates of the timing and realization of deferred income tax assets and the timing and amount of income tax payments. We account for tax benefits taken or expected to be taken in our tax returns in accordance with the accounting standard relating to the uncertainty in income taxes, which requires the use of a two-step approach for recognizing and measuring tax benefits taken or expected to be taken in a tax return. We review and adjust our liability for unrecognized tax benefits based on our best judgment given the facts, circumstances and information available at each reporting date. To the extent that the final outcome of these tax positions is different than the amounts recorded, such differences may impact income tax expense and actual tax payments. We recognize any interest and penalties accrued related to unrecognized tax benefits in income tax expense. Actual tax payments may materially differ from estimated liabilities as a result of changes in tax laws as well as unanticipated transactions impacting related income tax balances. See Note 11 to the consolidated financial statements for additional information.
|
•
|
Our
Property, plant and equipment
balance represents a significant component of our consolidated assets. We record
Property, plant and equipment
at cost. We depreciate
Property, plant and equipment
on a straight-line basis over the estimated useful life of the assets. We expect that a one-year increase in estimated useful lives of our
Property, plant and equipment
would result in a decrease to our
2017
depreciation expense of $2.7 billion and that a one-year decrease would result in an increase of approximately $5.1 billion in our
2017
depreciation expense.
|
•
|
We maintain allowances for uncollectible accounts receivable, including our device payment plan agreement receivables, for estimated losses resulting from the failure or inability of our customers to make required payments. Our allowance for uncollectible accounts receivable is based on management’s assessment of the collectability of specific customer accounts and includes consideration of the credit worthiness and financial condition of those customers. We record an allowance to reduce the receivables to the amount that is reasonably believed to be collectible. We also record an allowance for all other receivables based on multiple factors, including historical experience with bad debts, the general economic environment and the aging of such receivables.
If there is a deterioration of our customers’ financial condition or if future actual default rates on receivables in general differ from those currently anticipated, we may have to adjust our allowance for doubtful accounts, which would affect earnings in the period the adjustments are made.
|
Recently Issued Accounting Standards
|
Acquisitions and Divestitures
|
Cautionary Statement Concerning 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.
|
Report of Management on Internal Control Over Financial Reporting
|
/s/
|
Lowell C. McAdam
|
|
Lowell C. McAdam
|
|
Chairman and Chief Executive Officer
|
|
|
/s/
|
Matthew D. Ellis
|
|
Matthew D. Ellis
|
|
Executive Vice President and Chief Financial Officer
|
|
|
/s/
|
Anthony T. Skiadas
|
|
Anthony T. Skiadas
|
|
Senior Vice President and Controller
|
Report of Independent Registered Public Accounting Firm
|
/s/
|
Ernst & Young LLP
|
|
Ernst & Young LLP
|
|
New York, New York
|
|
|
|
February 23, 2018
|
Report of Independent Registered Public Accounting Firm
|
/s/
|
Ernst & Young LLP
|
|
Ernst & Young LLP
|
|
We have served as Verizon's auditor since 2000.
|
|
New York, New York
|
|
|
|
February 23, 2018
|
Consolidated Statements of Income Verizon Communications Inc. and Subsidiaries
|
|
(dollars in millions, except per share amounts)
|
|
|||||||||
Years Ended December 31,
|
2017
|
|
|
2016
|
|
|
2015
|
|
|||
|
|
|
|
|
|
||||||
Operating Revenues
|
|
|
|
|
|
||||||
Service revenues and other
|
$
|
107,145
|
|
|
$
|
108,468
|
|
|
$
|
114,696
|
|
Wireless equipment revenues
|
18,889
|
|
|
17,512
|
|
|
16,924
|
|
|||
Total Operating Revenues
|
126,034
|
|
|
125,980
|
|
|
131,620
|
|
|||
|
|
|
|
|
|
||||||
Operating Expenses
|
|
|
|
|
|
||||||
Cost of services (exclusive of items shown below)
|
29,409
|
|
|
29,186
|
|
|
29,438
|
|
|||
Wireless cost of equipment
|
22,147
|
|
|
22,238
|
|
|
23,119
|
|
|||
Selling, general and administrative expense (including net gain on sale of divested businesses of $1,774, $1,007 and $0, respectively)
|
30,110
|
|
|
31,569
|
|
|
29,986
|
|
|||
Depreciation and amortization expense
|
16,954
|
|
|
15,928
|
|
|
16,017
|
|
|||
Total Operating Expenses
|
98,620
|
|
|
98,921
|
|
|
98,560
|
|
|||
|
|
|
|
|
|
||||||
Operating Income
|
27,414
|
|
|
27,059
|
|
|
33,060
|
|
|||
Equity in losses of unconsolidated businesses
|
(77
|
)
|
|
(98
|
)
|
|
(86
|
)
|
|||
Other income (expense), net
|
(2,010
|
)
|
|
(1,599
|
)
|
|
186
|
|
|||
Interest expense
|
(4,733
|
)
|
|
(4,376
|
)
|
|
(4,920
|
)
|
|||
Income Before Benefit (Provision) For Income Taxes
|
20,594
|
|
|
20,986
|
|
|
28,240
|
|
|||
Benefit (provision) for income taxes
|
9,956
|
|
|
(7,378
|
)
|
|
(9,865
|
)
|
|||
Net Income
|
$
|
30,550
|
|
|
$
|
13,608
|
|
|
$
|
18,375
|
|
|
|
|
|
|
|
||||||
Net income attributable to noncontrolling interests
|
$
|
449
|
|
|
$
|
481
|
|
|
$
|
496
|
|
Net income attributable to Verizon
|
30,101
|
|
|
13,127
|
|
|
17,879
|
|
|||
Net Income
|
$
|
30,550
|
|
|
$
|
13,608
|
|
|
$
|
18,375
|
|
|
|
|
|
|
|
||||||
Basic Earnings Per Common Share
|
|
|
|
|
|
||||||
Net income attributable to Verizon
|
$
|
7.37
|
|
|
$
|
3.22
|
|
|
$
|
4.38
|
|
Weighted-average shares outstanding (in millions)
|
4,084
|
|
|
4,080
|
|
|
4,085
|
|
|||
|
|
|
|
|
|
||||||
Diluted Earnings Per Common Share
|
|
|
|
|
|
||||||
Net income attributable to Verizon
|
$
|
7.36
|
|
|
$
|
3.21
|
|
|
$
|
4.37
|
|
Weighted-average shares outstanding (in millions)
|
4,089
|
|
|
4,086
|
|
|
4,093
|
|
Consolidated Statements of Comprehensive Income Verizon Communications Inc. and Subsidiaries
|
|
(dollars in millions)
|
|
|||||||||
Years Ended December 31,
|
2017
|
|
|
2016
|
|
|
2015
|
|
|||
|
|
|
|
|
|
||||||
Net Income
|
$
|
30,550
|
|
|
$
|
13,608
|
|
|
$
|
18,375
|
|
Other Comprehensive Income, net of tax expense (benefit)
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
245
|
|
|
(159
|
)
|
|
(208
|
)
|
|||
Unrealized gains (losses) on cash flow hedges, net of tax of $(20), $168 and $(160)
|
(31
|
)
|
|
198
|
|
|
(194
|
)
|
|||
Unrealized losses on marketable securities, net of tax of $(10), $(26) and $(4)
|
(14
|
)
|
|
(55
|
)
|
|
(11
|
)
|
|||
Defined benefit pension and postretirement plans, net of tax of $(144), $1,339 and $(91)
|
(214
|
)
|
|
2,139
|
|
|
(148
|
)
|
|||
Other comprehensive income (loss) attributable to Verizon
|
(14
|
)
|
|
2,123
|
|
|
(561
|
)
|
|||
Total Comprehensive Income
|
$
|
30,536
|
|
|
$
|
15,731
|
|
|
$
|
17,814
|
|
Comprehensive income attributable to noncontrolling interests
|
449
|
|
|
481
|
|
|
496
|
|
|||
Comprehensive income attributable to Verizon
|
30,087
|
|
|
15,250
|
|
|
17,318
|
|
|||
Total Comprehensive Income
|
$
|
30,536
|
|
|
$
|
15,731
|
|
|
$
|
17,814
|
|
Consolidated Balance Sheets Verizon Communications Inc. and Subsidiaries
|
(dollars in millions, except per share amounts)
|
|
||||||
At December 31,
|
2017
|
|
|
2016
|
|
||
|
|
|
|
||||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
