Item 2.02. Results of Operations and Financial Condition Attached as an exhibit hereto are a press release and financial tables dated
April 21, 2021issued 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 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. EBITDA and EBITDA Margin Related Non-GAAP Measures Consolidated earnings before interest, taxes, depreciation and amortization (EBITDA), 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 as they are a widely accepted financial measures used in evaluating the profitability of a company and with its competitors. Consolidated EBITDA is calculated by adding back interest, taxes and depreciation and amortization expense to net income. 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 Related to Non-GAAP Measures Consolidated Adjusted EBITDA is a non-GAAP financial measure that we believe provides 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 is 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: severance charges, loss on spectrum licenses and net loss from dispositions of assets and businesses. Severance charges recorded during 2020 relate to voluntary separations under our existing plans. Loss on spectrum licenses relates to the reclassification of certain spectrum licenses to assets held for sale at fair value in connection with spectrum sale transactions in 2021 and Auction 103 in 2020. Net loss from dispositions of assets and businesses relates to the sale of Huffington Postin 2020. Net Unsecured Debt, Net Unsecured Debt to Consolidated Adjusted EBITDA Ratio and Net Unsecured Debt to Consolidated Adjusted EBITDA Ratio Forecast Net Unsecured Debt, Net Unsecured Debt to Consolidated Adjusted EBITDA Ratio and Net Unsecured Debt to Consolidated Adjusted EBITDA Ratio Forecast 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. We have not provided a reconciliation for our Net Unsecured Debt to Consolidated Adjusted EBITDA Ratio Forecast because we cannot, without unreasonable effort, predict the special items that could arise during 2021.
Adjusted earnings per common share (Adjusted EPS) and Adjusted EPS forecast
Adjusted EPS and Forecast Adjusted EPS are non-GAAP financial measures that we believe are useful to management, investors and other users of our financial information in evaluating our results of operations and understanding our business trends. ‘operation without the effect of special items which may vary from period to period. period. We believe that the exclusion of special items allows for a 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: the loss on spectrum licenses and the net repo revaluation royalty. We have not provided a reconciliation for our adjusted EPS forecast because we cannot, without unreasonable effort, predict any special items that may arise in 2021.
Adjusted effective tax rate attributable to Verizon forecast (Adjusted ETR forecast)
Adjusted ETR forecasts are a non-GAAP financial measure that we believe is useful to management, investors and other users of our financial information in assessing our effective tax rate without the effect of special items that could vary from period to period. The adjusted ETR forecast is calculated by dividing the provision for income taxes by net income attributable to Verizon before taxes 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 any special items that may arise in 2021.
Free movement of capital
Free cash flow is a non-GAAP financial measure that reflects an additional way of looking at our cash flow which, when viewed in conjunction with our GAAP results, allows for a more complete understanding of the factors and trends affecting our cash flow. Treasury. We believe this is a more conservative measure of cash flow since capital expenditures are required for day-to-day operations. Free cash flow has limitations because it does not represent the residual cash flow available for discretionary spending. For example, free cash flow does not include 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 supplement to all of our consolidated statements of cash flows.
Free cash flow is calculated by subtracting capital expenditures (including capitalized software) from net cash provided by operating activities. See the attached appendices for reconciliations of non-GAAP financial measures to GAAP.
Item 9.01. Financial Statements and Exhibits (d) Exhibits. Exhibit Number Description 99 Press release and financial tables, dated
April 21, 2021, issued by Verizon Communications Inc.104 Cover Page Interactive Data File (formatted as inline XBRL).
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