8-KOther Events

VERIZON COMMUNICATIONS INC 8-K Report, Corporate Update (Dec 1, 2009)

Filed December 1, 2009For Securities:VZ

Summary

Verizon Communications Inc. filed an 8-K on December 1, 2009, to report on the progress of its agreement with Frontier Communications Corporation, initially announced on May 13, 2009. This transaction involves the divestiture of Verizon's local exchange and related business assets in 14 states. The filing provides summarized financial information for these divested operations for the three and nine months ended September 30, 2009, which were prepared for inclusion in Frontier's filings related to the transaction. Investors should note that these are separate financial statements prepared for a business not historically operated as a standalone entity. The disclosed financial data shows operating revenues of $1,007 million and $3,081 million for the respective three and nine-month periods, leading to net income of $44 million and $281 million. The filing also highlights capital expenditures of $129 million and $408 million for these periods. A key detail within operating expenses is the inclusion of significant pension settlement losses in the three and nine-month periods. The completion of this transaction is still subject to regulatory approvals.

Key Highlights

  • 1Verizon is progressing with the sale of its local exchange and related assets in 14 states to Frontier Communications, as per the agreement announced in May 2009.
  • 2Summarized financial results for the divested operations for the three and nine months ended September 30, 2009, are provided.
  • 3Operating revenues for the divested segment were $1,007 million (3Q 2009) and $3,081 million (9M 2009).
  • 4Net income for the divested segment was $44 million (3Q 2009) and $281 million (9M 2009).
  • 5Capital expenditures for the divested operations amounted to $129 million (3Q 2009) and $408 million (9M 2009).
  • 6The financial information includes pension settlement losses of $154 million and $293 million for the three and nine-month periods, respectively.
  • 7Transaction closing remains contingent on receiving necessary regulatory approvals.

Frequently Asked Questions

This 8-K filing provides an update on the definitive agreement between Verizon Communications Inc. and Frontier Communications Corporation for the sale of Verizon's local exchange and related business assets in 14 states. It also discloses summarized financial information for the divested operations for the periods ending September 30, 2009.

Verizon is divesting its local exchange business and related landline activities in parts or all of Arizona, California, Idaho, Illinois, Indiana, Michigan, Nevada, North Carolina, Ohio, Oregon, South Carolina, Washington, West Virginia, and Wisconsin. This includes internet access, long-distance services, and broadband video services provided to designated customers in these areas.

For the three months ended September 30, 2009, the divested operations generated $1,007 million in revenue and $44 million in net income. For the nine months ended September 30, 2009, revenue was $3,081 million with a net income of $281 million. The filing also notes significant pension settlement losses of $154 million and $293 million for these periods.

The transaction is subject to the satisfaction of certain conditions, most notably the receipt of applicable regulatory approvals. The filing does not indicate that these approvals have been obtained, implying the transaction is still pending.