Verizon Communications (VZ)

Revenue Growth, Margin Expansion and Strong Operating Cash Flows

Verizon’s total operating revenues grew to $24.1 billion in the second quarter 2008. This is a 3.7 percent increase compared with the second quarter 2007, or an increase of 4.9 percent when adjusted for the spinoff of the Wireline segment’s non-strategic local exchange and related business assets in Maine, New Hampshire and Vermont (non-GAAP). Total operating expenses increased 2.4 percent to $19.6 billion, comparing second quarter 2008 with second quarter 2007.

Verizon’s operating income grew 9.6 percent to $4.5 billion, compared with the second quarter 2007. Adjusted operating income (non-GAAP) grew 10.9 percent. Operating income margin rose to 18.8 percent, compared with 17.8 percent in the second quarter 2007. On an adjusted basis, Verizon’s operating income margin rose to 19.0 percent, compared with 18.0 percent in the second quarter 2007.

Cash flows from continuing operations were $12.1 billion through the first six months of 2008, up 4.2 percent compared with the same period last year. Capital expenditures were $8.4 billion through the first six months of 2008, down more than $100 million over the same period last year.

Total debt was $43.1 billion, compared with $35.8 billion at the end of the first quarter 2008. In the second quarter, the company made final payments of approximately $8.5 billion for licenses won in the Federal Communications Commission’s 700 MHz spectrum auction and purchased $4.8 billion of Alltel Corp. debt in connection with the pending acquisition of Alltel.