2,079
|
|
|
$
|
2,880
|
|
Accounts receivable, net of allowances of $939 and $845
|
23,493
|
|
|
17,513
|
|
||
Inventories
|
1,034
|
|
|
1,202
|
|
||
Assets held for sale
|
—
|
|
|
882
|
|
||
Prepaid expenses and other
|
3,307
|
|
|
3,918
|
|
||
Total current assets
|
29,913
|
|
|
26,395
|
|
||
|
|
|
|
||||
Property, plant and equipment
|
246,498
|
|
|
232,215
|
|
||
Less accumulated depreciation
|
157,930
|
|
|
147,464
|
|
||
Property, plant and equipment, net
|
88,568
|
|
|
84,751
|
|
||
|
|
|
|
||||
Investments in unconsolidated businesses
|
1,039
|
|
|
1,110
|
|
||
Wireless licenses
|
88,417
|
|
|
86,673
|
|
||
Goodwill
|
29,172
|
|
|
27,205
|
|
||
Other intangible assets, net
|
10,247
|
|
|
8,897
|
|
||
Non-current assets held for sale
|
—
|
|
|
613
|
|
||
Other assets
|
9,787
|
|
|
8,536
|
|
||
Total assets
|
$
|
257,143
|
|
|
$
|
244,180
|
|
|
|
|
|
||||
Liabilities and Equity
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Debt maturing within one year
|
$
|
3,453
|
|
|
$
|
2,645
|
|
Accounts payable and accrued liabilities
|
21,232
|
|
|
19,593
|
|
||
Other
|
8,352
|
|
|
8,102
|
|
||
Total current liabilities
|
33,037
|
|
|
30,340
|
|
||
|
|
|
|
||||
Long-term debt
|
113,642
|
|
|
105,433
|
|
||
Employee benefit obligations
|
22,112
|
|
|
26,166
|
|
||
Deferred income taxes
|
31,232
|
|
|
45,964
|
|
||
Other liabilities
|
12,433
|
|
|
12,245
|
|
||
Total long-term liabilities
|
179,419
|
|
|
189,808
|
|
||
|
|
|
|
||||
Commitments and Contingencies (Note 15)
|
|
|
|
||||
|
|
|
|
||||
Equity
|
|
|
|
||||
Series preferred stock ($.10 par value; 250,000,000 shares authorized; none issued)
|
—
|
|
|
—
|
|
||
Common stock ($.10 par value; 6,250,000,000 shares authorized in each period; 4,242,374,240 shares issued in each period)
|
424
|
|
|
424
|
|
||
Additional paid in capital
|
11,101
|
|
|
11,182
|
|
||
Retained earnings
|
35,635
|
|
|
15,059
|
|
||
Accumulated other comprehensive income
|
2,659
|
|
|
2,673
|
|
||
Common stock in treasury, at cost (162,897,868 and 165,689,589 shares outstanding)
|
(7,139
|
)
|
|
(7,263
|
)
|
||
Deferred compensation – employee stock ownership plans and other
|
416
|
|
|
449
|
|
||
Noncontrolling interests
|
1,591
|
|
|
1,508
|
|
||
Total equity
|
44,687
|
|
|
24,032
|
|
||
Total liabilities and equity
|
$
|
257,143
|
|
|
$
|
244,180
|
|
Consolidated Statements of Cash Flows Verizon Communications Inc. and Subsidiaries
|
|
|
(dollars in millions)
|
|
|||||||||
Years Ended December 31,
|
|
2017
|
|
|
2016
|
|
|
2015
|
|
|||
|
|
|
|
|
|
|
||||||
Cash Flows from Operating Activities
|
|
|
|
|
|
|
||||||
Net Income
|
|
$
|
30,550
|
|
|
$
|
13,608
|
|
|
$
|
18,375
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
||||||
Depreciation and amortization expense
|
|
16,954
|
|
|
15,928
|
|
|
16,017
|
|
|||
Employee retirement benefits
|
|
440
|
|
|
2,705
|
|
|
(1,747
|
)
|
|||
Deferred income taxes
|
|
(14,463
|
)
|
|
(1,063
|
)
|
|
3,516
|
|
|||
Provision for uncollectible accounts
|
|
1,167
|
|
|
1,420
|
|
|
1,610
|
|
|||
Equity in losses of unconsolidated businesses, net of dividends received
|
|
117
|
|
|
138
|
|
|
127
|
|
|||
Changes in current assets and liabilities, net of effects from acquisition/disposition of businesses
|
|
|
|
|
|
|
||||||
Accounts receivable
|
|
(5,436
|
)
|
|
(5,067
|
)
|
|
(945
|
)
|
|||
Inventories
|
|
168
|
|
|
61
|
|
|
(99
|
)
|
|||
Other assets
|
|
656
|
|
|
449
|
|
|
942
|
|
|||
Accounts payable and accrued liabilities
|
|
(335
|
)
|
|
(1,079
|
)
|
|
2,545
|
|
|||
Discretionary contribution to qualified pension plans
|
|
(3,411
|
)
|
|
(186
|
)
|
|
—
|
|
|||
Net gain on sale of divested businesses
|
|
(1,774
|
)
|
|
(1,007
|
)
|
|
—
|
|
|||
Other, net
|
|
672
|
|
|
(3,097
|
)
|
|
(1,314
|
)
|
|||
Net cash provided by operating activities
|
|
25,305
|
|
|
22,810
|
|
|
39,027
|
|
|||
|
|
|
|
|
|
|
||||||
Cash Flows from Investing Activities
|
|
|
|
|
|
|
||||||
Capital expenditures (including capitalized software)
|
|
(17,247
|
)
|
|
(17,059
|
)
|
|
(17,775
|
)
|
|||
Acquisitions of businesses, net of cash acquired
|
|
(5,928
|
)
|
|
(3,765
|
)
|
|
(3,545
|
)
|
|||
Acquisitions of wireless licenses
|
|
(583
|
)
|
|
(534
|
)
|
|
(9,942
|
)
|
|||
Proceeds from dispositions of businesses
|
|
3,614
|
|
|
9,882
|
|
|
48
|
|
|||
Other, net
|
|
772
|
|
|
493
|
|
|
1,171
|
|
|||
Net cash used in investing activities
|
|
(19,372
|
)
|
|
(10,983
|
)
|
|
(30,043
|
)
|
|||
|
|
|
|
|
|
|
||||||
Cash Flows from Financing Activities
|
|
|
|
|
|
|
||||||
Proceeds from long-term borrowings
|
|
27,707
|
|
|
12,964
|
|
|
6,667
|
|
|||
Proceeds from asset-backed long-term borrowings
|
|
4,290
|
|
|
4,986
|
|
|
—
|
|
|||
Repayments of long-term borrowings and capital lease obligations
|
|
(23,837
|
)
|
|
(19,159
|
)
|
|
(9,340
|
)
|
|||
Repayments of asset-backed long-term borrowings
|
|
(400
|
)
|
|
—
|
|
|
—
|
|
|||
Decrease in short-term obligations, excluding current maturities
|
|
(170
|
)
|
|
(149
|
)
|
|
(344
|
)
|
|||
Dividends paid
|
|
(9,472
|
)
|
|
(9,262
|
)
|
|
(8,538
|
)
|
|||
Purchase of common stock for treasury
|
|
—
|
|
|
—
|
|
|
(5,134
|
)
|
|||
Other, net
|
|
(4,852
|
)
|
|
(2,797
|
)
|
|
1,577
|
|
|||
Net cash used in financing activities
|
|
(6,734
|
)
|
|
(13,417
|
)
|
|
(15,112
|
)
|
|||
|
|
|
|
|
|
|
||||||
Decrease in cash and cash equivalents
|
|
(801
|
)
|
|
(1,590
|
)
|
|
(6,128
|
)
|
|||
Cash and cash equivalents, beginning of period
|
|
2,880
|
|
|
4,470
|
|
|
10,598
|
|
|||
Cash and cash equivalents, end of period
|
|
$
|
2,079
|
|
|
$
|
2,880
|
|
|
$
|
4,470
|
|
Consolidated Statements of Changes in Equity Verizon Communications Inc. and Subsidiaries
|
|
(dollars in millions, except per share amounts, and shares in thousands)
|
|
||||||||||||||||||
Years Ended December 31,
|
2017
|
|
|
|
|
|
2016
|
|
|
|
|
|
2015
|
|
|
|
||||
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|
Shares
|
|
|
Amount
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Common Stock
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance at beginning of year
|
4,242,374
|
|
|
$
|
424
|
|
|
4,242,374
|
|
|
$
|
424
|
|
|
4,242,374
|
|
|
$
|
424
|
|
Balance at end of year
|
4,242,374
|
|
|
424
|
|
|
4,242,374
|
|
|
424
|
|
|
4,242,374
|
|
|
424
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Additional Paid In Capital
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance at beginning of year
|
|
|
11,182
|
|
|
|
|
11,196
|
|
|
|
|
11,155
|
|
||||||
Other
|
|
|
(81
|
)
|
|
|
|
(14
|
)
|
|
|
|
41
|
|
||||||
Balance at end of year
|
|
|
11,101
|
|
|
|
|
11,182
|
|
|
|
|
11,196
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Retained Earnings
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance at beginning of year
|
|
|
15,059
|
|
|
|
|
11,246
|
|
|
|
|
2,447
|
|
||||||
Net income attributable to Verizon
|
|
|
30,101
|
|
|
|
|
13,127
|
|
|
|
|
17,879
|
|
||||||
Dividends declared ($2.335, $2.285, $2.23) per share
|
|
|
(9,525
|
)
|
|
|
|
(9,314
|
)
|
|
|
|
(9,080
|
)
|
||||||
Balance at end of year
|
|
|
35,635
|
|
|
|
|
15,059
|
|
|
|
|
11,246
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Accumulated Other Comprehensive Income
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance at beginning of year attributable to Verizon
|
|
|
2,673
|
|
|
|
|
550
|
|
|
|
|
1,111
|
|
||||||
Foreign currency translation adjustments
|
|
|
245
|
|
|
|
|
(159
|
)
|
|
|
|
(208
|
)
|
||||||
Unrealized gains (losses) on cash flow hedges
