Verizon Communications Inc. (VZ) | Equity Method Investments

Selected Financial Data

Verizon Communications Inc.'s selected financial data

USD $ in millions

	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
Equity in earnings of unconsolidated businesses	324	444	508	553	567
Equity investees	3,306	3,403	3,473	3,108	3,059

ROA (equity method investments only)¹	9.80%	13.05%	14.63%	17.79%	18.54%

Source: Based on data from Verizon Communications Inc. Annual Reports

2012 Calculations

¹ ROA (equity method investments only) = 100 × Equity in earnings of unconsolidated businesses ÷ Equity investees
= 100 × 324 ÷ 3,306 = 9.80%

Item	Description	The company
Equity in earnings of unconsolidated businesses	This item represents the entity's proportionate share for the period of the net income (loss) of its investee (such as unconsolidated subsidiaries and joint ventures) to which the equity method of accounting is applied. Such amount typically reflects adjustments similar to those made in preparing consolidated statements, including adjustments to eliminate intercompany gains and losses, and to amortize, if appropriate, any difference between cost and underlying equity in net assets of the investee at the date of investment.	Verizon Communications Inc.'s equity in earnings of unconsolidated businesses declined from 2010 to 2011 and from 2011 to 2012.
Equity investees	This item represents the carrying amount on the entity's balance sheet of its investment in common stock of an equity method investee. This is not an indicator of the fair value of the investment, rather it is the initial cost adjusted for the entity's share of earnings and losses of the investee, adjusted for any distributions (dividends) and other than temporary impairment losses recognized.	Verizon Communications Inc.'s equity investees declined from 2010 to 2011 and from 2011 to 2012.
ROA (equity method investments only)	A profitability ratio calculated as equity in earnings of unconsolidated businesses divided by equity investees.	Verizon Communications Inc.'s ROA of equity method investments deteriorated from 2010 to 2011 and from 2011 to 2012.

Summarized Financial Information

Summarized financial information for Verizon Communications Inc.'s affiliates, subsidiaries, associates, and joint ventures

USD $ in millions

	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
Current assets	3,516	3,720	3,620	3,588	3,247
Noncurrent assets	8,159	8,469	7,568	8,179	8,315
Total assets	11,675	12,189	11,188	11,767	11,562
Current liabilities	5,526	6,123	5,509	6,804	5,847
Noncurrent liabilities	5	8	8	49	54
Total liabilities	5,531	6,131	5,517	6,853	5,901
Equity	6,144	6,058	5,671	4,914	5,661
Total liabilities and equity	11,675	12,189	11,188	11,767	11,562
Net revenue	10,825	12,668	12,356	12,903	13,077
Operating income	2,823	4,021	4,156	4,313	3,820
Net income	1,679	2,451	2,563	2,717	2,634

Source: Based on data from Verizon Communications Inc. Annual Reports

Item	Description	The company
Equity	This item represents the disclosure of summarized financial information for unconsolidated subsidiaries and 50 percent-or-less owned entities accounted for using the equity method of accounting. If investments in common stock of corporate joint ventures or other investments accounted for under the equity method are, in the aggregate, material in relation to the financial position or results of operations of an investor, it may be necessary to present summarized information as to assets, liabilities, and results of operations of the investee, or group of investments for which combined disclosure is appropriate, either by individual financial statement caption or in groups, as appropriate. Such summarized financial information may include total equity or capital (as applicable).	Equity of Verizon Communications Inc.'s affiliates, subsidiaries, associates, and joint ventures increased from 2010 to 2011 and from 2011 to 2012.
Net income	This item represents the disclosure of summarized financial information for unconsolidated subsidiaries and 50 percent-or-less owned entities accounted for using the equity method of accounting. If investments in common stock of corporate joint ventures or other investments accounted for under the equity method are, in the aggregate, material in relation to the financial position or results of operations of an investor, it may be necessary to present summarized information as to assets of the investee, or group of investments for which combined disclosure is appropriate, either by individual financial statement caption or in groups, as appropriate. Such summarized financial information may, at a minimum, include net income or loss.	Net income of Verizon Communications Inc.'s affiliates, subsidiaries, associates, and joint ventures declined from 2010 to 2011 and from 2011 to 2012.

Adjustments to Financial Data: Proportionate Consolidation

Recognition of Verizon Communications Inc.'s proportionate share of affiliates, subsidiaries, associates, and joint ventures assets and liabilities instead of net equity.

