Verizon Reports Fifth Consecutive Quarter of Double-Digit Operating Income and Earnings Growth

Verizon Reports Fifth Consecutive Quarter of Double-Digit Operating Income and
                               Earnings Growth

PR Newswire

NEW YORK, April 24, 2014

NEW YORK, April 24, 2014 /PRNewswire/ --

1Q 2014 HIGHLIGHTS

Consolidated

  o$1.15 in earnings per share (EPS) and 84 cents in adjusted EPS (non-GAAP),
    excluding net non-operational gains and losses – compared with 68 cents in
    both reported and adjusted EPS in 1Q 2013.

Wireless

  o7.5 percent year-over-year increase in service revenues; 6.7 percent
    year-over-year increase in retail service revenues; 35.0 percent operating
    income margin; 52.1 percent segment EBITDA margin on service revenues
    (non-GAAP).
  oAdded 549,000 net retail connections, including 539,000 net retail
    postpaid connections; low retail postpaid churn of 1.07 percent; 103.3
    million total retail connections; 97.3 million total retail postpaid
    connections.

Wireline

  o6.2 percent year-over-year increase in consumer revenues; consumer ARPU
    (average revenue per user) up 11.3 percent year over year.
  o15.5 percent year-over-year increase in FiOS revenues; 98,000 FiOS
    Internet and 57,000 FiOS Video net additions.

Verizon Communications Inc. (NYSE, Nasdaq: VZ) today reported its fifth
consecutive quarter of double-digit percentage growth in operating income and
earnings per share. First-quarter 2014 results included the impact of
February's close of the $130 billion transaction to acquire full ownership of
Verizon Wireless.

Lowell McAdam, Verizon chairman and CEO, said: "Verizon has delivered
double-digit earnings growth in eight of the past nine quarters, and in
first-quarter 2014 we posted our strongest consolidated revenue growth in five
quarters. With the wireless transaction now behind us, we have great
confidence in our ability to sustain these strong results.

"We are already seeing the expected earnings accretion from the transaction,"
McAdam added. "The full access we now have to the significant cash flows of
Verizon Wireless is energizing our efforts to provide customers with product
and service innovations and to enable powerful solutions to some of the
world's biggest challenges."

Verizon reported $1.15 in EPS in first-quarter 2014, compared with 68 cents
per share in first-quarter 2013. First-quarter 2014 results included an
after-tax gain of approximately $1.9 billion (55 cents per share) related to
the sale of Verizon's minority interest in Vodafone Omnitel as part of the
wireless transaction, and charges of $575 million (17 cents per share) related
to debt redemption and $260 million (8 cents per share) in interest and
financing costs related to the wireless transaction.

On an adjusted basis (non-GAAP), Verizon reported EPS of 84 cents in
first-quarter 2014, compared with 68 cents per share in first-quarter 2013 –
an increase of 23.5 percent.

With the transaction to acquire full ownership of Verizon Wireless closing on
Feb. 21, Verizon's first-quarter 2014 results only include five weeks of the
full results of Verizon Wireless. On a non-GAAP, illustrative basis, adjusted
EPS of 84 cents would have been 91 cents per share assuming 100 percent
ownership of Verizon Wireless and all shares issued in the transaction were
outstanding for the full quarter.

Consolidated Results Highlighted by Top-Line Growth, Margin Expansion

With continued solid operational execution and revenue growth across all
strategic areas – Verizon Wireless, FiOS and strategic enterprise services –
Verizon delivered consolidated top-line growth and margin expansion in
first-quarter 2014.