|
|
|
(31
|
)
|
|
|
|
198
|
|
|
|
|
(194
|
)
|
||||||
Unrealized losses on marketable securities
|
|
|
(14
|
)
|
|
|
|
(55
|
)
|
|
|
|
(11
|
)
|
||||||
Defined benefit pension and postretirement plans
|
|
|
(214
|
)
|
|
|
|
2,139
|
|
|
|
|
(148
|
)
|
||||||
Other comprehensive income (loss)
|
|
|
(14
|
)
|
|
|
|
2,123
|
|
|
|
|
(561
|
)
|
||||||
Balance at end of year attributable to Verizon
|
|
|
2,659
|
|
|
|
|
2,673
|
|
|
|
|
550
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Treasury Stock
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance at beginning of year
|
(165,690
|
)
|
|
(7,263
|
)
|
|
(169,199
|
)
|
|
(7,416
|
)
|
|
(87,410
|
)
|
|
(3,263
|
)
|
|||
Shares purchased
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(104,402
|
)
|
|
(5,134
|
)
|
|||
Employee plans (Note 14)
|
2,787
|
|
|
124
|
|
|
3,439
|
|
|
150
|
|
|
17,072
|
|
|
740
|
|
|||
Shareowner plans (Note 14)
|
5
|
|
|
—
|
|
|
70
|
|
|
3
|
|
|
5,541
|
|
|
241
|
|
|||
Balance at end of year
|
(162,898
|
)
|
|
(7,139
|
)
|
|
(165,690
|
)
|
|
(7,263
|
)
|
|
(169,199
|
)
|
|
(7,416
|
)
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Deferred Compensation-ESOPs and Other
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance at beginning of year
|
|
|
449
|
|
|
|
|
428
|
|
|
|
|
424
|
|
||||||
Restricted stock equity grant
|
|
|
157
|
|
|
|
|
223
|
|
|
|
|
208
|
|
||||||
Amortization
|
|
|
(190
|
)
|
|
|
|
(202
|
)
|
|
|
|
(204
|
)
|
||||||
Balance at end of year
|
|
|
|
416
|
|
|
|
|
|
449
|
|
|
|
|
|
428
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Noncontrolling Interests
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance at beginning of year
|
|
|
1,508
|
|
|
|
|
1,414
|
|
|
|
|
1,378
|
|
||||||
Net income attributable to noncontrolling interests
|
|
|
449
|
|
|
|
|
481
|
|
|
|
|
496
|
|
||||||
Total comprehensive income
|
|
|
449
|
|
|
|
|
481
|
|
|
|
|
496
|
|
||||||
Distributions and other
|
|
|
(366
|
)
|
|
|
|
(387
|
)
|
|
|
|
(460
|
)
|
||||||
Balance at end of year
|
|
|
1,591
|
|
|
|
|
1,508
|
|
|
|
|
1,414
|
|
||||||
Total Equity
|
|
|
$
|
44,687
|
|
|
|
|
|
$
|
24,032
|
|
|
|
|
|
$
|
17,842
|
|
Notes to Consolidated Financial Statements Verizon Communications Inc. and Subsidiaries
|
Note 1
|
Description of Business and Summary of Significant Accounting Policies
|
Note 2
|
Acquisitions and Divestitures
|
•
|
In January 2015, the FCC completed an auction of 65MHz of spectrum, which it identified as the Advanced Wireless Services (AWS)-3 band. Verizon participated in that auction and was the high bidder on
181
spectrum licenses, for which we paid cash of approximately
|
•
|
During the fourth quarter of 2015, we completed a license exchange transaction with an affiliate of T-Mobile USA, Inc. (T-Mobile USA) to exchange certain AWS and Personal Communication Services (PCS) spectrum licenses. As a result, we received
$0.4 billion
of AWS and PCS spectrum licenses at fair value and recorded a pre-tax gain of approximately
$0.3 billion
in Selling, general and administrative expense on our consolidated statement of income for the year ended December 31, 2015.
|
•
|
During the fourth quarter of 2015, we entered into a license exchange agreement with affiliates of AT&T Inc. (AT&T) to exchange certain AWS and PCS spectrum licenses. This non-cash exchange was completed in March 2016. As a result, we received
$0.4 billion
of AWS and PCS spectrum licenses at fair value and recorded a pre-tax gain of
$0.1 billion
in Selling, general and administrative expense on our consolidated statement of income for the year ended December 31, 2016.
|
•
|
During the first quarter of 2016, we entered into a license exchange agreement with affiliates of Sprint Corporation to exchange certain AWS and PCS spectrum licenses. This non-cash exchange was completed in September 2016. As a result, we received
$0.3 billion
of AWS and PCS spectrum licenses at fair value and recorded an insignificant gain in Selling, general and administrative expense on our consolidated statement of income for the year ended December 31, 2016.
|
•
|
During the fourth quarter of 2016, we entered into a license exchange agreement with affiliates of AT&T to exchange certain AWS and PCS spectrum licenses. This non-cash exchange was completed in February 2017. As a result,
we received
$1.0 billion
of AWS and PCS spectrum licenses at fair value and recorded a pre-tax gain of
$0.1 billion
in Selling, general and administrative expense on our consolidated statement of income for the year ended December 31, 2017.
|
•
|
During the first quarter of 2017, we entered into a license exchange agreement with affiliates of Sprint Corporation to exchange certain PCS spectrum licenses. This non-cash exchange was completed in May 2017. As a result, we received
$0.1 billion
of PCS spectrum licenses at fair value and recorded an insignificant gain in Selling, general and administrative expense on our consolidated statement of income for the year ended December 31, 2017.
|
•
|
During the third quarter of 2017, we entered into a license exchange agreement with affiliates of T-Mobile USA to exchange certain AWS and PCS spectrum licenses. This non-cash exchange was completed in December 2017. As a result,
we received
$0.4 billion
of AWS and PCS spectrum licenses at fair value and recorded a pre-tax gain of
$0.1 billion
in Selling, general and administrative expense on our consolidated statement of income for the year ended December 31, 2017.
|
(dollars in millions)
|
As of June 23, 2015
|
|
|
Cash payment to AOL’s equity holders
|
$
|
3,764
|
|
Estimated liabilities to be paid
(1)
|
377
|
|
|
Total consideration
|
$
|
4,141
|
|
|
|
||
Assets acquired:
|
|
||
Goodwill
|
$
|
1,938
|
|
Intangible assets subject to amortization
|
2,504
|
|
|
Other
|
1,551
|
|
|
Total assets acquired
|
5,993
|
|
|
|
|
||
Liabilities assumed:
|
|
||
Total liabilities assumed
|
1,851
|
|
|
|
|
||
Net assets acquired:
|
4,142
|
|
|
Noncontrolling interest
|
(1
|
)
|
|
Total consideration
|
$
|
4,141
|
|
(1)
|
During the years ended December 31, 2017 and 2016, we made cash payments of
$1 million
and
$179 million
, respectively, in respect of acquisition-date estimated liabilities to be paid. As of December 31, 2017, the remaining balance of estimated liabilities to be paid was
$197 million
.
|
(dollars in millions)
|
As of June 13, 2017
|
|
Measurement-period adjustments
(1)
|
|
As of December 31, 2017
|
|
|||
Cash payment to Yahoo’s equity holders
|
$
|
4,723
|
|
$
|
(50
|
)
|
$
|
4,673
|
|
Estimated liabilities to be paid
|
38
|
|
—
|
|
38
|
|
|||
Total consideration
|
$
|
4,761
|
|
$
|
(50
|
)
|
$
|
4,711
|
|
|
|
|
|
||||||
Assets acquired:
|
|
|
|
||||||
Goodwill
|
$
|
874
|
|
$
|
1,055
|
|
$
|
1,929
|
|
Intangible assets subject to amortization
|
2,586
|
|
(713
|
)
|
1,873
|
|
|||
Property, plant, and equipment
|
1,796
|
|
9
|
|
1,805
|
|
|||
Other
|
1,362
|
|
(30
|
)
|
1,332
|
|
|||
Total assets acquired
|
6,618
|
|
321
|
|
6,939
|
|
|||
|
|
|
|
||||||
Liabilities assumed:
|
|
|
|
||||||
Total liabilities assumed
|
1,824
|
|
354
|
|
2,178
|
|
|||
|
|
|
|
||||||
Net assets acquired:
|
4,794
|
|
(33
|
)
|
4,761
|
|
|||
Noncontrolling interest
|
(33
|
)
|
(17
|
)
|
(50
|
)
|
|||
Total consideration
|
$
|
4,761
|
|
$
|
(50
|
)
|
$
|
4,711
|
|
(1)
|
Adjustments to preliminary fair value measurements to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date.
