Item 2.02. Results of Operations and Financial Condition
Attached as an exhibit hereto are a press release and financial tables dated
January 30, 2020 issued by Verizon Communications Inc. (Verizon).
Non-GAAP Measures
Verizon's press release and financial tables include financial information
prepared in conformity with generally accepted accounting principles in the
United States (GAAP) as well as non-GAAP financial 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 non-GAAP
measures provide relevant and useful information, which is used by management,
investors and other users of our financial information in assessing 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.
EBITDA and EBITDA Margin Related Non-GAAP Measures
Consolidated earnings before interest, taxes, depreciation and amortization
(EBITDA), Consolidated EBITDA Margin, Segment EBITDA and Segment EBITDA Margin
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 depreciation and
amortization expense related primarily to capital expenditures and acquisitions
that occurred in prior periods, as well as in evaluating operating performance
in relation to Verizon's competitors.
Consolidated EBITDA is calculated by adding back interest, taxes and
depreciation and amortization expense to net income. Consolidated EBITDA Margin
is calculated by dividing Consolidated EBITDA by consolidated operating
revenues.
Segment EBITDA is calculated by adding back segment depreciation and
amortization expense to segment operating income. Segment EBITDA Margin is
calculated by dividing Segment EBITDA by segment total operating revenues.
Consolidated Adjusted EBITDA and Consolidated Adjusted EBITDA Margin Related
Non-GAAP Measures
Consolidated Adjusted EBITDA and Consolidated Adjusted EBITDA Margin are
non-GAAP financial measures that we believe provide relevant and useful
information to management, investors and other users of our financial
information in evaluating the effectiveness of our operations and underlying
business trends in a manner that is consistent with management's evaluation of
business performance. We believe that Consolidated Adjusted EBITDA and
Consolidated Adjusted EBITDA Margin are 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 policies. Further, the
exclusion of non-operational items and special items enables comparability to
prior period performance and trend analysis.
Consolidated Adjusted EBITDA is calculated by excluding from Consolidated EBITDA
the effect of the following non-operational items: equity in losses and earnings
of unconsolidated businesses and other income and expense, net, and the
following special items: impairment charges, severance charges, product
realignment charges, acquisition and integration related charges and net gain
from dispositions of assets and businesses. The impairment charges relate to
goodwill impairment charges recognized in 2019 and 2018 as a result of the
Company's annual goodwill impairment testing of its media business, Verizon
Media, and the impairment charge of an investment in a media joint venture in
2019. Severance charges recorded during 2019 and 2018 relate to headcount
reduction initiatives. Product realignment charges recorded primarily relate to
the discontinuation of the go90 platform and associated content. Acquisition and
integration related charges represent transaction expenses related to business
acquisitions and incremental expenses directly incurred to integrate the
acquired businesses into our operations. Net gain from dispositions of assets
and businesses relates to the sale of various real estate properties and
businesses.
Consolidated Adjusted EBITDA Margin is calculated by dividing Consolidated
Adjusted EBITDA by Consolidated Operating Revenues.
Net Debt and Net Debt to Consolidated Adjusted EBITDA Ratio
Net Debt and Net Debt to Consolidated Adjusted EBITDA Ratio are non-GAAP
financial measures that we believe are useful to management, investors and other
users of our financial information in evaluating Verizon's ability to service
its debt.
Net Debt is calculated by subtracting cash and cash equivalents from the sum of
debt maturing within one year and long-term debt. Net Debt to Consolidated
Adjusted EBITDA Ratio is calculated by dividing Net Debt by Consolidated
Adjusted EBITDA. For

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purposes of Net Debt to Consolidated Adjusted EBITDA Ratio, Consolidated Adjusted EBITDA is calculated for the last twelve months. Net Unsecured Debt and Net Unsecured Debt to Consolidated Adjusted EBITDA Ratio Net Unsecured Debt and Net Unsecured Debt to Consolidated Adjusted EBITDA Ratio are non-GAAP financial measures that we believe are useful to management, investors and other users of our financial information in evaluating Verizon's ability to service its unsecured debt from continuing operations. Net Unsecured Debt is calculated by subtracting secured debt and cash and cash equivalents from the sum of debt maturing within one year and long-term debt. Net Unsecured Debt to Consolidated Adjusted EBITDA Ratio is calculated by dividing Net Unsecured Debt by Consolidated Adjusted EBITDA. For purposes of Net Unsecured Debt to Consolidated Adjusted EBITDA Ratio, Consolidated Adjusted EBITDA is calculated for the last twelve months.

