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 1-3435
VERIZON NEW YORK INC.
| A New York Corporation |
I.R.S. Employer Identification No. 13-5275510 |
1095 Avenue of the Americas, Room 3868, New York, New York 10036
Telephone Number (212) 395-2121
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 New York Inc.
| Page | ||||
| PART I |
Financial Information |
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| Item 1. |
Financial Statements |
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| Three Months Ended March 31, 2003 and 2002 |
1 | |||
| March 31, 2003 and December 31, 2002 |
2 | |||
| Three Months Ended March 31, 2003 and 2002 |
4 | |||
| 5 | ||||
| Item 2. |
Management’s Discussion and Analysis of Results of Operations |
8 | ||
| Item 4. |
15 | |||
| PART II |
Other Information |
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| Item 6. |
16 | |||
| 17 | ||||
| 18 | ||||
| 20 | ||||
Verizon New York Inc.
PART I – FINANCIAL INFORMATION
| Item 1. | Financial Statements |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
| Three Months Ended | ||||
| (Dollars in Millions) (Unaudited) |
2003 |
2002 | ||
| Operating Revenues (including $100.1 and $160.0 from affiliates) |
$1,862.0 |
$2,010.5 | ||
| Operating Expenses (including $362.9 and $306.4 to affiliates) |
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| Cost of services and sales (exclusive of items shown below) |
766.7 |
692.8 | ||
| Selling, general and administrative expense |
499.4 |
577.8 | ||
| Depreciation and amortization |
443.8 |
468.7 | ||
| Total Operating Expenses |
1,709.9 |
1,739.3 | ||
| Operating Income |
152.1 |
271.2 | ||
| Other income, net (including $31.2 and $44.0 from affiliates) |
33.2 |
44.0 | ||
| Interest expense (including $8.3 and $18.7 to affiliates) |
87.1 |
69.1 | ||
| Income before provision for income taxes and cumulative effect of change in accounting principle |
98.2 |
246.1 | ||
| Provision for income taxes |
22.8 |
72.4 | ||
| Income Before Cumulative Effect of Change In Accounting Principle |
75.4 |
173.7 | ||
| Cumulative effect of change in accounting principle, net of tax |
519.2 |
— | ||
| Net Income |
$594.6 |
$173.7 | ||
See Notes to Condensed Consolidated Financial Statements.
1
Verizon New York Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
| (Dollars in Millions) |
March 31, |
December 31, | ||||
| (Unaudited) |
||||||
| Current assets |
||||||
| Short-term investments |
$ |
373.6 |
$ |
554.8 | ||
| Note receivable from affiliate |
|
2.7 |
|
114.3 | ||
| Accounts receivable: |
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| Trade and other, net of allowances for uncollectibles of $496.8 and $496.2 |
|
1,135.5 |
|
1,401.6 | ||
| Affiliates |
|
338.0 |
|
354.7 | ||
| Material and supplies |
|
47.4 |
|
49.2 | ||
| Prepaid expenses |
|
122.5 |
|
122.4 | ||
| Deferred income taxes |
|
153.3 |
|
152.4 | ||
| Other |
|
241.5 |
|
217.7 | ||
|
|
2,414.5 |
|
2,967.1 | |||
| Plant, property and equipment |
|
28,715.4 |
|
28,586.9 | ||
| Less accumulated depreciation |
|
16,417.5 |
|
16,902.1 | ||
|
|
12,297.9 |
|
11,684.8 | |||
| Intangible assets, net |
|
216.1 |
|
224.9 | ||
| Prepaid pension asset |
|
312.0 |
|
286.4 | ||
| Deferred income taxes |
|
— |
|
64.9 | ||
| Other assets |
|
640.0 |
|
654.5 | ||
| Total assets |
$ |
15,880.5 |
$ |
15,882.6 | ||
See Notes to Condensed Consolidated Financial Statements.
