Verizon Wireless 2006 Annual Report Download - page 8

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12/31/05 03/31/06 06/30/06 09/30/06 12/31/06
Verizon S&P 500
2006 Total Return
34.6%
15.8%
66
How we’re performing.
Our฀ 2006฀ results฀ demonstrate฀ that฀ we฀ are฀ executing฀ our฀ strategy฀ and฀ turning฀
opportunity฀into฀protable฀growth฀and฀value฀creation฀for฀shareowners.฀
Operating฀revenues฀ for฀2006฀ were฀ $88.1฀ billion,฀ a฀26.8฀percent฀ increase฀ over฀
2005.฀On฀a฀pro฀forma฀basis฀–฀that฀is,฀as฀if฀Verizon฀and฀MCI฀had฀been฀a฀single฀company฀
since฀2005฀–฀revenues฀grew฀by฀3.3฀percent฀on฀the฀year,฀with฀an฀increasing฀share฀
coming฀from฀growth฀businesses,฀and฀operating฀income฀margins฀were฀16.1฀percent,฀
also฀ up฀ year-over-year.฀ We฀ strengthened฀ our฀ balance฀ sheet฀ by฀ reducing฀ debt฀ by฀
$1.9฀ billion,฀ even฀ while฀ absorbing฀ $6฀ billion฀ of฀ debt฀ in฀ the฀ MCI฀ transaction.฀ We฀
focused฀on฀our฀core฀network฀businesses฀by฀disposing฀of฀non-network฀assets,฀such฀
as฀Verizon฀Information฀Services฀–฀now฀trading฀on฀the฀New฀York฀Stock฀Exchange฀as฀
Idearc฀–฀and฀our฀investment฀in฀the฀Dominican฀Republic.฀We฀also฀paid฀$4.7฀billion฀in฀
dividends฀and฀repurchased฀approximately฀$1.7฀billion฀in฀Verizon฀shares.
Reported฀earnings฀for฀2006฀were฀$6.2฀billion,฀or฀$2.12฀per฀share.฀Before฀special฀
items,฀earnings฀were฀$7.4฀billion,฀or฀$2.54฀per฀share.฀Our฀total฀return฀for฀2006฀was฀
34.6฀percent.฀This฀performance฀is฀especially฀signicant฀since฀we฀sold฀or฀spun฀off฀
assets฀that,฀while฀no฀longer฀strategic฀to฀our฀network฀focus,฀generated฀substantial฀
earnings฀and฀cash.฀Idearc฀has฀also฀appreciated฀in฀value฀since฀the฀spin-off,฀so฀inves-
tors฀who฀own฀both฀stocks฀have฀enjoyed฀an฀even฀higher฀total฀ return.฀It฀ was฀also฀
good฀to฀see฀that฀the฀overall฀industry฀–฀wireless,฀telecommunications,฀cable฀and฀on-
line฀services฀–฀was฀healthier฀in฀2006฀than฀it฀has฀been฀in฀some฀time.฀
We฀invested฀$17.1฀billion฀in฀our฀networks฀to฀differentiate฀our฀products฀and฀ser-
vices,฀deliver฀quality฀growth฀and฀expand฀our฀relationships฀with฀customers.
With฀ its฀ emphasis฀ on฀ network฀ quality฀ and฀ a฀ record฀ of฀ innovation,฀ Verizon฀
Wireless฀ continued฀ to฀ post฀ the฀ best฀ results฀ in฀ the฀ industry฀ in฀ 2006:฀ the฀ highest฀
revenue฀ growth,฀ at฀ 17.8฀ percent;฀ the฀ highest฀ operating฀ margins,฀ at฀ 25.2฀ percent;฀฀
the฀highest฀number฀of฀new฀customers,฀at฀7.7฀million;฀the฀most฀retail฀customers,฀at฀
56.8฀million;฀and฀the฀ most฀ loyal฀customers,฀as฀indicated฀by฀our฀industry-leading฀
customer฀turnover฀of฀1.17฀percent.฀
Return of 34.6% excludes the Idearc spin-off and includes dividends.