Adjusted Earnings per Common Share (Adjusted EPS) and Adjusted EPS Growth Forecast

Adjusted EPS and Adjusted EPS Growth Forecast are non-GAAP financial measures that we believe are useful to management, investors and other users of our financial information in evaluating our operating results and understanding our operating trends without the effect of special items which could vary from period to period. We believe excluding special items provides more comparable assessment of our financial results from period to period.

Adjusted EPS is calculated by excluding from the calculation of reported EPS the effect of the following special items: severance, pension and benefits charges, acquisition and integration related charges, impairment charges, Historical Wireless legal entity restructuring, early debt redemption costs, disposition of preferred stock, net gain from dispositions of assets and businesses, and product realignment charges.

We have not provided a reconciliation for our Adjusted EPS Growth Forecast because we cannot, without unreasonable effort, predict the special items that could arise during 2020.

Adjusted Effective Income Tax Rate Attributable to Verizon Forecast (Adjusted ETR Forecast)

Adjusted ETR Forecast is a non-GAAP financial measure that we believe is useful to management, investors and other users of our financial information in assessing our effective income tax rate without the effect of special items which could vary from period to period. Adjusted ETR Forecast is calculated by dividing the Provision for income taxes by Net Income attributable to Verizon before tax after adjusting for the impact of special items.

We have not provided a reconciliation for our Adjusted ETR Forecast because we cannot, without unreasonable effort, predict the special items that could arise during 2020.

Free Cash Flow

Free cash flow is a non-GAAP financial measure that reflects an additional way of viewing our liquidity that, when viewed with our GAAP results, provides a more complete understanding of factors and trends affecting our cash flows. 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 acquisitions of businesses 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.

Free cash flow is calculated by subtracting capital expenditures (including capitalized software) from net cash provided by operating activities.

Supplemental Information - Wireless and Wireline The Wireless and Wireline segment results included in the schedules accompanying this Report are non-GAAP financial measures that we believe provide relevant and useful information to investors and other users of our financial information in reconciling the results of our new segments, Verizon Consumer Group and Verizon Business Group, effective as of April 1, 2019, to the historical presentation of our segment results prior to our strategic reorganization. This supplemental operating information is also provided to help investors and users understand trends in our new segment results.

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The Wireless and Wireline segment results are calculated by adjusting total
reportable segments operating revenues and operating expenses for intersegment
transactions that have been eliminated under the new structure, and the impact
of VZ Connect and other early-stage development businesses previously included
in Corporate. Total reportable segments operating revenues and operating
expenses are calculated by aggregating the total operating revenues and
operating expenses of Verizon Consumer Group and Verizon Business Group. This
supplemental operating information should be considered in addition to, but not
as a substitute for, our segment financial information.
Wireless EBITDA, Wireless EBITDA Margin, Wireline EBITDA and Wireline EBITDA
Margin 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 comparable basis with prior period results. The lack of
comparability results from the implementation of certain new accounting
standards on a prospective basis.
Wireless EBITDA and Wireline EBITDA are calculated by adding back depreciation
and amortization expense to their respective segment operating income. Wireless
EBITDA Margin and Wireline EBITDA Margin are calculated by dividing Wireless
EBITDA by Wireless total operating revenues and Wireline EBITDA by Wireline
total operating revenues, respectively.
See the accompanying schedules for reconciliations of non-GAAP financial
measures to GAAP.

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Item 9.01. Financial Statements and Exhibits
(d) Exhibits.

Exhibit
Number                 Description

     99                Press release and financial tables, dated January 30, 2020,
                       issued by Verizon Communications Inc.

     104               Cover Page Interactive Data File (formatted as inline XBRL).

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