Verizon Communications Inc., adjustments to financial data

USD $ in millions

	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
Weighted average percentage interest in affiliates	53.81%	56.17%	61.24%	63.25%	54.04%
Adjustment to Current Assets
Current assets (as reported)	21,235	30,939	22,348	22,608	26,075
Add: Current assets of affiliates (adjustment)	1,892	2,090	2,217	2,269	1,755
Current assets (adjusted)	23,127	33,029	24,565	24,877	27,830
Adjustment to Total Assets
Total assets (as reported)	225,222	230,461	220,005	227,251	202,352
Less: Equity investees (adjustment)	3,306	3,403	3,473	3,108	3,059
Add: Total assets of affiliates (adjustment)	6,282	6,847	6,852	7,442	6,248
Total assets (adjusted)	228,198	233,905	223,384	231,585	205,541
Adjustment to Current Liabilities
Current liabilities (as reported)	26,956	30,761	30,597	29,136	25,906
Add: Current liabilities of affiliates (adjustment)	2,973	3,440	3,374	4,303	3,160
Current liabilities (adjusted)	29,929	34,201	33,971	33,439	29,066
Adjustment to Total Liabilities
Total liabilities (as reported)	139,689	144,553	133,093	142,884	123,447
Add: Total liabilities of affiliates (adjustment)	2,976	3,444	3,379	4,334	3,189
Total liabilities (adjusted)	142,665	147,997	136,472	147,218	126,636
Adjustment to Operating Revenues
Operating revenues (as reported)	115,846	110,875	106,565	107,808	97,354
Add: Net revenue of affiliates (adjustment)	5,825	7,116	7,567	8,161	7,066
Operating revenues (adjusted)	121,671	117,991	114,132	115,969	104,420

Adjusted Ratios: Proportionate Consolidation (Summary)

Verizon Communications Inc., adjusted ratios

	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
Current Ratio
Reported current ratio	0.79	1.01	0.73	0.78	1.01
Adjusted current ratio	0.77	0.97	0.72	0.74	0.96
Net Profit Margin
Reported net profit margin	0.76%	2.17%	2.39%	3.39%	6.60%
Adjusted net profit margin	0.72%	2.04%	2.23%	3.15%	6.16%
Total Asset Turnover
Reported total asset turnover	0.51	0.48	0.48	0.47	0.48
Adjusted total asset turnover	0.53	0.50	0.51	0.50	0.51
Financial Leverage
Reported financial leverage	6.79	6.41	5.70	5.46	4.85
Adjusted financial leverage	6.88	6.50	5.79	5.57	4.93
Return on Assets (ROA)
Reported ROA	0.39%	1.04%	1.16%	1.61%	3.18%
Adjusted ROA	0.38%	1.03%	1.14%	1.58%	3.13%

Ratio	Description	The company
Adjusted current ratio	A liquidity ratio calculated as adjusted current assets divided by adjusted current liabilities.	Verizon Communications Inc.'s adjusted current ratio improved from 2010 to 2011 but then slightly deteriorated from 2011 to 2012 not reaching 2010 level.
Adjusted net profit margin	An indicator of profitability, calculated as net income divided by adjusted revenue.	Verizon Communications Inc.'s adjusted net profit margin deteriorated from 2010 to 2011 and from 2011 to 2012.
Adjusted total asset turnover	An activity ratio calculated as adjusted total revenue divided by adjusted total assets.	Verizon Communications Inc.'s adjusted total asset turnover deteriorated from 2010 to 2011 but then improved from 2011 to 2012 exceeding 2010 level.
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	Verizon Communications Inc.'s adjusted financial leverage increased from 2010 to 2011 and from 2011 to 2012.
Adjusted ROA	A profitability ratio calculated as net income divided by adjusted total assets.	Verizon Communications Inc.'s adjusted ROA deteriorated from 2010 to 2011 and from 2011 to 2012.

Adjusted Current Ratio

	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
As Reported
Current assets (USD $ in millions)	21,235	30,939	22,348	22,608	26,075
Current liabilities (USD $ in millions)	26,956	30,761	30,597	29,136	25,906

Current ratio¹	0.79	1.01	0.73	0.78	1.01
Adjusted: from Equity Method to Proportionate Consolidation
Adjusted current assets (USD $ in millions)	23,127	33,029	24,565	24,877	27,830
Adjusted current liabilities (USD $ in millions)	29,929	34,201	33,971	33,439	29,066

Adjusted current ratio²	0.77	0.97	0.72	0.74	0.96

2012 Calculations

¹ Current ratio = Current assets ÷ Current liabilities
= 21,235 ÷ 26,956 = 0.79

² Adjusted current ratio = Adjusted current assets ÷ Adjusted current liabilities
= 23,127 ÷ 29,929 = 0.77

Ratio	Description	The company
Adjusted current ratio	A liquidity ratio calculated as adjusted current assets divided by adjusted current liabilities.	Verizon Communications Inc.'s adjusted current ratio improved from 2010 to 2011 but then slightly deteriorated from 2011 to 2012 not reaching 2010 level.

