Message From Lowell McAdam on 3Q Results

V Team,

Today we announced our third-quarter financial results, reporting 3.9 percent revenue growth and our third consecutive quarter of double-digit earnings growth. We are growing in all our strategic areas, particularly in wireless, and we have generated 50 percent more cash flow year-to-date than last year. This overall strong performance puts us on track to meet our financial objectives for the year.

Wireless. Wireless had an excellent quarter of growth and profitability. Service revenue rose by 7.5 percent and margins were a record-setting 50 percent. Fueled by our leadership in 4G LTE, our new “Share Everything” plans and customers’ growing appetite for smartphones and tablets, we continue to take share from our competitors, winning 1.8 million retail net customers in the quarter – the highest in four years. We need to continue to build on this excellent momentum in the holiday selling season and move as many customers as possible to the faster, more efficient 4G LTE platform.

Wireline. Total wireline revenues declined by 2.3 percent. Although consumer revenues grew 4.6 percent — the fastest in many years — Verizon Enterprise Solutions revenues were down 3.6 percent, reflecting the continuing challenges of the global economy. Margins were down year-over-year, and we are not seeing the second-half improvement in profitability that we had expected going into 2012. We are attacking the growth and margin issues in a number of ways.

  • VES is focusing on growing strategic services, which increased 4.4 percent in the quarter.
  • We expect to accelerate FiOS penetration in fourth quarter and into 2013.
  • Both organizations are focused on process improvement and simplifying their product portfolios utilizing our VLSS framework in order to reduce our cost structure and improve our performance in the eyes of the customer.
  • Our new union contract, which we hope will be ratified shortly, will improve the wireline cost structure while providing secure jobs and great benefits to all employees.

Corporate. Good management of our capital budget contributed to our excellent cash flows in the quarter. Corporate groups remain focused on process improvement and efficiency through such efforts as the restructuring of the finance department and the rationalization of systems by IT. We’re starting to see some early results from VLSS, with the big fundamental improvements still to come.

We began the year with the theme, “Change Energizes Us.” In the course of 2012, we have seen significant change across all parts of our business:

  • From the purchase of new spectrum, the launch of our partnership with cable, and new products and price plans in wireless,
  • To the introduction of FiOS Quantum and the soon-to-be-launched Red Box video product in Consumer & Mass Business,
  • To the Hughes acquisition and expansion into such fields as health care and energy in VES,
  • To our continued investment in strategic technologies like LTE,
  • To the ongoing VLSS and process improvements being driven by thousands of employee initiatives all across the business.

Now our challenge is to capitalize on all these change initiatives and maintain our strong momentum in the fourth quarter and into 2013.

I hope you’ll join me, Fran Shammo and the rest of Verizon’s business leaders on our quarterly webcast tomorrow to discuss what we need to do to ensure a strong finish to the year.

News:

Wireless boosts Verizon’s third-quarter profit, mum on 2013

Verizon Quarterly Results Show Double-Digit Growth, 4G LTE Focus

Verizon unloads $7.5 billion pension burden to Prudential

October 17, 2012

(Reuters) – Verizon Communications Inc will transfer $7.5 billion in pension obligations to insurer Prudential, removing a quarter of its long-term employee retirement burden with a single upfront payment.

The move by the company, which operates No. 1 U.S. wireless carrier Verizon Wireless with Vodafone Group, follows a similar deal that General Motors Co did with Prudential earlier this year.

The transaction affects U.S. management pension benefits covering about 41,000 current management retirees, Verizon said in a statement on Wednesday.

Read the full story.

Tentative Agreement Questions and Answers

Soon we will know the results of the contract ratification vote. The CWA Local 1101 ballots must be in by October 17th.

Ballots will be counted by AAA on October 17th and the results will be sent to the National Union. All locals are required to have their results to the National Union by October 18th.

There are many questions concerning the new contract (tentative agreement). Below find some of the questions and answers that fellow members have asked and CWA Locals have answered.

CWA Local 1101 Q & A

CWA Local 1103 Q & A

Note from CWA 1103:

The question and answer document is only a guide to provide assistance to Local 1103 Members.   The views expressed in the question and answer document are those of the Local 1103 Executive Board only. They have not been approved by the CWA National Union and are not binding on the Company.

The questions and answers have been researched to the best of our ability and shall serve as a general reference, but in no way does this document substitute for actual contractual language or any plan documents that may have been referenced within.

Tentative Agreement Q&A from Local 1101, local1101.org

Your Vote Is Your Voice

Contract explanation Meeting 10-02-12. Click on photo to view gallery.

By now you have heard the pros and cons concerning the Verizon contract ratification vote. It is now up to you to make an educated decision (documents below). Please make sure that you fill out your ballot and mail it in before October 17th. This is your vote and your decision.

Ballots to vote on the proposed Tentative Agreement were mailed to Local 1101 members on Thursday, October 4th. If you have not received a ballot by Tuesday, October 9th call the AAA at 1-800-529-5218. Ballots must be received by October 17th @ 9 am.

