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| 138 | | | 2.8 | % | | |
| Effective income tax rate | 21.9 | % | | 28.8 | % | | | | | | | | |
The effective income tax rate is calculated by dividing the provision for income taxes by income before the provision for income taxes. The decrease in the effective income tax rate was primarily due to the Verizon Business Group goodwill impairment charge of $5.8 billion in 2023 that substantially decreased income before income taxes and was not deductible. The increase in the provision for income taxes was primarily due to the increase in 2024 in income before income taxes.
A reconciliation of the statutory federal income tax rate to the effective income tax rate for each period is included in Note 12 to the consolidated financial statements.
Consolidated Net Income, Consolidated EBITDA and Consolidated Adjusted EBITDA
Consolidated earnings before interest, taxes, depreciation and amortization expense (Consolidated EBITDA) and Consolidated Adjusted EBITDA, which are presented below, are non-GAAP financial measures that we believe are useful to management, investors and other users of our financial information in evaluating operating profitability on a more variable cost basis as they exclude the depreciation and amortization expense related primarily to capital expenditures and acquisitions that occurred in prior years, as well as in evaluating operating performance in relation to Verizon’s competitors. Consolidated EBITDA is calculated by adding back interest, taxes, depreciation and amortization expense to net income.
Consolidated Adjusted EBITDA is calculated by excluding from Consolidated EBITDA the effect of the following non-operational items: equity in earnings and losses of unconsolidated businesses and other income and expense, net, as well as the effect of certain special items. We believe that this measure is useful to management, investors and other users of our financial information in evaluating the effectiveness of our operations and underlying business trends. We believe that Consolidated Adjusted EBITDA is widely used by investors to compare a company’s operating performance to its competitors by minimizing impacts caused by differences in capital structure, taxes, and depreciation and amortization policies. Further, the exclusion of non-operational items and special items enables comparability to prior period performance and trend analysis. See "Special Items" for additional information.
It is management’s intent to provide non-GAAP financial information to enhance the understanding of Verizon’s GAAP financial information, and it should be considered by the reader in addition to, but not instead of, the financial statements prepared in accordance with GAAP. Each non-GAAP financial measure is presented along with the corresponding GAAP measure so as not to imply that more emphasis should be placed on the non-GAAP measure. We believe that providing these non-GAAP measures in addition to the GAAP measures allows management, investors and other users of our financial information to more fully and accurately assess both consolidated and segment performance. The non-GAAP financial information presented may be determined or calculated differently by other companies and may not be directly comparable to that of other companies.
| | | | | | | | | | | |
| (dollars in millions) |
| Years Ended December 31, | 2024 | | 2023 |
| Consolidated Net Income | $ | 17,949 | | | $ | 12,095 | |
| Add: | | | |
| Provision for income taxes | 5,030 | | | 4,892 | |
| Interest expense | 6,649 | | | 5,524 | |
Depreciation and amortization expense(1) | 17,892 | | | 17,624 | |
| Consolidated EBITDA | $ | 47,520 | | | $ | 40,135 | |
| | | |
| Add (Less): | | | |
Other (income) expense, net(2) | $ | (995) | | | $ | 313 | |
Equity in losses of unconsolidated businesses | 53 | | | 53 | |
Severance charges | 1,733 | | | 533 | |
Asset and business rationalization | 374 | | | 480 | |
Legacy legal matter | 106 | | | — | |
| Verizon Business Group goodwill impairment | — | | | 5,841 | |
| Legal settlement | — | | | 100 | |
| | | |
| | | |
| | | |
| Business transformation costs | — | | | 176 | |
| Non-strategic business shutdown | — | | | 158 | |
| Consolidated Adjusted EBITDA | $ | 48,791 | | | $ | 47,789 | |
| | | |
| | | |
| | | |
(1) Includes Amortization of acquisition-related intangible assets, which were $817 million and $865 million during the years ended December 31, 2024 and 2023, respectively. The results for the year ended December 31, 2023 also include a portion of the charges associated with the Non-strategic business shutdown. See "Special Items" for additional information.
(2) Includes Pension and benefits mark-to-market credits of $532 million during the year ended December 31, 2024 and charges of $992 million during the year ended December 31, 2023. See "Special Items" for additional information.
The changes in Consolidated Net Income, Consolidated EBITDA and Consolidated Adjusted EBITDA in the table above during 2024 compared to 2023 were primarily a result of the factors described above in connection with consolidated operating revenues and consolidated operating expenses.
| | |
Segment Results of Operations |
We have two reportable segments that we operate and manage as strategic business units - Consumer and Business. We measure and evaluate our segments based on segment operating income. The use of segment operating income is consistent with the chief operating decision maker’s assessment of segment performance.
To aid in the understanding of segment performance as it relates to segment operating income, management uses the following operating statistics to evaluate the overall effectiveness of our segments. We believe these operating statistics are useful to investors and other users of our financial information because they provide additional insight into drivers of our segments’ operating results, key trends and performance relative to our peers. These operating statistics may be determined or calculated differently by other companies and may not be directly comparable to those statistics of other companies.
Wireless retail connections are retail customer device postpaid and prepaid connections as of the end of the period. Retail connections under an account may include those from smartphones and basic phones (collectively, phones), postpaid and prepaid FWA, as well as tablets and other internet devices, wearables and retail IoT devices. Wireless retail connections are calculated by adding total retail postpaid and prepaid new connections in the period to prior period retail connections, and subtracting total retail postpaid and prepaid disconnects in the period.
Wireless retail postpaid connections are retail postpaid customer device connections as of the end of the period. Retail postpaid connections under an account may include those from phones, postpaid FWA, as well as tablets and other internet devices, wearables and retail IoT devices. Wireless retail postpaid connections are calculated by adding retail postpaid new connections in the period to prior period retail postpaid connections, and subtracting retail postpaid disconnects in the period.
Wireless retail prepaid connections are retail prepaid customer device connections as of the end of the period. Retail prepaid connections may include those from phones, prepaid FWA, as well as tablets and other internet devices, and wearables. Wireless retail prepaid connections are calculated by adding retail prepaid new connections in the period to prior period retail prepaid connections, and subtracting retail prepaid disconnects in the period.
Fios internet connections are the total number of connections to the internet using Fios internet services as of the end of the period. Fios internet connections are calculated by adding Fios internet new connections in the period to prior period Fios internet connections, and subtracting Fios internet disconnects in the period.
Fios video connections are the total number of connections to traditional linear video programming using Fios video services as of the end of the period. Fios video connections are calculated by adding Fios video net additions in the period to prior period Fios video connections. Fios video net additions are calculated by subtracting the Fios video disconnects from the Fios video new connections.
Total broadband connections are the total number of connections to the internet using Fios internet services, Digital Subscriber Line (DSL), and postpaid, prepaid and IoT FWA as of the end of the period. Total broadband connections are calculated by adding total broadband connections, net additions in the period to prior period total broadband connections.
FWA broadband connections are the total number of postpaid and prepaid connections to the internet through our 5G or 4G LTE wireless networks as of the end of the period. FWA broadband connections are calculated by adding FWA broadband connections, net additions in the period to prior period FWA broadband connections.
Wireline broadband connections are the total number of connections to the internet using DSL and Fios internet services as of the end of the period. Wireline broadband connections are calculated by adding wireline broadband connections, net additions in the period to prior period wireline broadband connections.
Wireless retail connections, net additions are the total number of additional retail customer device postpaid and prepaid connections, less the number of device disconnects in the period. Wireless retail connections, net additions in each period presented are calculated by subtracting the total retail postpaid and prepaid disconnects, net of certain adjustments, from the total retail postpaid and prepaid new connections in the period.
Wireless retail postpaid connections, net additions are the total number of additional retail customer device postpaid connections, less the number of device disconnects in the period. Wireless retail postpaid connections, net additions in each period presented are calculated by subtracting the retail postpaid disconnects, net of certain adjustments, from the retail postpaid new connections in the period.
Wireless retail prepaid connections, net additions are the total number of additional retail customer device prepaid connections, less the number of device disconnects in the period. Wireless retail prepaid connections, net additions in each period presented are calculated by subtracting the retail prepaid disconnects, net of certain adjustments, from the retail prepaid new connections in the period.
Wireless retail postpaid phone connections, net additions are the total number of additional retail customer postpaid phone connections, less the number of phone disconnects in the period. Wireless retail postpaid phone connections, net additions in each period presented are calculated by subtracting the retail postpaid phone disconnects, net of certain adjustments, from the retail postpaid phone new connections in the period.
Total broadband connections, net additions are the total number of additional total broadband connections, less the number of total broadband disconnects in the period. Total broadband connections, net additions in each period presented are calculated by subtracting the total broadband disconnects, net of certain adjustments, from the total broadband new connections in the period.
FWA broadband connections, net additions are the total number of additional FWA broadband connections, less the number of FWA broadband disconnects in the period. FWA broadband connections, net additions in each period presented are calculated by subtracting the FWA broadband disconnects, net of certain adjustments, from the FWA broadband new connections in the period.
Wireline broadband connections, net additions are the total number of additional wireline broadband connections, less the number of wireline broadband disconnects in the period. Wireline broadband connections, net additions in each period presented are calculated by subtracting the wireline broadband disconnects, net of certain adjustments, from the wireline broadband new connections in the period.
Wireless churn is the rate at which service to retail, retail postpaid, or retail postpaid phone connections is terminated on average in the period. The churn rate in each period presented is calculated by dividing retail disconnects, retail postpaid disconnects, or retail postpaid phone disconnects by the average retail connections, average retail postpaid connections, or average retail postpaid phone connections, respectively, in the period.
Wireless retail postpaid ARPA is the calculated average retail postpaid service revenue per account (ARPA) from retail postpaid accounts in the period. Wireless retail postpaid service revenue does not include recurring device payment plan billings related to the Verizon device payment program, plan billings related to device warranty and insurance or regulatory fees. Wireless retail postpaid ARPA in each period presented is calculated by dividing retail postpaid service revenue by the average retail postpaid accounts in the period.
Wireless retail postpaid accounts are wireless retail customers that are directly served and managed under the Verizon brand and use its services as of the end of the period. Accounts include unlimited plans, shared data plans and corporate accounts, as well as legacy single connection plans and multi-connection family plans. A single account may include monthly wireless services for a variety of connected devices. Wireless retail postpaid accounts are calculated by adding retail postpaid new accounts to the prior period retail postpaid accounts.
Wireless retail postpaid connections per account is the calculated average number of retail postpaid connections per retail postpaid account as of the end of the period. Wireless retail postpaid connections per account is calculated by dividing the total number of retail postpaid connections by the number of retail postpaid accounts as of the end of the period.
Segment operating income margin reflects the profitability of the segment as a percentage of revenue. Segment operating income margin is calculated by dividing total segment operating income by total segment operating revenues.
Segment earnings before interest, taxes, depreciation and amortization (Segment EBITDA), which is presented below, is a non-GAAP measure and does not purport to be an alternative to operating income (loss) as a measure of operating performance. We believe this measure is useful to management, investors and other users of our financial information in evaluating operating profitability on a more variable cost basis as it excludes the depreciation and amortization expense related primarily to capital expenditures and acquisitions that occurred in prior years, as well as in evaluating operating performance in relation to our competitors. Segment EBITDA is calculated by adding back depreciation and amortization expense to segment operating income (loss). Segment EBITDA margin is calculated by dividing Segment EBITDA by total segment operating revenues. See Note 13 to the consolidated financial statements for additional information.
Verizon Consumer Group
Our Consumer segment provides consumer-focused wireless and wireline communications services and products. Our wireless services are provided across one of the most extensive wireless networks in the U.S. under the Verizon family of brands and through wholesale and other arrangements. We also provide FWA broadband through our 5G or 4G LTE networks as an alternative to traditional landline internet access. Our wireline services are provided in nine states in the Mid-Atlantic and Northeastern U.S., as well as Washington D.C., over our 100% fiber-optic network through our Verizon Fios product portfolio and over a traditional copper-based network to customers who are not served by Fios.
Operating Revenues and Selected Operating Statistics
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| 2,006 | | | 2.7 | % | | |
| | (5.1) | | | |
| | 5.2 | | | |
| 1,278 | | | 1.3 | | | |
| | | | | | | | | | | |
Revenue Statistics: | | | | | | | | | | | |
| 2,016 | | | 3.2 | | | |
| 33 | | | 0.3 | | | |
| | | | | | | | | | | |
Connections (‘000):(1) | | | | | | | | | | | |
| | 1.4 | | | |
| | (4.7) | | | |
| | 0.2 | | | |
| | | | | | | | | | | |
| | 2.3 | | | |
| | (9.0) | | | |
| | | | | | | | | | | |
| | 45.4 | | | |
| | 1.5 | | | |
| | 10.6 | | | |
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| | | | | | | | | | | |
| Net Additions in Period (‘000): | | | | | | | | | | | |
| | (34.2) | | | |
| | 15.3 | | | |
| | (58.6) | | | |
| | | | | | | | | | | |
| | nm | | |
| | | | | | | | | | | |
| | (14.5) | | | |
| | (36.8) | | | |
| | (17.8) | | | |
| | | | | | | | | | | |
| Churn Rate: | | | | | | | | | | | |
| Wireless retail | 1.62 | % | | 1.67 | % | | | | | | | | |
| Wireless retail postpaid | 1.06 | % | | 1.03 | % | | | | | | | | |
| Wireless retail postpaid phones | 0.84 | % | | 0.83 | % | | | | | | | | |
| | | | | | | | | | | |
| Account Statistics: | | | | | | | | | | | |
| 5.89 | | | 4.4 | | | |
|
| | (0.6) | | | |
| | 2.1 | | | |
|
|
(1) As of end of period
Where applicable, the operating results reflect certain adjustments, including those related to the 3G network shutdowns, migration activity among different types of devices and plans, customer profile changes, and adjustments in connection with mergers, acquisitions and divestitures.
nm - not meaningful
Consumer's total operating revenues increased during 2024 compared to 2023 as a result of increases in Service and Other revenues, partially offset by a decrease in Wireless equipment revenue.
Service Revenue
Service revenue increased during 2024 compared to 2023 primarily driven by an increase in Wireless service revenue.
Wireless service revenue increased during 2024 compared to 2023 primarily as a result of:
•an increase of $1.5 billion in access revenues related to our postpaid plans primarily due to pricing actions, an increase in subscriptions through MyPlan offerings and a 45% increase in our FWA subscriber base. These increases were partially offset by the amortization of wireless equipment sales promotions;
•an increase of $638 million related to growth in non-retail service revenue;
•an increase of $318 million in TravelPass revenue due to increased customer international travel; and
•a decrease of $625 million in prepaid revenue primarily due to a decrease in the prepaid subscriber base partially driven by the termination of the Affordable Connectivity Program in the second quarter of 2024.
Wireless Equipment Revenue
Wireless equipment revenue decreased during 2024 compared to 2023 primarily as a result of:
•a decrease of $1.5 billion driven by a lower volume of wireless devices sold primarily related to a decrease of 10% in upgrades; and
•an increase of $474 million due to a shift to higher priced equipment in the mix of wireless devices sold, partially offset by the impact of related promotions.
Other Revenue
Other revenue includes fees that partially recover the direct and indirect costs of complying with regulatory and industry obligations and programs, revenues associated with certain products included in our device protection offerings, leasing and interest recognized when equipment is sold to the customer by an authorized agent under a device payment plan agreement.
Other revenue increased during 2024 compared to 2023 primarily due to:
•an increase of $193 million driven by regulatory surcharges primarily related to a higher net Federal Universal Service Fund rate, along with an increase in other regulatory surcharges; and
•an increase of $116 million related to device protection offerings primarily due to changes in the products offered and pricing actions.
Operating Expenses
Cost of Services
Cost of services increased during 2024 compared to 2023 primarily as a result of:
•an increase of $270 million in rent and lease expense primarily driven by new leases and lease modifications related to the continued deployment of the C-Band spectrum and Consumer's proportionate usage of shared leased assets;
•an increase of $195 million in personnel costs mainly driven by certain other post-employment benefit credits in 2023 that did not reoccur in 2024;
•an increase of $154 million in digital content costs primarily associated with an increase in subscriptions through MyPlan offerings, partially offset by a decrease in traditional linear content costs due to a decline in Fios video subscribers; and
•a decrease of $169 million in access costs primarily as a result of decreases in prepaid subscribers, changes in usage and net circuit access prices.
Cost of Wireless Equipment
Cost of wireless equipment decreased during 2024 compared to 2023 primarily as a result of:
•a decrease of $1.7 billion driven by a lower volume of wireless devices sold primarily related to a decrease of 10% in upgrades; and
•an increase of $1.2 billion due to a shift to higher priced equipment in the mix of wireless devices sold.
Selling, General and Administrative Expense
Selling, general and administrative expense increased during 2024 compared to 2023 primarily due to:
•an increase of $176 million in the provision for credit losses resulting from an increase in postpaid phone gross additions and additional bad debt reserves; and
•an increase of $105 million in advertising costs related to Value Brand marketing campaigns in 2024 compared to 2023.
Depreciation and Amortization Expense
Depreciation and amortization expense increased during 2024 compared to 2023 driven by the change in the mix of total Verizon depreciable and amortizable assets and Consumer's usage of those assets.
Segment Operating Income and EBITDA
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| 473 | | | 1.6 | % | | |
| | 3.6 | | | |
| 948 | | | 2.3 | | | |
| Segment operating income margin | 28.7 | % | | 28.5 | % | | | | | | | | |
| Segment EBITDA margin | 41.8 | % | | 41.4 | % | | | | | | | | |
The changes in the table above during the periods presented were primarily a result of the factors described above in connection with Consumer operating revenues and operating expenses.
Verizon Business Group
Our Business segment provides wireless and wireline communications services and products, including FWA broadband, data, video and advanced communication services, corporate networking solutions, security and managed network services, local and long distance voice services and network access to deliver various IoT services and products. We provide these products and services to businesses, public sector customers and wireless and wireline carriers across the U.S. and a subset of these products and services to customers around the world. The Business segment is organized in three customer groups: Enterprise and Public Sector, Business Markets and Other, and Wholesale.
Operating Revenues and Selected Operating Statistics
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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| | | | |
| (858) | | | (5.7) | % | | | | | | |
| | 3.0 | | | | | | | |
| | (5.0) | | | | | | | |
| (591) | | | (2.0) | | | | | | | |
| | | | | | | | | | | | | | | | |
Revenue Statistics: | | | | | | | | | | | | | | | | |
| 381 | | | 2.8 | | | | | | | |
| 17 | | | 1.4 | | | | | | | |
| | | | | | | | | | | | | | | | |
Connections (‘000):(2) | | | | | | | | | | | | | | | | |
| | 3.5 | | | | | | | |
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| | 4.2 | | | | | | | |
| | (11.5) | | | | | | | |
| | | | | | | | | | | | | | | | |
| | 54.4 | | | | | | | |
| | (0.2) | | | | | | | |
| | 39.3 | | | | | | | |
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| | | | | | | | | | | | | | | | |
| Net Additions in Period ('000): | | | | | | | | | | | | | | | | |
| | (18.7) | | | | | | | |
| | (2.8) | | | | | | | |
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| | 13.7 | | | | | | | |
| | 87.5 | | | | | | | |
| | 15.2 | | | | | | | |
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| Churn Rate: | | | | | | | | | | | | | | | | |
| Wireless retail postpaid | 1.47 | % | | 1.48 | % | | | | | | | | | | | | | |
| Wireless retail postpaid phones | 1.11 | % | | 1.13 | % | | | | | | | | | | | | | |
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(1)Service and other revenues included in our Business segment were approximately $25.9 billion and $26.4 billion for the years ended December 31, 2024 and 2023, respectively. Wireless equipment revenues included in our Business segment were approximately $3.6 billion and $3.7 billion for the years ended December 31, 2024 and 2023, respectively.
(2) As of end of period
Where applicable, the operating results reflect certain adjustments, including those related to the 3G network shutdowns, migration activity among different types of devices and plans, customer profile changes, and adjustments in connection with mergers, acquisitions and divestitures.
Business's total operating revenues decreased during 2024 compared to 2023 as a result of decreases in Enterprise and Public Sector and Wholesale revenues, partially offset by an increase in Business Markets and Other revenue.
Enterprise and Public Sector
Enterprise and Public Sector offers wireless products and services as well as wireline connectivity such as broadband and managed services to our large business and public sector customers. Large businesses are identified based on their size and volume of business with Verizon. Public sector customers include U.S. federal, state and local governments and educational institutions. Our offerings to this customer group include plans with features and pricing designed to address their specific needs.
Enterprise and Public Sector revenues decreased during 2024 compared to 2023 primarily due to a decrease of $702 million in wireline revenue primarily driven by declines in networking, traditional data and voice communication services along with related professional services. These declines were due to secular market pressure and technology shifts, coupled with lower customer premise equipment sales volumes.
Business Markets and Other
Business Markets and Other offers wireless services (including FWA broadband), wireless equipment, advanced communication services, tailored voice and networking products, Fios services, advanced voice solutions and security services to businesses
that ordinarily do not meet the requirements to be categorized as Enterprise and Public Sector, as described above. Business Markets and Other also includes solutions that support mobile resource management.
Business Markets and Other revenue increased during 2024 compared to 2023 primarily as a result of:
•an increase of $486 million in Wireless service revenue primarily due to pricing actions and an increase in our FWA subscriber base; and
•a decrease of $89 million in connection with the shutdown of our BlueJeans business offering in 2023 and a decline in traditional voice communication revenues.
Wholesale
Wholesale offers wireline communications services including data, voice, local dial tone and broadband services primarily to local, long distance, and wireless carriers that use our facilities to provide services to their customers.
Wholesale revenues decreased during 2024 compared to 2023 primarily due to a decrease of $117 million related to declines in traditional voice communication and network connectivity as a result of technology substitution, as well as a decrease in core data.
Operating Expenses | | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
| (438) | | | (4.3) | % | | |
| | (2.4) | | | |
| | 1.8 | | | |
| | (4.0) | | | |
| (583) | | | (2.1) | | | |
Cost of Services
Cost of services decreased during 2024 compared to 2023 primarily due to:
•a decrease of $99 million in rent and lease expense primarily driven by a change in Business's proportionate usage of shared leased assets;
•a decrease of $87 million in access costs primarily related to changes in usage and net circuit access prices;
•a decrease of $82 million in customer premise equipment costs due to lower volumes sold; and
•a decrease of $63 million in personnel costs related to the impact of workforce changes, partially offset by certain other post-employment benefit credits in 2023 that did not reoccur in 2024.
Cost of Wireless Equipment
Cost of wireless equipment decreased during 2024 compared to 2023 primarily as a result of:
•a decrease of $385 million driven by a lower volume of wireless devices sold; and
•an increase of $267 million due to a shift to higher priced equipment in the mix of wireless devices sold.
Selling, General and Administrative Expense
Selling, general and administrative expense increased during 2024 compared to 2023 primarily as a result of:
•an increase of $221 million in personnel costs primarily related to an increase in costs associated with the transition to third-party contracted resources along with the impacts of a prior year compensation plan assumption change that did not reoccur; and
•a decrease of $63 million in the provision for credit losses resulting from a reduction in bad debt reserves.
Depreciation and Amortization Expense
Depreciation and amortization expense decreased during 2024 compared to 2023 driven by the change in the mix of total Verizon depreciable and amortizable assets and Business's usage of those assets.