Consolidated Highlights

  oDriven by wireless and FiOS services, total operating revenues in
    first-quarter 2014 were $30.8 billion, a 4.8 percent increase compared
    with first-quarter 2013 and the company's highest quarterly growth rate in
    the past five quarters.
  oContinued effective cost management drove first-quarter 2014 operating
    income to $7.2 billion, a 15.1 percent increase compared with
    first-quarter 2013.
  oConsolidated operating income margin was 23.2 percent for first-quarter
    2014, compared with 21.1 percent for first-quarter 2013. Consolidated
    EBITDA margin (non-GAAP, based on earnings before interest, taxes,
    depreciation and amortization) was 36.7 percent for first-quarter 2014,
    compared with 35.1 percent for first-quarter 2013.
  oCash flow from operating activities totaled $7.1 billion in the quarter,
    compared with $7.5 billion in first-quarter 2013. First-quarter 2014 cash
    flow included an incremental $1.3 billion in interest payments and $200
    million in pension funding that the company did not have in first-quarter
    2013. Capital expenditures totaled $4.15 billion in first-quarter 2014,
    and the company continues to target full-year investments in the range of
    $16.5 billion to $17 billion, with a decrease in capital spending as a
    percentage of total revenues.
  oFree cash flow (non-GAAP, cash flow from operations less capital
    expenditures) totaled $3.0 billion in first-quarter 2014, compared with
    $3.9 billion in first-quarter 2013. With full ownership of Verizon
    Wireless, Verizon retains 100 percent – rather than 55 percent – of the
    Verizon Wireless free cash flow. On a comparable basis, free cash flow
    available to Verizon Communications was approximately $1.4 billion higher
    in first-quarter 2014 than in first-quarter 2013, assuming all free cash
    flow at Verizon Wireless had been distributed to the partners.

Verizon Wireless Delivers Strong Profitability and Customer, Revenue Growth

In first-quarter 2014, Verizon Wireless delivered strong growth in retail
postpaid net additions and revenues, an increase in smartphone penetration,
and continued high segment EBITDA margin on service revenues (non-GAAP).

Wireless Financial Highlights

  oTotal revenues were $20.9 billion in first-quarter 2014, up 6.9 percent
    year over year. Service revenues in the quarter totaled $18.0 billion, up
    7.5 percent year over year. Retail service revenues grew 6.7 percent year
    over year, to $17.2 billion.
  oRetail postpaid ARPA (average revenue per account) increased 6.3 percent
    over first-quarter 2013, to $159.67 per month.
  oIn first-quarter 2014, wireless operating income margin was 35.0 percent
    and segment EBITDA margin on service revenues was 52.1 percent. This
    compares with 32.9 percent and 50.4 percent, respectively, in
    first-quarter 2013.

Wireless Operational Highlights

  oVerizon Wireless added 549,000 retail net connections, including 539,000
    retail postpaid net connections, in the first quarter. These additions
    exclude acquisitions and adjustments.
  oAt the end of the first quarter, the company had 103.3 million retail
    connections, including 97.3 million retail postpaid connections, a 4.4
    percent increase year over year.
  oVerizon Wireless had 35.1 million retail postpaid accounts at the end of
    the first quarter, a 0.3 percent increase over first-quarter 2013, and
    2.77 connections per account, up 3.7 percent year over year.
  oAt the end of the first quarter, smartphones accounted for more than 72
    percent of the Verizon Wireless retail postpaid customer phone base, up
    from 70 percent at year-end 2013.
  oRetail postpaid churn was 1.07 percent in the first quarter, up 6 basis
    points year over year. Retail churn was 1.37 percent in the first quarter,
    up 7 basis points year over year.
  oThe company continued to enhance its 4G LTE smartphone lineup. In the
    first quarter, Verizon Wireless launched the Nokia Lumia Icon and the HTC
    One (M8). The company also launched the following tablets: the Nexus 7,
    the LG G Pad 8.3 LTE, the Samsung Galaxy Note Pro and the Samsung Galaxy
    Note 10.1 2014 edition. Earlier this month, Verizon Wireless launched the
    Samsung Galaxy S 5 and ATIV SE, the Lucid 3 by LG and the DROID MAXX by
    Motorola 16GB.
  oVerizon Wireless was the network performance leader in the rankings of
    wireless providers in the United States in the first Root Metrics National
    RootScore Report, issued in March. Verizon Wireless was the leader in the
    state rankings with wins or ties for first place for overall performance
    in 45 states.

Wireline Consumer Revenue Growth Remains Strong

Verizon's wireline segment reported continued strong results for consumer
services, where year-over-year quarterly revenues now have grown by more than
4 percent for seven consecutive quarters.