Tentative Agreement- Supporting Documents

VP Chris Shelton’s Message To VZ Membership

Summary of Changes – Revisited Local 1101

Message from Keith Purce, President 1101

Your Vote Is Your Voice – Make It Count!

Voting Quotes

To make democracy work, we must be a nation of participants, not simply observers. One who does not vote has no right to complain.

Half of the American people never read a newspaper. Half never voted for President. One hopes it is the same half.

“Democracy cannot succeed unless those who express their choice are prepared to choose wisely. The real safeguard of democracy, therefore, is education.”
Franklin D. Roosevelt

CWA District 1 VP Chris Shelton’s Message To The Verizon Membership:

Contract Meeting 10-02-2012

Post Date: Oct 1 2012
October 1, 2012

Dear Fellow CWA Member at Verizon,

I am writing to explain to you why I think it is critical for you to vote to ratify our recently negotiated contract with Verizon that has been recommended by your elected Bargaining Committee.

I wish I could have the opportunity to talk to each of you personally, but with nearly 18,000 District One Verizon members spread out from Massachusetts to New Jersey, that obviously isn’t possible.

There’s a lot of heated rhetoric flying back and forth now about the contract. Some members and a handful of local leaders are calling this contract a “sellout” and urging that we go on strike. I respectfully disagree with them, in large part because I don’t think they can really answer this fundamental question: “What happens after we turn the contract down?”

So I hope that before you cast your vote, you will read this letter carefully and seriously consider what I have to say.

First of all, let me be clear: in the 44 years that I have been in CWA, these were by far the most difficult contract negotiations we have ever faced.

There are many reasons for this and we all should be aware of them: the enormous decline in private sector union membership over the last two decades, to under 7% today; the loss of half of our own membership at Verizon in the last 10 years; the fact that virtually all workers, in both the public and private sectors, now contribute substantially to the cost of their health care premiums—on average 28% of the cost for family coverage.

On top of that, our industry has changed dramatically. Verizon CEO Lowell McAdam is blunt: “The vision that I have is we are going into the copper plant areas and every place we have FiOS, we are going to kill the copper… And then in other areas that are more rural and more sparsely populated, we have got LTE built that will handle all of those services and so we are going to cut the copper off there. We are going to do it over wireless.”

In other words, the company is abandoning the network that provides work for most of our members.

As leaders, in considering the union’s course of action, the Bargaining Committee had to weigh all these factors. It is easy to just say “no.” It is easy to scream “sellout.” It is easy to walk out the door. It’s getting back in that is hard.

That’s why I urge you consider this question very seriously—if we turn down this contract, what will happen next?

It is clear to me, after more than a year of bargaining and mobilization, that we have negotiated the best possible contract we can get. There is no more to be won by talking at the bargaining table.

The question, then, is “are we prepared to strike?” What are the risks of a strike? What would our strike issues be, would we enjoy public support for our strike, how long could we sustain our strike, and how effective would it be? I ask you to think these questions over seriously.

First, you should be aware of the specific provisions of the contract that go into effect only upon ratification:

• The return to work of the fired workers. If we strike, those workers will be back on the street, with no arbitration and their only recourse will be to the NLRB, which takes years and years to make a decision and no guarantees it will go our way.

• The $800 signing bonus will be lost.

• The first raise of 2.25% will be lost.

Next, let’s talk first about health care.

None of us—least of all me–are happy about the decision to pay a share of health premiums. But you should know that the Bargaining Committee and the Local Presidents have been wrestling with the question of whether health care should be a strike issue for months. In January 2012, the two groups decided unanimously that our number one priorities were job security and pensions for active employees. However, at that point, I was not prepared to make any compromise offer on health care premiums at the bargaining table.

Then in early May, nearly six months ago, at another meeting of the Local Presidents and Bargaining Committee, we reached another unanimous decision on a “what if” proposal to the company, in which we offered to phase in modest payments for health care premiums in exchange for the company withdrawing a range of other retrogressive demands. In the May 7th,2012 Bargaining Report, we were upfront with our members about this decision. We had decided that our most important objectives were job security, pensions, disability benefits and retiree benefits.

I do not believe that this company will ever settle a contract without some contribution towards the cost of premiums. The world has changed drastically since 1989, when it took us four months in the street to fend off premium contributions. At that time, most workers and most unions had free health care. As I mentioned earlier, virtually no one does today.

Besides, how much public sympathy would we have gotten during a strike once the public found out that three years from now, our members will be paying $110 a month for family coverage and $55 a month for individual coverage? The Con Ed workers in New York City—who were recently locked out for 26 days—will be paying $94 a WEEK for health care by the time we’re paying $110 a month. Nationally, workers pay 28% of the cost of family coverage, and with the average cost of a family plan around $15,000 a year, that works out to $4200 a year. Our family health care costs are $32,000 a year—if we paid the same percentage as the typical U.S. worker, the cost would be $8960—not the $1320 we negotiated.

