America Online 2015 Annual Report Download - page 10

become widespread, they will drive
more and more traffic on our wire-
less and broadband networks. More
broadly, they will be the central eco-
system for technology development,
unleashing a cascade of innovations
with the potential to make our lives
richer and our society safer and
smarter in such fields as healthcare,
education, energy management and
smart cities. Also, the markets for
these services are global, giving us
a new, less capital- intensive path to
expand the Verizon brand globally.
For all these reasons, we believe
these are big, scalable businesses
that leverage our core assets and will
contribute meaningfully to our growth
in the next three to five years.
Delivering results
Underpinning Verizon’s transformation
is our continued attention to the funda-
mentals of the business. Thanks to our
management team’s unrelenting oper-
ational discipline and the incomparable
dedication of our front-line employees,
our wireless and wireline businesses
are executing well, based on our core
attributes of network quality, customer
service and efficiency. The result is
another year of growth and profitabil-
ity. Cash flows from operating activities
totaled $38.9billion in 2015, compared
with $30.6billion in 2014. Adjusted
EBITDA margin expanded year over
year to 35.4percent, evidence of our
rigorous attention to improving the
efficiency of our operating model and
freeing up resources that can be used
to move the business forward.
Our strong cash flows support con-
sistent investment in networks and
a record of dividend increases that
now stands at nine consecutive years.
Wecontinued to sharpen our strategic
focus in 2015 with the planned sale of
some telecom properties to Frontier
(expected to close at the end of the
first quarter of 2016) and the monetiza-
tion of certain tower assets. We used
some of the proceeds to return value
to shareowners in the form of an accel-
erated stock repurchase in 2015 and
plan to further repay debt in 2016. Our
balance sheet is strong, and we remain
on target with the debt reduction out-
lined at the time of our acquisition of
Vodafone’s interest in Verizon Wireless.
We are committed to returning to our
pre- Vodafone transaction credit rating
profile in the 2018–2019 time frame.
Adjusted earnings per share (EPS)
for 2015 were $3.99, up 19.1percent
over $3.35 in adjusted EPS in 2014.
Total return to shareowners for the
year was 3.5percent, which reflects
more than $13.5billion in dividends
and stock repurchases and exceeds
the performance of the Dow Jones
Industrial Average and the S&P 500
for 2015. We remain confident in the
performance of our core businesses
and believe that our strategy of deliv-
ering strong operating results and
creating new business models will
fuelour growth over the long term.
Delivering the future
Not many companies can trans-
form their businesses in a time of
accelerating change. It requires a
management team that can do many
things at once: maintain a strong
core business, bring totally new
products and technologies to market,
remain financially sound, and stay
true to their values. While we haven’t
chosen the easy road, I am confi-
dent we will prevail — as we have in
the past — because we’re willing to
disrupt the industry, rather than wait
to be disrupted. Most of all, we will
win because we have the two things
that are essential to any company
that succeeds over the long term: a
strong, customer- centric culture and
an essential role in making the world
abetter place.
I am grateful to our leadership team
and our Board for their courage and
guidance through this exciting period
of our history. Our employees embody
the values at the heart of our Credo,
and I continue to marvel at their dedi-
cation to customers and willingness to
embrace change as we transform our
company for the future. More change
is coming, but no matter how fast the
flywheel spins, we will remain true
tothe values and strengths that have
made us great. We’re committed to
setting the standard for excellence in
our industry, now and in the future.
Our best years are ahead of us.
Lowell McAdam
Chairman and Chief Executive Officer
Verizon Communications Inc.
We’re
committed
to setting
the standard
for excellence
in our industry,
now and in
the future.
8
2015 Annual Report www.verizon.com/2015AnnualReport
Chairman’s letter