Verizon Wireless 2012 Annual Report Download - page 26

Capital Expenditures
Our 2013 capital program includes capital to fund advanced networks
andservices,including4GLTEandFiOS,thecontinuedexpansionof
our core networks, including our IP and data center enhancements,
maintenance and support for our legacy voice networks and other
expenditures to drive operating efficiencies. The level and the timing of
theCompany’scapitalexpenditureswithinthesebroadcategoriescan
vary significantly as a result of a variety of factors outside our control,
including, for example, material weather events. We are replacing dam-
aged copper wire with fiber-optic cable which will not alter our capital
program but should result in lower maintenance costs. Capital expendi-
tures were approximately $16 billion in 2012 and 2011, respectively. We
believe that we have significant discretion over the amount and timing
of our capital expenditures on a Company-wide basis as we are not sub-
ject to any agreement that would require significant capital expenditures
on a designated schedule or upon the occurrence of designated events.
We expect capital expenditures as a percentage of revenue to decline in
2013 from levels in 2012.
Cash Flow from Operations
We create value for our shareowners by investing the cash flows gen-
erated by our business in opportunities and transactions that support
continued profitable growth, thereby increasing customer satisfaction
and usage of our products and services. In addition, we have used our
cash flows to maintain and grow our dividend payout to shareowners.
Verizon’sBoardofDirectorsincreasedtheCompany’squarterlydividend
by 3.0% during 2012, making this the sixth consecutive year in which we
have raised our dividend.
Our goal is to use our cash to create long-term value for our shareholders.
We will continue to look for investment opportunities that will help us to
grow the business. When appropriate, we will also use our cash to reduce
our debt levels and to buy back shares of our outstanding common
stock, and Verizon Wireless may make distributions to its partners (see
“CashFlowsfromFinancingActivities”).Therewerenorepurchasesof
commonstockduring2012,2011or2010.ThroughFebruary15,2013,
we purchased approximately 3.50 million shares under our current share
buyback authorization.
Other
We do not currently expect that legislative efforts relating to climate
control will have a material adverse impact on our consolidated financial
results or financial condition. We believe there may be opportunities for
companies to increase their use of communications services, including
those we provide, in order to minimize the environmental impact of their
businesses.
COnsOlidated results Of OperatiOns
In this section, we discuss our overall results of operations and highlight
items of a non-operational nature that are not included in our segment
results. We have two reportable segments, Verizon Wireless and Wireline,
which we operate and manage as strategic business units and organize
byproductsandservices.In“SegmentResultsofOperations,”wereview
the performance of our two reportable segments.
Corporate, eliminations and other includes unallocated corporate
expenses such as certain pension and other employee benefit related
costs, intersegment eliminations recorded in consolidation, the results
of other businesses such as our investments in unconsolidated busi-
nesses, lease financing and divested operations, and other adjustments
and gains and losses that are not allocated in assessing segment perfor-
mance due to their non-operational nature. Although such transactions
are excluded from the business segment results, they are included in
reported consolidated earnings. Gains and losses that are not individually
significant are included in all segment results as these items are included
inthechiefoperatingdecisionmaker’sassessmentofsegmentperfor-
mance. We believe that this presentation assists users of our financial
statements in better understanding our results of operations and trends
from period to period.
Corporate, eliminations and other during 2010 included a one-time
non-cash adjustment of $0.2 billion primarily to adjust wireless service
revenues. This adjustment was recorded to properly defer previously
recognized wireless service revenues that were earned and recognized
in future periods. The adjustment was not material to the consolidated
financialstatements(see“OtherItems”).Inaddition,theresultsofopera-
tionsrelatedtothedivestitureswecompletedin2010(see“Acquisitions
andDivestitures”)areincludedinCorporate,eliminationsandother,as
follows:
(dollars in millions)
Years Ended December 31, 2012 2011 2010
Impact of Divested Operations
Operating revenues $ – $ – $ 2,407
Cost of services and sales – – 574
Selling, general and administrative expense – – 665
Depreciation and amortization expense – – 413
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MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS continued