Segment Operating Income and EBITDA
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
| (8) | | | (0.4) | % | | |
| | (4.0) | | | |
| (189) | | | (2.9) | | | |
| Segment operating income margin | 7.0 | % | | 6.9 | % | | | | | | | | |
| Segment EBITDA margin | 21.6 | % | | 21.8 | % | | | | | | | | |
The changes in the table above during the periods presented were primarily a result of the factors described above in connection with Business operating revenues and operating expenses.
Special items included in Income Before Provision For Income Taxes were as follows:
| | | | | | | | | | | |
| | (dollars in millions) |
| Years Ended December 31, | 2024 | | 2023 |
Amortization of acquisition-related intangible assets(1) | | | |
| Depreciation and amortization expense | $ | 817 | | | $ | 865 | |
| Severance, pension and benefits charges (credits) | | | |
| Selling, general and administrative expense | 1,733 | | | 533 | |
| Other (income) expense, net | (532) | | | 992 | |
Asset and business rationalization | | | |
| Cost of services | 189 | | | 22 | |
| Selling, general and administrative expense | 185 | | | 458 | |
Legacy legal matter | | | |
| Selling, general and administrative expense | 106 | | | — | |
| Verizon Business Group goodwill impairment | | | |
Verizon Business Group goodwill impairment | — | | | 5,841 | |
| Legal settlement | | | |
| Selling, general and administrative expense | — | | | 100 | |
| Business transformation costs | | | |
| Cost of services | — | | | 15 | |
| Selling, general and administrative expense | — | | | 161 | |
| Non-strategic business shutdown | | | |
| Depreciation and amortization expense | — | | | 21 | |
| Cost of services | — | | | 45 | |
| Selling, general and administrative expense | — | | | 113 | |
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| Total | $ | 2,498 | | | $ | 9,166 | |
(1) Amounts are included in segment results of operations.
Consolidated Adjusted EBITDA, a non-GAAP measure discussed in the section titled "Consolidated Net Income, Consolidated EBITDA and Consolidated Adjusted EBITDA" as part of Consolidated Results of Operations, excludes all of the amounts included above.
The income and expenses related to special items included in our consolidated results of operations were as follows:
| | | | | | | | | | | |
| (dollars in millions) |
| Years Ended December 31, | 2024 | | 2023 |
| Within Total Operating Expenses | $ | 3,030 | | | $ | 8,174 | |
| Within Other (income) expense, net | (532) | | | 992 | |
| | | |
| | | |
| | | |
| Total | $ | 2,498 | | | $ | 9,166 | |
Amortization of Acquisition-Related Intangible Assets
During 2024 and 2023, we recorded pre-tax amortization expense of $817 million and $865 million, respectively, related to acquired intangible assets.
Severance, Pension and Benefits Charges (Credits)
During 2024, we recorded pre-tax severance charges of $1.7 billion, related to separations under our voluntary separation program for select U.S.-based management employees as well as other headcount reduction initiatives. The severance charges were recorded in Selling, general and administrative expense in our consolidated statement of income.
During 2024, in accordance with our accounting policy to recognize actuarial gains and losses in the period in which they occur, we recorded a net pre-tax pension and benefits credit of $532 million in our pension and postretirement benefit plans. The net gain was recorded in Other income (expense), net in our consolidated statement of income and was primarily driven by:
•a credit of $1.3 billion ($635 million for pension plans and $656 million for postretirement benefit plans) due to an increase in our discount rate assumption used to determine the current year liabilities of our plans from a weighted-average of 5.0% for both our pension and post retirement plans at December 31, 2023 to a weighted-average of 5.8% for our pension plans and 5.6% for our postretirement benefit plans at December 31, 2024;
•a charge of $711 million due to the difference between our estimated and actual return on assets; and
•a net charge of $48 million primarily due to other actuarial assumption adjustments.
During 2023, we recorded net pre-tax severance charges of $533 million, primarily related to involuntary separations under our existing plans, in Selling, general and administrative expense in our consolidated statement of income.
During 2023, in accordance with our accounting policy to recognize actuarial gains and losses in the period in which they occur, we recorded net pre-tax pension and benefits charges of $992 million in our pension and postretirement benefit plans. The charges were recorded in Other income (expense), net in our consolidated statement of income and were primarily driven by:
•a charge of $534 million due to an increase in our healthcare cost trend rate assumption used to determine the current year liabilities of our postretirement benefit plans from a weighted-average of 6.6% at December 31, 2022 to a weighted-average of 7.3% at December 31, 2023;
•a charge of $503 million ($288 million for pension plans and $215 million for postretirement benefit plans) due to a decrease in our discount rate assumption used to determine the current year liabilities of our plans from a weighted-average of 5.2% at December 31, 2022 to a weighted-average of 5.0% at December 31, 2023; and
•a net credit of $45 million primarily due to other actuarial assumption adjustments, which includes the difference between our estimated and our actual return on plan assets.
Due to the presentation of the other components of net periodic benefit cost, we recognize a portion of the pension and benefits charges (credits) in Other income (expense), net in our consolidated statements of income.
See Note 11 to the consolidated financial statements for additional information related to severance, pension and benefits charges (credits).
Asset and Business Rationalization
During 2024, we recorded a pre-tax asset and business rationalization charge of $374 million predominately related to the decision to cease use of certain real estate assets and exit non-strategic portions of certain businesses as part of our continued transformation initiatives.
During 2023, we recorded pre-tax asset rationalization charges of $480 million. Asset rationalization charges of $155 million recorded during the second quarter of 2023 related to certain real estate and non-strategic assets that we made a decision to cease use of as part of our transformation initiatives. Asset rationalization charges of $325 million recorded during the fourth quarter of 2023 primarily related to Business network assets that we made a decision to cease use of as part of our continued transformation initiatives.
Legacy Legal Matter
During 2024, we recorded a pre-tax charge of $106 million associated with a litigation matter related to a legacy contract for the production of telephone directories in Costa Rica by a subsidiary of the Company.
Verizon Business Group Goodwill Impairment
During 2023, we recorded a pre-tax charge of $5.8 billion as a result of the annual goodwill impairment test performed in the fourth quarter. See "Critical Accounting Estimates" for additional information.
Legal Settlement
During 2023, we recorded a pre-tax charge of $100 million related to the settlement of a litigation matter regarding certain administrative fees.
Business Transformation Costs
During 2023, we recorded pre-tax charges of $176 million primarily related to costs incurred in connection with strategic partnership initiatives in our managed network support services for certain Business customers.
Non-Strategic Business Shutdown
During 2023, we recorded pre-tax charges of $179 million related to the shutdown of our BlueJeans business offering.
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Operating Environment and Trends |
The telecommunications industry is highly competitive, and we expect competition to remain intense as traditional and non-traditional participants seek increased market share. We believe that our high-quality networks and customer base in addition to our attractive offerings and value proposition differentiate us from our competitors and give us the ability to plan and manage through changing market conditions. We remain focused on executing on the fundamentals of the business: enhancing our networks, offering innovative services and products, growing and maintaining a high-quality customer base, and delivering strong financial and operating results. We also continue to focus on cost efficiencies in order to have flexibility to adjust to changes in the competitive and economic environments and increase shareholder value.
The U.S. wireless market has achieved a high penetration of smartphones, which reduces the opportunity for new phone connection growth for the industry. We expect the wireless industry's customer growth rate to moderate over time in comparison to historical growth rates, furthering competition for customers. Future revenue growth in the industry is expected to be driven by expanding existing customer relationships, increasing the number of ways customers can connect with wireless networks and services and increasing the penetration of FWA and connected devices including wearables, tablets and IoT devices. Although certain advanced use cases for 5G technologies and related ecosystems are in the early phases of adoption, we believe that they will provide an opportunity for growth in the coming years.
We expect future service revenue growth opportunities to arise from increased access revenue as customer demand for mobile and FWA 5G connectivity continues to expand and customers shift to higher access plans. Additionally, we expect service revenue to benefit from targeted pricing actions and increased connections per account. Future service revenue growth opportunities will be dependent on expanding the penetration of our services, increasing the number of ways that our customers can connect with our networks and services and the development of new 5G use cases and ecosystems.
Pricing plays an increasingly important role in the wireless competitive landscape. As the demand for wireless services continues to grow, wireless service providers are offering a range of service plans and bundled services at competitive prices. In addition, aggressive device promotions have become more common in recent years in an effort to encourage customers to switch carriers, as well as retain existing customers. We compete in this area by offering our customers services and devices, with a variety of content options and other perks, that we believe provide significant value for the price. We and other wireless service providers, as well as equipment manufacturers, offer device payment options, which provide customers with the ability to pay for their device over a period of time, and some providers offer device leasing arrangements.
For further details on competitive environment and trends, refer to "Business — Competition and Related Trends" in Part I, Item 1 and "Risk Factors — Economic and Strategic Risks — We face significant competition that may negatively affect our operating results" in Part I, Item 1A of this Annual Report on Form 10-K.
Connection Trends
In our Consumer segment, we are focused on attracting new customers and maintaining our high-quality retail postpaid customer base by capitalizing on demand for reliable high-speed connectivity and customizable, personalized offerings and solutions. We believe the combination of our wireless network quality and service and product offerings represents an attractive value proposition and provides a compelling customer experience, supporting increased penetration of data services. While our Consumer segment experienced diminished wireless connection growth in recent years, we expect that future connection growth opportunities will be driven by the comparative value we provide to our customers, as well as our FWA broadband service. In our prepaid business, while we expect to continue to operate in a highly competitive environment, we are making improvements to achieve long-term growth.
We expect to continue to grow our Fios internet connections as we seek to expand availability of Fios, increase our penetration rates within our Fios service areas, and experience continued strong demand for higher speed internet connections. Our pending acquisition of Frontier is expected to enhance our fiber broadband footprint and provide opportunities for future growth. At the same time, we expect continued growth of FWA connections to complement strong Fios results as demand for broadband services continues to grow.
In Fios video, the business continues to face ongoing pressure as observed throughout the linear television market. We have experienced continuing access line and DSL losses as customers have switched to alternative technologies such as wireless, VoIP, and cable for voice and data services, and we expect this trend to continue.
In our Business segment, we offer wireless products and services to business and public sector customers across the U.S. We continue to grow our connections while operating in a highly competitive environment. We expect that this connection growth, combined with our industry-leading network assets, will provide additional opportunities to sell solutions, such as those around security, private networking and other network connectivity services, advanced communications and professional services.
In addition, in both our Consumer and our Business segments, we expect to support connection growth in part by adding capacity and further expanding our wireless coverage, and by continuing the build-out and densification of our 5G network.
Service Revenue Trends
In our Consumer segment, we expect continued growth in our wireless service revenue, driven by targeted pricing actions, migrations to higher priced plans, increased offering of perks, and increases in FWA connections and revenue, offset in part by higher promotion amortization impacts in 2025. Our efforts to maintain and grow our customer base and make improvements to our prepaid business, if successful, are also expected to benefit our wireless service revenue. We expect Fios revenue to benefit from growth in our Fios customer base and an ongoing demand for higher speed internet connections, which offsets the impact of the shift from bundled wireline services to standalone internet service.
In our Business segment, we expect wireless service revenue to expand, driven by growth from an increase in wireless volumes and strong FWA revenue. We expect that Fios, through increased penetration, will also contribute to revenue growth and that legacy traditional wireline services will continue to face secular pressures.
Other Trends
We are focused on achieving profitable growth as we continue to deliver strong revenues and undertake initiatives to reduce costs and improve efficiencies, including through AI-driven technologies.
We expect that our ability to generate cash flows will benefit from our expected service revenue growth, despite the moderate expected increase in our 2025 capital program compared to 2024. See "Liquidity and Capital Resources" for additional information on our capital program.
In the course of business, we make promotional equipment offers to attract and retain customers. In 2024, the growth of our wireless service revenue was unfavorably impacted by the amortization of wireless equipment sales and promotions. We expect these pressures to continue and increase in 2025. In addition, in 2023 and 2024, we had fewer phone upgrades compared to prior years. To the extent upgrade volumes increase in 2025, the expenses associated with those device sales are expected to contribute to higher costs.
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| Liquidity and Capital Resources |
We use the net cash generated from our operations to invest in new businesses and spectrum, fund expansion and modernization of our networks, pay dividends, service and repay external financing and, when appropriate, buy back shares of our outstanding common stock. Our sources of funds, primarily from operations and, to the extent necessary, from external financing arrangements, are sufficient to meet ongoing operating and investing requirements over the next 12 months and beyond.
Our cash and cash equivalents balance is $4.2 billion as of December 31, 2024. Our cash and cash equivalents are held both domestically and internationally, and are invested to maintain principal and provide liquidity. See "Quantitative and Qualitative Disclosures About Market Risk" for additional information regarding our foreign currency risk management strategies.
We expect that our capital spending requirements will continue to be financed primarily through internally generated funds. Debt or equity financing may be needed to fund additional investments or development activities, including, for example, to complete our acquisition of Frontier, or to maintain an appropriate capital structure to ensure our financial flexibility. Our external financing arrangements include credit facilities and other bank lines of credit, an active commercial paper program, vendor financing arrangements, issuances of registered debt or equity securities, U.S. retail medium-term notes and other securities that are privately-placed or offered overseas. In addition, we monetize certain receivables through asset-backed debt transactions.
Capital Expenditures
Our 2025 capital program includes capital to fund advanced networks and services, including expanding and adding capacity and density to our core networks, the ongoing deployment of C-Band spectrum, and advancing our network architecture. It will also support our broadband expansion plans including the launch of our fixed wireless access solution for multi-dwelling units. We anticipate cash requirements for our 2025 capital program to be between $17.5 billion and $18.5 billion.
Contractual Obligations and Commitments
We have various contractual obligations and commitments. The following represent our anticipated material cash requirements from known contractual and other obligations as of December 31, 2024:
•Long-term debt, including current maturities, commitments of $142.2 billion, of which $21.7 billion (including $3.3 billion of unsecured debt) are expected to be due within the next twelve months. Related interest payments are $66.3 billion, of which $5.8 billion, are expected to be due within the next twelve months. Items included in long-term debt with variable coupon rates exclude unamortized debt issuance costs, and are described in Note 7 to the consolidated financial statements.
•Operating lease obligations of $29.1 billion and Finance lease obligations of $2.5 billion, of which $5.0 billion and $954 million, respectively, are expected to be due within the next twelve months. In addition, Verizon has an obligation of $3.7 billion representing future minimum payments under the leaseback and sublease arrangements for our cell towers, of which $447 million is expected to be due within the next twelve months. See Note 6 to the consolidated financial statements for additional information.
•Unconditional purchase obligations, with terms in excess of one year, amount to $16.7 billion, of which $6.2 billion is expected to be due within the next twelve months. Items included in unconditional purchase obligations are primarily commitments to purchase content, network equipment, software and services, marketing services and other items which will be used or sold in the ordinary course of business. These amounts do not represent our entire anticipated purchases in the future, but represent only those items that are the subject of contractual obligations. We also purchase products and services as needed with no firm commitment. See Note 16 to the consolidated financial statements for additional information.
•Other long-term liabilities, including current maturities, of $3.9 billion, of which approximately $726 million is expected to be due within the next twelve months. Other long-term liabilities represent estimated postretirement benefit and qualified pension plan contributions. Qualified pension plan contributions include estimated minimum funding contributions. We expect that there will be no required pension funding through the end of 2025, subject to changes in market conditions. Postretirement benefit payments include future postretirement benefit payments. These estimated amounts: (1) are subject to change based on changes to assumptions and future plan performance, which could impact the timing and/or amounts of these payments; and (2) exclude expectations beyond 5 years due to uncertainty of the timing and amounts.
•We are not able to make a reasonable estimate of when the unrecognized tax benefits balance of $2.6 billion and related interest and penalties will be settled with the respective taxing authorities until the related tax audits are further developed or resolved.
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Consolidated Financial Condition |
| | | | | | | | | | | |
| (dollars in millions) |
| Years Ended December 31, | 2024 | | 2023 |
| Cash Flows Provided By (Used In) | | | |
Operating activities | $ | 36,912 | | | $ | 37,475 | |
Investing activities | (18,674) | | | (23,432) | |
Financing activities | (17,100) | | | (14,657) | |
| Increase (decrease) in cash, cash equivalents and restricted cash | $ | 1,138 | | | $ | (614) | |
Cash Flows Provided By Operating Activities
Our primary source of funds continues to be cash generated from operations. Net cash provided by operating activities decreased $563 million during 2024 compared to 2023 primarily due to changes in working capital, partially offset by an increase in earnings and an increase in Other, net cash flow from operating activities.
Changes in current assets and liabilities, net of effects from acquisition/disposition of businesses
The change in working capital was primarily driven by higher cash income taxes paid in the current period as well as higher interest expense and severance payments primarily related to separations under our voluntary separation program.
Other, Net
Other, net cash flow from operating activities during 2024 includes $2.0 billion of proceeds related to the transaction with Vertical Bridge REIT, LLC (Vertical Bridge). These proceeds were partially offset by discretionary contributions made in March 2024 in the aggregate amount of $365 million to our qualified pension plans. We expect that there will be no required pension funding through the end of 2025, subject to changes in market conditions.
Cash Flows Used In Investing Activities
Capital Expenditures
Capital expenditures continue to relate primarily to the use of capital resources to enhance the operating efficiency and productivity of our networks, maintain our existing infrastructure, facilitate the introduction of new products and services and enhance responsiveness to competitive challenges.
Capital expenditures, including capitalized software, were $17.1 billion and $18.8 billion for 2024 and 2023, respectively. Capital expenditures decreased approximately $1.7 billion during 2024, compared to 2023, primarily due to the completion of our accelerated $10 billion C-Band deployment program in 2023.
Acquisitions of Wireless Licenses
During 2024 and 2023, we made payments of $269 million and $4.3 billion, respectively, for obligations related to clearing costs and accelerated clearing incentives associated with Auction 107.
During 2024 and 2023, we recorded capitalized interest related to wireless licenses of $616 million and $1.4 billion, respectively.
Collateral Receipts (Payments) Related to Derivative Contracts, Net
During 2024, we made collateral payments of $712 million related to derivative contracts, net of receipts. During 2023, we received return of collateral posted of $880 million related to derivative contracts, net of payments. See Note 9 to the consolidated financial statements for additional information.
Cash Flows Used In Financing Activities
We seek to maintain a mix of fixed and variable rate debt to lower borrowing costs within reasonable risk parameters and to protect against earnings and cash flow volatility resulting from changes in market conditions. During 2024 and 2023, net cash used in financing activities was $17.1 billion and $14.7 billion, respectively.
2024
During 2024, our net cash used in financing activities of $17.1 billion was primarily driven by $20.3 billion used for repayments and repurchases of long-term borrowings (secured and unsecured) as well as finance lease obligations, $11.2 billion used for dividend payments, and $1.1 billion used for other financing activities. These cash flows used in financing activities were partially offset by $15.6 billion provided by proceeds from long-term borrowings, which included $12.4 billion of proceeds from our asset-backed debt transactions.
Proceeds from and Repayments and Repurchases of Long-Term Borrowings
At December 31, 2024, our total debt decreased to $144.0 billion compared to $150.7 billion at December 31, 2023. Our effective interest rate was 5.1% and 4.9% during the years ended December 31, 2024 and 2023, respectively. We have entered into interest rate swaps to achieve a targeted mix of fixed and variable rate debt, managing our exposure to changes in interest rates. See "Quantitative and Qualitative Disclosures About Market Risk" and Note 7 to the consolidated financial statements for additional information.
At December 31, 2024, approximately $30.5 billion, or 20.6%, of the aggregate principal amount of our total debt portfolio consisted of foreign denominated debt, primarily Euro and British Pound Sterling. We have entered into cross currency swaps on our foreign denominated debt in order to fix our future interest and principal payments in U.S. dollars and mitigate the impact of foreign currency transaction gains or losses. See "Quantitative and Qualitative Disclosures About Market Risk" for additional information.
Verizon may acquire debt securities issued by Verizon and its affiliates through open market purchases, redemptions, privately negotiated transactions, tender offers, exchange offers, or otherwise, upon such terms and at such prices as Verizon may from time to time determine, for cash or other consideration.
Other, Net
Other, net cash flow from financing activities during 2024 includes $830 million in proceeds related to financing obligations for the cell towers transaction with Vertical Bridge. These proceeds were partially offset by $431 million in payments related to vendor financing arrangements, $425 million in equity distribution payments made for controlled entities, $313 million in payments made under the sublease arrangement for our cell towers, $280 million in cash consideration payments to acquire additional interest in certain controlled entities and $243 million in payments for settlement of cross currency swaps. See Note 6 to the consolidated financial statements for additional information on the Vertical Bridge transaction. See Note 14 to the consolidated financial statements for additional information on noncontrolling interests.
Dividends
The Board of Directors of the Company assesses the level of our dividend payments on a periodic basis taking into account such factors as long-term growth opportunities, internal cash requirements and the expectations of our shareholders. During the third quarter of 2024, our Board of Directors increased our quarterly dividend payment by 1.9% to $0.6775 from $0.6650 per share in the preceding quarter. This is the eighteenth consecutive year that Company’s Board of Directors has approved a quarterly dividend increase.
As in prior periods, dividend payments were a significant use of capital resources. During 2024, we paid $11.2 billion in dividends.
2023
During 2023, our net cash used in financing activities of $14.7 billion was primarily driven by $11.0 billion used for dividend payments, $10.6 billion used for repayments and repurchases of long-term borrowings (secured and unsecured) as well as finance lease obligations and $1.5 billion used for other financing activities. These cash flows used in financing activities were
partially offset by $8.6 billion provided by proceeds from long-term borrowings, which included $6.6 billion of proceeds from our asset-backed debt transactions.
Proceeds from and Repayments and Repurchases of Long-Term Borrowings
At December 31, 2023, our total debt was $150.7 billion. During the year ended December 31, 2023, our effective interest rate was 4.9%. We have entered into interest rate swaps to achieve a targeted mix of fixed and variable rate debt, managing our exposure to changes in interest rates. See "Quantitative and Qualitative Disclosures About Market Risk" and Note 7 to the consolidated financial statements for additional information.
At December 31, 2023, approximately $33.7 billion, or 21.7%, of the aggregate principal amount of our total debt portfolio consisted of foreign denominated debt, primarily Euro and British Pound Sterling. We have entered into cross currency swaps on our foreign denominated debt in order to fix our future interest and principal payments in U.S. dollars and mitigate the impact of foreign currency transaction gains or losses. See "Quantitative and Qualitative Disclosures About Market Risk" for additional information.
Other, Net
Other, net cash flow from financing activities during 2023 includes $302 million in payments made under the sublease arrangement for our cell towers, $257 million in payments for contingent consideration related to the acquisition of TracFone Wireless, Inc. (TracFone) and $252 million in payments related to vendor financing arrangements. See Note 3 to the consolidated financial statements for additional information on the TracFone contingent considerations.
Dividends
During the third quarter of 2023, our Board of Directors increased our quarterly dividend payment by 1.9% to $0.6650 per share.
During 2023, we paid $11.0 billion in dividends.
Asset-Backed Debt
Cash collections on the receivables and on the underlying receivables related to the participation interest collateralizing our asset-backed debt securities are required at certain specified times to be placed into segregated accounts. Deposits to the segregated accounts are considered restricted cash and are included in Prepaid expenses and other and Other assets in our consolidated balance sheets.