Wireline Financial Highlights

  oIn first-quarter 2014, consumer revenues were $3.8 billion, an increase of
    6.2 percent compared with first-quarter 2013. Consumer ARPU for wireline
    services increased to $120.17 in first-quarter 2014, up 11.3 percent
    compared with first-quarter 2013.
  oRepresenting 74 percent of total consumer revenues, FiOS consumer revenues
    grew 14.6 percent year over year, and total FiOS revenues grew 15.5
    percent over the same periods. For the first time, total quarterly FiOS
    revenues surpassed $3 billion in first-quarter 2014.
  oWireline operating income margin was 1.5 percent in first-quarter 2014, up
    from 0.1 percent in first-quarter 2013. Segment EBITDA margin (non-GAAP)
    was 22.3 percent in first-quarter 2014, compared with 21.4 percent in
    first-quarter 2013.
  oSales of strategic services to global enterprise customers increased 1.8
    percent compared with first-quarter 2013. Strategic services include
    private IP, Ethernet, data center, cloud, security and managed services.

Wireline Operational Highlights

  oIn first-quarter 2014, Verizon added 98,000 net new FiOS Internet
    connections and 57,000 net new FiOS Video connections. Verizon had totals
    of 6.2 million FiOS Internet and 5.3 million FiOS Video connections at the
    end of the first quarter, representing year-over-year increases of 9.9
    percent and 8.7 percent, respectively.
  oFiOS Internet penetration (subscribers as a percentage of potential
    subscribers) was 39.7 percent at the end of first-quarter 2014, compared
    with 38.2 percent at the end of first-quarter 2013. In the same periods,
    FiOS Video penetration was 35.0 percent, compared with 34.1 percent. The
    FiOS network passed 18.9 million premises by the end of first-quarter
    2014.
  oBy the end of first-quarter 2014, 51 percent of consumer FiOS Internet
    customers subscribed to FiOS Quantum, which provides speeds ranging from
    50 to 500 megabits per second, up from 46 percent at year-end 2013.
  oBroadband connections totaled more than 9.0 million at the end of
    first-quarter 2014, a 1.5 percent year-over-year increase. Net broadband
    connections increased by 16,000 in first-quarter 2014, as FiOS Internet
    net additions more than offset declines in DSL-based High Speed Internet
    connections.
  oVerizon has been replacing high-maintenance portions of its residential
    copper network with fiber optics to provide enhanced services and to
    reduce ongoing repair costs. In first-quarter 2014, Verizon migrated an
    additional 78,000 customers from copper.
  oIn the first quarter, Verizon Enterprise Solutions began deploying
    innovative cloud, security, M2M (machine-to-machine), networking and other
    technology solutions for a variety of clients around the globe, including
    Kaiser Permanente, Molina Healthcare, Forest Pharmaceuticals, National
    DCP, American First Credit Union, Schindler Elevator, Sally Beauty
    Holdings, TE Connectivity, National Oceanic and Atmospheric Administration
    (NOAA), Mitsuba Corporation, State of Delaware, Alcatel-Lucent and
    Oracle.In addition, it added Oracle, SAP, Hitachi Data Systems
    Corporation and CloudBees to the growing number of leading technology
    companies that will offer services on Verizon's next-generation cloud
    computing and cloud storage platform, Verizon Cloud.

Other Guidance and Outlook Items

Verizon continues to target consolidated top-line growth of 4 percent and
adjusted consolidated EBITDA margin expansion in 2014, with positive
contributions to profitable growth from both wireless and wireline.

In wireless, pricing under Verizon Edge – which makes it easy for customers to
buy a new smartphone with a low upfront cost and affordable monthly payments –
had minimal impact on first-quarter 2014 ARPA and EBITDA margin. Continued
Edge adoption will likely have a greater impact on service revenue growth in
subsequent quarters, as service revenues shift to equipment revenues.

Verizon reiterates guidance of increases in wireless and wireline EBITDA and
EBITDA margin in 2014.

NOTE: See the accompanying schedules and www.verizon.com/investor for
reconciliations to generally accepted accounting principles (GAAP) for
non-GAAP financial measures cited in this document.

