Verizon Wireless 2007 Annual Report Download - page 21

technology substitution that have resulted in access line losses, and
will enable us to grow revenues. Also at Wireline, we continued to roll
out next-generation global IP networks to meet the ongoing global
enterprise market shift to IP-based products and services. Deployment
of new strategic service offerings -- including expansion of our VoIP
and international Ethernet capabilities, the introduction of cutting
edge video and web-based conferencing capabilities, and enhance-
ments to our virtual private network portfolio -- will allow us to con-
tinue to gain share in the enterprise market. In addition, during 2007
we acquired a security-services firm that enhanced our managed infor-
mation security services offerings to large-business and government
customers worldwide. At Domestic Wireless, we continue to execute
on the fundamentals of our network superiority and value proposition
to deliver growth for our business and provide new and innovative
products and services, such as Broadband Access, our EV-DO service.
We also continue to expand our wireless data, messaging and multi-
media offerings for both consumer and business customers and take
advantage of the growing demand for wireless data services.
• Performance-Based Culture – We embrace a culture of corporate-
wide accountability, based on individual and team objectives that are
performance-based and tied to these imperatives. Key objectives of our
compensation programs are pay-for-performance and the alignment
of executives’ and shareowners’ long-term interests. We also employ a
highly diverse workforce, since respect for diversity is an integral part of
Verizon’s culture and a critical element of our competitive success.
We create value for our shareowners by investing the cash flows gen-
erated by the business in opportunities and transactions that support
these strategic imperatives, thereby increasing customer satisfaction and
usage of our products and services. In addition, we use our cash flows
to repurchase shares and maintain and grow our dividend payout to
shareowners. Verizon’s total debt decreased by $5,204 million to $31,157
millionasofDecember31,2007fromDecember31,2006.Reflecting
continued strong cash flows and confidence in Verizon’s business model,
Verizon’s Board of Directors increased the Company’s quarterly dividend
6.2% during the third quarter of 2007. Verizon’s ratio of debt to debt
combined with shareowners’ equity was 38.1% as of December 31, 2007
compared with 42.8% as of December 31, 2006. During 2007, we repur-
chased $2,843 million of our common stock as part of our previously
announced share buyback program. We plan to continue our share buy-
back program in 2008. Verizon’s cash and cash equivalents at December
31, 2007 of $1,153 million decreased by $2,066 million from $3,219 mil-
lion at December 31, 2006.
Asdiscussedinthe“RecentDevelopments”sectionbeginningonpage33,
in January 2007, Verizon announced a definitive agreement with FairPoint
Communications, Inc. (FairPoint) that will result in Verizon establishing a
separate entity for its local exchange access lines and related business
assets in Maine, New Hampshire and Vermont, spinning off that new
entity to Verizon’s shareowners, and immediately merging it with and
into FairPoint. Based upon the number of shares (as adjusted) and closing
price of FairPoint common stock on the date immediately prior to the
announcement of the merger, the estimated total value to be received by
Verizon and its shareowners in exchange for these operations was approx-
imately $2,715 million. The actual total value to be received by Verizon and
its shareowners will be determined based on the number of shares (as
adjusted) and price of FairPoint common stock on the date of the closing
of the merger, and is expected to be less than $2,715 million.
CONSOLIDATED RESULTS OF OPERATIONS
In this section, we discuss our overall results of operations and highlight
items that are not included in our business segment results. As a result
of the spin-off of our domestic print and Internet yellow pages directo-
ries business, which was included in the Information Services segment,
andthesaleofourinterestsinTelecomunicacionesdePuertoRico,Inc.
(TELPRI)andVerizonDominicana,eachofwhichwasincludedinthe
International segment, the operations of our former domestic print
and Internet yellow pages directories business, Verizon Dominicana
andTELPRIarereportedasdiscontinuedoperationsandassetsheldfor
sale. Accordingly, we currently have two reportable segments, which we
operate and manage as strategic business units and organize by products
and services. Our segments are Wireline and Domestic Wireless. Included
in our Wireline results of operations are the results of the former MCI busi-
ness subsequent to the close of the merger on January 6, 2006.
Thissectionandthefollowing“SegmentResultsofOperations”section
also highlight and describe those items of a non-recurring nature sepa-
rately to ensure consistency of presentation. In the following section, we
review the performance of our two reportable segments. We exclude the
effects of certain items that management does not consider in assessing
segment performance, due primarily to their non-recurring and/or non-
operational nature as discussed below and in the “Other Consolidated
Results”and“OtherItems”sections.Webelievethatthispresentation
will assist readers in better understanding our results of operations and
trends from period to period.
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Management’s Discussion and Analysis
ofFinancialConditionandResultsofOperations continued