Adjusted Net Profit Margin

	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
As Reported
Net income attributable to Verizon (USD $ in millions)	875	2,404	2,549	3,651	6,428
Operating revenues (USD $ in millions)	115,846	110,875	106,565	107,808	97,354

Net profit margin¹	0.76%	2.17%	2.39%	3.39%	6.60%
Adjusted: from Equity Method to Proportionate Consolidation
Net income attributable to Verizon (USD $ in millions)	875	2,404	2,549	3,651	6,428
Adjusted operating revenues (USD $ in millions)	121,671	117,991	114,132	115,969	104,420

Adjusted net profit margin²	0.72%	2.04%	2.23%	3.15%	6.16%

2012 Calculations

¹ Net profit margin = 100 × Net income attributable to Verizon ÷ Operating revenues
= 100 × 875 ÷ 115,846 = 0.76%

² Adjusted net profit margin = 100 × Net income attributable to Verizon ÷ Adjusted operating revenues
= 100 × 875 ÷ 121,671 = 0.72%

Ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as net income divided by adjusted revenue.	Verizon Communications Inc.'s adjusted net profit margin deteriorated from 2010 to 2011 and from 2011 to 2012.

Adjusted Total Asset Turnover

	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
As Reported
Operating revenues (USD $ in millions)	115,846	110,875	106,565	107,808	97,354
Total assets (USD $ in millions)	225,222	230,461	220,005	227,251	202,352

Total asset turnover¹	0.51	0.48	0.48	0.47	0.48
Adjusted: from Equity Method to Proportionate Consolidation
Adjusted operating revenues (USD $ in millions)	121,671	117,991	114,132	115,969	104,420
Adjusted total assets (USD $ in millions)	228,198	233,905	223,384	231,585	205,541

Adjusted total asset turnover²	0.53	0.50	0.51	0.50	0.51

2012 Calculations

¹ Total asset turnover = Operating revenues ÷ Total assets
= 115,846 ÷ 225,222 = 0.51

² Adjusted total asset turnover = Adjusted operating revenues ÷ Adjusted total assets
= 121,671 ÷ 228,198 = 0.53

Ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as adjusted total revenue divided by adjusted total assets.	Verizon Communications Inc.'s adjusted total asset turnover deteriorated from 2010 to 2011 but then improved from 2011 to 2012 exceeding 2010 level.

Adjusted Financial Leverage

	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
As Reported
Total assets (USD $ in millions)	225,222	230,461	220,005	227,251	202,352
Equity attributable to Verizon (USD $ in millions)	33,158	35,970	38,569	41,606	41,706

Financial leverage¹	6.79	6.41	5.70	5.46	4.85
Adjusted: from Equity Method to Proportionate Consolidation
Adjusted total assets (USD $ in millions)	228,198	233,905	223,384	231,585	205,541
Equity attributable to Verizon (USD $ in millions)	33,158	35,970	38,569	41,606	41,706

Adjusted financial leverage²	6.88	6.50	5.79	5.57	4.93

2012 Calculations

¹ Financial leverage = Total assets ÷ Equity attributable to Verizon
= 225,222 ÷ 33,158 = 6.79

² Adjusted financial leverage = Adjusted total assets ÷ Equity attributable to Verizon
= 228,198 ÷ 33,158 = 6.88

Ratio	Description	The company
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	Verizon Communications Inc.'s adjusted financial leverage increased from 2010 to 2011 and from 2011 to 2012.

Adjusted Return On Assets (ROA)

	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
As Reported
Net income attributable to Verizon (USD $ in millions)	875	2,404	2,549	3,651	6,428
Total assets (USD $ in millions)	225,222	230,461	220,005	227,251	202,352

ROA¹	0.39%	1.04%	1.16%	1.61%	3.18%
Adjusted: from Equity Method to Proportionate Consolidation
Net income attributable to Verizon (USD $ in millions)	875	2,404	2,549	3,651	6,428
Adjusted total assets (USD $ in millions)	228,198	233,905	223,384	231,585	205,541

Adjusted ROA²	0.38%	1.03%	1.14%	1.58%	3.13%

¹ ROA = 100 × Net income attributable to Verizon ÷ Total assets
= 100 × 875 ÷ 225,222 = 0.39%

² Adjusted ROA = 100 × Net income attributable to Verizon ÷ Adjusted total assets
= 100 × 875 ÷ 228,198 = 0.38%

Ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as net income divided by adjusted total assets.	Verizon Communications Inc.'s adjusted ROA deteriorated from 2010 to 2011 and from 2011 to 2012.