Verizon Communications Inc. (NYSE, Nasdaq: VZ), headquartered in New York, is
a global leader in delivering broadband and other wireless and wireline
communications services to consumer, business, government and wholesale
customers. Verizon Wireless operates America's most reliable wireless network,
with more than 103 million retail connections nationwide. Verizon also
provides converged communications, information and entertainment services over
America's most advanced fiber-optic network, and delivers integrated business
solutions to customers in more than 150 countries. A Dow 30 company with more
than $120 billion in 2013 revenues, Verizon employs a diverse workforce of
176,900. For more information, visit www.verizon.com.

VERIZON'S ONLINE NEWS CENTER: Verizon news releases, executive speeches and
biographies, media contacts and other information are available at Verizon's
online News Center at newscenter.verizon.com. The news releases are available
through an RSS feed. To subscribe, visit
newscenter.verizon.com/corporate/feeds.

Forward-Looking Statements

In this communication we have made forward-looking statements. These
statements are based on our estimates and assumptions and are subject to risks
and uncertainties. Forward-looking statements include the information
concerning our possible or assumed future results of operations.
Forward-looking statements also include those preceded or followed by the
words "anticipates," "believes," "estimates," "hopes" or similar expressions.
For those statements, we claim the protection of the safe harbor for
forward-looking statements contained in the Private Securities Litigation
Reform Act of 1995. The following important factors, along with those
discussed in our filings with the Securities and Exchange Commission (the
"SEC"), could affect future results and could cause those results to differ
materially from those expressed in the forward-looking statements: the ability
to realize the expected benefits of our transaction with Vodafone in the
timeframe expected or at all; an adverse change in the ratings afforded our
debt securities by nationally accredited ratings organizations or adverse
conditions in the credit markets affecting the cost, including interest rates,
and/or availability of further financing; significantly increased levels of
indebtedness as a result of the Vodafone transaction; changes in tax laws or
treaties, or in their interpretation; adverse conditions in the U.S. and
international economies; material adverse changes in labor matters, including
labor negotiations, and any resulting financial and/or operational impact;
material changes in technology or technology substitution; disruption of our
key suppliers' provisioning of products or services; changes in the regulatory
environment in which we operate, including any increase in restrictions on our
ability to operate our networks; breaches of network or information technology
security, natural disasters, terrorist attacks or acts of war or significant
litigation and any resulting financial impact not covered by insurance; the
effects of competition in the markets in which we operate; changes in
accounting assumptions that regulatory agencies, including the SEC, may
require or that result from changes in the accounting rules or their
application, which could result in an impact on earnings; significant
increases in benefit plan costs or lower investment returns on plan assets;
and the inability to implement our business strategies.



Verizon Communications Inc.
Condensed Consolidated Statements of Income
                                      (dollars in millions, except per share
                                      amounts)
                                      3 Mos. Ended 3 Mos. Ended
Unaudited                             3/31/14        3/31/13        % Change
Operating Revenues                    $   30,818  $   29,420  4.8
Operating Expenses
Cost of services and sales            11,189         10,932         2.4
Selling, general and administrative   8,332          8,148          2.3
expense
Depreciation and amortization expense 4,137          4,118          0.5
Total Operating Expenses              23,658         23,198         2.0
Operating Income                      7,160          6,222          15.1
Equity in earnings of unconsolidated  1,902          (5)            *
businesses
Other income and (expense), net       (894)          39             *
Interest expense                      (1,214)        (537)          *
Income Before Provision for Income    6,954          5,719          21.6
Taxes
Provision for income taxes            (968)          (864)          12.0
Net Income                            $    5,986 $    4,855 23.3
Net income attributable to            $    2,039 2,903          (29.8)
noncontrolling interests
Net income attributable to Verizon    3,947          1,952          *
Net Income                            $    5,986 $    4,855 23.3
Basic Earnings per Common Share
Net income attributable to Verizon    $         $        69.1
                                      1.15           .68
Weighted average number of common     3,425          2,866
shares (in millions)
Diluted Earnings per Common Share
^(1)
Net income attributable to Verizon    $         $        69.1
                                      1.15           .68
Weighted average number of common
        shares-assuming dilution (in  3,430          2,872
        millions)
Footnotes:
        Diluted Earnings per Common Share includes the dilutive effect of
(1)     shares issuable under our stock-based compensation plans, which
        represents the only potential dilution.
        Certain reclassifications have been made, where appropriate, to
        reflect comparable operating results.
*       Not meaningful



