Summary
Verizon Communications Inc. reported relatively stable operating revenues for the third quarter of 2003 compared to the prior year, with a slight increase to $17.155 billion from $17.113 billion. However, significant changes occurred in the composition of expenses and net income. Operating expenses increased substantially due to higher cost of services and sales, driven by reduced pension income and increased overtime, while selling, general, and administrative expenses decreased, largely due to lower special charges and impairment losses compared to the prior year. Net income saw a significant decline to $1.791 billion from $4.405 billion in the prior year's quarter, primarily impacted by a substantial pretax loss of $957 million related to the sale of its stake in Iusacell and several accounting changes, including a one-time charge for the directory business accounting change and a gain from the adoption of SFAS No. 143. The company's balance sheet shows a decrease in cash and cash equivalents to $746 million from $1.422 billion year-over-year, alongside a reduction in total assets. Long-term debt also decreased, reflecting ongoing deleveraging efforts. The Domestic Wireless segment continued its strong performance, showing robust revenue and segment income growth, while the Domestic Telecom segment experienced a revenue decline. Investors should note the ongoing strategic adjustments, including divestitures and accounting standard adoptions, which are significantly influencing the reported financial results.
Key Highlights
- 1Total operating revenues remained relatively flat year-over-year for the quarter, at $17.155 billion in Q3 2003 versus $17.113 billion in Q3 2002.
- 2Net income significantly decreased to $1.791 billion in Q3 2003 from $4.405 billion in Q3 2002, impacted by a substantial loss from discontinued operations (Iusacell) and accounting changes.
- 3Operating expenses rose by 25.7% in Q3 2003 compared to Q3 2002, primarily due to an increase in the 'Cost of services and sales' line item.
- 4The Domestic Wireless segment demonstrated strong growth, with operating revenues increasing by 18.2% and segment income rising by 12.3% year-over-year.
- 5The Domestic Telecom segment experienced a revenue decline of 4.1% year-over-year, attributed to falling local service and network access revenues.
- 6Significant accounting changes were implemented, including a $2.697 billion charge related to the directory business revenue recognition change and a $3.499 billion gain from the adoption of SFAS No. 143.
- 7Cash and cash equivalents decreased to $746 million at September 30, 2003, from $1.422 billion at December 31, 2002.