|
Note 3
|
Wireless Licenses, Goodwill and Other Intangible Assets
|
|
(dollars in millions)
|
|
|||||
At December 31,
|
2017
|
|
2016
|
||||
Wireless licenses
|
$
|
88,417
|
|
|
$
|
86,673
|
|
|
|
|
|
|
(dollars in millions)
|
|
|||||||||
|
Wireless
|
|
|
Wireline
|
|
|
Other
|
|
|
Total
|
|
||||
Balance at January 1, 2016
|
$
|
18,393
|
|
|
$
|
4,331
|
|
|
$
|
2,607
|
|
|
$
|
25,331
|
|
Acquisitions (Note 2)
|
—
|
|
|
—
|
|
|
2,310
|
|
|
2,310
|
|
||||
Reclassifications, adjustments and other
|
—
|
|
|
(547
|
)
|
|
111
|
|
|
(436
|
)
|
||||
Balance at December 31, 2016
|
$
|
18,393
|
|
|
$
|
3,784
|
|
|
$
|
5,028
|
|
|
$
|
27,205
|
|
Acquisitions (Note 2)
|
4
|
|
|
208
|
|
|
1,956
|
|
|
2,168
|
|
||||
Reclassifications, adjustments and other
|
—
|
|
|
1
|
|
|
(202
|
)
|
|
(201
|
)
|
||||
Balance at December 31, 2017
|
$
|
18,397
|
|
|
$
|
3,993
|
|
|
$
|
6,782
|
|
|
$
|
29,172
|
|
|
|
|
|
|
|
|
(dollars in millions)
|
|
|||||||||||||||
|
|
|
|
|
2017
|
|
|
|
|
|
|
2016
|
|
||||||||||
At December 31,
|
Gross
Amount
|
|
|
Accumulated
Amortization
|
|
|
Net
Amount
|
|
|
Gross
Amount
|
|
|
Accumulated
Amortization
|
|
|
Net
Amount
|
|
||||||
Customer lists (5 to 13 years)
|
$
|
3,621
|
|
|
$
|
(691
|
)
|
|
$
|
2,930
|
|
|
$
|
2,884
|
|
|
$
|
(480
|
)
|
|
$
|
2,404
|
|
Non-network internal-use software (3 to 7 years)
|
18,010
|
|
|
(12,374
|
)
|
|
5,636
|
|
|
16,135
|
|
|
(10,913
|
)
|
|
5,222
|
|
||||||
Other (2 to 25 years)
|
2,474
|
|
|
(793
|
)
|
|
1,681
|
|
|
1,854
|
|
|
(583
|
)
|
|
1,271
|
|
||||||
Total
|
$
|
24,105
|
|
|
$
|
(13,858
|
)
|
|
$
|
10,247
|
|
|
$
|
20,873
|
|
|
$
|
(11,976
|
)
|
|
$
|
8,897
|
|
Years
|
(dollars in millions)
|
|
|
2017
|
$
|
2,213
|
|
2016
|
1,701
|
|
|
2015
|
1,694
|
|
Note 4
|
Property, Plant and Equipment
|
|
|
|
(dollars in millions)
|
|
|||||
At December 31,
|
Lives (years)
|
|
2017
|
|
|
2016
|
|
||
Land
|
—
|
|
$
|
806
|
|
|
$
|
667
|
|
Buildings and equipment
|
7-45
|
|
28,914
|
|
|
27,117
|
|
||
Central office and other network equipment
|
3-50
|
|
145,093
|
|
|
136,737
|
|
||
Cable, poles and conduit
|
7-50
|
|
47,972
|
|
|
45,639
|
|
||
Leasehold improvements
|
5-20
|
|
8,394
|
|
|
7,627
|
|
||
Work in progress
|
—
|
|
6,139
|
|
|
5,710
|
|
||
Furniture, vehicles and other
|
3-20
|
|
9,180
|
|
|
8,718
|
|
||
|
|
|
246,498
|
|
|
232,215
|
|
||
Less accumulated depreciation
|
|
|
157,930
|
|
|
147,464
|
|
||
Property, plant and equipment, net
|
|
|
$
|
88,568
|
|
|
$
|
84,751
|
|
Note 5
|
Leasing Arrangements
|
Note 6
|
Debt
|
|
(dollars in millions)
|
|
|||||||||
|
Debt
Maturing
within One
Year
|
|
|
Long-term
Debt
|
|
|
Total
|
||||
Balance at January 1, 2017
|
$
|
2,645
|
|
|
$
|
105,433
|
|
|
$
|
108,078
|
|
Proceeds from long-term borrowings
|
103
|
|
|
27,604
|
|
|
27,707
|
|
|||
Proceeds from asset-backed long-term borrowings
|
—
|
|
|
4,290
|
|
|
4,290
|
|
|||
Repayments of long-term borrowings and capital leases obligations
|
(8,191
|
)
|
|
(15,646
|
)
|
|
(23,837
|
)
|
|||
Repayments of asset-backed long-term borrowings
|
(400
|
)
|
|
—
|
|
|
(400
|
)
|
|||
Decrease in short-term obligations, excluding current maturities
|
(170
|
)
|
|
—
|
|
|
(170
|
)
|
|||
Reclassifications of long-term debt
|
9,255
|
|
|
(9,255
|
)
|
|
—
|
|
|||
Other
|
211
|
|
|
1,216
|
|
|
1,427
|
|
|||
Balance at December 31, 2017
|
$
|
3,453
|
|
|
$
|
113,642
|
|
|
$
|
117,095
|
|
|
|
|
|
|
(dollars in millions)
|
|
|||||
At December 31,
|
Interest
Rates %
|
|
Maturities
|
|
2017
|
|
|
2016
|
|
||
Verizon—notes payable and other
|
1.38 – 3.96
|
|
2018 – 2047
|
|
$
|
31,370
|
|
|
$
|
28,491
|
|
|
4.09 – 5.51
|
|
2020 – 2055
|
|
67,906
|
|
|
53,909
|
|
||
|
5.82 – 6.90
|
|
2026 – 2054
|
|
5,835
|
|
|
11,295
|
|
||
|
7.35 – 8.95
|
|
2029 – 2039
|
|
1,106
|
|
|
1,860
|
|
||
|
Floating
|
|
2018 – 2025
|
|
6,684
|
|
|
9,750
|
|
||
|
|
|
|
|
|
|
|
||||
Verizon Wireless—Alltel assumed notes
|
6.80 – 7.88
|
|
2029 – 2032
|
|
234
|
|
|
525
|
|
||
|
|
|
|
|
|
|
|
||||
Telephone subsidiaries—debentures
|
5.13 – 6.50
|
|
2028 – 2033
|
|
226
|
|
|
319
|
|
||
|
7.38 – 7.88
|
|
2022 – 2032
|
|
341
|
|
|
561
|
|
||
|
8.00 – 8.75
|
|
2022 – 2031
|
|
229
|
|
|
328
|
|
||
|
|
|
|
|
|
|
|
||||
Other subsidiaries—notes payable, debentures and other
|
6.70 – 8.75
|
|
2018 – 2028
|
|
748
|
|
|
1,102
|
|
||
|
|
|
|
|
|
|
|
||||
Verizon Wireless and other subsidiaries—asset-backed debt
|
1.42 – 2.65
|
|
2021 – 2022
|
|
6,293
|
|
|
2,485
|
|
||
|
Floating
|
|
2021 – 2022
|
|
2,620
|
|
|
2,520
|
|
||
|
|
|
|
|
|
|
|
||||
Capital lease obligations (average rate of 3.6% and 3.5% in 2017 and 2016, respectively)
|
|
|
|
|
1,020
|
|
|
950
|
|
||
Unamortized discount, net of premium
|
|
|
|
|
(7,133
|
)
|
|
(5,716
|
)
|
||
Unamortized debt issuance costs
|
|
|
|
|
(534
|
)
|
|
(469
|
)
|
||
Total long-term debt, including current maturities
|
|
|
|
|
116,945
|
|
|
107,910
|
|
||
Less long-term debt maturing within one year
|
|
|
|
|
3,303
|
|
|
2,477
|
|
||
Total long-term debt
|
|
|
|
|
$
|
113,642
|
|
|
$
|
105,433
|
|
Years
|
(dollars in millions)
|
|
|
2018
|
$
|
3,308
|
|
2019
|
6,306
|
|
|
2020
|
6,587
|
|
|
2021
|
6,403
|
|
|
2022
|
9,520
|
|
|
Thereafter
|
85,355
|
|
Note 7
|
Wireless Device Payment Plans
|
|
(dollars in millions)
|
|
|||||
At December 31,
|
2017
|
|
|
2016
|
|
||
Device payment plan agreement receivables, gross
|
$
|
17,770
|
|
|
$
|
11,797
|
|
Unamortized imputed interest
|
(821
|
)
|
|
(511
|
)
|
||
Device payment plan agreement receivables, net of unamortized imputed interest
|
16,949
|
|
|
11,286
|
|
||
Allowance for credit losses
|
(848
|
)
|
|
(688
|
)
|
||
Device payment plan agreement receivables, net