Proceeds from our asset-backed debt transactions are reflected in Cash flows from financing activities in our consolidated statements of cash flows. The asset-backed debt issued is included in Debt maturing within one year and Long-term debt in our consolidated balance sheets.
See Note 7 to the consolidated financial statements for additional information.
Long-Term Credit Facilities
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | At December 31, 2024 |
| (dollars in millions) | Maturities | | Facility Capacity | | Unused Capacity | | Principal Amount Outstanding |
Verizon revolving credit facility(1) | 2028 | | $ | 12,000 | | | $ | 11,963 | | | $ | — | |
Various export credit facilities(2) | 2025 - 2031 | | 10,000 | | | — | |
| 5,441 | |
| Total | | | $ | 22,000 | | | $ | 11,963 | | | $ | 5,441 | |
(1) The revolving credit facility does not require us to comply with financial covenants or maintain specified credit ratings, and it permits us to borrow even if our business has incurred a material adverse change. The revolving credit facility provides for the issuance of letters of credit. As of December 31, 2024, there have been no drawings against the revolving credit facility since its inception.
(2) During 2024, there were no drawings from these facilities. During 2023, we drew down $1.0 billion from these facilities. Borrowings under certain of these facilities are amortized semi-annually in equal installments up to the applicable maturity dates. Maturities reflect maturity dates of principal amounts outstanding. Any amounts borrowed under these facilities and subsequently repaid cannot be reborrowed.
In March 2024, we amended our $9.5 billion revolving credit facility to increase the capacity to $12.0 billion and extended its maturity to 2028.
Common Stock
Common stock has been used from time to time to satisfy some of the funding requirements of employee and shareholder plans. During the years ended December 31, 2024 and 2023, we issued 5.4 million and 4.4 million shares of common stock from treasury stock, which had aggregate values of $238 million and $192 million, respectively.
In February 2020, the Board of Directors of the Company authorized a share buyback program to repurchase up to 100 million shares of our common stock. The program will terminate when the aggregate number of shares purchased reaches 100 million, or a new share repurchase plan superseding the current plan is authorized, whichever is sooner. The program permits Verizon to repurchase shares over time, with the amount and timing of repurchases depending on market conditions and corporate needs. There were no repurchases of common stock during 2024 and 2023 under our authorized share buyback program.
Credit Ratings
Verizon’s credit ratings did not change in 2024 or 2023.
Securities ratings assigned by rating organizations are expressions of opinion and are not recommendations to buy, sell or hold securities. A securities rating is subject to revision or withdrawal at any time by the assigning rating organization. Each rating should be evaluated independently of any other rating.
Covenants
Our credit agreements contain covenants that are typical for large, investment grade companies. These covenants include requirements to pay interest and principal in a timely fashion, pay taxes, maintain insurance with responsible and reputable insurance companies, preserve our corporate existence, keep appropriate books and records of financial transactions, maintain our properties, provide financial and other reports to our lenders, limit pledging and disposition of assets and mergers and consolidations, and other similar covenants.
We and our consolidated subsidiaries are in compliance with all of our restrictive covenants in our debt agreements.
Change In Cash, Cash Equivalents and Restricted Cash
Our Cash and cash equivalents at December 31, 2024 totaled $4.2 billion, a $2.1 billion increase compared to December 31, 2023, primarily as a result of the factors discussed above.
Restricted cash at December 31, 2024 totaled $441 million, a $991 million decrease compared to restricted cash at December 31, 2023, primarily related to cash collections on certain receivables and on the underlying receivables related to the participation interest that are required at certain specified times to be placed into segregated accounts. The decrease of $991 million in restricted cash was primarily due to a change in the timing on when cash collections on certain receivables collateralizing our asset-backed debt securities are required to be placed into segregated accounts.
Free Cash Flow
Free cash flow is a non-GAAP financial measure that reflects an additional way of viewing our liquidity that, we believe, when viewed with our GAAP results, provides management, investors and other users of our financial information with a more complete understanding of factors and trends affecting our cash flows. Free cash flow is calculated by subtracting capital expenditures (including capitalized software) from net cash provided by operating activities. We believe it is a more conservative measure of cash flow since capital expenditures are necessary for ongoing operations. Free cash flow has limitations due to the fact that it does not represent the residual cash flow available for discretionary expenditures. For example, free cash flow does not incorporate payments made on finance lease obligations or cash payments for business acquisitions or wireless licenses. Therefore, we believe it is important to view free cash flow as a complement to our entire consolidated statements of cash flows.
The following table reconciles net cash provided by operating activities to free cash flow:
| | | | | | | | | | | |
| | (dollars in millions) |
| Years Ended December 31, | 2024 | | 2023 |
| Net cash provided by operating activities | $ | 36,912 | | | $ | 37,475 | |
| Less Capital expenditures (including capitalized software) | 17,090 | | | 18,767 | |
| Free cash flow | $ | 19,822 | | | $ | 18,708 | |
The increase in free cash flow during 2024 is a reflection of the decrease in capital expenditures, partially offset by the decrease in operating cash flows, both of which are discussed above.
Employee Benefit Plans Funded Status and Contributions
Employer Contributions
We operate numerous qualified and nonqualified pension plans and other postretirement benefit plans. These plans primarily relate to our domestic business units. During 2024, we made discretionary contributions in the aggregate amount of $365 million to our qualified pension plans. During 2023, we made a discretionary contribution of $200 million to one of our qualified pension plans. During 2024 and 2023, we made contributions of $56 million and $52 million to our nonqualified pension plans, respectively.
Our overall investment strategy is to achieve a mix of assets that allows us to meet projected benefit payments while taking into consideration risk and return. In an effort to reduce the risk of our portfolio strategy and better align assets with liabilities, we have adopted a liability driven pension strategy that seeks to better match the interest rate sensitivity of the liability hedging assets with the interest rate sensitivity of the liability. We expect that the strategy will reduce the likelihood that assets will decline at a time when liabilities increase (referred to as liability hedging), with the goal to reduce the risk of underfunding to the plan and its participants and beneficiaries. Over time, as the asset allocation shifts to more liability hedging assets, this strategy will generally result in lower expected asset returns. For 2025, we expect no required qualified pension plan contributions and insignificant nonqualified pension plan contributions.
Contributions to our other postretirement benefit plans generally relate to payments for benefits on an as-incurred basis since these other postretirement benefit plans do not have funding requirements similar to the pension plans. We contributed $935 million and $936 million to our other postretirement benefit plans in 2024 and 2023, respectively. Contributions to our other postretirement benefit plans are estimated to be approximately $726 million in 2025.
Leasing Arrangements
See Note 6 to the consolidated financial statements for additional information related to leasing arrangements.
Guarantees
We guarantee the debentures of our operating telephone company subsidiaries. See Note 7 to the consolidated financial statements for additional information.
In connection with the execution of agreements for the sale of businesses and investments, Verizon ordinarily provides representations and warranties to the purchasers pertaining to a variety of nonfinancial matters, such as ownership of the securities being sold, as well as financial losses. See Note 16 to the consolidated financial statements for additional information.
As of December 31, 2024, letters of credit totaling approximately $816 million, which were executed in the normal course of business and support several financing arrangements and payment obligations to third parties, were outstanding. See Note 16 to the consolidated financial statements for additional information.
Other Future Obligations
As of December 31, 2024, Verizon had 28 renewable energy purchase agreements with third parties for a total of approximately 3.7 gigawatts of anticipated renewable energy capacity across multiple states. See Note 16 to the consolidated financial statements for additional information.
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Critical Accounting Estimates |
Critical Accounting Estimates
A summary of the critical accounting estimates used in preparing our financial statements are as follows:
Wireless Licenses and Goodwill
Wireless licenses and goodwill are a significant component of our consolidated assets. Both our wireless licenses and goodwill are treated as indefinite-lived intangible assets and, therefore are not amortized, but rather are tested for impairment annually in the fourth fiscal quarter, unless there are events requiring an earlier assessment or changes in circumstances during an interim period suggesting impairment indicators are present. We believe our estimates and assumptions are reasonable and represent appropriate marketplace considerations as of the valuation date. Although we use consistent methodologies in developing the assumptions and estimates underlying the fair value calculations used in our impairment tests, these estimates and assumptions are uncertain by nature, may change over time and can vary from actual results. It is possible that in the future there may be changes in our estimates and assumptions, including the timing and amount of future cash flows, margins, growth rates, market participant assumptions, comparable benchmark companies and related multiples and discount rates, which could result in different fair value estimates. Significant and adverse changes to any one or more of the above-noted estimates and assumptions could result in an impairment to our wireless licenses and goodwill impairment for one or more of our reporting units.
Wireless Licenses
The carrying value of our wireless licenses was approximately $156.6 billion as of December 31, 2024. We aggregate our wireless licenses into one single unit of accounting, as we utilize our wireless licenses on an integrated basis as part of our nationwide wireless network. Our wireless licenses provide us with the exclusive right to utilize certain radio frequency spectrum to provide wireless communication services. There are currently no legal, regulatory, contractual, competitive, economic or other factors that limit the useful life of our wireless licenses.
We test our wireless licenses for potential impairment annually or more frequently if impairment indicators are present. We have the option to first perform a qualitative assessment to determine whether it is necessary to perform a quantitative impairment test. However, we may elect to bypass the qualitative assessment in any period and proceed directly to performing the quantitative impairment test. It is our policy to perform quantitative impairment assessment at least every three years.
Our quantitative impairment assessment consisted of comparing the estimated fair value of our aggregate wireless licenses to the aggregated carrying amount as of the test date. Under our quantitative assessment, we estimated the fair value of our wireless licenses using the Greenfield approach. The Greenfield approach is an income based valuation approach that values the wireless licenses by calculating the cash flow generating potential of a hypothetical start-up company that goes into business with no assets except the wireless licenses to be valued. A discounted cash flow analysis is used to estimate what a marketplace participant would be willing to pay to purchase the aggregated wireless licenses as of the valuation date. As a result, we were required to make significant estimates about future cash flows and profitability specifically associated with our wireless licenses, an appropriate discount rate based on the risk associated with those estimated cash flows and assumed terminal value and growth rates. We considered current and expected future economic conditions, current and expected availability of wireless network technology and infrastructure and related equipment and the costs thereof as well as other relevant factors in estimating future cash flows and profitability. The discount rate represented our estimate of the weighted-average cost of capital (WACC), or expected return, that a marketplace participant would have required as of the valuation date and includes a risk premium associated with the current and expected economic conditions as of the valuation date. We developed the discount rate based on our consideration of the cost of debt and equity of a group of guideline companies as of the valuation date. The terminal value growth rate represented our estimate of the marketplace's long-term growth rate.
During the fourth quarter of 2023, we performed a qualitative impairment assessment as our annual impairment test to determine whether it is more likely than not that the fair value of our wireless licenses was less than the carrying amount. As part of our qualitative assessment we considered several factors including the enterprise value of our combined wireless business, macroeconomic conditions (including changes in interest rates and discount rates), industry and market considerations (including industry revenue and EBITDA margin results, projections and recent merger and acquisition activity), the recent and projected financial performance of our combined wireless business as a whole, as well as other factors including the result of our last quantitative assessment performed in 2021. Our annual impairment test in 2023 indicated that it is more likely than not that the fair value of our wireless licenses remained above their carrying value and, therefore, did not result in an impairment.
During the fourth quarter of 2024, we performed a quantitative impairment assessment in accordance with our policy. The quantitative impairment assessment we performed during the fourth quarter of 2024 indicated that the fair value of our wireless licenses is substantially in excess of their carrying value and, therefore, did not result in an impairment. In the event of a 10% decline in the fair value of our wireless licenses, the fair value would have still exceeded their carrying value. We do not believe reasonable changes in significant estimates would change the outcome to this quantitative assessment. For instance, if either the terminal value growth rate declined by 50 basis points (bps) or if the WACC increased by 50 bps, the fair value of wireless licenses would still exceed their carrying value.
Goodwill
At both December 31, 2024 and 2023, the balance of our goodwill was approximately $22.8 billion, of which $21.2 billion was in our Consumer reporting unit and $1.7 billion was in our Business reporting unit.
To determine if goodwill is potentially impaired, we have the option to perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If we elect not to conduct the qualitative assessment or if indications of a potential impairment exist, the determination of whether an impairment has occurred requires the fair value of each reporting unit to be assessed. It is our policy to perform quantitative impairment assessments at least every three years.
Under the qualitative assessment, we consider several factors, including the enterprise value of the reporting unit from the last quantitative test and the excess of fair value over carrying value from this test, macroeconomic conditions (including changes in interest rates and discount rates), industry and market considerations (including industry revenue and EBITDA margin results, projections and recent merger and acquisition activity), the recent and projected financial performance of the reporting unit, as well as other factors.
Under the quantitative assessment, the fair value of the reporting unit is calculated using an average of the market approach and a discounted cash flow method, as a form of the income approach. The market approach includes the use of comparative multiples to complement discounted cash flow results. The discounted cash flow method is based on the present value of two
components-projected cash flows and a terminal value. The terminal value represents the expected normalized future cash flows of the reporting unit beyond the cash flows from the discrete projection period. The fair value of the reporting unit using the income approach is calculated based on the sum of the present value of the cash flows from the discrete period and the present value of the terminal value. The discount rate represents our estimate of the WACC, or expected return, that a marketplace participant would have required as of the valuation date. The application of our goodwill impairment test requires key assumptions underlying our valuation model. The discounted cash flow analysis factors in assumptions on discount rates and terminal growth rates to reflect risk profiles of key strategic revenue and cost initiatives, as well as revenue and EBITDA growth relative to history and market trends and expectations. The market multiples approach reflects significant judgment involved in the selection of comparable public company multiples and benchmarks. The selection of companies and multiples is influenced by differences in growth and profitability, and volatility in market prices of peer companies. These valuation inputs are inherently judgmental, and an adverse change in one or a combination of these inputs could result in a goodwill impairment.
During the fourth quarter of 2023, we performed a qualitative impairment assessment for our Consumer reporting unit. Our qualitative assessment indicated that it was more likely than not that the fair value of our Consumer reporting unit exceeded its carrying value and, therefore, did not result in an impairment.
During the fourth quarter of 2024, we performed a quantitative impairment assessment for our Consumer reporting unit in accordance with our policy. We applied a combination of a market approach and a discounted cash flow method reflecting current assumptions and inputs, including our revised projections, discount rate and expected growth rates. Our assessment indicated that the fair value of our Consumer reporting unit substantially exceeded its carrying value and, therefore, did not result in an impairment. In the event of a 10% decline in the fair value of our Consumer reporting unit, the fair value of the Consumer reporting unit would have still exceeded its book value. We do not believe reasonable changes in significant assumptions would change the outcome to this quantitative assessment. For instance, if either the terminal value growth rate declined by 50 bps or if the discount rate increased by 50 bps, the fair value of our Consumer reporting unit would still exceed its carrying value.
During the fourth quarter of 2023, we performed a quantitative impairment assessment for our Business reporting unit given the low excess of fair value over carrying value identified in our 2022 annual impairment assessment and increased competitive and market pressures experienced throughout 2023. These pressures resulted in lower projected cash flows primarily driven by secular declines in wireline services and products across our Business customer groups. In connection with Verizon’s annual budget process in the fourth quarter of 2023, leadership completed a comprehensive five-year strategic planning review of our Business reporting unit resulting in declines in financial projections driven by market dynamics as compared to the prior year five-year strategic planning cycle. The revised projections were used as a key input into the Business reporting unit’s annual goodwill impairment test performed in the fourth quarter of 2023. In addition, changes in the macroeconomic environment, including interest rate and inflationary pressures also impacted the fair value of the reporting unit. We applied a combination of a market approach and a discounted cash flow method reflecting current assumptions and inputs, including our revised projections, discount rate and expected growth rates, which resulted in the determination that the fair value of our Business reporting unit was less than its carrying amount. As a result, in the fourth quarter of 2023, we recorded a noncash goodwill impairment charge of approximately $5.8 billion ($5.8 billion after-tax) in our consolidated statement of income. The goodwill balance of the Business reporting unit was approximately $7.5 billion prior to the occurrence of this impairment charge.
During the fourth quarter of 2024, we performed a quantitative impairment assessment for our Business reporting unit given the impairment of the Business reporting unit's goodwill in the prior year. In addition, the Business reporting unit has continued to experience competitive and market pressures throughout 2024, that may persist over the near term. We applied a combination of a market approach and a discounted cash flow method reflecting current assumptions and inputs, including our revised projections, discount rate and expected growth rates, which indicated that the fair value of our Business reporting unit exceeded its carrying value and, therefore, did not result in an impairment. At the goodwill impairment measurement date of October 31, 2024, our Business reporting unit had a fair value that exceeded its carrying amount by approximately 8% and remains susceptible to future impairment risk. We do not anticipate reasonable changes in significant assumptions to change the outcome of the quantitative impairment assessment. For instance, if either the terminal value growth rate declined by 50 bps, or if the discount rate increased by 50 bps, or if the EBITDA margin decreased by 100 basis points, the fair value of our Business reporting unit would still exceed its carrying value. However, management believes there is a continued risk that our Business reporting unit may be required to recognize an impairment charge in the future. As of December 31, 2024, $1.7 billion of goodwill was allocated to our Business reporting unit. See Note 4 to the consolidated financial statements for additional information.
A projected sustained decline in the reporting unit's revenues and earnings could have a significant negative impact on its fair value and could result in future impairment charges. Such a decline could be driven by, among other things: (1) decreases in sales volumes or long-term growth rate as a result of competitive pressures or other factors; or (2) the reporting unit's inability to achieve or delays in achieving its goals or strategic initiatives. Adverse changes to macroeconomic factors, such as increases in long-term interest rates, would also negatively impact the fair value of the reporting unit.
Pension and Other Postretirement Benefit Plans
We maintain benefit plans for most of our employees, including, for certain employees, pension and other postretirement benefit plans. Benefit plan assumptions, including the discount rate used, the long-term rate of return on plan assets, the determination of the substantive plan and health care trend rates are periodically updated and impact the amount of benefit plan income,
expense, assets and obligations. Changes to one or more of these assumptions could significantly impact our accounting for pension and other postretirement benefits.
In determining pension and other postretirement obligations, the weighted-average discount rate was selected to approximate the composite interest rates available on a selection of high-quality bonds available in the market at December 31, 2024. The bonds selected had maturities that coincided with the time periods during which benefit payments are expected to occur, were non-callable (or callable with certain selection criteria met) and available in sufficient quantities to ensure marketability (at least $300 million par outstanding). Bond yields are subject to uncertainty for a number of reasons including corporate performance, credit rating downgrades and upgrades, government fiscal policy decisions, and general market volatility. The expected long-term rates of return on plan assets used in determining Verizon’s pension and other postretirement obligations are based on expectations for future investment returns for the plans’ asset allocation. The rates are subject to uncertainty for a number of reasons including corporate performance, credit ratings, monetary policy, inflation, exchange rates, investor behavior and general market volatility.
A sensitivity analysis of the impact of changes in the discount rate and the long-term rate of return on plan assets on the benefit obligations and expense (income) recorded, as well as an increase or a decrease in the actual versus expected return on plan assets as of December 31, 2024 and for the year then ended pertaining to Verizon’s pension and postretirement benefit plans, is provided in the table below. The amounts in the table below related to discount rate changes are gross impacts on benefit obligations and expense, and do not reflect changes in asset values as a result of interest rate changes, for which our pension plan is highly hedged.
| | | | | | | | |
| (dollars in millions) | Percentage point
change | Increase/(Decrease) at December 31, 2024 |
| Pension plans discount rate | +0.50 | $ | (410) | |
| -0.50 | 451 | |
| Rate of return on pension plan assets | +1.00 | (78) | |
| -1.00 | 78 | |
| Postretirement plans discount rate | +0.50 | (450) | |
| -0.50 | 486 | |
| Rate of return on postretirement plan assets | +1.00 | (4) | |
| -1.00 | 4 | |
|
|
In addition to our liability hedging assets, we also employ an interest rate hedging strategy to further minimize the impact of discount rate changes on the funded ratio of the pension plan. While the target hedge ratio varies depending on the funded status of the plan and the level of interest rates, the target hedge ratio was 60% at December 31, 2024, limiting volatility.
The annual measurement date for both our pension and other postretirement benefits is December 31. We use the full yield curve approach to estimate the interest cost component of net periodic benefit cost for pension and other postretirement benefits. The full yield curve approach refines our estimate of interest cost by applying the individual spot rates from a yield curve composed of the rates of return on several hundred high-quality fixed income corporate bonds available at the measurement date. These individual spot rates align with the timing of each future cash outflow for benefit payments and therefore provide a more precise estimate of interest cost.
See Note 11 to the consolidated financial statements for additional information.
Income Taxes
Our current and deferred income taxes and associated valuation allowances are impacted by events and transactions arising in the normal course of business as well as in connection with the adoption of new accounting standards, changes in tax laws and rates, acquisitions and dispositions of businesses and non-recurring items. As a global commercial enterprise, our income tax rate and the classification of income taxes can be affected by many factors, including estimates of the timing and realization of deferred income tax assets and the timing and amount of income tax payments. We account for tax benefits taken or expected to be taken in our tax returns in accordance with the accounting standard relating to the uncertainty in income taxes, which requires the use of a two-step approach for recognizing and measuring tax benefits taken or expected to be taken in a tax return. We review and adjust our liability for unrecognized tax benefits based on our best judgment given the facts, circumstances and information available at each reporting date. To the extent that the final outcome of these tax positions is different than the amounts recorded, such differences may impact income tax expense and actual tax payments. We recognize any interest and penalties accrued related to unrecognized tax benefits in income tax expense. Actual tax payments may materially differ from estimated liabilities as a result of changes in tax laws as well as unanticipated transactions impacting related income tax balances. See Note 12 to the consolidated financial statements for additional information.
Property, Plant and Equipment
Our Property, plant and equipment balance represents a significant component of our consolidated assets. We record property, plant and equipment at cost. We depreciate property, plant and equipment on a straight-line basis over the estimated useful life of the assets. The estimated useful life is subject to change due to a variety of factors such as change in asset capacity or
performance, technical obsolescence, market expectations and competitive impacts. In connection with our ongoing review of the estimated useful lives of property, plant and equipment during 2024, we determined that the estimated useful life of our property, plant and equipment would remain unchanged. We expect that a one year increase in estimated useful lives of our property, plant and equipment would result in a decrease to our 2024 depreciation expense of $2.4 billion and that a one year decrease would result in an increase of approximately $3.6 billion in our 2024 depreciation expense.
Accounts Receivable
Accounts receivable are recorded at amortized cost less an allowance for credit losses that are not expected to be recovered. The gross amount of accounts receivable and corresponding allowance for credit losses are presented separately in the consolidated balance sheets. We maintain allowances for credit losses resulting from the expected failure or inability of our customers to make required payments. We recognize the allowance for credit losses at inception and reassess quarterly based on management’s expectation of the asset’s collectability. The allowance is based on multiple factors including historical experience with bad debts, the credit quality of the customer base, the aging of such receivables and current macroeconomic conditions, as well as management’s expectations of conditions in the future, as applicable. The impact of these factors on the allowance involves significant level of estimation and is subject to uncertainty. Our allowance for credit losses is based on management’s assessment of the collectability of assets pooled together with similar risk characteristics.
