Verizon Wireless 2007 Annual Report Download - page 6

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The Verizon Value Creation Model
4
margins.฀ Going฀ forward,฀ these฀ support฀ organizations฀ will฀ be฀ focused฀ on฀ creating฀ the฀
end-to-end฀efciencies฀that฀will฀expand฀margins.฀More฀importantly,฀they฀are฀also฀help-
ing฀us฀to฀think฀ through฀the฀customer’s฀ total฀relationship฀with฀ Verizon฀and฀create฀the฀
integrated฀experiences฀that฀build฀loyalty฀and฀long-term฀value.฀
Our฀focus฀on฀operational฀excellence฀is฀helping฀us฀drive฀the฀benets฀of฀our฀growth฀to฀
the฀ bottom฀ line.฀ Reported฀ earnings฀ for฀ the฀ year฀ were฀ $5.5฀ billion,฀ or฀ $1.90฀ per฀ share.฀
Adjusted฀earnings฀from฀continuing฀operations฀were฀$6.9฀billion,฀or฀$2.36฀per฀share,฀up฀15.1฀
percent฀on฀a฀pro฀ forma฀basis฀for฀ the฀year.฀Adjusted฀operating฀income฀grew฀almost฀18฀
percent,฀with฀margins฀improving฀every฀quarter.฀Operating฀cash฀ows฀from฀continuing฀
operations฀grew฀14.2฀percent,฀to฀$26.3฀billion,฀which฀we฀have฀used฀to฀strengthen฀our฀bal-
ance฀ sheet,฀ reinvest฀ $17.5฀ billion฀ in฀ our฀ business,฀ raise฀ our฀ quarterly฀ dividend฀ by฀ 6.2฀
percent฀and฀buy฀back฀$2.8฀billion฀of฀stock.฀(See฀charts฀on฀pages฀4-7฀for฀an฀illustration฀of฀
the฀Verizon฀value฀creation฀model.)฀
Investors฀noted฀our฀solid฀execution,฀condence฀ in฀ the฀ future฀ and฀ commitment฀ to฀
growing฀shareowner฀value.฀Total฀return฀for฀2007฀was฀just฀over฀22฀percent,฀compared฀to฀
5.5฀percent฀for฀the฀S&P฀500.฀Although฀we฀have฀seen฀some฀of฀those฀gains฀erode฀in฀early฀
2008฀as฀the฀overall฀market฀has฀dropped฀on฀investors’฀concerns฀over฀a฀slowing฀economy฀
170
687
1,541
FiOS Internet
Customers
(thousands)
05 06 07
We changed our profile by investing in growth.
With all of the changes taking place in the telecom industry, we
developed a strategy to simplify our operations and focus our invest-
ments in growth products. We streamlined our portfolio by divesting
our directory business and selling some access lines and international
equity holdings. The capital from these transactions helped to further
change our corporate profile, through the acquisition of MCI and
investments in our broadband wireless and fiber networks.
Collectively, these moves have diversified our revenue base, provided
new growth opportunities and created shareowner value. Today a
larger percentage of our revenue stream comes from our growth
businesses. By focusing on the power of our advanced wireless, fiber
and global IP networks – along with offering a superior set of prod-
ucts, services and distribution capabilities – we have created a strong
platform for continued growth.
1.