|
$
|
16,101
|
|
|
$
|
10,598
|
|
|
|
|
|
||||
Classified on our consolidated balance sheets:
|
|
|
|
||||
Accounts receivable, net
|
$
|
11,064
|
|
|
$
|
6,140
|
|
Other assets
|
5,037
|
|
|
4,458
|
|
||
Device payment plan agreement receivables, net
|
$
|
16,101
|
|
|
$
|
10,598
|
|
Note 8
|
Fair Value Measurements and Financial Instruments
|
|
|
|
|
|
(dollars in millions)
|
|
|||||||||
|
Level 1
(1)
|
|
|
Level 2
(2)
|
|
|
Level 3
(3)
|
|
|
Total
|
|
||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Other assets:
|
|
|
|
|
|
|
|
||||||||
Equity securities
|
$
|
74
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
74
|
|
Fixed income securities
|
—
|
|
|
366
|
|
|
—
|
|
|
366
|
|
||||
Interest rate swaps
|
—
|
|
|
54
|
|
|
—
|
|
|
54
|
|
||||
Cross currency swaps
|
—
|
|
|
450
|
|
|
—
|
|
|
450
|
|
||||
Interest rate caps
|
—
|
|
|
6
|
|
|
—
|
|
|
6
|
|
||||
Total
|
$
|
74
|
|
|
$
|
876
|
|
|
$
|
—
|
|
|
$
|
950
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Other liabilities:
|
|
|
|
|
|
|
|
||||||||
Interest rate swaps
|
$
|
—
|
|
|
$
|
413
|
|
|
$
|
—
|
|
|
$
|
413
|
|
Cross currency swaps
|
—
|
|
|
46
|
|
|
—
|
|
|
46
|
|
||||
Total
|
$
|
—
|
|
|
$
|
459
|
|
|
$
|
—
|
|
|
$
|
459
|
|
|
|
|
|
|
(dollars in millions)
|
|
|||||||||
At December 31,
|
2017
|
|
|
2016
|
|
||||||||||
|
Carrying
Amount
|
|
|
Fair
Value
|
|
|
Carrying
Amount
|
|
|
Fair
Value
|
|
||||
Short- and long-term debt, excluding capital leases
|
$
|
116,075
|
|
|
$
|
128,658
|
|
|
$
|
107,128
|
|
|
$
|
117,584
|
|
|
|
|
(dollars in millions)
|
|
|||
At December 31,
|
2017
|
|
|
2016
|
|
||
Interest rate swaps
|
$
|
20,173
|
|
|
$
|
13,099
|
|
Cross currency swaps
|
16,638
|
|
|
12,890
|
|
||
Interest rate caps
|
2,840
|
|
|
2,540
|
|
Note 9
|
Stock-Based Compensation
|
|
Restricted Stock Units
|
Performance
|
|
|||||
(shares in thousands)
|
Equity Awards
|
|
|
Liability Awards
|
|
|
Stock Units
|
|
Outstanding January 1, 2015
|
15,007
|
|
|
—
|
|
|
19,966
|
|
Granted
|
4,958
|
|
|
—
|
|
|
7,044
|
|
Payments
|
(5,911
|
)
|
|
—
|
|
|
(6,732
|
)
|
Cancelled/Forfeited
|
(151
|
)
|
|
—
|
|
|
(3,075
|
)
|
Outstanding December 31, 2015
|
13,903
|
|
|
—
|
|
|
17,203
|
|
Granted
|
4,409
|
|
|
—
|
|
|
6,391
|
|
Payments
|
(4,890
|
)
|
|
—
|
|
|
(4,702
|
)
|
Cancelled/Forfeited
|
(114
|
)
|
|
—
|
|
|
(1,143
|
)
|
Outstanding Adjustments
|
—
|
|
|
—
|
|
|
170
|
|
Outstanding December 31, 2016
|
13,308
|
|
|
—
|
|
|
17,919
|
|
Granted
|
4,216
|
|
|
25,168
|
|
|
6,564
|
|
Payments
|
(4,825
|
)
|
|
(8,487
|
)
|
|
(6,031
|
)
|
Cancelled/Forfeited
|
(66
|
)
|
|
(2,690
|
)
|
|
(217
|
)
|
Outstanding December 31, 2017
|
12,633
|
|
|
13,991
|
|
|
18,235
|
|
Note 10
|
Employee Benefits
|
|
|
|
|
|
(dollars in millions)
|
|
|||||||||
|
Pension
|
|
|
Health Care and Life
|
|
||||||||||
At December 31,
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
||||
Change in Benefit Obligations
|
|
|
|
|
|
|
|
||||||||
Beginning of year
|
$
|
21,112
|
|
|
$
|
22,016
|
|
|
$
|
19,650
|
|
|
$
|
24,223
|
|
Service cost
|
280
|
|
|
322
|
|
|
149
|
|
|
193
|
|
||||
Interest cost
|
683
|
|
|
677
|
|
|
659
|
|
|
746
|
|
||||
Plan amendments
|
—
|
|
|
428
|
|
|
(545
|
)
|
|
(5,142
|
)
|
||||
Actuarial loss, net
|
1,377
|
|
|
1,017
|
|
|
627
|
|
|
1,289
|
|
||||
Benefits paid
|
(1,932
|
)
|
|
(938
|
)
|
|
(1,080
|
)
|
|
(1,349
|
)
|
||||
Curtailment and termination benefits
|
11
|
|
|
4
|
|
|
—
|
|
|
—
|
|
||||
Settlements paid
|
—
|
|
|
(1,270
|
)
|
|
—
|
|
|
—
|
|
||||
Divestiture (Note 2)
|
—
|
|
|
(1,144
|
)
|
|
—
|
|
|
(310
|
)
|
||||
End of year
|
$
|
21,531
|
|
|
$
|
21,112
|
|
|
$
|
19,460
|
|
|
$
|
19,650
|
|
|
|
|
|
|
|
|
|
||||||||
Change in Plan Assets
|
|
|
|
|
|
|
|
||||||||
Beginning of year
|
$
|
14,663
|
|
|
$
|
16,124
|
|
|
$
|
1,363
|
|
|
$
|
1,760
|
|
Actual return on plan assets
|
2,342
|
|
|
882
|
|
|
134
|
|
|
35
|
|
||||
Company contributions
|
4,141
|
|
|
837
|
|
|
702
|
|
|
917
|
|
||||
Benefits paid
|
(1,932
|
)
|
|
(938
|
)
|
|
(1,080
|
)
|
|
(1,349
|
)
|
||||
Settlements paid
|
—
|
|
|
(1,270
|
)
|
|
—
|
|
|
—
|
|
||||
Divestiture (Note 2)
|
(39
|
)
|
|
(972
|
)
|
|
—
|
|
|
—
|
|
||||
End of year
|
$
|
19,175
|
|
|
$
|
14,663
|
|
|
$
|
1,119
|
|
|
$
|
1,363
|
|
|
|
|
|
|
|
|
|
||||||||
Funded Status
|
|
|
|
|
|
|
|
||||||||
End of year
|
$
|
(2,356
|
)
|
|
$
|
(6,449
|
)
|
|
$
|
(18,341
|
)
|
|
$
|
(18,287
|
)
|
|
|
|
|
|
|
|
|
|
(dollars in millions)
|
|
|||||||||||||
|
Pension
|
|
|
Health Care and Life
|
|
||||||||||||||||||
Years Ended December 31,
|
2017
|
|
|
2016
|
|
|
2015
|
|
|
2017
|
|
|
2016
|
|
|
2015
|
|
||||||
Service cost
|
$
|
280
|
|
|
$
|
322
|
|
|
$
|
374
|
|
|
$
|
149
|
|
|
$
|
193
|
|
|
$
|
324
|
|
Amortization of prior service cost (credit)
|
39
|
|
|
21
|
|
|
(5
|
)
|
|
(949
|
)
|
|
(657
|
)
|
|
(287
|
)
|
||||||
Expected return on plan assets
|
(1,262
|
)
|
|
(1,045
|
)
|
|
(1,270
|
)
|
|
(53
|
)
|
|
(54
|
)
|
|
(101
|
)
|
||||||
Interest cost
|
683
|
|
|
677
|
|
|
969
|
|
|
659
|
|
|
746
|
|
|
1,117
|
|
||||||
Remeasurement loss (gain), net
|
337
|
|
|
1,198
|
|
|
(209
|
)
|
|
546
|
|
|
1,300
|
|
|
(2,659
|
)
|
||||||
Net periodic benefit (income) cost
|
77
|
|
|
1,173
|
|
|
(141
|
)
|
|
352
|
|
|
1,528
|
|
|
(1,606
|
)
|
||||||
Curtailment and termination benefits
|
11
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total
|
$
|
88
|
|
|
$
|
1,177
|
|
|
$
|
(141
|
)
|
|
$
|
352
|
|
|
$
|
1,528
|
|
|
$
|
(1,606
|
)
|
|
Pension
|
|
|
Health Care and Life
|
|
||||||
At December 31,
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
|
Discount Rate
|
3.70
|
%
|
|
4.30
|
%
|
|
3.60
|
%
|
|
4.20
|
%
|
Rate of compensation increases