We record an allowance to reduce the receivables to the amount that is expected to be collectible. For device payment plan agreement receivables, we record bad debt expense based on a default and loss calculation using our proprietary loss model. The expected loss rate is determined based on customer credit scores and other qualitative factors as noted above. The loss rate is assigned individually on a customer by customer basis and the custom credit scores are then aggregated by vintage and used in our proprietary loss model to calculate the weighted-average loss rate used for determining the allowance balance. The weighted-average expected loss rate increased 0.75% at December 31, 2024 as compared to the rate at December 31, 2023. We expect that an increase or decrease of 0.25% in the weighted-average loss rate would result in a change of $160 million in bad debt expense.
We monitor the collectability of our wireless service receivables as one overall pool. Wireline service receivables are disaggregated and pooled by the following types of customers and related contracts: consumer, small and medium business, enterprise, public sector and wholesale. For wireless service receivables and wireline consumer and small and medium business receivables, the allowance is calculated based on a 12 month rolling average write-off balance multiplied by the average life-cycle of an account from billing to write-off. The risk of loss is assessed over the contractual life of the receivables and is adjusted based on the historical loss amounts for current and future conditions based on management’s qualitative considerations. For enterprise, public sector and wholesale wireline receivables, the allowance for credit losses is based on historical write-off experience and individual customer credit risk, if applicable. We consider multiple factors in determining the allowance as discussed above.
If there is a deterioration of our customers’ financial condition or if future actual default rates on receivables in general differ from those currently anticipated, we may have to adjust our allowance for credit losses, which would affect earnings in the period the adjustments are made. See Note 8 to the consolidated financial statements for additional information.
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Acquisitions and Divestitures |
Spectrum License Transactions
From time to time we enter into agreements to buy, sell or exchange spectrum licenses. We believe these spectrum license transactions have allowed us to continue to enhance the reliability of our wireless network while also resulting in a more efficient use of spectrum.
In February 2021, the Federal Communications Commission (FCC) concluded Auction 107 for C-Band wireless spectrum. In accordance with the rules applicable to the auction, Verizon is required to make payments for our allocable share of clearing costs incurred by, and incentive payments due to, the incumbent license holders associated with the auction, which are estimated to be $7.5 billion. During 2024, 2023 and 2022, we made payments of $269 million, $4.3 billion and $1.6 billion, respectively, for obligations related to clearing costs and accelerated clearing incentives. The carrying value of the wireless spectrum won in Auction 107 consists of all payments required to participate and purchase licenses in the auction, including Verizon’s allocable share of clearing costs incurred by, and incentive payments due to, the incumbent license holders associated with the auction that we are obligated to pay in order to acquire the licenses, as well as capitalized interest to the extent qualifying activities have occurred.
In March 2022, Verizon signed agreements with satellite operators in which operators agreed to clear C-Band spectrum in certain markets and frequencies ahead of the previously expected timeframe. During 2022, Verizon incurred costs associated with these agreements of approximately $340 million, of which $310 million was paid as of December 31, 2022 and the remainder was paid in 2023. This early clearance accelerated Verizon's access to more spectrum in a number of key markets to support its 5G network initiatives.
On October 17, 2024, Verizon entered into a license purchase agreement to acquire select spectrum licenses of United States Cellular Corporation and certain of its subsidiaries (UScellular) for total consideration of $1.0 billion, subject to certain potential adjustments. The closing of this transaction is subject to the receipt of regulatory approvals and other closing conditions, including the consummation of UScellular's proposed sale of its wireless operations and select spectrum assets to T-Mobile US, Inc., and the termination of certain post-closing arrangements with respect to that sale.
See Note 3 to the consolidated financial statements for additional information regarding our spectrum license transactions.
TracFone Wireless, Inc.
On November 23, 2021 (the Acquisition Date), we completed the acquisition of TracFone. Verizon acquired all of TracFone's outstanding stock in exchange for approximately $3.5 billion in cash, net of cash acquired and working capital and other adjustments, 57,596,544 shares of common stock of the Company valued at approximately $3.0 billion, and up to an additional $650 million in future cash contingent consideration related to the achievement of certain performance measures and other commercial arrangements. The fair value of the common stock was determined on the basis of its closing market price on the Acquisition Date. The estimated fair value of the contingent consideration as of the Acquisition Date was approximately $560 million and represented a Level 3 measurement. The contingent consideration payable was based on the achievement of certain revenue and operational targets, measured over a two year earn out period. Contingent consideration payments were completed in January of 2024.
During 2024 and 2023, Verizon made payments of $52 million and $257 million, respectively, related to the contingent consideration, which are reflected in Cash flows from financing activities in our consolidated statements of cash flows. See Note 3 and Note 9 to the consolidated financial statements for additional information.
Frontier Communications Parent, Inc.
On September 4, 2024, Verizon entered into an Agreement and Plan of Merger (the Merger Agreement) to acquire Frontier, a U.S. provider of broadband internet and other communication services. The transaction is structured as a merger of the Company's subsidiary with and into Frontier, as a result of which Frontier will become a wholly owned subsidiary of the Company and shares of Frontier common stock outstanding immediately prior to the effective time of merger (subject to certain limited exceptions) will be cancelled and converted into the right to receive a per share merger consideration of $38.50, in cash. In November 2024, Frontier shareholders approved the transaction. Consummation of the transaction is subject to the receipt of certain regulatory approvals and other customary closing conditions. Under certain circumstances, if the Merger Agreement is terminated, Frontier may be required to pay Verizon a termination fee of $320 million. Under certain other specified circumstances, Verizon may be required to pay Frontier a termination fee of $590 million.
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| Item 7A. Quantitative and Qualitative Disclosures About Market Risk |
We are exposed to various types of market risk in the normal course of business, including the impact of interest rate changes, foreign currency exchange rate fluctuations, changes in investment, equity and commodity prices and changes in corporate tax rates. We employ risk management strategies, which may include the use of a variety of derivatives including cross currency swaps, forward starting interest rate swaps, interest rate swaps, interest rate caps, treasury rate locks and foreign exchange forwards. We do not hold derivatives for trading purposes.
It is our general policy to enter into interest rate, foreign currency and other derivative transactions only to the extent necessary to achieve our desired objectives in optimizing exposure to various market risks. Our objectives include maintaining a mix of fixed and variable rate debt to lower borrowing costs within reasonable risk parameters and to protect against earnings and cash flow volatility resulting from changes in market conditions. We do not hedge our market risk exposure in a manner that would completely eliminate the effect of changes in interest rates and foreign exchange rates on our earnings.
Counterparties to our derivative contracts are major financial institutions with whom we have negotiated derivatives agreements (ISDA master agreements) and credit support annex (CSA) agreements which provide rules for collateral exchange. The CSA agreements contain fixed cap amounts or rating based thresholds such that we or our counterparties may be required to hold or post collateral based upon changes in outstanding positions as compared to established thresholds or caps and changes in credit ratings. We do not offset fair value amounts recognized for derivative instruments and fair value amounts recognized for the right to reclaim cash collateral or the obligation to return cash collateral arising from derivative instruments recognized at fair value. At both December 31, 2024 and 2023, we did not hold any collateral. At December 31, 2024 and 2023, we posted $2.1 billion and $1.4 billion, respectively, of collateral related to derivative contracts under collateral exchange agreements, which were recorded as Prepaid expenses and other in our consolidated balance sheets. While we may be exposed to credit losses due to the nonperformance of our counterparties, we consider the risk remote and do not expect that any such nonperformance would result in a significant effect on our results of operations or financial condition due to our diversified pool of counterparties. See Note 9 to the consolidated financial statements for additional information regarding the derivative portfolio.
We are exposed to changes in interest rates, primarily on our short-term debt and the portion of long-term debt that carries floating interest rates. As of December 31, 2024, approximately 76% of the aggregate principal amount of our total debt portfolio consisted of fixed-rate indebtedness, including the effect of interest rate swap agreements designated as hedges. The impact of a 100-basis-point change in interest rates affecting our floating rate debt would result in a change in annual interest expense, including our interest rate swap agreements that are designated as hedges, of approximately $362 million. The interest rates on our existing long-term debt obligations are unaffected by changes to our credit ratings.
The table that follows summarizes the fair values of our long-term debt, including current maturities, and interest rate swap derivatives as of December 31, 2024 and 2023. The table also provides a sensitivity analysis of the estimated fair values of these financial instruments assuming 100-basis-point upward and downward shifts in the yield curve. Our sensitivity analysis does not include the fair values of our commercial paper and bank loans, if any, because they are not significantly affected by changes in market interest rates.
| | | | | | | | | | | | | | | | | |
| | | | | (dollars in millions) |
| Long-term debt and related derivatives | Fair Value | | Fair Value assuming
+ 100 basis point shift | | Fair Value assuming
- 100 basis point shift |
| At December 31, 2024 | $ | 142,201 | | | $ | 135,521 | | | $ | 149,956 | |
| At December 31, 2023 | 150,058 | | | 142,551 | | | 158,912 | |
Interest Rate Swaps
We enter into interest rate swaps to achieve a targeted mix of fixed and variable rate debt. We principally receive fixed rates and pay variable rates, resulting in a net increase or decrease to Interest expense. These swaps are designated as fair value hedges and hedge against interest rate risk exposure of designated debt issuances. At December 31, 2024 and 2023, the fair value of the liability of these contracts was $5.3 billion and $4.5 billion, respectively. At December 31, 2024 and 2023, the total notional amount of the interest rate swaps was $24.0 billion and $26.1 billion, respectively.
The functional currency for our foreign operations is primarily the local currency. The translation of income statement and balance sheet amounts of our foreign operations into U.S. dollars is recorded as cumulative translation adjustments, which are included in Accumulated other comprehensive loss in our consolidated balance sheets. Gains and losses on foreign currency transactions are recorded in the consolidated statements of income. At December 31, 2024, our primary translation exposure was to the British Pound Sterling, Euro, Australian Dollar and Swedish Krona.
Cross Currency Swaps
We have entered into cross currency swaps to exchange our British Pound Sterling, Euro, Swiss Franc, Canadian Dollar and Australian Dollar-denominated cash flows into U.S. dollars and to fix our cash payments in U.S. dollars, as well as to mitigate the impact of foreign currency transaction gains or losses. The fair value of the asset of these contracts was $500 million and $762 million at December 31, 2024 and 2023, respectively. At December 31, 2024 and 2023, the fair value of the liability of these contracts was $2.7 billion and $2.1 billion, respectively. At December 31, 2024 and 2023, the total notional amount of the cross currency swaps was $32.1 billion and $33.5 billion, respectively.
Foreign Exchange Forwards
We also have foreign exchange forwards which we use as an economic hedge but for which we have elected not to apply hedge accounting. We entered into British Pound Sterling and Euro foreign exchange forwards to mitigate our foreign exchange rate risk related to non-functional currency denominated monetary assets and liabilities of international subsidiaries.
At both December 31, 2024 and 2023, the fair value of the asset and liability of these contracts was insignificant. At December 31, 2024 and 2023, the total notional amount of the foreign exchange forwards was $620 million and $1.1 billion, respectively.
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| Item 8. Financial Statements and Supplementary Data |
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Report of Independent Registered Public Accounting Firm |
To the Shareholders and the Board of Directors of Verizon Communications Inc.
Opinion on Internal Control Over Financial Reporting
We have audited Verizon Communications Inc. and subsidiaries’ (Verizon) internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Verizon maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of Verizon as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, cash flows, and changes in equity for each of the three years in the period ended December 31, 2024, and the related notes and financial statement schedule listed in the Index at Item 15(a) and our report dated February 12, 2025 expressed an unqualified opinion thereon.
Basis for Opinion
Verizon’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on Verizon’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to Verizon in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
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| /s/ | Ernst & Young LLP |
| Ernst & Young LLP |
| New York, New York |
| |
| February 12, 2025 |
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Report of Independent Registered Public Accounting Firm |
To the Shareholders and the Board of Directors of Verizon Communications Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Verizon Communications Inc. and subsidiaries (Verizon or the Company) as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, cash flows, and changes in equity for each of the three years in the period ended December 31, 2024, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Verizon at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), Verizon’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 12, 2025 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of Verizon’s management. Our responsibility is to express an opinion on Verizon’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to Verizon in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
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| Valuation of Employee Benefit Obligations |
| Description of the Matter | The Company sponsors several pension plans and other post-employment benefit plans. At December 31, 2024, the Company’s aggregate defined benefit pension obligation was $7.9 billion and exceeded the fair value of pension plan assets of $6.8 billion, resulting in an unfunded defined benefit pension obligation of $1.1 billion. Also, at December 31, 2024, the other postretirement benefits obligation was approximately $10.5 billion. As explained in Note 11 of the consolidated financial statements, the Company updates the estimates used to measure employee benefit obligations and plan assets in the fourth quarter and upon a remeasurement event to reflect the actual return on plan assets and updated actuarial assumptions.
Auditing the employee benefit obligations was complex due to the highly judgmental nature of the actuarial assumption relating to the discount rates used in the measurement process. This assumption had a significant effect on the projected benefit obligations. |
| | | | | |
| How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the employee benefits obligation valuation process. For example, we tested controls over management’s review of the employee benefit obligation calculations, the actuarial assumption relating to the discount rates and the data inputs provided to the actuary.
To test the employee benefit obligations, our audit procedures included, among others, evaluating the methodologies used, the actuarial assumption relating to the discount rates and the underlying data used by the Company. We compared the actuarial assumption used by management to historical trends, current economic factors and evaluated the change in the employee benefit obligations from prior year due to the change in service cost, interest cost, actuarial gains and losses, benefit payments, contributions and other activities. In addition, we involved an actuarial specialist to assist in evaluating management’s methodology for determining the discount rates that reflect the maturity and duration of the benefit payments and are used to measure the employee benefit obligations. As part of this assessment, we compared the projected cash flows to prior year projections and compared the current year benefits paid to the prior year projected cash flows. We also tested the completeness and accuracy of the underlying data. |
| | | | | |
| /s/ | Ernst & Young LLP |
| Ernst & Young LLP |
| We have served as Verizon's auditor since 2000. |
| New York, New York |
| |
| February 12, 2025 |
| | |
Consolidated Statements of Income |
Verizon Communications Inc. and Subsidiaries |
| | | | | | | | | | | | | | | | | |
| | (dollars in millions, except per share amounts) |
| Years Ended December 31, | 2024 | | 2023 | | 2022 |
| | | | | |
| Operating Revenues | | | | | |
Service revenues and other | $ | | | | $ | | | | $ | | |
Wireless equipment revenues | | | | | | | | |
| Total Operating Revenues | | | | | | | | |
| | | | | |
| Operating Expenses | | | | | |
Cost of services (exclusive of items shown below) | | | | | | | | |
Cost of wireless equipment | | | | | | | | |
| Selling, general and administrative expense | | | | | | | | |
Depreciation and amortization expense | | | | | | | | |
| Verizon Business Group goodwill impairment | | | | | | | | |
| Total Operating Expenses | | | | | | | | |
| | | | | |
| Operating Income | | | | | | | | |
| Equity in earnings (losses) of unconsolidated businesses | () | | | () | | | | |
| Other income (expense), net | | | | () | | | | |
| Interest expense | () | | | () | | | () | |
| Income Before Provision For Income Taxes | | | | | | | | |
| Provision for income taxes | () | | | () | | | () | |
| Net Income | $ | | | | $ | | | | $ | | |
| | | | | |
| Net income attributable to noncontrolling interests | $ | | | | $ | | | | $ | | |
| Net income attributable to Verizon | | | | | | | | |
| Net Income | $ | | | | $ | | | | $ | | |
| | | | | |
| Basic Earnings Per Common Share | | | | | |
| Net income attributable to Verizon | $ | | | | $ | | | | $ | | |
| Weighted-average shares outstanding (in millions) | | | | | | | | |
| | | | | |
| Diluted Earnings Per Common Share | | | | | |
| Net income attributable to Verizon | $ | | | | $ | | | | $ | | |
| Weighted-average shares outstanding (in millions) | | | | | | | | |
See Notes to Consolidated Financial Statements
| | |
Consolidated Statements of Comprehensive Income |
Verizon Communications Inc. and Subsidiaries |
| | | | | | | | | | | | | | | | | |
| | (dollars in millions) |
| Years Ended December 31, | 2024 | | 2023 | | 2022 |
| | | | | |
| Net Income | $ | | | | $ | | | | $ | | |
| Other Comprehensive Income (Loss), Net of Tax (Expense) Benefit | | | | | |
Foreign currency translation adjustments, net of tax of $(), $ and $() | () | | | | | | () | |
Unrealized gain on cash flow hedges, net of tax of $(), $() and $() | | | | | | | | |
Unrealized gain (loss) on fair value hedges, net of tax of $(), $() and $ | | | | | | | () | |
Unrealized gain (loss) on marketable securities, net of tax of $, $() and $ | () | | | | | | () | |
Defined benefit pension and postretirement plans, net of tax of $, $ and $ | () | | | () | | | () | |
| Other comprehensive income (loss) attributable to Verizon | | | | | | | () | |
| Total Comprehensive Income | $ | | | | $ | | | | $ | | |
| | | | | |
| Comprehensive income attributable to noncontrolling interests | $ | | | | $ | | | | $ | | |
| Comprehensive income attributable to Verizon | | | | | | | | |
| Total Comprehensive Income | $ | | | | $ | | | | $ | | |
See Notes to Consolidated Financial Statements
| | |
Consolidated Balance Sheets |
Verizon Communications Inc. and Subsidiaries |
| | | | | | | | | | | |
| (dollars in millions, except per share amounts) |
| At December 31, | 2024 | | 2023 |
| Assets | | | |
| Current assets | | | |
| Cash and cash equivalents | $ | | | | $ | | |
| Accounts receivable | | | | | |
Less Allowance for credit losses | | | | | |
| |
| Accounts receivable, net | | | | | |
| Inventories | | | | | |
| Prepaid expenses and other | | | | | |
| Total current assets | | | | | |
| | | |
| Property, plant and equipment | | | | | |
| Less Accumulated depreciation | | | | | |
| Property, plant and equipment, net | | | | | |
| | | |
| Investments in unconsolidated businesses | | | | | |
| Wireless licenses | | | | | |
| |
| Goodwill | | | | | |
| Other intangible assets, net | | | | | |
| Operating lease right-of-use assets | | | | | |
| Other assets | | | | | |
| Total assets | $ | | | | $ | | |
| | | |
| Liabilities and Equity | | | |
| Current liabilities | | | |
| Debt maturing within one year | $ | | | | $ | | |
| Accounts payable and accrued liabilities | | | | | |
| Current operating lease liabilities | | | | | |
| Other current liabilities | | | | | |
| Total current liabilities | | | | | |
| | | |
| Long-term debt | | | | | |
| Employee benefit obligations | | | | | |
| Deferred income taxes | | | | | |
| Non-current operating lease liabilities | | | | | |
| Other liabilities | | | | | |
| Total long-term liabilities | | | | | |
| | | |
| Commitments and Contingencies (Note 16) | | | |
| | | |
| Equity | | | |
Series preferred stock ($ par value; shares authorized; issued) | | | | | |
Common stock ($ par value; shares authorized in each period; shares issued in each period) | | | | | |
| Additional paid in capital | | | | | |
| Retained earnings | | | | | |
| Accumulated other comprehensive loss | () | | | () | |
Common stock in treasury, at cost ( and shares outstanding) | () | | | () | |
| Deferred compensation – employee stock ownership plans (ESOPs) and other | | | | | |
| Noncontrolling interests | | | | | |
| Total equity | | | | | |
| Total liabilities and equity | $ | | | | $ | | |
See Notes to Consolidated Financial Statements
| | |
Consolidated Statements of Cash Flows |
Verizon Communications Inc. and Subsidiaries |
| | | | | | | | | | | | | | | | | | | | |
| | | (dollars in millions) |
| Years Ended December 31, | | 2024 | | 2023 | | 2022 |
| | | | | | |
| Cash Flows from Operating Activities | | | | | | |
| Net Income | | $ | | | | $ | | | | $ | | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | |
| Depreciation and amortization expense | | | | | | | | | |
| Employee retirement benefits | | () | | | | | | () | |
| Deferred income taxes | | | | | | | | | |
| Provision for expected credit losses | | | | | | | | | |
| Equity in losses (earnings) of unconsolidated businesses, net of dividends received | | | | | | | | () | |
| | | | |
| Verizon Business Group goodwill impairment | | | | | | | | | |
Changes in current assets and liabilities, net of effects from acquisition/disposition of businesses: | | | | | | |
| Accounts receivable | | () | | | () | | | () | |
| Inventories | | () | | | | | | | |
| Prepaid expenses and other | | () | | | () | | | | |
| Accounts payable and accrued liabilities and Other current liabilities | | | | | | | | () | |
| | | | |
| Other, net | | | | | () | | | () | |
| Net cash provided by operating activities | | | | | | | | | |
| | | | | | |
| Cash Flows from Investing Activities | | | | | | |
| Capital expenditures (including capitalized software) | | () | | | () | | | () | |
| Cash received (paid) related to acquisitions of businesses, net of cash acquired | | | | | () | | | | |
| Acquisitions of wireless licenses | | () | | | () | | | () | |
| Collateral receipts (payments) related to derivative contracts, net | | () | | | | | | () | |
| Proceeds from disposition of business | | | | | | | | | |
| Other, net | | | | | | | | | |
| Net cash used in investing activities | | () | | | () | | | () | |
| | | | | | |
| Cash Flows from Financing Activities | | | | | | |
| Proceeds from long-term borrowings | | | | | | | | | |
| Proceeds from asset-backed long-term borrowings | | | | | | | | | |
| Net proceeds from (repayments of) short-term commercial paper | | | | | () | | | | |
| Repayments of long-term borrowings and finance lease obligations | | () | | | () | | | () | |
| Repayments of asset-backed long-term borrowings | | () | | | () | | | () | |
| Dividends paid | | () | | | () | | | () | |
| Other, net | | () | | | () | | | () | |
| Net cash used in financing activities | | () | | | () | | | () | |
| | | | | | |
| Increase (decrease) in cash, cash equivalents and restricted cash | | | | | () | | | () | |
| Cash, cash equivalents and restricted cash, beginning of period | | | | | | | | | |
| Cash, cash equivalents and restricted cash, end of period (Note 1) | | $ | | | | $ | | | | $ | | |
See Notes to Consolidated Financial Statements
| | |
Consolidated Statements of Changes in Equity |
Verizon Communications Inc. and Subsidiaries |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (dollars in millions, except per share amounts, and shares in thousands) |
| Years Ended December 31, | | | 2024 | | | | 2023 | | | | 2022 |
| | Shares | | Amount | | Shares | | Amount | | Shares | | Amount |
| | | | | | | | | | | |
| Common Stock | | | | | | | | | | | |
| Balance at beginning of year | | | | $ | | | | | | | $ | | | | | | | $ | | |
| | | | | | | | | |
| Balance at end of year | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
| Additional Paid In Capital | | | | | | | | | | | |
| Balance at beginning of year | | | | | | | | | | | | | | |
| | | | | | | | | |
Other (Note 14) | | | () | | | | | | | | | | () | |
| Balance at end of year | | | | | | | | | | | | | | |
| | | | | | | | | | | |
| Retained Earnings | | | | | | | | | | | |
| Balance at beginning of year | | | | | | | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| Net income attributable to Verizon | | | | | | | | | | | | | | |
Dividends declared ($, $, $ per share) | | | () | | | | | () | | | | | () | |
| Other | | | () | | | | | | | | | | () | |
| Balance at end of year | | | | | | | | | | | | | | |
| | | | | | | | | | | |
| Accumulated Other Comprehensive Income (Loss) | | | | | | | | | | | |
Balance at beginning of year attributable to Verizon | | | () | | | | | () | | | | | () | |
| | | | | | | | | |
| | | | | | | | | |
| Foreign currency translation adjustments | | | () | | | | | | | | | | () | |
| Unrealized gain on cash flow hedges | | | | | | | | | | | | | | |
| Unrealized gain (loss) on fair value hedges | | | | | | | | | | | | | () | |
| Unrealized gain (loss) on marketable securities | | | () | | | | | | | | | | () | |
| Defined benefit pension and postretirement plans | | | () | | | | | () | | | | | () | |
| Other comprehensive income (loss) | | | | | | | | | | | | | () | |
Balance at end of year attributable to Verizon | | | () | | | | | () | | | | | () | |
| | | | | | | | | | | |
| Treasury Stock | | | | | | | | | | | |
| Balance at beginning of year | () | | | () | | | () | | | () | | | () | | | () | |
| | | | | | | | | |
| Employee plans (Note 14) | | | | | | | | | | | | | | | | | |
| Shareholder plans (Note 14) | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
| Balance at end of year | () | | | () | | | () | | | () | | | () | | | () | |
| | | | | | | | | | | |
Deferred Compensation-ESOPs and Other | | | | | | | | | | | |
| Balance at beginning of year | | | | | | | | | | | | | | |
| Restricted stock equity grant | | | | | | | | | | | | | | |
| Amortization | | | () | | | | | () | | | | | () | |
| Balance at end of year | | | | | | | | | | | | | | |
| | | | | | | | | | | |
| Noncontrolling Interests | | | | | | | | | | | |
| Balance at beginning of year | | | | | | | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
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reportable segments that we operate and manage as strategic business units, Consumer and Business. Revenue is disaggregated by products and services within Consumer, and customer groups (Enterprise and Public Sector, Business Markets and Other, and Wholesale) within Business. See Note 13 for additional information on revenue by segment, including Corporate and other.
