What are the primary non-GAAP financial measures Verizon is highlighting in this filing?

Verizon is highlighting several non-GAAP measures including EBITDA, Segment EBITDA, Segment EBITDA Margin, Consolidated Adjusted EBITDA, Net Debt, Net Unsecured Debt, Net Unsecured Debt to Consolidated Adjusted EBITDA Ratio, Adjusted Earnings per Common Share (Adjusted EPS), Adjusted EPS Growth Forecast, and Free Cash Flow. These are presented to provide additional insights into the company's operational and financial performance.

How is Free Cash Flow defined by Verizon, and what are its limitations?

Verizon defines Free Cash Flow as net cash provided by operating activities less capital expenditures (including capitalized software). The company states it's a useful measure of liquidity that, when viewed with GAAP results, provides a more complete understanding of cash flow trends. However, it notes limitations as it does not represent residual cash flow available for discretionary spending and does not incorporate payments on finance lease obligations or cash for acquisitions of businesses or licenses.

VZ 8-K: Earnings & Results

Q: Why does Verizon use non-GAAP financial measures, and how should investors interpret them?

Verizon uses non-GAAP measures to provide a more comprehensive understanding of its performance by excluding certain items that management believes do not reflect ongoing operational trends or comparability. For example, Adjusted EBITDA excludes items like impairment charges, severance, and gains/losses from asset dispositions. Investors should interpret these measures as complementary to GAAP results, offering insights into operational efficiency and underlying business trends, but should always consider them alongside the company's official GAAP financial statements.

Summary

Verizon Communications Inc. (VZ) filed an 8-K on July 24, 2020, primarily to furnish a press release and financial tables detailing their operational and financial performance. The filing emphasizes the use of non-GAAP financial measures to provide a more comprehensive understanding of the company's performance, alongside traditional GAAP figures. Key non-GAAP metrics discussed include EBITDA, Adjusted EBITDA, Net Debt to Adjusted EBITDA ratio, and Adjusted Earnings Per Share (Adjusted EPS). Investors should note Verizon's focus on these adjusted metrics as they offer insights into operational efficiency and underlying business trends by excluding certain non-operational items and special charges. The company believes these measures allow for better comparability with peers and historical performance. The filing outlines the specific methodologies for calculating these measures, such as the exclusion of equity in unconsolidated businesses, impairment charges, severance, and gains/losses from asset dispositions from Adjusted EBITDA.

Key Highlights

1Verizon is reporting financial results and providing additional context through non-GAAP financial measures in its July 24, 2020, 8-K filing.
2Key non-GAAP metrics highlighted include EBITDA, Adjusted EBITDA, Net Debt, Net Unsecured Debt, and their related ratios.
3The company also detailed Adjusted Earnings per Common Share (Adjusted EPS) and its growth forecast, which excludes special items for better comparability.
4Verizon defines its non-GAAP measures like EBITDA, Adjusted EBITDA, and Net Debt, explaining how they are calculated and why they are considered useful for investors.
5The rationale behind using non-GAAP measures is to enhance the understanding of performance by minimizing impacts from capital structure, taxes, depreciation policies, and non-operational or special items.
6The filing includes definitions for Free Cash Flow, calculated as operating cash flow less capital expenditures, presented as a complementary liquidity measure.
7Reconciliations of these non-GAAP measures to their corresponding GAAP figures are available in accompanying schedules, though not detailed within the 8-K text itself.

VERIZON COMMUNICATIONS INC 8-K Report, Financial Results (Jul 24, 2020)

Summary

Key Highlights

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