|
3.00
|
%
|
|
3.00
|
%
|
|
N/A
|
|
|
N/A
|
|
|
Pension
|
|
|
Health Care and Life
|
|
||||||||||||
At December 31,
|
2017
|
|
|
2016
|
|
|
2015
|
|
|
2017
|
|
|
2016
|
|
|
2015
|
|
Discount rate in effect for determining service cost
|
4.70
|
%
|
|
4.50
|
%
|
|
4.20
|
%
|
|
4.60
|
%
|
|
4.50
|
%
|
|
4.20
|
%
|
Discount rate in effect for determining interest cost
|
3.40
|
|
|
3.20
|
|
|
4.20
|
|
|
3.50
|
|
|
3.40
|
|
|
4.20
|
|
Expected return on plan assets
|
7.70
|
|
|
7.00
|
|
|
7.25
|
|
|
4.50
|
|
|
3.80
|
|
|
4.80
|
|
Rate of compensation increases
|
3.00
|
|
|
3.00
|
|
|
3.00
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
Health Care and Life
|
|
||||||
At December 31,
|
2017
|
|
|
2016
|
|
|
2015
|
|
Healthcare cost trend rate assumed for next year
|
7.00
|
%
|
|
6.50
|
%
|
|
6.00
|
%
|
Rate to which cost trend rate gradually declines
|
4.50
|
|
|
4.50
|
|
|
4.50
|
|
Year the rate reaches the level it is assumed to remain thereafter
|
2026
|
|
|
2025
|
|
|
2024
|
|
|
(dollars in millions)
|
|
|||||||||||||
Asset Category
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
||||
Cash and cash equivalents
|
$
|
2,889
|
|
|
$
|
2,874
|
|
|
$
|
15
|
|
|
$
|
—
|
|
Equity securities
|
2,795
|
|
|
2,794
|
|
|
—
|
|
|
1
|
|
||||
Fixed income securities
|
|
|
|
|
|
|
|
||||||||
U.S. Treasuries and agencies
|
1,382
|
|
|
1,234
|
|
|
148
|
|
|
—
|
|
||||
Corporate bonds
|
2,961
|
|
|
139
|
|
|
2,718
|
|
|
104
|
|
||||
International bonds
|
1,068
|
|
|
17
|
|
|
1,031
|
|
|
20
|
|
||||
Other
|
396
|
|
|
4
|
|
|
392
|
|
|
—
|
|
||||
Real estate
|
627
|
|
|
—
|
|
|
—
|
|
|
627
|
|
||||
Other
|
|
|
|
|
|
|
|
||||||||
Private equity
|
580
|
|
|
—
|
|
|
—
|
|
|
580
|
|
||||
Hedge funds
|
845
|
|
|
—
|
|
|
660
|
|
|
185
|
|
||||
Total investments at fair value
|
13,543
|
|
|
7,062
|
|
|
4,964
|
|
|
1,517
|
|
||||
Investments measured at NAV
|
5,632
|
|
|
|
|
|
|
|
|||||||
Total
|
$
|
19,175
|
|
|
$
|
7,062
|
|
|
$
|
4,964
|
|
|
$
|
1,517
|
|
|
(dollars in millions)
|
|
|||||||||||||
Asset Category
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
||||
Cash and cash equivalents
|
$
|
71
|
|
|
$
|
1
|
|
|
$
|
70
|
|
|
$
|
—
|
|
Equity securities
|
294
|
|
|
294
|
|
|
—
|
|
|
—
|
|
||||
Fixed income securities
|
|
|
|
|
|
|
|
||||||||
U.S. Treasuries and agencies
|
23
|
|
|
22
|
|
|
1
|
|
|
—
|
|
||||
Corporate bonds
|
141
|
|
|
141
|
|
|
—
|
|
|
—
|
|
||||
International bonds
|
60
|
|
|
18
|
|
|
42
|
|
|
—
|
|
||||
Total investments at fair value
|
589
|
|
|
476
|
|
|
113
|
|
|
—
|
|
||||
Investments measured at NAV
|
530
|
|
|
|
|
|
|
|
|||||||
Total
|
$
|
1,119
|
|
|
$
|
476
|
|
|
$
|
113
|
|
|
$
|
—
|
|
|
|
|
(dollars in millions)
|
|
|||
Year
|
Pension Benefits
|
|
|
Health Care and Life
|
|
||
2018
|
$
|
2,401
|
|
|
$
|
1,246
|
|
2019
|
2,098
|
|
|
1,249
|
|
||
2020
|
1,464
|
|
|
1,297
|
|
||
2021
|
1,212
|
|
|
1,318
|
|
||
2022
|
1,161
|
|
|
1,336
|
|
||
2023 to 2027
|
5,526
|
|
|
6,277
|
|
|
|
|
|
|
|
|
(dollars in millions)
|
|
|||||||||||
Year
|
Beginning of Year
|
|
|
Charged to
Expense
|
|
|
Payments
|
|
|
Other
|
|
|
End of Year
|
|
|||||
2015
|
$
|
875
|
|
|
$
|
551
|
|
|
$
|
(619
|
)
|
|
$
|
(7
|
)
|
|
$
|
800
|
|
2016
|
800
|
|
|
417
|
|
|
(583
|
)
|
|
22
|
|
|
656
|
|
|||||
2017
|
656
|
|
|
581
|
|
|
(564
|
)
|
|
(46
|
)
|
|
627
|
|
Note 11
|
Taxes
|
|
(dollars in millions)
|
|
|||||||||
Years Ended December 31,
|
2017
|
|
|
2016
|
|
|
2015
|
|
|||
Domestic
|
$
|
19,645
|
|
|
$
|
20,047
|
|
|
$
|
27,639
|
|
Foreign
|
949
|
|
|
939
|
|
|
601
|
|
|||
Total
|
$
|
20,594
|
|
|
$
|
20,986
|
|
|
$
|
28,240
|
|
Years Ended December 31,
|
2017
|
|
|
2016
|
|
|
2015
|
|
Statutory federal income tax rate
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
State and local income tax rate, net of federal tax benefits
|
1.6
|
|
|
2.2
|
|
|
2.1
|
|
Affordable housing credit
|
(0.6
|
)
|
|
(0.7
|
)
|
|
(0.5
|
)
|
Employee benefits including ESOP dividend
|
(0.5
|
)
|
|
(0.5
|
)
|
|
(0.4
|
)
|
Impact of tax reform re-measurement
|
(81.6
|
)
|
|
—
|
|
|
—
|
|
Noncontrolling interests
|
(0.6
|
)
|
|
(0.6
|
)
|
|
(0.5
|
)
|
Non-deductible goodwill
|
1.0
|
|
|
2.2
|
|
|
—
|
|
Other, net
|
(2.6
|
)
|
|
(2.4
|
)
|
|
(0.8
|
)
|
Effective income tax rate
|
(48.3
|
)%
|
|
35.2
|
%
|
|
34.9
|
%
|
|
|
|
(dollars in millions)
|
|
|||||||
|
2017
|
|
|
2016
|
|
|
2015
|
|
|||
Balance at January 1,
|
$
|
1,902
|
|
|
$
|
1,635
|
|
|
$
|
1,823
|
|
Additions based on tax positions related to the current year
|
219
|
|
|
338
|
|
|
194
|
|
|||
Additions for tax positions of prior years
|
756
|
|
|
188
|
|
|
330
|
|
|||
Reductions for tax positions of prior years
|
(419
|
)
|
|
(153
|
)
|
|
(412
|
)
|
|||
Settlements
|
(42
|
)
|
|
(18
|
)
|
|
(79
|
)
|
|||
Lapses of statutes of limitations
|
(61
|
)
|
|
(88
|
)
|
|
(221
|
)
|
|||
Balance at December 31,
|
$
|
2,355
|
|
|
$
|
1,902
|
|
|
$
|
1,635
|
|
At December 31,
|
(dollars in millions)
|
|
|
2017
|
$
|
269
|
|
2016
|
142
|
|
Note 12
|
Segment Information
|
Segment
|
|
Description
|
Wireless
|
Wireless’ communications products and services include wireless voice and data services and equipment sales, which are provided to
consumer, business and government customers across the
U.S.
|
Wireline
|
Wireline’s
voice, data and video communications products and enhanced services include broadband video and data services, corporate networking solutions, security and managed network services and local and long distance voice services. We provide these products and services to consumers in the U.S., as well as to carriers, businesses and government customers both in the U.S. and around the world.