How about the issue of 401(k)s for new hires? Ask yourself, how long would you personally be willing to stay on the street to guarantee a defined benefit pension for workers who are not yet hired—and may never be? In fact, it’s important to remember that the company has barely hired anyone new over the last decade. There’s no army of new hires waiting outside Verizon’s doors. But if some workers are in fact hired, we have negotiated an enhanced 401(k) plan that will give them a real opportunity to save for retirement.

No one wanted to give up a defined benefit pension for new hires. But we had to weigh that against the risk of 4, 5, or 6 months of lost pay for the 18,000 of you we represent right now.

And finally, would striking be the best strategy? At a time when the company is abandoning the copper business…at a time when the company could give a cell phone to any customer who had service problems during a strike….at a time when all of our call center work could be rerouted, permanently, at the flick of a switch, your leadership decided that striking was a weapon we would use only as a last resort.

If we had to defend the pensions of active members; if we had to defend the job security of the current workforce; if we had to ensure a decent wage increase; if we had to bring back the jobs of the fired workers—we were prepared to strike. In July, when it seemed like the company was preparing to go to impasse and shove those demands down our throat, we in fact began preparing for another strike.

But calling a strike is a decision no leader takes lightly. I felt that District 2-13 Vice President Ed Mooney and I held the responsibility for leading 34,000 CWA families into a long, long strike. Families—not just workers. Families with mortgages, rents, mouths to feed, and tuition to pay. At a time when working for the telephone company is one of the last good, family-supporting working class jobs left, we thought long and hard before putting those jobs at risk.

That’s why we decided to go to federal mediation in a last-ditch effort to avoid a lengthy and potentially destructive strike. The possibility of conflict also brought our top-level political allies into the battle, and they pressured management to abandon its most extreme demands.

That’s why we were willing to endure over 7 weeks of intensive mediation and negotiation, in an effort to get management to back off on huge issues like job security and gutting the pensions of current employees. These were demands that the company had not moved on for a year. When management did back off, and when wages and other significant improvements fell into place, your Bargaining Committee decided unanimously that we had won a good contract that protected the living standards and job security of our membership. Yes, we took a step back in certain areas. We had to bend in order not to break. But we believed that in balancing all the factors, going on strike over the remaining issues made no sense.

I urge you to vote Yes because this is a good contract, the best that could be negotiated, and because a strike could put at risk everything we have. This contract includes:

• An 8.2% compounded wage increase over the next three years.

• A signing bonus of $800, and a minimum of $700 in corporate profit sharing each of the next three years.

• The creation of an $850 tax-free Health Reimbursement Account (HRA) that can offset new health care costs.

• The preservation of all of our no-layoff, no forced transfer, no downgrade language.

• The preservation of the restrictions on movement of work out of the region.

• The preservation of pensions for the current workforce, with no reductions.

• The unconditional return to work of all but one fired CWA member.

• The preservation of shift and weekend differentials that the company sought to eliminate.

• A “call-sharing” program among different call centers that guarantees us a percentage of work that we never previously had, with new penalties built into the agreement to provide additional job security provisions for those who are not covered under Job Security Letter.

Given what is going on at bargaining tables in industries across the country, I believe that this contract represents a tremendous victory against a giant corporation that was hell-bent on destroying us. Not only did they not break us, every one of our members will see an improvement in their standard of living over the life of the contract.

When we started bargaining in June 2011, we had the best contract in the telecom industry. I can tell you unequivocally, even though this contract may not be perfect, it is still the best contract in the industry. I am proud of what we accomplished at the bargaining table.

I really urge you to focus on this: It is easy to say “no.” It is easy to scream “sellout.” It is even easy to call a strike—if you do not take seriously the responsibility for what would happen to 34,000 CWA families during a lengthy strike.

I truly believe—and so did your Bargaining Committee—that if we did go out, most likely it would not have been for two or three weeks, maybe not even two or three months. We believed that if we walked, we had to be prepared for a strike that might have lasted longer than our 17-week strike in 1989, maybe six months or more. In fact, going out might have been walking into a trap the company had set for us—giving them an opportunity to replace thousands of us and break our union.

Finally, let me close by saying that the battle with Verizon is not over. We need to spend the next three years preparing to continue the fight to preserve unionized jobs in the communications industry. That is where the real battle for the future will be won or lost.

I think we made the tough, correct decisions. Ultimately, your vote will determine what happens. All I ask is that you look past the rhetoric and strong emotions, and weigh the factors that all of us on the Bargaining Committee weighed. I sincerely believe that if you do, you will vote Yes to ratify this contract.

Sincerely,

Chris Shelton
Vice President

Click here for the letter.

Verizon Contract Meetings, Tuesday and Wednesday

Manhattan: Fashion Institute of Technology on Tuesday, October 2nd at 5:30pm
Location: 227 W.27th Street Bet. 7th and 8th Avenue

Bronx: St. Raymond’s Church on Wednesday, October 3rd at 5:30 pm
Location: 2151 St. Raymond’s Ave.

This is Your Contract and Your Vote.
Base your vote on facts,
attend a contract meeting and read the documents.

Official Contract Documents Here: New contract plan comparisons from District 1, released today.