Verizon Wireless 2014 Annual Report Download - page 25

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23
Selling, General and Administrative Expense
Selling, general and administrative expense decreased during 2014 com-
pared to 2013 primarily due to declines in employee costs as a result of
reduced headcount, decreased advertising expense and lower transac-
tion and property taxes.
Selling, general and administrative expense decreased during 2013 com-
pared to 2012 primarily due to declines in employee costs, primarily as
a result of reduced headcount, and declines in rent expenses, partially
oset by higher transaction and property tax expenses.
Depreciation and Amortization Expense
Depreciation and amortization expense decreased during 2014 com-
pared to 2013, as well as 2013 compared to 2012, due to decreases in net
depreciable assets.
Non-operationalitemsexcludedfromWireline’sOperatingincomewere
as follows:
(dollars in millions)
Years Ended December 31, 2014 2013 2012
Severance, pension and benet charges $ 189 $ – $ –
Impact of divested operations (12) (43) (56)
Other costs 137 – 56
$ 314 $ (43) $ –
Cost of Services and Sales
Cost of services and sales decreased slightly during 2014 compared
to 2013, primarily due to a decrease in employee costs as a result of
reduced headcount and a decline in access costs driven by declines in
overall wholesale long distance volumes, which was partially oset by an
increaseincontentcostsof$0.4billionassociatedwithcontinuedFiOS
subscriber growth and programming license fee increases.
Cost of services and sales decreased during 2013 compared to 2012, pri-
marily due to a decrease in costs related to customer premise equipment
which reected our focus on improving margins by de-emphasizing sales
of equipment that are not part of an overall enterprise solutions bundle, a
decline in access costs resulting primarily from declines in overall whole-
sale long distance volumes and the net eect of storm-related insurance
recoveries. These decreases were partially oset by higher content costs
associatedwithcontinuedFiOSsubscribergrowthandprogramming
license fee increases.
The changes inWireline’s Operating income, Segment EBITDA and
Segment EBITDA margin during the periods presented were primarily
a result of the factors described in connection with operating revenues
and operating expenses.
Operating Expenses (dollars in millions)
Increase/(Decrease)
Years Ended December 31, 2014 2013 2012 2014 vs. 2013 2013 vs. 2012
Cost of services and sales $ 21,332 $ 21,396 $ 21,657 $ (64) (0.3)% $ (261) (1.2) %
Selling, general and administrative expense 8,180 8,571 8,860 (391) (4.6) (289) (3.3)
Depreciation and amortization expense 7,882 8,327 8,424 (445) (5.3) (97) (1.2)
Total Operating Expenses $ 37,394 $ 38,294 $ 38,941 $ (900) (2.4) $ (647) (1.7)
Segment Operating Income and EBITDA (dollars in millions)
Increase/(Decrease)
Years Ended December 31, 2014 2013 2012 2014 vs. 2013 2013 vs. 2012
Segment Operating Income $ 1,035 $ 330 $ 4 $ 705 nm $ 326 nm
Add Depreciation and amortization expense 7,882 8,327 8,424 (445) (5.3)% (97) (1.2)%
Segment EBITDA $ 8,917 $ 8,657 $ 8,428 $ 260 3.0 $ 229 2.7
Segment operating income margin 2.7% 0.9% –
Segment EBITDA margin 23.2% 22.4% 21.6%
nm - not meaningful
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS continued