2
Verizon New York Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREOWNER’S INVESTMENT
| (Dollars in Millions) |
March 31, |
December 31, |
||||||
| (Unaudited) |
||||||||
| Current liabilities |
||||||||
| Debt maturing within one year: |
||||||||
| Notes payable to affiliates |
$ |
2,060.6 |
|
$ |
2,184.4 |
| ||
| Other |
|
500.5 |
|
|
350.6 |
| ||
| Accounts payable and accrued liabilities: |
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| Affiliates |
|
1,041.4 |
|
|
1,364.5 |
| ||
| Other |
|
1,112.4 |
|
|
1,415.2 |
| ||
| Other current liabilities |
|
398.2 |
|
|
397.5 |
| ||
|
|
5,113.1 |
|
|
5,712.2 |
| |||
| Long-term debt |
|
3,883.6 |
|
|
4,133.0 |
| ||
| Employee benefit obligations |
|
3,878.0 |
|
|
3,901.4 |
| ||
| Deferred credits and other liabilities |
||||||||
| Deferred income taxes |
|
290.2 |
|
|
16.6 |
| ||
| Unamortized investment tax credits |
|
36.0 |
|
|
36.8 |
| ||
| Other |
|
385.4 |
|
|
383.3 |
| ||
|
|
711.6 |
|
|
436.7 |
| |||
| Shareowner’s investment |
||||||||
| Common stock-one share, without par value |
|
1.0 |
|
|
1.0 |
| ||
| Additional paid-in capital |
|
1,095.7 |
|
|
1,095.4 |
| ||
| Reinvested earnings |
|
1,740.8 |
|
|
1,146.2 |
| ||
| Accumulated other comprehensive loss |
|
(543.3 |
) |
|
(543.3 |
) | ||
|
|
2,294.2 |
|
|
1,699.3 |
| |||
| Total liabilities and shareowner’s investment |
$ |
15,880.5 |
|
$ |
15,882.6 |
| ||
See Notes to Condensed Consolidated Financial Statements.
3
Verizon New York Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| Three Months Ended |
||||||||
| (Dollars in Millions) (Unaudited) |
2003 |
2002 |
||||||
| Net Cash Provided by Operating Activities |
$ |
267.8 |
|
$ |
296.0 |
| ||
| Cash Flows from Investing Activities |
||||||||
| Capital expenditures (including capitalized network and non-network software) |
|
(250.0 |
) |
|
(266.7 |
) | ||
| Net change in short-term investments |
|
181.2 |
|
|
173.3 |
| ||
| Change in note receivable from affiliate |
|
111.6 |
|
|
(110.7 |
) | ||
| Other, net |
|
(.1 |
) |
|
(.2 |
) | ||
| Net cash provided by/(used in) investing activities |
|
42.7 |
|
|
(204.3 |
) | ||
| Cash Flows from Financing Activities |
||||||||
| Proceeds from borrowings |
|
— |
|
|
1,479.2 |
| ||
| Early extinguishment of debt |
|
(100.0 |
) |
|
(205.0 |
) | ||
| Principal repayments of capital lease obligations |
|
(.3 |
) |
|
(.6 |
) | ||
| Change in note payable to affiliate |
|
(123.8 |
) |
|
(1,306.1 |
) | ||
| Dividends paid |
|
(72.0 |
) |
|
(16.0 |
) | ||
| Net change in outstanding checks drawn on controlled disbursement accounts |
|
(14.4 |
) |
|
(43.2 |
) | ||
| Net cash used in financing activities |
|
(310.5 |
) |
|
(91.7 |
) | ||
| Net change in cash |
|
— |
|
|
— |
| ||
| Cash, beginning of period |
|
— |
|
|
— |
| ||
| Cash, end of period |
$ |
— |
|
$ |
— |
| ||
See Notes to Condensed Consolidated Financial Statements.
4
Verizon New York Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
Verizon New York Inc. and its wholly owned subsidiary, Empire City Subway Company, are wholly owned subsidiaries of NYNEX Corporation (NYNEX), which is a wholly owned subsidiary of Verizon Communications Inc. (Verizon). The accompanying unaudited condensed consolidated financial statements have been prepared based upon Securities and Exchange Commission (SEC) rules that permit reduced disclosure for interim periods. These financial statements reflect all adjustments that are necessary for a fair presentation of results of operations and financial position for the interim periods shown including normal recurring accruals. The results for the interim periods are not necessarily indicative of results for the full year. The balance sheet at December 31, 2002 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For a more complete discussion of significant accounting policies and certain other information, you should refer to the consolidated financial statements included in our 2002 Annual Report on Form 10-K.
We have reclassified certain amounts from prior year’s data to conform to the 2003 presentation.