UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
| (Mark one) |
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| x |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2003 |
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| OR |
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| ¨ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to |
Commission File Number 1-6964
VERIZON VIRGINIA INC.
| A Virginia Corporation |
I.R.S. Employer Identification No. 54-0167060 |
600 East Main Street, Richmond, Virginia 23219
Telephone Number (804) 225-6300
THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(a) AND (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH REDUCED DISCLOSURE FORMAT PURSUANT TO GENERAL INSTRUCTION H(2).
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes ¨ No x
Verizon Virginia Inc.
| Page | ||||
| PART I |
Financial Information |
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| Item 1. |
Financial Statements |
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| Condensed Statements of Income Three Months Ended March 31, 2003 and 2002 |
1 | |||
| March 31, 2003 and December 31, 2002 |
2 | |||
| Condensed Statements of Cash Flows Three Months Ended March 31, 2003 and 2002 |
4 | |||
| 5 | ||||
| Item 2. |
Management’s Discussion and Analysis of Results of Operations |
9 | ||
| Item 4. |
16 | |||
| PART II |
Other Information |
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| Item 6. |
17 | |||
| 18 | ||||
| 19 | ||||
| 21 | ||||
Verizon Virginia Inc.
PART I – FINANCIAL INFORMATION
| Item 1. | Financial Statements |
CONDENSED STATEMENTS OF INCOME
| Three Months Ended March 31, |
||||||||
| (Dollars in Millions) (Unaudited) |
2003 |
2002 |
||||||
| Operating Revenues (including $33.0 and $27.0 from affiliates) |
$ |
563.4 |
|
$ |
590.5 |
| ||
| Operating Expenses (including $130.9 and $120.1 to affiliates) |
||||||||
| Cost of services and sales (exclusive of items shown below) |
|
155.3 |
|
|
159.1 |
| ||
| Selling, general and administrative expense |
|
127.1 |
|
|
106.8 |
| ||
| Depreciation and amortization |
|
135.9 |
|
|
140.4 |
| ||
| Total Operating Expenses |
|
418.3 |
|
|
406.3 |
| ||
| Operating Income |
|
145.1 |
|
|
184.2 |
| ||
| Other income and (expense), net (including $(23.0) and $.1 from affiliates) |
|
(22.6 |
) |
|
(.6 |
) | ||
| Interest expense (including $2.1 and $3.7 to affiliate) |
|
15.6 |
|
|
18.6 |
| ||
| Income before provision for income taxes and cumulative effect of change in accounting principle |
|
106.9 |
|
|
165.0 |
| ||
| Provision for income taxes |
|
50.2 |
|
|
64.3 |
| ||
| Income Before Cumulative Effect of Change in Accounting Principle |
|
56.7 |
|
|
100.7 |
| ||
| Cumulative effect of change in accounting principle, net of tax |
|
87.1 |
|
|
— |
| ||
| Net Income |
$ |
143.8 |
|
$ |
100.7 |
| ||
See Notes to Condensed Financial Statements.
1
Verizon Virginia Inc.
ASSETS
| (Dollars in Millions) |
March 31, 2003 |
December 31, 2002 | ||||
| (Unaudited) |
||||||
| Current assets |
||||||
| Short-term investments |
$ |
43.7 |
$ |
64.9 | ||
| Note receivable from affiliate |
|
223.6 |
|
— | ||
| Accounts receivable: |
||||||
| Trade and other, net of allowances for uncollectibles of $158.9 and $150.0 |
|
435.7 |
|
469.4 | ||
| Affiliates |
|
62.4 |
|
62.3 | ||
| Material and supplies |
|
7.8 |
|
7.7 | ||
| Prepaid expenses |
|
19.4 |
|
30.3 | ||
| Deferred income taxes |
|
61.4 |
|
49.2 | ||
| Other |
|
60.0 |
|
58.7 | ||
|
|
914.0 |
|
742.5 | |||
| Plant, property and equipment |
|
8,198.1 |
|
8,209.3 | ||
| Less accumulated depreciation |
|
4,906.5 |
|
4,987.6 | ||
|
|
3,291.6 |
|
3,221.7 | |||
| Intangible assets, net |
|
69.5 |
|
72.8 | ||
| Prepaid pension asset |
|
279.0 |
|
262.1 | ||
| Other assets |
|
148.8 |
|
133.5 | ||
| Total assets |
$ |
4,702.9 |
$ |
4,432.6 | ||
See Notes to Condensed Financial Statements.