We also earn revenues that are not accounted for under Topic 606 from leasing arrangements (such as those for towers and equipment), captive reinsurance arrangements primarily related to wireless device insurance and the interest recognized when equipment is sold to the customer by an authorized agent under a device payment plan agreement. We have elected the practical expedient within Topic 842, to combine the lease and non-lease components for those customer arrangements under Topic 606 that involve customer premise equipment where we are the lessor. Revenues from arrangements that were not accounted for under Topic 606 were approximately $ billion, $ billion and $ billion for the years ended December 31, 2024, 2023 and 2022, respectively.
Remaining Performance Obligations
When allocating the total contract transaction price to identified performance obligations, a portion of the total transaction price may relate to service performance obligations which were not satisfied or are partially satisfied as of the end of the reporting period. Below we disclose information relating to these unsatisfied performance obligations. We apply the practical expedient available under Topic 606 that provides the option to exclude the expected revenues arising from unsatisfied performance obligations related to contracts that have an original expected duration of one year or less. This situation primarily arises with respect to certain month-to-month service contracts. At December 31, 2024, month-to-month service contracts represented approximately % of both our wireless postpaid contracts and our wireline Consumer and our Business Markets and Other contracts, compared to December 31, 2023, for which month-to-month service contracts represented approximately % of our wireless postpaid contracts and % of our wireline Consumer and our Business Markets and Other contracts.
Additionally, certain contracts provide customers the option to purchase additional services. The fees related to these additional services are recognized when the customer exercises the option (typically on a month-to-month basis).
Contracts for wireless services, with or without promotional credits that require maintenance of service, are generally either month-to-month and cancellable at any time, or considered to contain terms ranging from greater than to up to (typically under a device payment plan or a fixed-term plan). Additionally, customers may incur charges based on usage or additional optional services purchased in conjunction with entering into a contract that can be cancelled at any time and therefore are not included in the transaction price. The transaction price allocated to service performance obligations, which are not satisfied or are partially satisfied as of the end of the reporting period, are generally related to contracts that are not accounted for as month-to-month contracts.
Our Consumer group customers also include traditional wholesale resellers that purchase and resell wireless service under their own brands to their respective customers. Reseller arrangements generally include a stated contract term, which typically extends longer than and, in some cases, include a periodic minimum revenue commitment over the contract term for which revenues will be recognized in future periods.
Consumer customer contracts for wireline services are generally month-to-month; however, they may have a service term of or shorter than . Certain contracts with Business customers for wireline services extend into future periods, contain fixed monthly fees and usage-based fees, and can include annual commitments in each year of the contract or
or less.
Additionally, there are certain contracts with Business customers for wireline services that have a contractual minimum fee over the total contract term. We cannot predict the time period when revenue will be recognized related to those contracts; thus, they are excluded from the time bands below. These contracts have varying terms spanning over approximately ending in September 2053 and have aggregate contract minimum payments totaling $ billion.
At December 31, 2024, the transaction price related to unsatisfied performance obligations that are expected to be recognized for 2025, 2026 and thereafter was $ billion, $ billion and $ billion, respectively. Remaining performance obligation estimates are subject to change and are affected by several factors, including terminations and changes in the timing and scope of contracts, arising from contract modifications.
Accounts Receivable and Contract Balances
|
| (1) Balances do not include receivables related to the following: activity associated with certain vendor agreements, leasing arrangements (such as those for towers and equipment), captive reinsurance arrangements primarily related to wireless device insurance and device payment plan agreement receivables presented separately.
(2) Included in device payment plan agreement receivables presented in Note 8. Receivables derived from the sale of equipment on a device payment plan through an authorized agent are excluded.
Contract assets increased $ million during the year ended December 31, 2024. The change in contract assets was primarily due to new contracts and increases in sales promotions recognized upfront, driven by customer activity related to wireless and Fios services. These items were partially offset by reclassifications to accounts receivable due to billings on existing contracts and impairment charges of $ million.
Contract liabilities arise when we bill our customers and receive consideration in advance of providing the goods or services promised in the contract. We typically bill service one month in advance, which is the primary component of the contract liability balance. Contract liabilities are recognized as revenue when services are provided to the customer. The contract liability balances are presented in our consolidated balance sheets as Other current liabilities and Other liabilities.
Contract liabilities increased $ million during the year ended December 31, 2024. The change in contract liabilities was primarily due to increases in sales promotions recognized over time, upfront fees and wireless pricing actions.
Revenue recognized during the years ended December 31, 2024 and 2023 related to contract liabilities existing at January 1, 2024 and 2023 were $ billion and $ billion, respectively, as performance obligations related to services were satisfied.
| | $ | | |
| Other assets | | | | | |
Total Contract Assets | $ | | | | $ | | |
| | | |
| Liabilities | | | |
| Other current liabilities | $ | | | | $ | | |
| Other liabilities | | | | | |
Total Contract Liabilities | $ | | | | $ | | |
Contract Costs
Collectively, costs to obtain a contract and costs to fulfill a contract are referred to as deferred contract costs, and amortized over a two-to- period. Deferred contract costs are classified as current or non-current within Prepaid expenses and other and Other assets, respectively.
| | $ | | | | Other assets | | | | | |
| Total | $ | | | | $ | | |
For the years ended December 31, 2024 and 2023, we recognized expense of $ billion and $ billion, respectively, associated with the amortization of deferred contract costs, primarily within Selling, general and administrative expense in our consolidated statements of income.
We assess our deferred contract costs for impairment on a quarterly basis. We recognize an impairment charge to the extent the carrying amount of a deferred cost exceeds the remaining amount of consideration we expect to receive in exchange for the goods and services related to the cost, less the expected costs related directly to providing those goods and services that have not yet been recognized as expenses. There were impairment charges recognized for the year ended December 31, 2024. There were insignificant impairment charges recognized for the year ended December 31, 2023.
billion. During 2024, 2023 and 2022, we made payments of $ million, $ billion and $ billion respectively, for obligations related to clearing costs and accelerated clearing incentives. The carrying value of the wireless spectrum won in Auction 107 consists of all payments required to participate and purchase licenses in the auction, including Verizon’s allocable share of clearing costs incurred by, and incentive payments due to, the incumbent license holders associated with the auction that we are obligated to pay in order to acquire the licenses, as well as capitalized interest to the extent qualifying activities have occurred.
In March 2022, Verizon signed agreements with satellite operators in which operators agreed to clear C-Band spectrum in certain markets and frequencies ahead of the previously expected timeframe. During 2022, Verizon incurred costs associated with these agreements of approximately $ million, of which $ million was paid as of December 31, 2022 and the remainder was paid in 2023. This early clearance accelerated Verizon's access to more spectrum in a number of key markets to support its 5G network initiatives.
On October 17, 2024, Verizon entered into a license purchase agreement to acquire select spectrum licenses of United States Cellular Corporation and certain of its subsidiaries (UScellular) for total consideration of $ billion, subject to certain potential adjustments. The closing of this transaction is subject to the receipt of regulatory approvals and other closing conditions, including the consummation of UScellular's proposed sale of its wireless operations and select spectrum assets to T-Mobile US, Inc., and the termination of certain post-closing arrangements with respect to that sale.
Business Acquisitions and Divestitures
TracFone Wireless, Inc.
On November 23, 2021 (the Acquisition Date), we completed the acquisition of TracFone Wireless, Inc. (TracFone). Verizon acquired all of TracFone's outstanding stock in exchange for approximately $ billion in cash, net of cash acquired and working capital and other adjustments, shares of common stock of the Company valued at approximately $ billion, and up to an additional $ million in future cash contingent consideration related to the achievement of certain performance measures and other commercial arrangements. The fair value of the common stock was determined on the basis of its closing market price on the Acquisition Date. The estimated fair value of the contingent consideration as of the Acquisition Date was approximately $ million and represented a Level 3 measurement as defined in ASC 820, Fair Value Measurements and Disclosures. See Note 9 for additional information. The contingent consideration payable was based on the achievement of certain revenue and operational targets, measured over a earn out period. Contingent consideration payments were completed in January of 2024.
During 2024, 2023 and 2022, Verizon made payments of $ million, $ million and $ million, respectively, related to the contingent consideration, which are reflected in Cash flows from financing activities in our consolidated statements of cash flows.
During 2022, Verizon received net cash proceeds of $ million for the final settlement of working capital, which was included in our consideration as of the Acquisition Date.
Frontier Communications Parent, Inc.
On September 4, 2024, Verizon entered into an Agreement and Plan of Merger (the Merger Agreement) to acquire Frontier Communications Parent, Inc. (Frontier), a U.S. provider of broadband internet and other communication services. The transaction is structured as a merger of the Company's subsidiary with and into Frontier, as a result of which Frontier will become a wholly owned subsidiary of the Company and shares of Frontier common stock outstanding immediately prior to the effective time of merger (subject to certain limited exceptions) will be cancelled and converted into the right to receive a per share merger consideration of $, in cash. In November 2024, Frontier shareholders approved the transaction. Consummation of the transaction is subject to the receipt of certain regulatory approvals and other customary closing conditions. Under certain circumstances, if the Merger Agreement is terminated, Frontier may be required to pay Verizon a termination fee of $ million. Under certain other specified circumstances, Verizon may be required to pay Frontier a termination fee of $ million.
| | $ | | | | |
) | | () | |
| | | | | | | | | |
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| | | | $ | | |
(1) Goodwill balances are net of an accumulated impairment charge of $ million presented within both Other and Total.
(2) Includes a goodwill impairment charge of $ million related to non-strategic businesses presented within Other, recorded in Selling, general and administrative expense in our consolidated statement of income for the year ended December 31, 2023.
(3) Goodwill balances are net of accumulated impairment charges of $ billion, $ million and $ billion presented within Business, Other and Total, respectively.
During the fourth quarter of 2023, we performed a qualitative impairment assessment for our Consumer reporting unit. Our qualitative assessment indicated that it was more likely than not that the fair value of our Consumer reporting unit exceeded its carrying value and, therefore, did not result in an impairment.
During the fourth quarter of 2024, we performed a quantitative impairment assessment for our Consumer reporting unit in accordance with our policy. We applied a combination of a market approach and a discounted cash flow method reflecting current assumptions and inputs, including our revised projections, discount rate and expected growth rates. Our assessment indicated that the fair value of our Consumer reporting unit exceeded its carrying value and, therefore, did not result in an impairment.
During the fourth quarter of 2023, we performed a quantitative impairment assessment for our Business reporting unit given the low excess of fair value over carrying value identified in our 2022 annual impairment assessment and increased competitive and market pressures experienced throughout 2023. These pressures resulted in lower projected cash flows primarily driven by secular declines in wireline services and products across our Business customer groups. In connection with Verizon’s annual budget process in the fourth quarter of 2023, leadership completed a comprehensive five-year strategic planning review of our Business reporting unit resulting in declines in financial projections driven by market dynamics as compared to the prior year five-year strategic planning cycle. The revised projections were used as a key input into the Business reporting unit’s annual goodwill impairment test performed in the fourth quarter of 2023. In addition, changes in the macroeconomic environment, including interest rate and inflationary pressures also impacted the fair value of the reporting unit. We applied a combination of a market approach and a discounted cash flow method reflecting current assumptions and inputs, including our revised projections, discount rate and expected growth rates, which resulted in the determination that the fair value of our Business reporting unit was less than its carrying amount. As a result, in the fourth quarter of 2023, we recorded a noncash goodwill impairment charge of approximately $ billion ($ billion after-tax) in our consolidated statement of income.
to years)$ | | | | $ | () | | | $ | | | | $ | | | | $ | () | | | $ | | | Non-network internal-use software ( to years) | | | | () | | | | | | | | | () | | | | |
Other ( to years) | | | | () | | | | | | | | | () | | | | |
| Total | $ | | | | $ | () | | | $ | | | | $ | | | | $ | () | | | $ | | |
| | 2023 | | |
| 2022 | | |
| | 2026 | | |
| 2027 | | |
| 2028 | | |
| 2029 | | |
| | $ | | | | Buildings and equipment | to | | | | | | |
| Central office and other network equipment | to | | | | | | |
| Antennas, cable, conduit, poles and towers | to | | | | | | |
| Leasehold improvements | to | | | | | | |
| Work in progress | - | | | | | | |
| Furniture, vehicles and other | to | | | | | | |
| | | | | | | |
| Less accumulated depreciation | | | | | | | |
| Property, plant and equipment, net | | | $ | | | | $ | | |
year to years, some of which include options that we can elect to extend the leases term for up to years, and some of which include options to terminate the leases. For the majority of leases entered into during the current period, we have concluded it is not reasonably certain that we would exercise the options to extend the lease or not terminate the lease. Therefore, as of the lease commencement date, our lease terms generally do not include these options. We include options to extend the lease when it is reasonably certain that we will exercise that option.
During December 2024, we completed a transaction with Vertical Bridge REIT, LLC (Vertical Bridge) pursuant to which Vertical Bridge obtained the exclusive rights to lease, operate and manage over wireless towers from Verizon in exchange for an upfront payment of $ billion. Under the terms of the agreement, Vertical Bridge has exclusive rights to lease, operate and manage the towers over an average term of approximately years, with the option to acquire the towers at the end of the lease terms. We have leased back a portion of the capacity on the towers from Vertical Bridge for an initial term of years, with optional renewal terms of each, subject to certain early termination rights. We continue to include the towers in Property, plant and equipment, net in our consolidated balance sheets and depreciate them accordingly. The upfront payment, which is primarily included within Other liabilities on our consolidated balance sheet, is accounted for as prepaid rent and as a financing obligation. We recorded prepaid rent of $ billion related to the portion of the towers for which the right-of-use has passed to Vertical Bridge, which is reflected in Cash flows from operating activities in our consolidated statements of cash flows. In addition, we recorded a financing obligation of $ million related to the portion of the towers that we continue to occupy and use for network operations, which is reflected in Cash flows from financing activities in our consolidated statements of cash flows.
During March 2015, we completed a transaction with American Tower Corporation (American Tower) pursuant to which American Tower acquired the exclusive rights to lease and operate approximately of our wireless towers for an upfront payment of $ billion. We have subleased capacity on the towers from American Tower for a minimum of years at current market rates in 2015, with options to renew. We continue to include the towers in Property, plant and equipment, net in our consolidated balance sheets and depreciate them accordingly.
In addition to the rights to lease and operate the towers, Vertical Bridge and American Tower assumed the interest in the underlying ground leases related to these towers. While Vertical Bridge and American Tower can renegotiate the terms of and are responsible for paying the ground leases, we are still the primary obligor for these leases and accordingly, the present value of these ground leases are included in our operating lease right-of-use assets and operating lease liabilities. We do not expect to be required to make ground lease payments unless Vertical Bridge or American Tower defaults, which we determined to be remote.
| | $ | | | | $ | | | | Finance lease cost: | | | | | | |
| Amortization of right-of-use assets | Depreciation and amortization expense | | | | | | | | |
| Interest on lease liabilities | Interest expense | | | | | | | | |
Short-term lease cost(1) | Cost of services
Selling, general and administrative expense | | | | | | | | |
Variable lease cost(1) | Cost of services
Selling, general and administrative expense | | | | | | | | |
| Sublease income | Service revenues and other | () | | | () | | | () | |
| Total net lease cost | | $ | | | | $ | | | | $ | | |
| | | | |
| | | | | (1) All operating lease costs, including short-term and variable lease costs, are split between Cost of services and Selling, general and administrative expense in the consolidated statements of income based on the use of the facility or equipment that the rent is being paid on. See Note 1 for additional information. Variable lease costs represent payments that are dependent on a rate or index, or on usage of the asset.
) | | $ | () | | | $ | () | |
| Operating cash flows for finance leases | () | | | () | | | () | |
| | | |
| Cash Flows from Financing Activities | | | | | |
| Financing cash flows for finance leases | () | | | () | | | () | |
| Supplemental lease cash flow disclosures | | | | | |
| Operating lease right-of-use assets obtained in exchange for new operating lease liabilities | | | | | | | | |
| Right-of-use assets obtained in exchange for new finance lease liabilities | | | | | | | | |
| | $ | | | | | | |
| Liabilities | | | |
| Debt maturing within one year | $ | | | | $ | | |
| Long-term debt | | | | | |
| Total Finance lease liabilities | $ | | | | $ | | |
| | | Finance leases | | | |
| Weighted-average discount rate | | | |
| Operating leases | | % | | | % |
| Finance leases | | % | | | % |
| | $ | | | | 2026 | | | | | |
| 2027 | | | | | |
| 2028 | | | | | |
| 2029 | | | | | |
| Thereafter | | | | | |
| Total lease payments | | | | | |
| Less interest | | | | | |
| Present value of lease liabilities | | | | | |
| Less current obligation | | | | | |
Long-term obligation at December 31, 2024 | $ | | | | $ | | |
As of December 31, 2024, we have contractually obligated lease payments amounting to $ billion primarily for office facility operating leases and small cell colocation and fiber operating leases that have not yet commenced. We have legally obligated lease payments for various other operating leases that have not yet commenced for which the total obligation was not significant. We have certain rights and obligations for these leases, but have not recognized an operating lease right-of-use asset or an operating lease liability since they have not yet commenced.
- | $ | | | | $ | | | | 5-10 Years | | - | | | | | | |
| > 10 Years | | - | | | | | | |
| < 5 Years | | Floating(1) | | | | | | |
| 5-10 Years | | Floating(1) | | | | | | |
| | | | | |
| Alltel Corporation | < 5 Years | |
| | | | | N/A |
| 5-10 Years | | - | | | | | | |
| | | | | |
Operating telephone company subsidiaries – debentures | < 5 Years | | - | | | | | | |
| 5-10 Years | | - | | | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
Other subsidiaries – asset-backed debt | < 5 Years | | - | | | | | | |
| < 5 Years | | Floating(1) | | | | | | |
| | | | | |
Finance lease obligations (average rate of % and % in 2024 and 2023, respectively)(2) | | | | | | | | | |
Vendor financing arrangements(2) | | | | | | | | | |
| Unamortized discount, net of premium | | | | | () | | | () | |
| Unamortized debt issuance costs | | | | | () | | | () | |
| Total long-term debt, including current maturities | | | | | | | | | |
| Less long-term debt maturing within one year | | | | | | | | | |
| Total long-term debt | | | | | $ | | | | $ | | |
| | | | | | | |
| Long-term debt maturing within one year | | | | | $ | | | | $ | | |
Add short-term vendor financing arrangements(2) | | | | | | | | | |
| Debt maturing within one year | | | | | $ | | | | $ | | |
| Add long-term debt | | | | | | | | | |
| Total debt | | | | | $ | | | | $ | | |
N/A - not applicable
(1) For the period ending December 2024, the debt obligations bore interest at floating rates, including floating rates associated with the Secured Overnight Financing Rate (SOFR) for the interest period plus an applicable interest margin per annum. Floating rates associated with SOFR for the interest payments made in December 2024 ranged from % to %.
| | 2026 | | |
| 2027 | | |
| 2028 | | |
| 2029 | | |
| Thereafter | | |
During 2024, we received $ billion of proceeds from long-term borrowings, which included $ billion of proceeds from asset-backed debt transactions. The net proceeds were primarily used for general corporate purposes including the repayment of debt and the funding of certain renewable energy projects. We used $ billion of cash to repay and repurchase long-term borrowings and finance lease obligations, including $ billion to prepay and repay asset-backed, long-term borrowings. The net proceeds of approximately $ billion from the notes issued in 2024 are expected to be used to fund certain renewable energy projects.
During 2023, we received $ billion of proceeds from long-term borrowings, which included $ billion of proceeds from asset-backed debt transactions. The net proceeds were primarily used for general corporate purposes including the repayment of debt and the funding of certain renewable energy projects. We used $ billion of cash to repay and repurchase long-term borrowings and finance lease obligations, including $ billion to prepay and repay asset-backed, long-term borrowings. The net proceeds of approximately $ billion from the notes issued in 2023 were used to fund certain renewable energy projects.
% - % notes and floating rate notes, due 2025 - 2028$ | | | | $ | | | Verizon % notes due 2035(1) | | | | | |
| |
Total(2) | $ | | | | $ | | |
(1) The principal amount issued in exchange does not include either an insignificant amount of cash paid in lieu of the issuance of fractional new notes or accrued and unpaid interest paid on the old notes accepted for exchange to the date of exchange.
(2) The debt exchange offers above meet the criteria to be accounted for as a modification of debt. As a result, the excess of the principal amount of notes exchanged over the principal amount of new notes issued of $ million was recorded as a premium to Long-term debt in the consolidated balance sheets.
Tender Offers
| | | | | | | | | | | |
| (dollars in millions) | Principal Amount Purchased | | Cash Consideration(1) |
Verizon % - % notes due 2025 - 2028 | € | | | | $ | | |
Verizon % - % notes and floating rate notes, due 2025 - 2026 | $ | | | | | |
Total | | | $ | | |
(1) The total cash consideration includes the tender offer consideration, plus any accrued and unpaid interest to the date of purchase. In addition, for securities denominated in a currency other than the U.S. dollar, cash consideration is shown on a U.S. dollar equivalent basis and includes the amount payable per the derivatives entered into in connection with the transaction. See Note 9 for additional information on cross currency swap transactions related to the transaction.