|
|
(dollars in millions)
|
|
|||||||||
2016
|
Wireless
|
|
|
Wireline
|
|
|
Total
Reportable
Segments
|
|
|||
External Operating Revenues
|
|
|
|
|
|
||||||
Service
|
$
|
66,362
|
|
|
$
|
—
|
|
|
$
|
66,362
|
|
Equipment
|
17,511
|
|
|
—
|
|
|
17,511
|
|
|||
Other
|
4,915
|
|
|
—
|
|
|
4,915
|
|
|||
Consumer Markets
|
—
|
|
|
12,751
|
|
|
12,751
|
|
|||
Enterprise Solutions
|
—
|
|
|
9,162
|
|
|
9,162
|
|
|||
Partner Solutions
|
—
|
|
|
3,976
|
|
|
3,976
|
|
|||
Business Markets
|
—
|
|
|
3,356
|
|
|
3,356
|
|
|||
Other
|
—
|
|
|
314
|
|
|
314
|
|
|||
Intersegment revenues
|
398
|
|
|
951
|
|
|
1,349
|
|
|||
Total operating revenues
|
89,186
|
|
|
30,510
|
|
|
119,696
|
|
|||
|
|
|
|
|
|
||||||
Cost of services
|
7,988
|
|
|
18,353
|
|
|
26,341
|
|
|||
Wireless cost of equipment
|
22,238
|
|
|
—
|
|
|
22,238
|
|
|||
Selling, general and administrative expense
|
19,924
|
|
|
6,476
|
|
|
26,400
|
|
|||
Depreciation and amortization expense
|
9,183
|
|
|
5,975
|
|
|
15,158
|
|
|||
Total operating expenses
|
59,333
|
|
|
30,804
|
|
|
90,137
|
|
|||
Operating income (loss)
|
$
|
29,853
|
|
|
$
|
(294
|
)
|
|
$
|
29,559
|
|
|
|
|
|
|
|
||||||
Assets
|
$
|
211,345
|
|
|
$
|
66,679
|
|
|
$
|
278,024
|
|
Property, plant and equipment, net
|
42,898
|
|
|
40,205
|
|
|
83,103
|
|
|||
Capital expenditures
|
11,240
|
|
|
4,504
|
|
|
15,744
|
|
|
(dollars in millions)
|
|
|||||||||
2015
|
Wireless
|
|
|
Wireline
|
|
|
Total
Reportable
Segments
|
|
|||
External Operating Revenues
|
|
|
|
|
|
||||||
Service
|
$
|
70,305
|
|
|
$
|
—
|
|
|
$
|
70,305
|
|
Equipment
|
16,924
|
|
|
—
|
|
|
16,924
|
|
|||
Other
|
4,294
|
|
|
—
|
|
|
4,294
|
|
|||
Consumer Markets
|
—
|
|
|
12,696
|
|
|
12,696
|
|
|||
Enterprise Solutions
|
—
|
|
|
9,376
|
|
|
9,376
|
|
|||
Partner Solutions
|
—
|
|
|
4,228
|
|
|
4,228
|
|
|||
Business Markets
|
—
|
|
|
3,553
|
|
|
3,553
|
|
|||
Other
|
—
|
|
|
330
|
|
|
330
|
|
|||
Intersegment revenues
|
157
|
|
|
967
|
|
|
1,124
|
|
|||
Total operating revenues
|
91,680
|
|
|
31,150
|
|
|
122,830
|
|
|||
|
|
|
|
|
|
||||||
Cost of services
|
7,803
|
|
|
18,483
|
|
|
26,286
|
|
|||
Wireless cost of equipment
|
23,119
|
|
|
—
|
|
|
23,119
|
|
|||
Selling, general and administrative expense
|
21,805
|
|
|
7,140
|
|
|
28,945
|
|
|||
Depreciation and amortization expense
|
8,980
|
|
|
6,353
|
|
|
15,333
|
|
|||
Total operating expenses
|
61,707
|
|
|
31,976
|
|
|
93,683
|
|
|||
Operating income (loss)
|
$
|
29,973
|
|
|
$
|
(826
|
)
|
|
$
|
29,147
|
|
|
|
|
|
|
|
||||||
Assets
|
$
|
185,405
|
|
|
$
|
78,305
|
|
|
$
|
263,710
|
|
Property, plant and equipment, net
|
40,911
|
|
|
41,044
|
|
|
81,955
|
|
|||
Capital expenditures
|
11,725
|
|
|
5,049
|
|
|
16,774
|
|
|
(dollars in millions)
|
|
|||||||||
Years Ended December 31,
|
2017
|
|
|
2016
|
|
|
2015
|
|
|||
Operating Revenues
|
|
|
|
|
|
||||||
Total reportable segments
|
$
|
118,191
|
|
|
$
|
119,696
|
|
|
$
|
122,830
|
|
Corporate and other
|
9,019
|
|
|
5,663
|
|
|
3,738
|
|
|||
Reconciling items:
|
|
|
|
|
|
||||||
Operating results from divested businesses (Note 2)
|
368
|
|
|
2,115
|
|
|
6,224
|
|
|||
Eliminations
|
(1,544
|
)
|
|
(1,494
|
)
|
|
(1,172
|
)
|
|||
Consolidated operating revenues
|
$
|
126,034
|
|
|
$
|
125,980
|
|
|
$
|
131,620
|
|
Note 13
|
Comprehensive Income
|
(dollars in millions)
|
Foreign
currency
translation
adjustments
|
|
|
Unrealized gains (losses) on cash flow hedges
|
|
|
Unrealized losses on marketable securities
|
|
|
Defined benefit
pension and
postretirement
plans
|
|
|
Total
|
|
|||||
Balance at January 1, 2015
|
$
|
(346
|
)
|
|
$
|
(84
|
)
|
|
$
|
112
|
|
|
$
|
1,429
|
|
|
$
|
1,111
|
|
Other comprehensive loss
|
(208
|
)
|
|
(1,063
|
)
|
|
(5
|
)
|
|
—
|
|
|
(1,276
|
)
|
|||||
Amounts reclassified to net income
|
—
|
|
|
869
|
|
|
(6
|
)
|
|
(148
|
)
|
|
715
|
|
|||||
Net other comprehensive loss
|
(208
|
)
|
|
(194
|
)
|
|
(11
|
)
|
|
(148
|
)
|
|
(561
|
)
|
|||||
Balance at December 31, 2015
|
(554
|
)
|
|
(278
|
)
|
|
101
|
|
|
1,281
|
|
|
550
|
|
|||||
Other comprehensive (loss) income
|
(159
|
)
|
|
(225
|
)
|
|
(13
|
)
|
|
2,881
|
|
|
2,484
|
|
|||||
Amounts reclassified to net income
|
—
|
|
|
423
|
|
|
(42
|
)
|
|
(742
|
)
|
|
(361
|
)
|
|||||
Net other comprehensive (loss) income
|
(159
|
)
|
|
198
|
|
|
(55
|
)
|
|
2,139
|
|
|
2,123
|
|
|||||
Balance at December 31, 2016
|
(713
|
)
|
|
(80
|
)
|
|
46
|
|
|
3,420
|
|
|
2,673
|
|
|||||
Other comprehensive income
|
245
|
|
|
818
|
|
|
10
|
|
|
327
|
|
|
1,400
|
|
|||||
Amounts reclassified to net income
|
—
|
|
|
(849
|
)
|
|
(24
|
)
|
|
(541
|
)
|
|
(1,414
|
)
|
|||||
Net other comprehensive income (loss)
|
245
|
|
|
(31
|
)
|
|
(14
|
)
|
|
(214
|
)
|
|
(14
|
)
|
|||||
Balance at December 31, 2017
|
$
|
(468
|
)
|
|
$
|
(111
|
)
|
|
$
|
32
|
|
|
$
|
3,206
|
|
|
$
|
2,659
|
|
Note 14
|
Additional Financial Information
|
|
(dollars in millions)
|
|
|||||||||
Years Ended December 31,
|
2017
|
|
|
2016
|
|
|
2015
|
|
|||
Depreciation expense
|
$
|
14,741
|
|
|
$
|
14,227
|
|
|
$
|
14,323
|
|
Interest costs on debt balances
|
5,256
|
|
|
4,961
|
|
|
5,391
|
|
|||
Net amortization of debt discount
|
155
|
|
|
119
|
|
|
113
|
|
|||
Capitalized interest costs
|
(678
|
)
|
|
(704
|
)
|
|
(584
|
)
|
|||
Advertising expense
|
2,643
|
|
|
2,744
|
|
|
2,749
|
|
|
(dollars in millions)
|
|
|||||
At December 31,
|
2017
|
|
|
2016
|
|
||
Accounts Payable and Accrued Liabilities
|
|
|
|
||||
Accounts payable
|
$
|
7,063
|
|
|
$
|
7,084
|
|
Accrued expenses
|
6,756
|
|
|
5,717
|
|
||
Accrued vacation, salaries and wages
|
4,521
|
|
|
3,813
|
|
||
Interest payable
|
1,409
|
|
|
1,463
|
|
||
Taxes payable
|
1,483
|
|
|
1,516
|
|
||
|
$
|
21,232
|
|
|
$
|
19,593
|
|
|
|
|
|
||||
Other Current Liabilities
|
|
|
|
||||
Advance billings and customer deposits
|
$
|
3,084
|
|
|
$
|
2,914
|
|
Dividends payable
|
2,429
|
|
|
2,375
|
|
||
Other
|
2,839
|
|
|
2,813
|
|
||
|
$
|
8,352
|
|
|
$
|
8,102
|
|
|
(dollars in millions)
|
|
|||||||||
Years Ended December 31,
|
2017
|
|
|
2016
|
|
|
2015
|
|
|||
Cash Paid
|
|
|
|
|
|
||||||
Interest, net of amounts capitalized
|
$
|
4,369
|
|
|
$
|
4,085
|
|
|
$
|
4,491
|
|
Income taxes, net of amounts refunded
|
4,432
|
|
|
9,577
|
|
|
5,293
|
|
|||
|
|
|
|
|
|
||||||
Other, net Cash Flows from Operating Activities
|
|
|
|
|
|
||||||
Changes in device payment plan agreement receivables-non-current
|
$
|
(579
|
)
|
|
$
|
(3,303
|
)
|
|
$
|
(23
|
)
|
Proceeds from Tower Monetization Transaction
|
—
|
|
|
—
|
|
|
2,346
|
|
|||
Other, net
|
1,251
|
|
|
206
|
|
|
(3,637
|
)
|
|||
|
$
|
672
|
|
|
$
|
(3,097
|
)
|
|
$
|
(1,314
|
)
|
|
|
|
|
|
|
||||||
Other, net Cash Flows from Financing Activities
|
|
|
|
|
|
||||||
Net debt related costs
|
$
|
(3,599
|
)
|
|
$
|
(1,991
|
)
|
|
$
|
(422
|
)
|
Proceeds from Tower Monetization Transaction
|
—
|
|
|
—
|
|
|
2,742
|
