Share Repurchases to Increase by $200 Million to Total $1.7 Billion for
2006
NEW YORK, Dec. 6 /PRNewswire/ -- Verizon Communications Inc. (NYSE: VZ)
today updated investors on the progress of several initiatives designed to
enhance shareholder value.
At an investment conference here, Verizon CFO Doreen Toben said that
customer demand for and usage of key strategic Verizon services are
steadily increasing, and that adoption of new technologies is continuing to
gain traction in the marketplace.
She also announced that the company will further increase share
repurchases to a total of $1.7 billion in 2006. Verizon began the year with
a target of approximately $1 billion in share repurchases, increased that
to $1.5 billion by mid-year and today announced it expected to exceed that
figure by approximately $200 million.
Toben said two recently closed transactions, involving Idearc Inc.
(NYSE: IAR) and Verizon Dominicana, have further strengthened Verizon's
balance sheet and provided additional financial flexibility, creating value
for shareholders.
On Nov. 17, the company completed the spin-off of Idearc to Verizon
shareholders. Idearc now owns what were the Verizon domestic print and
Internet yellow pages directories publishing operations, and Verizon
distributed a dividend of one share of Idearc common stock for every 20
shares of Verizon common stock to shareholders of record.
As a result of the spin-off, Verizon reduced total debt by more than $7
billion in a debt-for-debt exchange and received approximately $2 billion
in cash. Toben said that the impact of the spin-off on Verizon's
fourth-quarter 2006 earnings, before offsets from Verizon's interest
savings on debt, will be approximately 4 cents per fully diluted share.
Toben added that Verizon will soon restate its financial history for
the purposes of comparability, including its former directories business
results in Income From Discontinued Operations. The directories business
contributed 29 cents per share to Verizon's 2006 earnings through Nov. 17,
and the full- year 2006 impact of the absence of Idearc earnings would be
about 33 cents per share. The comparable amount for 2005 was 39 cents per
share.
Proceeds From DR Sale, Fourth Quarter Special Item
On Dec. 1, Verizon completed the sale of its interest in Verizon
Dominicana, which provides telecommunications services in the Dominican
Republic, to a subsidiary of America Movil, S.A. de C.V. (NYSE: AMX).
This resulted in net cash proceeds of $1.7 billion. Toben said that in
the fourth quarter Verizon will recognize a pre-tax book gain of
approximately $50 million on the transaction and that the company will
incur book taxes on reinvested earnings, which must be recognized upon the
sale, of approximately $500 million. She added that the net effect will be
treated as a special item and will not be part of fourth-quarter adjusted
earnings (a non-GAAP measure).
Verizon expects to include from 10 cents to 11 cents in 2006 earnings
per share for Verizon Dominicana through Dec. 1, so the full-year impact
would be 11 cents to 12 cents per share.
Sales continue to proceed regarding Verizon's interests in
Telecomunicaciones de Puerto Rico, Inc. (Puerto Rico Telephone) and
Compania Anonima Nacional Telefonos de Venezuela (CANTV, NYSE: VNT).
Verizon estimates net cash proceeds of approximately $3 billion from the
sale of its Caribbean and Latin American telecommunications operations in
the three separate transactions, announced in April.
Toben said the full-year 2006 earnings impact of the three sales would
be about 22 cents per share before any interest savings effects. This
includes about 5 cents to 6 cents per share for CANTV, which is reported as
Income From Unconsolidated Business.
Steady Improvement in FiOS Metrics
Toben also discussed financial and operational metrics for FiOS,
Verizon's next-generation fiber-optic-based Internet and TV services. She
said "all of our FiOS metrics are moving in the right directions and closer
to the long- term targets" that the company announced in September. The
FiOS initiative's dilutive impact on earnings will peak in the fourth
quarter 2006 and first quarter 2007, Toben said, with a steady quarterly
improvement expected through 2007.
As previously announced, Verizon expects FiOS to generate positive
operating income beginning in 2009, based in part on growing revenues from
FiOS services combined with declining operational costs due to fiber
network efficiencies. Toben noted that the impact of FiOS dilution in 2006
and 2007 does not include costs savings related to moving a customer from
copper-based services to fiber-based services. These savings are
approximately $110 per line per year.
Verizon Communications Inc. (NYSE: VZ), a New York-based Dow 30
company, is a leader in delivering broadband and other wireline and
wireless communication innovations to mass market, business, government and
wholesale customers. Verizon Wireless operates America's most reliable
wireless network, serving nearly 57 million customers nationwide. Verizon's
Wireline operations include Verizon Business, which operates one of the
most expansive wholly-owned global IP networks, and Verizon Telecom, which
is deploying the nation's most advanced fiber-optic network to deliver the
benefits of converged communications, information and entertainment
services to customers. For more information, visit http://www.verizon.com.
VERIZON'S ONLINE NEWS CENTER: Verizon news releases, executive speeches
and biographies, media contacts, high quality video and images, and other
information are available at Verizon's News Center on the World Wide Web at
http://www.verizon.com/news. To receive news releases by e-mail, visit the
News Center and register for customized automatic delivery of Verizon news
releases.
NOTE: This news release contains statements about expected future
events and financial results that are forward-looking and subject to risks
and uncertainties. For those statements, we claim the protection of the
safe harbor for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995. The following important factors
could affect future results and could cause those results to differ
materially from those expressed in the forward-looking statements:
materially adverse changes in economic and industry conditions and labor
matters, including workforce levels and labor negotiations, and any
resulting financial and/or operational impact, in the markets served by us
or by companies in which we have substantial investments; material changes
in available technology; technology substitution; an adverse change in the
ratings afforded our debt securities by nationally accredited ratings
organizations; the final results of federal and state regulatory
proceedings concerning our provision of retail and wholesale services and
judicial review of those results; the effects of competition in our
markets; the timing, scope and financial impacts of our deployment of
fiber-to-the-premises broadband technology; the ability of Verizon Wireless
to continue to obtain sufficient spectrum resources; changes in our
accounting assumptions that regulatory agencies, including the SEC, may
require or that result from changes in the accounting rules or their
application, which could result in an impact on earnings; the timing of the
closings of the sales of our Latin American and Caribbean properties; and
the extent and timing of our ability to obtain revenue enhancements and
cost savings following our business combination with MCI, Inc.
SOURCE Verizon Communications
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Related links:
http://www.verizon.com
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CONTACT:
Bob Varettoni of Verizon, +1-908-559-6388,
robert.a.varettoni@verizon.com
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