Repayments and Repurchases
| | | | | | | | | | | |
| (dollars in millions) | Principal Repaid/ Repurchased | | Amount Paid(1) |
Verizon % notes due 2024 | € | | | | $ | | |
Verizon % notes due 2024 | £ | | | | | |
Verizon % notes due 2024 | $ | | | | | |
| Verizon floating rate notes due 2024 | | | | | |
Verizon % notes due 2024 | | | | | |
Open market repurchases of various Verizon notes(2) | | | | | |
| Total | | | $ | | |
(1) Represents amount paid to repay or repurchase, including any accrued interest. In addition, for securities denominated in a currency other than the U.S. dollar, amount paid is shown on a U.S. dollar equivalent basis and includes the amount payable per the derivatives entered into in connection with the transaction. See Note 9 for additional information on cross currency swap transactions related to the transaction.
(2) During 2024, we recorded gains of $ million in connection with the open market repurchases, which were reflected within Other income (expense), net in our consolidated statement of income.
% notes due 2032€ | | | | $ | | | Verizon % notes due 2036 | € | | | | | |
Verizon % notes due 2054(2) | $ | | | | | |
| Total | | | $ | | |
(1) Net proceeds were net of underwriting discounts and other issuance costs. In addition, for securities denominated in a currency other than the U.S. dollar, net proceeds are shown on a U.S. dollar equivalent basis. See Note 9 for additional information on cross currency swap transactions related to the issuances.
(2) An amount equal to the net proceeds from these notes is expected to be used to fund, in whole or in part, certain renewable energy projects, including new and existing investments made by us during the period from May 1, 2023 through the maturity date of the notes.
Commercial Paper Program
In 2024, we issued $ billion in net proceeds and made $ billion in principal repayments of commercial paper. These transactions are reflected within Cash flows from financing activities in our consolidated statements of cash flows on a net basis. As of December 31, 2024, we had commercial paper outstanding.
Asset-Backed Debt
As of December 31, 2024, the carrying value of our asset-backed debt was $ billion. Our asset-backed debt includes Asset-Backed Notes (ABS Notes) issued to third-party investors (Investors) and loans (ABS Financing Facilities) received from banks and their conduit facilities (collectively, the Banks). Our consolidated asset-backed debt bankruptcy remote legal entities (each, an ABS Entity, or collectively, the ABS Entities) issue the debt or are otherwise party to the transaction documentation in connection with our asset-backed debt transactions. Under the terms of our asset-backed debt, Cellco Partnership (Cellco), a wholly-owned subsidiary of the Company, and certain other Company affiliates (collectively, the Originators) transfer device payment plan agreement receivables and certain other receivables (collectively referred to as certain receivables) or a participation interest in certain other receivables to one of the ABS Entities, which in turn transfers such receivables and participation interest to another ABS Entity that issues the debt. Verizon entities retain the equity interests and residual interests, as applicable, in the ABS Entities, which represent the rights to all funds not needed to make required payments on the asset-backed debt and other related payments and expenses.
Our asset-backed debt is secured by the transferred receivables and participation interest, and future collections on such receivables and underlying receivables related to such participation interest. These receivables and participation interest transferred to the ABS Entities and related assets, consisting primarily of restricted cash, will only be available for payment of asset-backed debt and expenses related thereto, payments to the Originators in respect of additional transfers of certain receivables and participation interest, and other obligations arising from our asset-backed debt transactions, and will not be available to pay other obligations or claims of Verizon’s creditors until the associated asset-backed debt and other obligations are satisfied. The Investors or Banks, as applicable, which hold our asset-backed debt have legal recourse to the assets securing the debt, but do not have any recourse to Verizon with respect to the payment of principal and interest on the debt. Under a parent support agreement, the Company has agreed to guarantee certain of the payment obligations of Cellco and the Originators to the ABS Entities.
Cash collections on the receivables and on the underlying receivables related to the participation interest collateralizing our asset-backed debt securities are required at certain specified times to be placed into segregated accounts. Deposits to the segregated accounts are considered restricted cash and are included in Prepaid expenses and other and Other assets in our consolidated balance sheets.
Proceeds from our asset-backed debt transactions are reflected in Cash flows from financing activities in our consolidated statements of cash flows. The asset-backed debt issued is included in Debt maturing within one year and Long-term debt in our consolidated balance sheets.
| | $ | | | | A-1b Senior class notes | Compounded SOFR + | | | | |
| B Junior class notes | | | | | |
| C Junior class notes | | | | | |
| | | | |
| Series 2024-2 | | | | |
| A Senior class notes | | | | | |
| B Junior class notes | | | | | |
| C Junior class notes | | | | | |
| January 2024 total | | | | | |
| | | | |
| April 2024 | | | | |
| Series 2024-3 | | | | |
| A-1a Senior class notes | | | | | |
| A-1b Senior class notes | Compounded SOFR + | | | | |
| B Junior class notes | | | | | |
| C Junior class notes | | | | | |
| April 2024 total | | | | | |
| | | | |
| June 2024 | | | | |
| Series 2024-4 | | | | |
| A-1a Senior class notes | | | | | |
| A-1b Senior class notes | Compounded SOFR + | | | | |
| B Junior class notes | | | | | |
| C Junior class notes | | | | | |
| | | | |
| Series 2024-5 | | | | |
| A Senior class notes | | | | | |
| B Junior class notes | | | | | |
| C Junior class notes | | | | | |
| June 2024 total | | | | | |
| | | | |
September 2024 | | | | |
Series 2024-6 | | | | |
| A-1a Senior class notes | | | | | |
| A-1b Senior class notes | Compounded SOFR + | | | | |
| B Junior class notes | | | | | |
| C Junior class notes | | | | | |
| | | | |
Series 2024-7 | | | | |
| A Senior class notes | | | | | |
| B Junior class notes | | | | | |
| C Junior class notes | | | | | |
September 2024 total | | | | | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
Allowance for Credit Losses
The credit quality indicators are used in determining the estimated amount and the timing of expected credit losses for the device payment plan agreement and wireless service receivables portfolios.
For device payment plan agreement receivables, we record bad debt expense based on a default and loss calculation using our proprietary loss model. The expected loss rate is determined based on customer credit scores and other qualitative factors as noted above. The loss rate is assigned individually on a customer by customer basis and the custom credit scores are then
| | $ | | |
| |
| |
| Current period provision for expected credit losses | | | | | |
| Write-offs charged against the allowance | () | | | () | |
| Recoveries collected | | | | | |
Balance at December 31, 2024 | $ | | | | $ | | |
(1) Includes allowance for both short-term and long-term device payment plan agreement receivables.
We monitor delinquency and write-off experience based on the quality of our device payment plan agreement and wireless service receivables portfolios. The extent of our collection efforts with respect to a particular customer are based on the results of our proprietary custom internal scoring models that analyze the customer’s past performance to predict the likelihood of the customer falling further delinquent. These custom scoring models assess a number of variables, including origination characteristics, customer account history and payment patterns. Since our customers’ behaviors may be impacted by general economic conditions, we analyzed whether changes in macroeconomic conditions impact our credit loss experience and have concluded that our credit loss estimates are generally not materially impacted by reasonable and supportable forecasts of future economic conditions. Based on the score derived from these models, accounts are grouped by risk category to determine the collection strategy to be applied to such accounts. For device payment plan agreement receivables and wireless service receivables, we consider an account to be delinquent and in default status if there are unpaid charges remaining on the account on the day after the bill’s due date. The risk class determines the speed and severity of the collections effort including initiatives taken to facilitate customer payment.
| | | | Billed: | | | |
Current | | | | |
Past due | | | | |
| Device payment plan agreement receivables, at amortized cost | $ | | | | |
| | $ | | | | $ | | | | $ | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| Interest rate caps | | | | | | | | | | | |
| | | | | |
| | | | | |
| Other assets: | | | | | | | |
| | | | | |
| Fixed income securities | | | | | | | | | | | |
| | | | | |
| Cross currency swaps | | | | | | | | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| Total | $ | | | | $ | | | | $ | | | | $ | | |
| | | | | | | |
| Liabilities: | | | | | | | |
| Other current liabilities: | | | | | | | |
| Interest rate swaps | $ | | | | $ | | | | $ | | | | $ | | |
| | | | | |
| Cross currency swaps | | | | | | | | | | | |
| | | | | |
| Foreign exchange forwards | | | | | | | | | | | |
| Interest rate caps | | | | | | | | | | | |
| | | | | |
| | | | | |
| | | | | |
| Other liabilities: | | | | | | | |
| Interest rate swaps | | | | | | | | | | | |
| Cross currency swaps | | | | | | | | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| Total | $ | | | | $ | | | | $ | | | | $ | | |
(1) Quoted prices in active markets for identical assets or liabilities.
(2) Observable inputs other than quoted prices in active markets for identical assets and liabilities.
(3) Unobservable pricing inputs in the market.
| | $ | | | | $ | | | | $ | | | | | | | | |
| Cross currency swaps | | | | | | | | | | | |
| Foreign exchange forwards | | | | | | | | | | | |
| Interest rate caps | | | | | | | | | | | |
| Other assets: | | | | | | | |
| Fixed income securities | | | | | | | | | | | |
| | | | | |
| Cross currency swaps | | | | | | | | | | | |
| Interest rate caps | | | | | | | | | | | |
| | | | | |
| | | | | |
| | | | | |
| Total | $ | | | | $ | | | | $ | | | | $ | | |
| | | | | | | |
| Liabilities: | | | | | | | |
| Other current liabilities: | | | | | | | |
| Interest rate swaps | $ | | | | $ | | | | $ | | | | $ | | |
| | | | | |
| Cross currency swaps | | | | | | | | | | | |
| | | | | |
| Foreign exchange forwards | | | | | | | | | | | |
| Interest rate caps | | | | | | | | | | | |
| Contingent consideration | | | | | | | | | | | |
| Other liabilities: | | | | | | | |
| Interest rate swaps | | | | | | | | | | | |
| Cross currency swaps | | | | | | | | | | | |
| Interest rate caps | | | | | | | | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| Total | $ | | | | $ | | | | $ | | | | $ | | |
(1) Quoted prices in active markets for identical assets or liabilities.
(2) Observable inputs other than quoted prices in active markets for identical assets and liabilities.
(3) Unobservable pricing inputs in the market.
Certain of our equity investments do not have readily determinable fair values and are excluded from the tables above. Such investments are measured at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer and are included in Investments in unconsolidated businesses in our consolidated balance sheets. As of December 31, 2024 and December 31, 2023, the carrying amount of our investments without readily determinable fair values was $ million and $ million, respectively. During 2024, there were insignificant adjustments due to observable price changes and insignificant impairment charges. Cumulative adjustments due to observable price changes and impairment charges were approximately $ million and $ million, respectively.
Verizon had a liability for contingent consideration related to its acquisition of TracFone, completed in November 2021. The fair value was calculated using a probability-weighted discounted cash flow model and represented a Level 3 measurement. Level 3 instruments include valuation based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. Subsequent to the Acquisition Date, at each reporting date, the contingent consideration liability was remeasured to fair value. Contingent consideration payments were completed in January of 2024. During 2024 and 2023, we made payments of $ million and $ million, respectively, related to the contingent consideration. See Note 3 for additional information.
Fixed income securities consist primarily of investments in municipal bonds. The valuation of the fixed income securities is based on the quoted prices for similar assets in active markets or identical assets in inactive markets or models that apply inputs from observable market data. The valuation determines that these securities are classified as Level 2.
Derivative contracts are valued using models based on readily observable market parameters for all substantial terms of our derivative contracts and thus are classified within Level 2. We use mid-market pricing for fair value measurements of our derivative instruments. Our derivative instruments are recorded on a gross basis.
We recognize transfers between levels of the fair value hierarchy as of the end of the reporting period.
| | $ | | | | $ | | | | $ | | | | $ | | | At December 31, 2023 | | | | | | | | | | | | | | |
| | | | | | | |
Derivative Instruments
We enter into derivative transactions primarily to manage our exposure to fluctuations in foreign currency exchange rates and interest rates. We employ risk management strategies, which may include the use of a variety of derivatives including interest rate swaps, cross currency swaps, forward starting interest rate swaps, treasury rate locks, interest rate caps, swaptions and foreign exchange forwards. We do not hold derivatives for trading purposes.
| | $ | | |
| Cross currency swaps | | | | | |
| |
| |
| Foreign exchange forwards | | | | | |
| | $ | | | | | | Notional value settled | | | | | | | |
| Pre-tax gain recognized in Interest expense | | | | | | | |
| Cross Currency Swaps: | | | | | |
| Notional value entered into | | | | | | | |
| Notional value settled | | | | | | | |
| | | | | |
| Pre-tax gain (loss) on cross currency swaps recognized in Interest expense | () | | | | | | |
| Pre-tax gain (loss) on hedged debt recognized in Interest expense | | | | () | | | |
Excluded components recognized in Other comprehensive income (loss) | | | | | | | |
| Initial value of the excluded component amortized into Interest expense | | | | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| Treasury Rate Locks: | | | | | |
| Notional value entered into | | | | | | | |
| | | | | |
| | | | | |
| Notional value settled | | | | | | | |
Pre-tax gain (loss) recognized in Other comprehensive income (loss) | () | | | | | | |
| | | | | | | | | | | |
| | | (dollars in millions) |
| Years Ended December 31, | 2024 | | 2023 |
| Other, net Cash Flows from Operating Activities: | | | |
Cash paid for settlement of interest rate swaps | $ | () | | | $ | | |
| |
Cash received (paid) for settlement of treasury rate locks | () | | | | |
| Other, net Cash Flows from Financing Activities: | | | |
| Cash paid for settlement of cross currency swaps, net | () | | | () | |
| | $ | | |
| Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged liabilities | () | | | () | |
| Cumulative amount of fair value hedging adjustment remaining for which hedge accounting has been discontinued | | | | | |
Interest Rate Swaps
We enter into interest rate swaps to achieve a targeted mix of fixed and variable rate debt. We principally receive fixed rates and pay variable rates, resulting in a net increase or decrease to Interest expense. These swaps are designated as fair value hedges and hedge against interest rate risk exposure of designated debt issuances. We record the interest rate swaps at fair value in our consolidated balance sheets as assets and liabilities. Changes in the fair value of the interest rate swaps are recorded to Interest expense, which are primarily offset by changes in the fair value of the hedged debt due to changes in interest rates.
Cross Currency Swaps
We have entered into cross currency swaps to exchange our British Pound Sterling, Euro, Swiss Franc, Canadian Dollar and Australian Dollar-denominated cash flows into U.S. dollars and to fix our cash payments in U.S. dollars, as well as to mitigate the impact of foreign currency transaction gains or losses. These swaps are designated as fair value hedges. We record the cross currency swaps at fair value in our consolidated balance sheets as assets and liabilities. Changes in the fair value of the cross currency swaps attributable to changes in the spot rate of the hedged item and changes in the recorded value of the hedged debt due to changes in spot rates are recorded in the same income statement line item. We present exchange gains and losses from the conversion of foreign currency denominated debt as a part of Interest expense. During the years ended December 31, 2024 and 2023, these amounts completely offset each other and no net gain or loss was recorded.
Changes in the fair value of cross currency swaps attributable to time value and cross currency basis spread are initially recorded to Other comprehensive income (loss). Unrealized gains or losses on excluded components are recorded in Other comprehensive income (loss) and are recognized into Interest expense on a systematic and rational basis through the swap accrual over the life of the hedging instrument.
On March 31, 2022, we elected to de-designate our cross currency swaps previously designated as cash flow hedges and re-designated these swaps as fair value hedges. The amount remaining in Accumulated other comprehensive loss related to cash flow hedges on the date of transition will be reclassified to earnings when the hedged item is recognized in earnings or when it becomes probable that the forecasted transactions will not occur. For the fair value hedges, we elected to exclude the change in fair value of the cross currency swaps related to both time value and cross currency basis spread from the assessment of hedge effectiveness (the excluded components). The initial value of the excluded components of $ billion as of March 31, 2022 will continue to be amortized into Interest expense over the remaining life of the hedging instruments. During the years ended December 31, 2024 and 2023, the amortization of the initial value of the excluded component completely offset the amortization related to the amount remaining in Other comprehensive income (loss) related to cash flow hedges. See Note 14 for additional information. We estimate that $ million will be amortized into Interest expense within the next 12 months.
Treasury Rate Locks
We enter into treasury rate locks designated as cash flow hedges to mitigate our interest rate risk on future transactions. We recognize gains and losses resulting from interest rate movements in Other comprehensive income (loss).
Net Investment Hedges
We have designated certain foreign currency debt instruments as net investment hedges to mitigate foreign exchange exposure related to non-U.S. dollar net investments in certain foreign subsidiaries against changes in foreign exchange rates. The notional amount of Euro-denominated debt designated as a net investment hedge was € million as of both December 31, 2024 and 2023.
Undesignated Derivatives
We also have the following derivative contracts which we use as economic hedges but for which we have elected not to apply hedge accounting.
| | $ | | | | Notional value settled | | | | | |
Pre-tax gain (loss) recognized in Other income (expense), net | () | | | | |
| |
| |
| |
| |
| |
| |
| |
| |
Foreign Exchange Forwards
We entered into British Pound Sterling and Euro foreign exchange forwards to mitigate our foreign exchange rate risk related to non-functional currency denominated monetary assets and liabilities of international subsidiaries.
Concentrations of Credit Risk
Financial instruments that subject us to concentrations of credit risk consist primarily of temporary cash investments, short-term and long-term investments, trade receivables, including device payment plan agreement receivables, certain notes receivable, including lease receivables, and derivative contracts.
Counterparties to our derivative contracts are major financial institutions with whom we have negotiated derivatives agreements (ISDA master agreements) and credit support annex (CSA) agreements which provide rules for collateral exchange. The CSA agreements contain fixed cap amounts or rating based thresholds such that we or our counterparties may be required to hold or post collateral based upon changes in outstanding positions as compared to established thresholds or caps and changes in credit ratings. We do not offset fair value amounts recognized for derivative instruments and fair value amounts recognized for the right to reclaim cash collateral or the obligation to return cash collateral arising from derivative instruments recognized at fair value. At both December 31, 2024 and 2023, we did t hold any collateral. At December 31, 2024 and 2023, we posted $ billion and $ billion, respectively, of collateral related to derivative contracts under collateral exchange agreements, which were recorded as Prepaid expenses and other in our consolidated balance sheets. While we may be exposed to credit losses due to the nonperformance of our counterparties, we consider the risk remote and do not expect that any such nonperformance would result in a significant effect on our results of operations or financial condition due to our diversified pool of counterparties.
million shares are reserved for future issuance under the 2017 Plan.
Restricted Stock Units
Restricted Stock Units (RSUs) granted under the 2017 Plan generally vest in equal installments on each anniversary of the grant date. The RSUs that are paid in stock upon vesting and are thus classified as equity awards are measured using the grant date fair value of Verizon common stock and are not remeasured at the end of each reporting period. In 2020, Verizon announced a broad-based program that provides for the annual award of cash-settled RSUs under the 2017 Plan to all full-time and part-time employees who meet eligibility requirements. The RSUs that are settled in cash are classified as liability awards and the liability is measured at its fair value at the end of each reporting period. All RSUs granted under the 2017 Plan have dividend equivalent units (DEUs), which will be paid to participants if, and only to the extent the applicable RSU award vests, and is paid at the time the RSU award is paid, and in the same proportion as the RSU award.
We estimate forfeitures at the time of grant and revise those estimates in subsequent periods if actual forfeitures differ from those estimates. We use historical data to estimate forfeitures and recognize that estimated compensation cost of restricted stock units, net of estimated forfeitures, on a straight-line basis over the vesting period.
Performance Stock Units
The 2017 Plan also provides for grants of Performance Stock Units (PSUs) that generally vest at the end of the third year after the grant. As defined by the 2017 Plan, the Human Resources Committee of the Board of Directors determines the number of PSUs a participant earns based on the extent to which the corresponding performance goals have been achieved over the performance cycle. The PSUs that are paid in stock upon vesting and are classified as equity awards are measured using the grant date fair value of Verizon common stock and are not remeasured at the end of each reporting period. The PSUs that
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As of December 31, 2024, unrecognized compensation expense related to the unvested portion of Verizon’s RSUs and PSUs was approximately $ million and is expected to be recognized over approximately years.
The equity awards granted in 2024, 2023 and 2022 have weighted-average grant date fair values of $, $ and $ per unit, respectively. During 2024, 2023 and 2022, we paid $ million, $ million and $ million, respectively, to settle RSUs and PSUs classified as liability awards.
Stock-Based Compensation Expense
After-tax compensation expense for stock-based compensation related to RSUs and PSUs described above included in Net income attributable to Verizon was $ million, $ million and $ million for 2024, 2023 and 2022, respectively.
| | $ | | | | $ | | | | $ | | | | Service cost | | | | | | | | | | | |
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| Pension | | Health Care and Life |
| At December 31, | 2024 | | 2023 | | 2024 | | 2023 |
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| Total | $ | () | | | $ | () | | | $ | () | | | $ | () | |
| Amounts recognized in Accumulated other comprehensive loss (pre-tax) | | | | | | | |
| Prior service cost (benefit) | $ | | | | $ | | | | $ | () | | | $ | () | |
| Total | $ | | | | $ | | | | $ | () | | | $ | () | |
The accumulated benefit obligation for all defined benefit pension plans was $ billion and $ billion at December 31, 2024 and 2023, respectively.
Pension Annuitization
On February 29, 2024, we entered into separate commitment agreements, one by and between the Company, State Street Global Advisors Trust Company (State Street), as independent fiduciary of the Verizon Management Pension Plan and Verizon Pension Plan for Associates (the Pension Plans), and The Prudential Insurance Company of America (Prudential), and one by and between the Company, State Street and RGA Reinsurance Company (RGA), under which the Pension Plans purchased nonparticipating single premium group annuity contracts from Prudential and RGA, respectively, to settle approximately $ billion of benefit liabilities of the Pension Plans, net of certain adjustments, resulting in a net pre-tax settlement gain of $ million.
The purchase of the group annuity contracts closed on March 6, 2024. The group annuity contracts primarily cover a population that includes retirees who commenced benefit payments from the Pension Plans prior to January 1, 2023 (Transferred Participants). Prudential and RGA each irrevocably guarantee and assume the sole obligation to make future payments to the Transferred Participants as provided under their respective group annuity contracts, with direct payments beginning July 1, 2024. The aggregate amount of each Transferred Participant's payment under the group annuity contracts will be equal to the amount of each individual’s payment under the Pension Plans.
billion, of assets of the Pension Plans, net of certain settlements. The Company made additional contributions to the Pension Plans prior to the closing date of the transaction, as discussed below. With these contributions, the funded ratio of each of the Pension Plans does not change as a result of this transaction.
Pension plan assets and liabilities are primarily presented within Employee benefit obligations in our consolidated balance sheets.
Actuarial (Gain) Loss, Net
The net actuarial gain in 2024 is primarily the result of a $ billion gain ($ million in our pension plans and $ million in our postretirement benefit plans) due to an increase in our discount rate assumption used to determine the current year liabilities of our pension plans and postretirement benefit plans from a weighted-average of % for both our pension and postretirement plans at December 31, 2023 to a weighted-average of % for our pension plans and % for our postretirement plans at December 31, 2024, as well as a net pre-tax settlement gain of $ million resulting from the pension annuitization transaction discussed above.
