Verizon Communications Inc. — 2011 Form 10-K Summary
Reporting period: Fiscal year ended December 31, 2011. Although the request identifies 2011 Q4, this is an annual Form 10-K, not a standalone quarterly report. The filing incorporates much of its financial statements and management discussion from the 2011 Annual Report to Shareowners; those details are not reproduced in the supplied text.
Business context
Verizon is a communications and technology holding company with two primary segments: Verizon Wireless and Wireline. It reported approximately 193,900 employees and operated in more than 150 countries. Verizon owned 55% of Verizon Wireless; Vodafone owned the remaining 45%.
- Wireless: U.S. wireless voice, data and equipment services. Verizon Wireless had 92.2 million retail customers at year-end and reported 2011 revenue of approximately $70.2 billion, about 63% of Verizon’s aggregate revenue.
- Wireline: Consumer, business, government and carrier voice, broadband, video and network services. 2011 revenue was $40.7 billion, about 37% of aggregate revenue. FiOS Video was available to approximately 13 million homes in 12 states and the District of Columbia.
Financial and operating metrics
| Metric | Reported information |
|---|---|
| Wireless revenue | Approximately $70.2 billion for 2011 |
| Wireline revenue | $40.7 billion for 2011 |
| Profit, cash flow, margins, debt and liquidity | The supplied filing text does not provide clear values; it refers readers to incorporated Annual Report sections. |
| Gross property, plant and equipment investment | Approximately $216 billion at December 31, 2011, before accumulated depreciation, versus $212 billion at December 31, 2010. |
| Dividends | Cash dividend declared was $0.50 per share in each of Q3 and Q4 2011; $0.4875 in each of Q1 and Q2. |
| Share repurchases | No common shares repurchased in Q4 2011. A February 2011 authorization permitted repurchases of up to 100 million shares through February 28, 2014. |
Changes versus the prior comparable period
- Gross property, plant and equipment investment increased from approximately $212 billion at year-end 2010 to $216 billion at year-end 2011.
- Quarterly declared dividends rose from $0.4875 per share in Q1 and Q2 2011 to $0.50 in Q3 and Q4.
- Wireless properties’ share of total property increased to 32.8% from 30.9%; Wireline’s share declined to 66.0% from 67.9%.
- The filing text does not provide clear comparable-period figures for consolidated revenue, earnings, cash flow, margins, debt or liquidity, so their year-over-year changes cannot be assessed from the supplied text.
Outlook, risks and unusual items
- Management expected to extend 4G LTE to virtually all of Verizon Wireless’s existing 3G footprint by mid-2013. As of January 19, 2012, LTE covered 195 markets and more than 200 million people.
- Verizon identified growing wireless data demand and the need for additional spectrum as important capacity challenges. It had agreements to acquire certain AWS and PCS spectrum, subject to conditions and regulatory approvals.
- Wireline acquired Terremark and a cloud-software technology provider during 2011 to strengthen its managed hosting and cloud-services offerings.
- Union contracts covering many union employees expired August 6, 2011. A 14-day work stoppage followed; employees returned under an agreement continuing prior terms while contract negotiations remained ongoing.
- Two significant litigation matters were disclosed: an Idearc-related claim seeking more than $9 billion, with trial set for October 2012, and a FairPoint-related claim seeking approximately $2 billion, with no trial date set. The filing also describes other litigation and regulatory exposure.
- Other principal risks include intense competition, economic weakness, technology and supplier disruption, regulatory changes, cyberattacks and natural disasters, financing costs, benefit-plan costs, labor actions and litigation.
- Verizon’s CEO and CFO concluded disclosure controls were effective as of December 31, 2011; no material fourth-quarter change in internal control over financial reporting was reported.
Important facts for investors to verify
- Consult the incorporated 2011 Annual Report for consolidated revenue, net income, operating results, cash flows, capital expenditures, debt, liquidity and margins, and compare them with 2010.
- Review segment-level growth, subscriber additions, churn, data revenue and operating profitability, beyond the selected revenue and customer figures included here.
- Assess the cost, timing, regulatory approval and expected returns of LTE deployment and spectrum transactions.
- Track union negotiations and the status and potential exposure of the Idearc and FairPoint cases.
- Review cash generation, debt maturities, benefit funding needs, dividend coverage and any subsequent share repurchases.