2
Verizon Virginia Inc.
CONDENSED BALANCE SHEETS
LIABILITIES AND SHAREOWNER’S INVESTMENT
| (Dollars in Millions) |
March 31, 2003 |
December 31, 2002 | |||||
| (Unaudited) |
|||||||
| Current liabilities |
|||||||
| Debt maturing within one year: |
|||||||
| Note payable to affiliate |
$ |
— |
|
$ |
780.0 | ||
| Other |
|
1.7 |
|
|
1.7 | ||
| Accounts payable and accrued liabilities: |
|||||||
| Affiliates |
|
93.9 |
|
|
138.8 | ||
| Other |
|
333.6 |
|
|
335.7 | ||
| Other current liabilities |
|
137.3 |
|
|
139.6 | ||
|
|
566.5 |
|
|
1,395.8 | |||
| Long-term debt |
|
1,607.5 |
|
|
674.4 | ||
| Employee benefit obligations |
|
331.1 |
|
|
327.1 | ||
| Deferred credits and other liabilities |
|||||||
| Deferred income taxes |
|
475.2 |
|
|
404.4 | ||
| Unamortized investment tax credits |
|
9.4 |
|
|
9.5 | ||
| Other |
|
114.2 |
|
|
110.9 | ||
|
|
598.8 |
|
|
524.8 | |||
| Shareowner’s investment |
|||||||
| Common stock – one share, without par value |
|
873.7 |
|
|
873.7 | ||
| Capital surplus |
|
97.5 |
|
|
72.1 | ||
| Reinvested earnings |
|
632.5 |
|
|
564.7 | ||
| Accumulated other comprehensive loss |
|
(4.7 |
) |
|
— | ||
|
|
1,599.0 |
|
|
1,510.5 | |||
| Total liabilities and shareowner’s investment |
$ |
4,702.9 |
|
$ |
4,432.6 | ||
See Notes to Condensed Financial Statements.
3
Verizon Virginia Inc.
CONDENSED STATEMENTS OF CASH FLOWS
| Three Months |
||||||||
| (Dollars in Millions) (Unaudited) |
2003 |
2002 |
||||||
| Net Cash Provided by Operating Activities |
$ |
199.0 |
|
$ |
142.0 |
| ||
| Cash Flows from Investing Activities |
||||||||
| Capital expenditures (including capitalized network and non-network software) |
|
(55.4 |
) |
|
(89.6 |
) | ||
| Net change in short-term investments |
|
21.2 |
|
|
21.3 |
| ||
| Change in note receivable from affiliate |
|
(223.6 |
) |
|
— |
| ||
| Investment in unconsolidated business |
|
(25.4 |
) |
|
— |
| ||
| Other, net |
|
.2 |
|
|
— |
| ||
| Net cash used in investing activities |
|
(283.0 |
) |
|
(68.3 |
) | ||
| Cash Flows from Financing Activities |
||||||||
| Proceeds from borrowings |
|
989.0 |
|
|
— |
| ||
| Early extinguishment of debt |
|
(65.0 |
) |
|
(170.0 |
) | ||
| Principal repayments of borrowings and capital lease obligations |
|
(.4 |
) |
|
(100.4 |
) | ||
| Change in note payable to affiliate |
|
(780.0 |
) |
|
346.3 |
| ||
| Dividends paid |
|
(76.0 |
) |
|
(140.0 |
) | ||
| Capital contribution from parent |
|
25.4 |
|
|
— |
| ||
| Net change in outstanding checks drawn on controlled disbursement accounts |
|
(9.0 |
) |
|
(9.6 |
) | ||
| Net cash provided by/(used in) financing activities |
|
84.0 |
|
|
(73.7 |
) | ||
| Net change in cash |
|
— |
|
|
— |
| ||
| Cash, beginning of period |
|
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