Verizon Wireless 2008 Annual Report Download - page 17

discontinued operations. We expect 2009 capital expenditures, excluding
amounts related to the acquisition of Alltel, to be lower than 2008
capital expenditures.
Operational Efficiency – While focusing resources on revenue growth
and market share gains, we are continually challenging our management
team to lower expenses, particularly through technology-assisted produc-
tivity improvements, including self-service initiatives. The effect of these
and other efforts, such as real estate consolidations, call center routing
improvements, the formation of a centralized shared services organiza-
tion, and centralizing information technology and marketing efforts, has
led to changes in our cost structure as well as maintaining and improving
operating income margins. With our deployment of the FiOS network, we
expect to realize savings annually in our ongoing operating expenses as
a result of efficiencies gained from fiber network facilities. As the deploy-
ment of the FiOS network gains scale and installation and automation
improvements occur, average costs per home connected are expected
to decline.
Customer Service – Our goal is to be the leading company in customer
service in every market we serve. We view superior product offerings and
customer service experiences as a competitive differentiator and a cata-
lyst to growing revenues and gaining market share. We are committed
to providing high-quality customer service and continually monitoring
customer satisfaction in all facets of our business. We believe that we
have the most loyal customer base of any wireless service provider in the
United States, as measured by customer churn.
Performance-Based Culture – We embrace a culture of accountability,
based on individual and team objectives that are performance-based and
tied to Verizon’s strategic imperatives. Key objectives of our compensa-
tion 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 our business in opportunities and transactions that support
the aforementioned 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.Reflectingcontinuedstrongcashflowsandcon-
fidence in Verizon’s business model, Verizon’s Board of Directors increased
the Company’s quarterly dividend 6.2% during the third quarter of 2007
and 7.0% during the third quarter of 2008. During 2008, we repurchased
$1,368 million of our common stock as part of our previously announced
share buyback program. Net cash provided by operating activities – con-
tinuing operations for the year ended December 31, 2008 of $26,620
million increased by $311 million from $26,309 million for the year ended
December 31, 2007.
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. We have
two reportable segments, which we operate and manage as strategic
business units and organize by products and services. Our segments are
Domestic Wireless and Wireline.
Thissectionandthefollowing“SegmentResultsofOperations”section
also highlight and describe those items of a non-recurring or non-oper-
ational nature separately to ensure consistency of presentation. In the
following section, we review the performance of our two reportable seg-
ments. We exclude the effects of certain items that management does
not consider in assessing segment performance, primarily because of
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.
On March 31, 2008, we completed the spin-off of our local exchange
and related business assets in Maine, New Hampshire and Vermont.
Accordingly, Wireline results from divested operations have been reclassi-
fied to Corporate and Other and reflect comparable operating results.
15
Management’s Discussion and Analysis
ofFinancialConditionandResultsofOperations continued