|
|||
Other, net
|
(1,253
|
)
|
|
(806
|
)
|
|
(743
|
)
|
|||
|
$
|
(4,852
|
)
|
|
$
|
(2,797
|
)
|
|
$
|
1,577
|
|
Note 15
|
Commitments and Contingencies
|
Note 16
|
Quarterly Financial Information (Unaudited)
|
|
(dollars in millions, except per share amounts)
|
|
|||||||||||||||||||||
|
|
|
|
|
Net Income attributable to Verizon
(1)
|
|
|
||||||||||||||||
Quarter Ended
|
Operating
Revenues
|
|
|
Operating
Income
|
|
|
Amount
|
|
|
Per Share-
Basic
|
|
|
Per Share-
Diluted
|
|
|
Net
Income
|
|
||||||
2017
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
March 31
|
$
|
29,814
|
|
|
$
|
7,181
|
|
|
$
|
3,450
|
|
|
$
|
0.85
|
|
|
$
|
0.84
|
|
|
$
|
3,553
|
|
June 30
|
30,548
|
|
|
8,232
|
|
|
4,362
|
|
|
1.07
|
|
|
1.07
|
|
|
4,478
|
|
||||||
September 30
|
31,717
|
|
|
7,208
|
|
|
3,620
|
|
|
0.89
|
|
|
0.89
|
|
|
3,736
|
|
||||||
December 31
|
33,955
|
|
|
4,793
|
|
|
18,669
|
|
|
4.57
|
|
|
4.56
|
|
|
18,783
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
March 31
|
$
|
32,171
|
|
|
$
|
7,942
|
|
|
$
|
4,310
|
|
|
$
|
1.06
|
|
|
$
|
1.06
|
|
|
$
|
4,430
|
|
June 30
|
30,532
|
|
|
4,554
|
|
|
702
|
|
|
0.17
|
|
|
0.17
|
|
|
831
|
|
||||||
September 30
|
30,937
|
|
|
6,540
|
|
|
3,620
|
|
|
0.89
|
|
|
0.89
|
|
|
3,747
|
|
||||||
December 31
|
32,340
|
|
|
8,023
|
|
|
4,495
|
|
|
1.10
|
|
|
1.10
|
|
|
4,600
|
|
•
|
Results of operations for the first quarter of 2017 include after-tax charges attributable to Verizon of
$0.5 billion
related to early debt redemption costs, as well as after-tax credits attributable to Verizon of
$0.1 billion
related to a gain on spectrum license transactions.
|
•
|
Results of operations for the second quarter of 2017 include after-tax charges attributable to Verizon of
$0.1 billion
related to severance, pension and benefit charges, and after-tax charges attributable to Verizon of
$0.4 billion
related to acquisition and integration related charges, as well as after-tax credits attributable to Verizon of
$0.9 billion
related to a net gain on sale of divested businesses.
|
•
|
Results of operations for the third quarter of 2017 include after-tax charges attributable to Verizon of
$0.3 billion
related to early debt redemption costs and after-tax charges attributable to Verizon of
$0.1 billion
related to acquisition and integration related charges.
|
•
|
Results of operations for the fourth quarter of 2017 include after-tax credits attributable to Verizon of
$16.8 billion
related to the impact of tax reform, after-tax charges attributable to Verizon of
$0.7 billion
related to severance, pension and benefit charges, after-tax charges attributable to Verizon of
$0.5 billion
related to product realignment costs, as well as after-tax charges attributable to Verizon of
$0.4 billion
related to early debt redemption costs. In addition, results of operations for the fourth quarter of 2017 include after-tax credits attributable to Verizon of
$0.1 billion
related to a gain on spectrum license transactions and after-tax charges attributable to Verizon of
$0.1 billion
related to acquisition and integration related charges.
|
•
|
Results of operations for the first quarter of 2016 include after-tax charges attributable to Verizon of
$0.1 billion
related to a pension remeasurement, as well as after-tax credits attributable to Verizon of
$0.1 billion
related to a gain on spectrum license transactions.
|
•
|
Results of operations for the second quarter of 2016 include after-tax charges attributable to Verizon of
$2.2 billion
related to pension and benefit remeasurements and after-tax charges attributable to Verizon of
$1.1 billion
related to early debt redemption costs, as well as after-tax credits attributable to Verizon of
$0.1 billion
related to a gain on the Access Line Sale.
|
•
|
Results of operations for the third quarter of 2016 include after-tax charges attributable to Verizon of
$0.5 billion
related to a pension remeasurement and severance costs.
|
•
|
Results of operations for the fourth quarter of 2016 include after-tax credits attributable to Verizon of
$1.0 billion
related to severance, pension and benefit credits.
|
|
|
|
Name
|
|
State of Incorporation /
Organization
|
|
|
|
Verizon Delaware LLC
|
|
Delaware
|
|
|
|
Verizon Maryland LLC
|
|
Delaware
|
|
|
|
Verizon New England Inc.
|
|
New York
|
|
|
|
Verizon New Jersey Inc.
|
|
New Jersey
|
|
|
|
Verizon New York Inc.
|
|
New York
|
|
|
|
Verizon Pennsylvania LLC
|
|
Delaware
|
|
|
|
Verizon Virginia LLC
|
|
Virginia
|
|
|
|
Bell Atlantic Mobile Systems LLC
|
|
Delaware
|
|
|
|
Cellco Partnership
(d/b/a Verizon Wireless)
|
|
Delaware
|
|
|
|
GTE LLC
|
|
Delaware
|
|
|
|
GTE Wireless LLC
|
|
Delaware
|
|
|
|
MCI Communications Corporation
|
|
Delaware
|
|
|
|
Verizon Americas Inc.
|
|
Delaware
|
|
|
|
Verizon Business Global LLC
|
|
Delaware
|
|
|
/s/ Ernst & Young LLP
|
|
Ernst & Young LLP
|
|
New York, New York
|
|
|
|
February 23, 2018
|
|
/s/ Shellye L. Archambeau
|
Shellye L. Archambeau
|
/s/ Mark T. Bertolini
|
Mark T. Bertolini
|
/s/ Richard L. Carrión
|
Richard L. Carrión
|
/s/ Melanie L. Healey
|
Melanie L. Healey
|
/s/ M. Frances Keeth
|
M. Frances Keeth
|
/s/ Karl-Ludwig Kley
|
Karl-Ludwig Kley
|
/s/ Lowell C. McAdam
|
Lowell C. McAdam
|
/s/ Clarence Otis, Jr.
|
Clarence Otis, Jr.
|
/s/ Rodney E. Slater
|
Rodney E. Slater
|
/s/ Kathryn A. Tesija
|
Kathryn A. Tesija
|
/s/ Gregory D. Wasson
|
Gregory D. Wasson
|
/s/ Gregory G. Weaver
|
Gregory G. Weaver
|
/s/ Matthew D. Ellis
|
Matthew D. Ellis
|
/s/ Anthony T. Skiadas
|
Anthony T. Skiadas
|
1.
|
I have reviewed this annual report on Form 10-K of Verizon Communications Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
Date: February 23, 2018
|
/s/ Lowell C. McAdam
|
|
Lowell C. McAdam
Chairman and Chief Executive Officer
|
1.
|
I have reviewed this annual report on Form 10-K of Verizon Communications Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
Date: February 23, 2018
|
/s/ Matthew D. Ellis
|
|
Matthew D. Ellis
|
|
Executive Vice President
and Chief Financial Officer
|
(1)
|
the report of the Company on Form 10-K for the annual period ending
December 31, 2017
(the Report) fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934 (the Exchange Act); and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods referred to in the Report.
|
|
|
|
Date: February 23, 2018
|
/s/
|
Lowell C. McAdam
|
|
|
Lowell C. McAdam
|
|
|
Chairman and Chief Executive Officer
|
(1)
|
the report of the Company on Form 10-K for the annual period ending
December 31, 2017
(the Report) fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934 (the Exchange Act); and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods referred to in the Report.
|
|
|
|
Date: February 23, 2018
|
/s/
|
Matthew D. Ellis
|
|
|
Matthew D. Ellis
|
|
|
Executive Vice President and Chief Financial Officer
|