The net actuarial loss in 2023 is primarily the result of a $ million loss in our postretirement benefit plans due to an increase in our healthcare cost trend rate assumption used to determine the current year liabilities of our postretirement benefit plans from a weighted-average of % at December 31, 2022 to a weighted-average of % at December 31, 2023; and a $ million loss ($ million in our pension plans and $ million in our postretirement benefit plans) due to a decrease in our discount rate assumption used to determine the current year liabilities of our pension plans and postretirement benefit plans from a weighted-average of % at December 31, 2022 to a weighted-average of % at December 31, 2023.
Plan Amendments
The reclassifications from the amounts recorded in Accumulated other comprehensive income (loss) as a result of collective bargaining agreements and plan amendments made in 2016, 2017, 2018 and 2022 resulted in a net increase to net periodic benefit cost and net decrease to pre-tax income of an insignificant amount during 2024. The similar reclassifications resulted in a net decrease to net periodic benefit cost and net increase to pre-tax income of $ million during 2023 and $ million during 2022.
| | $ | | | | Fair value of plan assets | | | | | |
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| | $ | | | | $ | | | | $ | | | | $ | | | | $ | | | | Service cost - Selling, general and administrative expense | | | | | | | | | | | | | | | | | |
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The service cost component of net periodic benefit cost (income) is recorded in Cost of services and Selling, general and administrative expense in the consolidated statements of income while the other components, including mark-to-market adjustments, if any, are recorded in Other income (expense), net.
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Severance, Pension and Benefits Charges (Credits)
During 2024, we recorded net pre-tax severance charges of $ billion, principally as a result of our voluntary separation program, but also as a result of other headcount reduction initiatives, in Selling, general and administrative expense in our consolidated statements of income. In June 2024, we announced a voluntary separation program for select U.S.-based management employees. Approximately eligible employees will separate from Verizon under this program by the end of March 2025, with the majority of these employees having exited through December 31, 2024.
During 2023 and 2022, we recorded net pre-tax severance charges of $ million and $ million, respectively in Selling, general and administrative expense in our consolidated statements of income.
During 2024, in accordance with our accounting policy to recognize actuarial gains and losses in the period in which they occur, we recorded net pre-tax pension and benefits credits of $ million in our pension and postretirement benefit plans. The net gain was recorded in Other income (expense), net, in our consolidated statement of income. This was primarily driven by a credit of $ billion ($ million for pension plans and $ million for postretirement benefit plans) due to an increase in our discount rate assumption used to determine the current year liabilities of our pension plans from a weighted-average of % for both our pension and post retirement plans at December 31, 2023 to a weighted-average of % for our pension plans and % for our postretirement benefit plans at December 31, 2024; a charge of $ billion due to the difference between our estimated and our actual return on plan assets; and a net pre-tax settlement credit of $ million resulting from the pension annuitization transaction discussed above.
During 2023, we recorded net pre-tax pension and benefits charges of $ million in our pension and postretirement benefit plans. The charges were recorded in Other income (expense), net, in our consolidated statement of income and were primarily driven by a charge of $ million due to an increase in our healthcare cost trend rate assumption used to determine the current year liabilities of our postretirement benefit plans from a weighted-average of % at December 31, 2022 to a weighted-average of % at December 31, 2023; a charge of $ million due to a decrease in our discount rate assumption used to determine the current year liabilities of our pension plans ($ million) and postretirement benefit plans ($ million) from a weighted-average of % at December 31, 2022 to a weighted-average of % at December 31, 2023; a net credit of $ million primarily due to changes in other actuarial assumption adjustments, which includes the difference between our estimated and our actual return on plan assets.
During 2022, we recorded net pre-tax pension and benefits credits of $ billion in our pension and postretirement benefit plans. The credits were recorded in Other income (expense), net in our consolidated statement of income and were primarily driven by
billion due to an increase in our discount rate assumption used to determine the current year liabilities of our pension plans ($ billion) and postretirement benefit plans ($ billion) from a weighted-average of % at December 31, 2021 to a weighted-average of % at December 31, 2022, a charge of $ billion due to the difference between our estimated and our actual return on assets and a credit of $ million due to other actuarial assumption adjustments.
| | $ | | | | $ | | | | Foreign | | | | | | | | |
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State and local income taxes, net of federal income tax effect(1) | | | | | | | | | | | | | | |
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| Effective income tax rate | $ | | | | % | | $ | | | | % | | $ | | | | % | (1) The states that contribute to the majority (greater than 50%) of the tax effect in this category include California, Maryland and Pennsylvania for 2024, California, Georgia, Illinois, Maryland and Virginia for 2023, and California, Florida, Georgia, Illinois, New Jersey, Oregon and Pennsylvania for 2022.
The effective income tax rate for 2024 was % compared to % for 2023. The decrease in the effective income tax rate was primarily due to the Verizon Business Group goodwill impairment charge of $ billion in 2023 that substantially decreased income before income taxes and was not deductible. The increase in the provision for income taxes was primarily due to the increase in income before income taxes in the current period.
% compared to % for 2022. The increase in the effective income tax rate was primarily due to the Verizon Business Group goodwill impairment charge of $ billion that substantially decreased income before income taxes and was not deductible. The decrease in the provision for income taxes was primarily due to the decrease in income before income taxes in the current period.
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| Income taxes, net of amounts refunded | | | | | | | | |
| Employment taxes | | | | | | | | |
| Property and other taxes | | | | | | | | |
| Total | $ | | | | $ | | | | $ | | |
In 2024, there were no individual jurisdictions with cash taxes paid that equaled or exceeded 5% of total income taxes paid. In 2022 and 2023, the only jurisdiction with cash taxes paid that equaled or exceeded 5% of total income taxes paid was Ireland.
Deferred Tax Assets and Liabilities
| | $ | | | | Tax loss, credit, and other carry forwards | | | | | |
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| Net deferred tax liability | $ | | | | $ | | |
Undistributed earnings of certain foreign subsidiaries continue to be indefinitely invested outside the U.S. The majority of Verizon's cash flow is generated from domestic operations and we are not dependent on foreign cash or earnings to meet our funding requirements, nor do we intend to repatriate these undistributed foreign earnings to fund U.S. operations. Furthermore, a portion of these undistributed earnings represents amounts that legally must be kept in reserve in accordance with certain foreign jurisdictional requirements and are unavailable for distribution or repatriation. As a result, we have not provided U.S. deferred taxes on these undistributed earnings because we intend that they will remain indefinitely reinvested outside of the U.S. and, therefore unavailable for use in funding U.S. operations. Determination of the amount of unrecognized deferred taxes related to these undistributed earnings is not practicable.
At December 31, 2024, we had net after-tax loss, credit, and other carry forwards for income tax purposes of approximately $ billion that relate to federal, state and foreign taxes. Of these net after-tax loss, credit, and other carry forwards, approximately $ billion will expire between 2025 and 2044 and approximately $ million may be carried forward indefinitely.
During 2024, the valuation allowance increased by $ million. The $ billion valuation allowance at December 31, 2024 is primarily related to state and foreign taxes.
| | $ | | | | $ | | | | Additions based on tax positions related to the current year | | | | | | | | |
| Additions for tax positions of prior years | | | | | | | | |
| Reductions for tax positions of prior years | () | | | () | | | () | |
| Settlements | () | | | () | | | () | |
| Lapses of statutes of limitations | () | | | () | | | () | |
| Balance at December 31, | $ | | | | $ | | | | $ | | |
Included in the total unrecognized tax benefits at December 31, 2024, 2023 and 2022 is $ billion, $ billion and $ billion, respectively, that if recognized, would favorably affect the effective income tax rate.
| | 2023 | | |
| 2022 | | |
| | 2023 | | |
The decrease in unrecognized tax benefits in 2024 was primarily due to the resolution of issues under income tax examinations. The decrease in unrecognized tax benefits for 2023 was primarily due to lapses of statutes of limitations.
reportable segments that we operate and manage as strategic business units - Consumer and Business. We measure and evaluate our reportable segments based on segment operating income, consistent with the chief operating decision maker's (CODM) assessment of segment performance.
The Company's CODM is the Chief Executive Officer. The CODM uses segment operating income to allocate resources (including employees, financial or capital resources) and to assess performance during the monthly and quarterly financial strategic review process. When assessing segment performance and how to allocate resources, the CODM focuses on evaluating whether revenues generated are sufficient to cover variable and fixed costs with an appropriate return on investment. Key decisions considered by the CODM using segment operating income include prioritization and timing of changes to network technologies, allocation of capital expenditures based on the Company's priorities, geographic expansion of wireline and wireless networks, establishment of key financial and operational targets, pricing decisions, branding matters and people management.
states in the Mid-Atlantic and Northeastern U.S., as well as Washington D.C., over our 100% fiber-optic network through our Verizon Fios product portfolio and over a traditional copper-based network to customers who are not served by Fios. | | |
Verizon
Business Group | | Our Business segment provides wireless and wireline communications services and products, including FWA broadband, data, video and advanced communication services, corporate networking solutions, security and managed network services, local and long distance voice services and network access to deliver various IoT services and products. We provide these products and services to businesses, public sector customers and wireless and wireline carriers across the U.S. and a subset of these products and services to customers around the world. |
Our Consumer segment's wireless and wireline products and services are available to our retail customers, as well as resellers that purchase wireless network access from us on a wholesale basis. Our Business segment’s wireless and wireline products and services are organized by the primary customer groups for these offerings: Enterprise and Public Sector, Business Markets and Other, and Wholesale.
Corporate and other primarily includes device insurance programs, investments in unconsolidated businesses and development stage businesses that support our strategic initiatives, as well as unallocated corporate expenses, certain pension and other employee benefit related costs and interest and financing expenses. Corporate and other also includes the historical results of divested businesses and other adjustments and gains and losses that are not allocated or used in assessing segment performance due to their nature. Although such transactions are excluded from the business segment results, they are included in reported consolidated earnings. Gains and losses from these transactions that are not individually significant are included in segment results and therefore included in the CODM’s assessment of segment performance.
reportable segments: | | | | | | | | | | | | | | | | | |
| (dollars in millions) |
| 2024 | Consumer | | Business | | Total
Reportable
Segments |
| External Operating Revenues | | | | | |
| Service | $ | | | | $ | | | | $ | | |
| Wireless equipment | | | | | | | | |
Other(1) | | | | | | | | |
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| Enterprise and Public Sector | | | | | | | | |
| Business Markets and Other | | | | | | | | |
| Wholesale | | | | | | | | |
| Intersegment revenues | | | | | | | | |
Total Operating Revenues(2) | | | | | | | | |
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Operating Expenses(3) | | | | | |
| Cost of wireless equipment | | | | | | | | |
Centrally managed network and shared service costs(4) | | | | | | | | |
| Depreciation and amortization expense | | | | | | | | |
Other segment expenses(5) | | | | | | | | |
Total Operating Expenses | | | | | | | | |
| Operating Income | $ | | | | $ | | | | $ | | |
(1) Other revenue includes fees that partially recover the direct and indirect costs of complying with regulatory and industry obligations and programs, revenues associated with certain products included in our device protection offerings, leasing and interest recognized when equipment is sold to the customer by an authorized agent under a device payment plan agreement.
(2) Service and other revenues and Wireless equipment revenues included in our Business segment amounted to approximately $ billion and $ billion, respectively, for the year ended December 31, 2024.
(3) The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM. Intersegment expenses are included within the amounts shown.
(4) Centrally managed network and shared service costs include costs for network and leased assets, supply chain and other centralized services that are allocated to our Consumer and Business segments based on proportionate usage of services.
(5) Other segment expenses for each reportable segment include certain personnel, digital content, sales-related, overhead, other direct and operating costs.
| | $ | | | | $ | | | | Wireless equipment | | | | | | | | |
Other(1) | | | | | | | | |
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| Enterprise and Public Sector | | | | | | | | |
| Business Markets and Other | | | | | | | | |
| Wholesale | | | | | | | | |
| Intersegment revenues | | | | | | | | |
Total Operating Revenues(2) | | | | | | | | |
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Operating Expenses(3) | | | | | |
| Cost of wireless equipment | | | | | | | | |
Centrally managed network and shared service costs(4) | | | | | | | | |
| Depreciation and amortization expense | | | | | | | | |
Other segment expenses(5) | | | | | | | | |
Total Operating Expenses | | | | | | | | |
| Operating Income | $ | | | | $ | | | | $ | | |
(1) Other revenue includes fees that partially recover the direct and indirect costs of complying with regulatory and industry obligations and programs, revenues associated with certain products included in our device protection offerings, leasing and interest recognized when equipment is sold to the customer by an authorized agent under a device payment plan agreement.
(2) Service and other revenues and Wireless equipment revenues included in our Business segment amounted to approximately $ billion and $ billion, respectively, for the year ended December 31, 2023.
(3) The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM. Intersegment expenses are included within the amounts shown.
(4) Centrally managed network and shared service costs include costs for network and leased assets, supply chain and other centralized services that are allocated to our Consumer and Business segments based on proportionate usage of services.
(5) Other segment expenses for each reportable segment include certain personnel, digital content, sales-related, overhead, other direct and operating costs.
| | $ | | | | $ | | | | Wireless equipment | | | | | | | | |
Other(1) | | | | | | | | |
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| Enterprise and Public Sector | | | | | | | | |
| Business Markets and Other | | | | | | | | |
| Wholesale | | | | | | | | |
| Intersegment revenues | | | | | | | | |
Total Operating Revenues(2) | | | | | | | | |
| | | | | |
Operating Expenses(3) | | | | | |
| Cost of wireless equipment | | | | | | | | |
Centrally managed network and shared service costs(4) | | | | | | | | |
| Depreciation and amortization expense | | | | | | | | |
Other segment expenses(5) | | | | | | | | |
Total Operating Expenses | | | | | | | | |
| Operating Income | $ | | | | $ | | | | $ | | |
(1) Other revenue includes fees that partially recover the direct and indirect costs of complying with regulatory and industry obligations and programs, revenues associated with certain products included in our device protection offerings, leasing and interest recognized when equipment is sold to the customer by an authorized agent under a device payment plan agreement.
(2) Service and other revenues and Wireless equipment revenues included in our Business segment amounted to approximately $ billion and $ billion, respectively, for the year ended December 31, 2022.
(3) The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM. Intersegment expenses are included within the amounts shown.
(4) Centrally managed network and shared service costs include costs for network and leased assets, supply chain and other centralized services that are allocated to our Consumer and Business segments based on proportionate usage of services.
(5) Other segment expenses for each reportable segment include certain personnel, digital content, sales-related, overhead, other direct and operating costs.
The following table provides Fios revenues for our reportable segments and includes intersegment activity:
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| (dollars in millions) |
| Years Ended December 31, | 2024 | | 2023 | | 2022 |
| Consumer | $ | | | | $ | | | | $ | | |
| Business | | | | | | | | |
| Total Fios revenue | $ | | | | $ | | | | $ | | |
The following table provides Wireless service revenue for our reportable segments and includes intersegment activity:
| | | | | | | | | | | | | | | | | |
| (dollars in millions) |
| Years Ended December 31, | 2024 | | 2023 | | 2022 |
| Consumer | $ | | | | $ | | | | $ | | |
| Business | | | | | | | | |
| Total Wireless service revenue | $ | | | | $ | | | | $ | | |
Reconciliation to Consolidated Financial Information
The reconciliation of segment operating revenues and operating income to consolidated operating revenues and operating income below includes the effects of special items that the CODM does not consider in assessing segment performance, primarily because of their nature.
| | $ | | | | $ | | | | Corporate and other | | | | | | | | |
| Reconciling items: | | | | | |
| | | |
| Eliminations | () | | | () | | | () | |
| Consolidated Operating Revenues | $ | | | | $ | | | | $ | | |
| | $ | | | | $ | | | | Corporate and other | () | | | () | | | () | |
| Reconciling items: | | | | | |
| Severance charges | () | | | () | | | () | |
| Other components of net periodic pension and benefit charges (Note 11) | () | | | () | | | () | |
Asset and business rationalization | () | | | () | | | | |
Legacy legal matter | () | | | | | | | |
| Verizon Business Group goodwill impairment | | | | () | | | | |
| Legal settlement | | | | () | | | | |
| Business transformation costs | | | | () | | | | |
| Non-strategic business shutdown | | | | () | | | | |
| | | |
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| | | |
| Consolidated operating income | | | | | | | | |
| Equity in earnings (losses) of unconsolidated businesses | () | | | () | | | | |
| Other income (expense), net | | | | () | | | | |
| Interest expense | () | | | () | | | () | |
| Income Before Provision For Income Taxes | $ | | | | $ | | | | $ | | |
No single customer accounted for more than 10% of our total operating revenues during the years ended December 31, 2024, 2023 or 2022. International operating revenues were not significant during the years ended December 31, 2024, 2023 and 2022. As of December 31, 2024 and 2023, international long-lived assets were not significant.
million shares of our common stock. The program will terminate when the aggregate number of shares purchased reaches million or a new share repurchase plan superseding the current plan is authorized, whichever is sooner. During the years ended December 31, 2024, 2023, and 2022, we did t repurchase any shares of our common stock under our authorized share buyback program. At December 31, 2024, the maximum number of shares that could be purchased by or on behalf of Verizon under our share buyback program was million.
Common stock has been used from time to time to satisfy some of the funding requirements of employee and shareholder plans. During the years ended December 31, 2024, 2023, and 2022, we issued million, million and million shares of common stock from treasury stock, which had aggregate values of $ million, $ million and $ million, respectively.
Noncontrolling Interests
During the year ended December 31, 2024, Verizon entered into and completed agreements to acquire additional interests in certain controlled entities for cash consideration of $ million. Verizon continues to retain controlling financial interest within these entities; therefore, the changes in ownership interest were accounted for as equity transactions. This resulted in a reduction of additional paid-in capital of $ million, reflected in Other, and a reduction of noncontrolling interest of $ million,
) | | $ | () | | | $ | | | | $ | | | | $ | | | | $ | () | | | | | | | | | | | |
| | | | | | | | | |
| Excluded components recognized in other comprehensive income | — | | | — | | | () | | | — | | | — | | | () | |
| Other comprehensive loss | () | | | () | | | — | | | () | | | () | | | () | |
| Amounts reclassified to net income | — | | | | | | () | | | — | | | () | | | | |
| Net other comprehensive income (loss) | () | | | | | | () | | | () | | | () | | | () | |
| Balance at December 31, 2022 | () | | | () | | | () | | | () | | | | | | () | |
| Excluded components recognized in other comprehensive income | — | | | — | | | | | | — | | | — | | | | |
| Other comprehensive income | | | | | | | — | | | | | | — | | | | |
| Amounts reclassified to net income | — | | | | | | () | | | | | | () | | | () | |
| Net other comprehensive income (loss) | | | | | | | | | | | | | () | | | | |
| Balance at December 31, 2023 | () | | | () | | | | | | () | | | | | | () | |
| Excluded components recognized in other comprehensive income | — | | | — | | | | | | — | | | — | | | | |
| Other comprehensive loss | () | | | () | | | — | | | () | | | — | | | () | |
| Amounts reclassified to net income | — | | | | | | () | | | — | | | () | | | | |
| Net other comprehensive income (loss) | () | | | | | | | | | () | | | () | | | | |
| Balance at December 31, 2024 | $ | () | | | $ | () | | | $ | | | | $ | () | | | $ | | | | $ | () | |
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The amounts presented above in Net other comprehensive income (loss) are net of taxes. The amounts reclassified to net income related to unrealized gain (loss) on cash flow hedges and unrealized gain (loss) on fair value hedges in the table above are included in Other income (expense), net and Interest expense in our consolidated statements of income. See Note 9 for additional information. The amounts reclassified to net income related to unrealized gain (loss) on marketable securities in the table above are included in Other income (expense), net in our consolidated statements of income. The amounts reclassified to net income related to defined benefit pension and postretirement plans in the table above are included in Other income (expense), net in our consolidated statements of income. See Note 11 for additional information.
| | $ | | | | $ | | |
| Interest costs on debt balances | | | | | | | | |
| Net amortization of debt discount | | | | | | | | |
| Capitalized interest costs | () | | | () | | | () | |
| Advertising expense | | | | | | | | |
| | | | | |
| (dollars in millions) |
| Years Ended December 31, | 2024 | | 2023 | | 2022 |
| Other income (expense), net | | | | | |
| Interest income | $ | | | | $ | | | | $ | | |
| Other components of net periodic benefit (cost) income | | | | () | | | | |
| Net debt extinguishment gains (losses) | | | | | | | () | |
| Other, net | () | | | () | | | () | |
| | | |
| $ | | | | $ | () | | | $ | | |
| | $ | | | | Deferred contract costs | | | | | |
| Collateral payments related to derivative contracts | | | | | |
| Restricted cash | | | | | |
| Other prepaid expense and other | | | | | |
| $ | | | | $ | | |
| | | |
| Accounts payable and accrued liabilities | | | |
| Accounts payable | $ | | | | $ | | |
| Accrued expenses | | | | | |
| Accrued vacation, salaries and wages | | | | | |
| Interest payable | | | | | |
| Taxes payable | | | | | |
| $ | | | | $ | | |
| | | |
| Other current liabilities | | | |
| Dividends payable | $ | | | | $ | | |
| Contract liability | | | | | |
| Other | | | | | |
| $ | | | | $ | | |
As of December 31, 2024 and 2023, Property, plant and equipment includes approximately $ billion and $ billion, respectively, of additions that have not yet been paid.
| | $ | | | | $ | | | | Income taxes, net of amounts refunded | | | | | | | | |
| | | | | |
| Other, net Cash Flows from Operating Activities | | | | | |
| Changes in device payment plan agreement non-current receivables | $ | () | | | $ | () | | | $ | () | |
| Net debt extinguishment (gains) losses | () | | | () | | | | |
| | | |
| | | |
| Other, net | | | | () | | | | |
| $ | | | | $ | () | | | $ | () | |
| | | | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| Other, net Cash Flows from Financing Activities | | | | | |
Net debt related costs(1) | $ | () | | | $ | () | | | $ | () | |
| | | |
| Other, net | () | | | () | | | () | |
| $ | () | | | $ | () | | | $ | () | |
(1) These costs include the premiums paid for the early extinguishment of debt, fees paid in connection with exchange and tender offers, and settlements of associated instruments. |
Supplier Finance Program
We maintain a voluntary supplier finance program (SFP) with a financial institution which provides certain suppliers the option, at their sole discretion, to participate in the program and sell their receivables due from Verizon to the financial institution on a non-recourse basis. The eligible suppliers negotiate the terms directly with the financial institution and we have no involvement in establishing those terms nor are we a party to these agreements.
Our payments associated with the invoices from the suppliers participating in the SFP are made to the financial institution according to the original invoice terms generally at 90 days from the invoice date and for the original invoice amount. No additional payments are exchanged between Verizon and the financial institution related to the SFP. Verizon does not pledge any assets nor provide any guarantees to the financial institution in connection with the SFP. The SFP can be terminated by Verizon or the financial institution with a notice period.
| | | | Invoices added during the year | | | | |
| Invoices paid during the year | () | | | |
| Confirmed obligations outstanding at the end of year | $ | | | | |
million and $ million, respectively, remained as confirmed obligations outstanding related to suppliers participating in the SFP.
federal district court actions alleging that Verizon is infringing various patents. Most of these cases are brought by non-practicing entities and effectively seek only monetary damages; a small number are brought by companies that have sold products and could seek injunctive relief as well. These cases have progressed to various stages and a small number may have gone to trial or may go to trial in the coming 12 months if they are not otherwise resolved.
million, which were executed in the normal course of business and support several financing arrangements and payment obligations to third parties, were outstanding.
As of December 31, 2024, Verizon had renewable energy purchase agreements (REPAs) with third parties. Each of the REPAs is based on the expected operation of a renewable energy-generating facility and has a fixed price term of to years from the commencement of the facility's entry into commercial operation. of the facilities have entered into commercial operation, and the remainder are under development. The REPAs generally are expected to be financially settled based on the prevailing market price as energy is generated by the facilities.
We have various unconditional purchase obligations, which represent agreements to purchase goods or services that are enforceable and legally binding. We estimate that these unconditional purchase obligations, for contracts with terms in excess of one year, total $ billion, and primarily represent commitments to purchase content, network equipment, software and services, marketing services and other items which will be used or sold in the ordinary course of business from a variety of suppliers. Of this total amount, $ billion is attributable to 2025, $ billion is attributable to 2026, $ billion is attributable to 2027, $ billion is attributable to 2028, $ million is attributable to 2029 and $ million is attributable to years thereafter. These amounts do not represent our entire anticipated purchases in the future, but represent only those items that are the subject of contractual obligations. Our commitments are generally determined based on the noncancelable quantities to which we are contractually obliged. Since the commitments to purchase programming services from television networks and broadcast stations have no minimum volume requirement, we estimated our obligation based on number of subscribers at December 31, 2024, and applicable rates stipulated in the contracts in effect at that time. We also purchase products and services as needed with no firm commitment.
| | |
| Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
None.
| | |
| Item 9A. Controls and Procedures |
| | |
Evaluation of Disclosure Controls and Procedures |
Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the registrant’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934), as of the end of the period covered by this Annual Report, that ensure that information relating to the registrant which is required to be disclosed in this report is recorded, processed, summarized and reported within required time periods using the criteria for effective internal control established in Internal Control–Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that the registrant’s disclosure controls and procedures were effective as of December 31, 2024.
| | |
Changes in Internal Control over Financial Reporting |
In the ordinary course of business, we routinely review our system of internal control over financial reporting and make changes to our systems and processes that are intended to ensure an effective internal control environment. In the third quarter of 2020, we began a multi-year implementation of a new global enterprise resource planning (ERP) system, which will replace many of our existing core financial systems. The new ERP system is designed to enhance the flow of financial information, facilitate data analysis and accelerate information reporting. The implementation is ongoing and is expected to continue over the next few years.
As the phased implementation of the new ERP system continues, we could have changes to our processes and procedures which, in turn, could result in changes to our internal controls over financial reporting. As such changes occur, we will evaluate quarterly whether such changes materially affect our internal control over financial reporting.
There were no changes in Verizon's internal control over financial reporting during the fourth quarter of 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
| | |
Management's Annual Report on Internal Control over Financial Reporting |
The management of Verizon Communications Inc. is responsible for establishing and maintaining adequate internal control over financial reporting of Verizon. Management has evaluated internal control over financial reporting of Verizon using the criteria for effective internal control established in Internal Control–Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.
Management has assessed the effectiveness of Verizon’s internal control over financial reporting as of December 31, 2024. Based on this assessment, management believes that the internal control over financial reporting of Verizon is effective as of December 31, 2024. In connection with this assessment, there were no material weaknesses in Verizon’s internal control over financial reporting identified by management. The Company’s independent registered public accounting firm, Ernst & Young LLP, has provided an attestation report on Verizon’s internal control over financial reporting and is included in Item 8 of this Annual Report.
| | |
| Item 9B. Other Information |
During the three months ended December 31, 2024,
| | |
| Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections |
Not applicable.
| | |
| Item 10. Directors, Executive Officers and Corporate Governance |
Set forth below is information with respect to our current executive officers.
| | | | | | | | | | | | | | | | | | | | |
| Name | | Age | | Office | | Held Since |
| Hans Vestberg | | 59 | | | Chairman and Chief Executive Officer | | 2019 |
| Samantha Hammock | | 46 | | | Executive Vice President and Chief Human Resources Officer | | 2021 |
| Kyle Malady | | 57 | | | Executive Vice President and Group CEO - Verizon Business | | 2023 |
| Joseph Russo | | 51 | | | Executive Vice President and President - Global Networks and Technology | | 2023 |
| Sowmyanarayan Sampath | | 48 | | | Executive Vice President and Group CEO - Verizon Consumer | | 2023 |
| Anthony Skiadas | | 56 | | | Executive Vice President and Chief Financial Officer | | 2023 |
| Mary-Lee Stillwell | | 51 | | | Senior Vice President and Controller | | 2023 |
| Vandana Venkatesh | | 53 | | | Executive Vice President - Public Policy and Chief Legal Officer | | 2022 |
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|
|
|
Each of the above officers has held the indicated office or other high-level managerial positions within the Company or one of its subsidiaries for at least five years, with the exception of Samantha Hammock and Mary-Lee Stillwell, who have both been with Verizon since 2020. Officers are not elected for a fixed term of office and may be removed from office at any time at the discretion of the Board of Directors.
Samantha Hammock is the Executive Vice President and Chief Human Resources Officer of the Company. Ms. Hammock joined Verizon in December 2020 as Senior Vice President of Global Talent and began serving in her current role in December 2021. Prior to joining Verizon, Ms. Hammock spent 14 years at the American Express Company, a globally integrated payments company and provider of credit and charge cards to consumers and businesses around the world, where she served as Head of Talent and Learning from April 2020 to December 2020, Chief Learning Officer from 2017 to April 2020, and Vice President, Leadership Strategy, from 2016 to April 2020.
Mary-Lee Stillwell is the Senior Vice President and Controller of the Company. Ms. Stillwell joined Verizon in August 2020 as Vice President - Accounting & External Reporting and began serving in her current role in May 2023. Prior to joining Verizon, Ms. Stillwell spent 17 years in senior leadership roles in the energy industry, including Chief Accounting Officer of Clearway Energy, Inc. from 2018 until 2020, and, prior to that, Vice President and Assistant Controller for NRG Energy, Inc.
For other information required by this item, see the sections entitled "Governance — Item 1: Election of Directors — Election process and — Nominees for election, — Our governance framework — Board committees — Audit Committee, — Other risk-related matters — Business conduct and ethics and — Insider trading policy, and — Where to find more information" in our definitive Proxy Statement to be filed with the Securities and Exchange Commission and delivered to shareholders in connection with our 2025 Annual Meeting of Shareholders, which are incorporated herein by reference.
| | |
| Item 11. Executive Compensation |
For information with respect to executive compensation, see the sections entitled "Governance — Non-employee Director compensation" and "Executive compensation — Compensation discussion and analysis, — Compensation Committee Report and — Compensation tables" (excluding information under "— Pay versus performance") in our definitive Proxy Statement to be filed with the Securities and Exchange Commission and delivered to shareholders in connection with our 2025 Annual Meeting of Shareholders, which are incorporated by reference herein. There were no relationships to be disclosed under paragraph (e)(4) of Item 407 of Regulation S-K.
| | |
| Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
For information with respect to the security ownership of certain beneficial owners, the directors and executive officers, see the section entitled "Stock ownership — Security ownership of certain beneficial owners and management" in our definitive Proxy Statement to be filed with the Securities and Exchange Commission and delivered to shareholders in connection with our 2025 Annual Meeting of Shareholders, which is incorporated herein by reference.
The following table provides information as of December 31, 2024 for (i) all equity compensation plans previously approved by the Company’s shareholders, and (ii) all equity compensation plans not previously approved by the Company’s shareholders. Since May 4, 2017, the Company has only issued awards under the 2017 Verizon Communications. Inc. Long-Term Incentive Plan (2017 LTIP), which provides for awards of stock options, restricted stock, restricted stock units, performance stock units and other equity-based hypothetical stock units to employees of Verizon. No new awards are permitted to be issued under any other equity compensation plan. In accordance with SEC rules, the table does not include outstanding awards that are payable solely in cash by the terms of the award, and such awards do not reduce the number of shares remaining for issuance under the 2017 LTIP.
| | | | | | | | | | | | | | | | | | | | |
| Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | | Weighted-average exercise price of outstanding options, warrants and rights (b) | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | |
Equity compensation plans approved by security holders | 29,804,583 | | (1) | $ | — | | (2) | 49,966,120 | | (3) |
Equity compensation plans not approved by security holders | 68,189 | | (4) | — | | | — | | |
| Total | 29,872,772 | | | $ | — | | | 49,966,120 | | |
(1) This amount includes: 29,804,583 shares of common stock subject to outstanding restricted stock units and performance stock units, including dividend equivalents accrued on such awards through December 31, 2024. This does not include performance stock units, deferred stock units and deferred share equivalents payable solely in cash.
(2) The Company's outstanding restricted stock units, performance stock units and deferred stock units do not have exercise prices associated with the settlement of these awards.
(3) This number reflects the number of shares of common stock that remained available for future issuance under the 2017 LTIP.
(4) This number reflects shares subject to deferred stock units credited to the Verizon Income Deferral Plan, which were awarded in 2002 under the Verizon Communications Broad-Based Incentive Plan. No new awards are permitted to be issued under this plan.
| | |
| Item 13. Certain Relationships and Related Transactions, and Director Independence |
For information with respect to certain relationships and related transactions and director independence, see the sections entitled "Governance — Our governance framework — Other risk-related matters — Related person transactions and — Item 1: Election of Directors — Our Board's independence" in our definitive Proxy Statement to be filed with the Securities and Exchange Commission and delivered to shareholders in connection with our 2025 Annual Meeting of Shareholders, which are incorporated herein by reference.
| | |
| Item 14. Principal Accounting Fees and Services |
Our independent registered public accounting firm is , , Auditor Firm ID: .
For information with respect to principal accounting fees and services, see the section entitled "Audit matters — Item 3: Ratification of appointment of independent registered public accounting firm" in our definitive Proxy Statement to be filed with the Securities and Exchange Commission and delivered to shareholders in connection with our 2025 Annual Meeting of Shareholders, which is incorporated herein by reference.
| | |
| Item 15. Exhibits and Financial Statement Schedules |
(a) Documents filed as part of this report:
| | | | | | | | | | | | | | |
| | | | |
| | | | | Page |
| | | | |
| (1) | | | Financial Statements | | |
| | | | |
| | Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting | | |
| | | | |
| | Report of Independent Registered Public Accounting Firm on Financial Statements | | |
| | | | |
| | Financial Statements covered by Report of Independent Registered Public Accounting Firm: | | |
| | Consolidated Statements of Income | | |
| | Consolidated Statements of Comprehensive Income | | |
| | Consolidated Balance Sheets | | |
| | Consolidated Statements of Cash Flows | | |
| | Consolidated Statements of Changes in Equity | | |
| | Notes to Consolidated Financial Statements | | |
| | | | |
| (2) | | | Financial Statement Schedule | | |
| | | | |
| | II – Valuation and Qualifying Accounts | | |
| | | | |
| (3) | | | Exhibits | | |
| | | | |
| | Exhibits identified in parentheses below, on file with the SEC, are incorporated herein by reference as exhibits hereto. Unless otherwise indicated, all exhibits so incorporated are from File No. 1-8606. | | |
| | Pursuant to Regulation S-K, Item 601(b)(4)(iii)(A), certain instruments which define the rights of holders of long-term debt of Verizon Communications Inc. and its consolidated subsidiaries are not filed herewith, and the Company hereby agrees to furnish a copy of any such instrument to the SEC upon request. | | |
| | | | | | | | | | | | | | |
Exhibit
Number | | Description |
| | | | |
| | Agreement and Plan of Merger, dated as of September 4, 2024, by and among Verizon Communications Inc., Frontier Communications Parent, Inc. and France Merger Sub Inc. (filed as Exhibit 2.1 to Form 8-K filed on September 5, 2024 and incorporated herein by reference).* |
| | | | |
| | Restated Certificate of Incorporation of Verizon Communications Inc. (filed as Exhibit 3a to Form 10-Q for the period ended June 30, 2014 and incorporated herein by reference). |
| | | | |
| | Bylaws of Verizon Communications Inc., as amended and restated, effective as of December 5, 2024 (filed as Exhibit 3b to Form 8-K filed on December 6, 2024 and incorporated herein by reference). |
| | | | |
| | Indenture between Verizon Communications Inc., both individually and as successor in interest to Verizon Global Funding Corp., and U.S. Bank National Association, as successor trustee to Wachovia Bank, National Association, formerly known as First Union National Bank, as Trustee, dated as of December 1, 2000 (filed as Exhibit 4.1 to Verizon Global Funding Corp.’s Registration Statement on Form S-4, Registration No. 333-64792, and incorporated herein by reference). |
| | | | |
| | First Supplemental Indenture between Verizon Communications Inc., both individually and as successor in interest to Verizon Global Funding Corp., and U.S. Bank National Association, as successor trustee to Wachovia Bank, National Association, formerly known as First Union National Bank, as Trustee, dated as of May 15, 2001 (filed as Exhibit 4.2 to Verizon Global Funding Corp.’s Registration Statement on Form S-3, Registration No. 333-67412, and incorporated herein by reference). |
| | | | |
| | Second Supplemental Indenture between Verizon Communications Inc., both individually and as successor in interest to Verizon Global Funding Corp., and U.S. Bank National Association, as successor trustee to Wachovia Bank, National Association, formerly known as First Union National Bank, as Trustee, dated as of September 29, 2004 (filed as Exhibit 4.1 to Form 8-K filed on February 9, 2006, and incorporated herein by reference). |
| | | | |
| | Third Supplemental Indenture between Verizon Communications Inc., both individually and as successor in interest to Verizon Global Funding Corp., and U.S. Bank National Association, as successor trustee to Wachovia Bank, National Association, formerly known as First Union National Bank, as Trustee, dated as of February 1, 2006 (filed as Exhibit 4.2 to Form 8-K filed on February 9, 2006, and incorporated herein by reference). |
| | | | |
| | Fourth Supplemental Indenture between Verizon Communications Inc., both individually and as successor in interest to Verizon Global Funding Corp., and U.S. Bank National Association, as successor trustee to Wachovia Bank, National Association, formerly known as First Union National Bank, as Trustee, dated as of April 4, 2016 (filed as Exhibit 4.5 to Verizon Communications Inc.’s Registration Statement on Form S-4, Registration No. 333-212307, and incorporated herein by reference). |
| | | | |
| | Fifth Supplemental Indenture between Verizon Communications Inc., both individually and as successor in interest to Verizon Global Funding Corp., and U.S. Bank National Association, as successor trustee to Wachovia Bank, National Association, formerly known as First Union National Bank, as Trustee, dated as of May 15, 2020 (filed as Exhibit 4.1 to Form 8-K filed on May 15, 2020, and incorporated herein by reference). |
| | | | |
| | Description of Verizon's Securities Registered Pursuant to Section 12 of the Securities and Exchange Act of 1934. |
| | | | |
| | 2017 Verizon Communications Inc. Long-Term Incentive Plan (incorporated by reference to Appendix B of the Registrant’s Proxy Statement included in Schedule 14A filed on March 20, 2017).** |
| | | | |
| | | | |
| | | | Form of 2022 Performance Stock Unit Agreement pursuant to the 2017 Verizon Communications Inc. Long-Term Incentive Plan (filed as Exhibit 10a to Form 10-Q for the period ended March 31, 2022 and incorporated herein by reference).** |
| | | | |
| | | | Form of 2022 Restricted Stock Unit Agreement pursuant to the 2017 Verizon Communications Inc. Long-Term Incentive Plan (filed as Exhibit 10b to Form 10-Q for the period ended March 31, 2022 and incorporated herein by reference).** |
| | | | |
| | | | Form of 2023 Performance Stock Unit Agreement pursuant to the 2017 Verizon Communications Inc. Long-Term Incentive Plan (filed as Exhibit 10a to Form 10-Q for the period ended March 31, 2023 and incorporated herein by reference).** |
| | | | |
| | | | Form of 2023 Restricted Stock Unit Agreement pursuant to the 2017 Verizon Communications Inc. Long-Term Incentive Plan (filed as Exhibit 10b to Form 10-Q for the period ended March 31, 2023 and incorporated herein by reference).** |
| | | | |
| | | | Form of 2024 Performance Stock Unit Agreement pursuant to the 2017 Verizon Communications Inc. Long-Term Incentive Plan (filed as Exhibit 10a to Form 10-Q for the period ended March 31, 2024 and incorporated herein by reference).** |
| | | | |
| | | | Form of 2024 Restricted Stock Unit Agreement pursuant to the 2017 Verizon Communications Inc. Long-Term Incentive Plan (filed as Exhibit 10b to Form 10-Q for the period ended March 31, 2024 and incorporated herein by reference).** |
| | | | |
| | | | | | | | | | | | | | |
| | Verizon Communications Inc. Short-Term Incentive Plan (filed as Exhibit 10a to Form 10-Q for the period ended March 31, 2019 and incorporated herein by reference).** |
| | | | |
| | Verizon Executive Deferral Plan (filed as Exhibit 10e to Form 10-K for the period ended December 31, 2017 and incorporated herein by reference).** |
| | | | |
| | Verizon Communications Inc. Income Deferral Plan (filed as Exhibit 10f to Form 10-Q for the period ended June 30, 2002 and incorporated herein by reference).** |
| | | | |
| | | | Description of Amendment to Verizon Communications Inc. Income Deferral Plan (filed as Exhibit 10o(i) to Form 10-K for the year ended December 31, 2004 and incorporated herein by reference).** |
| | | | |
| | Verizon Excess Pension Plan (filed as Exhibit 10p to Form 10-K for the year ended December 31, 2004 and incorporated herein by reference).** |
| | | | |
| | | | First Amendment to Verizon Excess Pension Plan (filed as Exhibit 10p(i) to Form 10-K for the year ended December 31, 2004 and incorporated herein by reference).** |
| | | | |
| | Bell Atlantic Senior Management Long-Term Disability and Survivor Protection Plan, as amended (filed as Exhibit 10h to Form SE filed on March 27, 1986 and Exhibit 10b(ii) to Form 10-K for the year ended December 31, 1997 and incorporated herein by reference).** |
| | | | |
| | Verizon Executive Life Insurance Plan, As Amended and Restated September 2009 (filed as Exhibit 10s to Form 10-K for the year ended December 31, 2010 and incorporated herein by reference).** |
| | | | |
| | Form of Aircraft Time Sharing Agreement (filed as Exhibit 10i to Form 10-K for the year ended December 31, 2020 and incorporated herein by reference).** |
| | | | |
| | Verizon Senior Manager Severance Plan (filed as Exhibit 10d to Form 10-Q for the period ended March 31, 2010 and incorporated herein by reference).** |
| | | | |
| | |
| | | | |
| | List of principal subsidiaries of Verizon Communications Inc. |
| | | | |
| | Consent of Ernst & Young LLP. |
| | | | |
| | Powers of Attorney. |
| | | | |
| | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| | | | |
| | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| | | | |
| | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| | | | |
| | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| | | | |
| | Verizon Communications Inc. Policy for the Recovery of Erroneously Awarded Compensation (filed as Exhibit 97 to Form 10-K for the year ended December 31, 2023 and incorporated herein by reference).
|
| | | | |
| 101.INS | | XBRL Instance Document - the instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document. |
| | | | |
| 101.SCH | | XBRL Taxonomy Extension Schema Document. |
| | | | |
| 101.PRE | | XBRL Taxonomy Presentation Linkbase Document. |
| | | | |
| 101.CAL | | XBRL Taxonomy Calculation Linkbase Document. |
| | | | |
| 101.LAB | | XBRL Taxonomy Label Linkbase Document. |
| | | | |
| 101.DEF | | XBRL Taxonomy Extension Definition Linkbase Document. |
| | | | |
| 104 | | Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101). |
| | | | |
* | | Schedules (or similar attachments) have been omitted from this filing pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule will be furnished to the SEC upon request. |
| ** | | Indicates management contract or compensatory plan or arrangement. |
| | $ | | | | $ | | |
| $ | | | | $ | | |
| Year 2023 | | | | | | | | | | | | | | | |
| Year 2022 | | | | | | | | | | | | | | | |
| | | | | | | | | | |
| | | | Additions | | | | |
| Description | | Balance at
Beginning of
Period | | Charged to
Expenses | | Charged to Other Accounts(d) | | Deductions(e) | | Balance at End of Period |
| Valuation allowance for deferred tax assets: | | | | | | |
| Year 2024 | | $ | | | | $ | | | | $ | | | | $ | | | | $ | | |
| Year 2023 | | | | | | | | | | | | | | | |
| Year 2022 | | | | | | | | | | | | | | | |
(a)Charged to Other Accounts primarily includes amounts previously written off which were credited directly to this account when recovered.
(b)Deductions primarily include amounts written off as uncollectible or transferred to other accounts or utilized.
(c)Allowance for credit losses includes approximately $ million, $ million, and $ million at December 31, 2024, 2023, and 2022, respectively, related to long-term device payment receivables.
(d)Charged to Other Accounts includes current year increase to valuation allowance charged to equity and reclassifications from other balance sheet accounts.
(e)Reductions to valuation allowances related to deferred tax assets.
| | |
| Item 16. Form 10-K Summary |
None.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | | | | | | | | | | |
| VERIZON COMMUNICATIONS INC. |
| | | |
| By: | /s/ | Mary-Lee Stillwell | Date: February 12, 2025 |
| | Mary-Lee Stillwell
Senior Vice President and Controller | |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| | | | | | | | | | | |
| Principal Executive Officer: | | |
| | | |
| /s/ | Hans E. Vestberg | | February 12, 2025 |
| Hans E. Vestberg Chairman and Chief Executive Officer | |
| | | |
| | | |
| Principal Financial Officer: | | |
| | | |
| /s/ | Anthony T. Skiadas | | February 12, 2025 |
| Anthony T. Skiadas Executive Vice President and Chief Financial Officer | |
| | | |
| | | |
| Principal Accounting Officer: | | |
| | | |
| /s/ | Mary-Lee Stillwell | | February 12, 2025 |
| Mary-Lee Stillwell Senior Vice President and Controller | |
| | | |
| | | | | | | | |
| * | Director | February 12, 2025 |
Hans E. Vestberg | | |
| | |
| * | Director | February 12, 2025 |
Shellye L. Archambeau | | |
| | |
| * | Director | February 12, 2025 |
| Roxanne S. Austin | | |
| | |
| * | Director | February 12, 2025 |
Mark T. Bertolini | | |
| | |
| * | Director | February 12, 2025 |
| Vittorio Colao | | |
| | |
| * | Director | February 12, 2025 |
| Caroline Litchfield | | |
| | |
| * | Director | February 12, 2025 |
| Laxman Narasimhan | | |
| | |
| * | Director | February 12, 2025 |
Clarence Otis, Jr. | | |
| | |
| * | Director | February 12, 2025 |
Daniel H. Schulman | | |
| | |
| * | Director | February 12, 2025 |
Rodney E. Slater | | |
| | |
| * | Director | February 12, 2025 |
Carol B. Tomé | | |
| | |
| * By: /s/ Mary-Lee Stillwell | | |
| Mary-Lee Stillwell | | |
| (as attorney-in-fact) | | |
| | |
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