Verizon Communications Inc.
Condensed Consolidated Balance Sheets
                                                                   (dollars in
                                                                   millions)
Unaudited                               3/31/14       12/31/13      $ Change
Assets
Current assets
Cash and cash equivalents               $   2,907  $  53,528    $   
                                                                    (50,621)
Short-term investments                  637           601           36
Accounts receivable, net                12,131        12,439        (308)
Inventories                             881           1,020         (139)
Prepaid expenses and other              6,716         3,406         3,310
Total current assets                    23,272        70,994        (47,722)
Plant, property and equipment           223,841       220,865       2,976
Less accumulated depreciation           134,785       131,909       2,876
                                        89,056        88,956        100
Investments in unconsolidated           889           3,432         (2,543)
businesses
Wireless licenses                       72,713        75,747        (3,034)
Goodwill                                24,647        24,634        13
Other intangible assets, net            5,839         5,800         39
Other assets                            5,146         4,535         611
Total Assets                            $ 221,562     $ 274,098     $   
                                                                    (52,536)
Liabilities and Equity
Current liabilities
Debt maturing within one year           $   2,152  $   3,933  $    
                                                                    (1,781)
Accounts payable and accrued            14,984        16,453        (1,469)
liabilities
Other                                   8,217         6,664         1,553
Total current liabilities               25,353        27,050        (1,697)
Long-term debt                         107,617       89,658        17,959
Employee benefit obligations            26,977        27,682        (705)
Deferred income taxes                   41,597        28,639        12,958
Other liabilities                       6,167         5,653         514
Equity
Common stock                            424           297           127
Contributed capital                     10,976        37,939        (26,963)
Reinvested earnings                     3,534         1,782         1,752
Accumulated other comprehensive income  1,290         2,358         (1,068)
Common stock in treasury, at cost       (3,794)       (3,961)       167
Deferred compensation - employee
stock ownership plans and other         281           421           (140)
Noncontrolling interests               1,140         56,580        (55,440)
Total equity                            13,851        95,416        (81,565)
Total Liabilities and Equity            $ 221,562     $ 274,098     $   
                                                                    (52,536)
Verizon - Selected Financial and Operating Statistics
Unaudited                               3/31/14       12/31/13
Total debt (in millions)                $ 109,769     $  93,591
Net debt (in millions)                  $ 106,862     $  40,063
Net debt / Adjusted EBITDA ^(1)         2.5x          1.0x
Common shares outstanding end of period 4,141         2,862
(in millions)
Total employees                        176,900       176,800
Quarterly cash dividends declared per   $   0.530  $   0.530
common share

Footnotes:
(1)    Adjusted EBITDA excludes the effects of non-operational items.
       The unaudited condensed consolidated balance sheets are based on
       preliminary information.





Verizon Communications Inc.
Condensed Consolidated Statements of Cash Flows
                                                                  (dollars in
                                                                  millions)
                                                3 Mos.   3 Mos.
                                                Ended    Ended
Unaudited                                       3/31/14   3/31/13  $ Change
Cash Flows From Operating Activities
Net Income                                      $      $     $     
                                                5,986    4,855   1,131
Adjustments to reconcile net income to net cash
provided by
operating activities:
Depreciation and amortization expense           4,137     4,118    19
Employee retirement benefits                    281       295      (14)
Deferred income taxes                           (155)     878      (1,033)
Provision for uncollectible accounts            231       260      (29)
Equity in earnings of unconsolidated            (1,894)   14       (1,908)
businesses, net of dividends received
Changes in current assets and liabilities, net
of effects from
acquisition/disposition of businesses           (1,626)   (1,491)  (135)
Other, net                                      179       (1,398)  1,577
Net cash provided by operating activities       7,139     7,531    (392)
Cash Flows From Investing Activities
Capital expenditures (including capitalized     (4,150)   (3,602)  (548)
software)
Acquisitions of investments and businesses, net (157)     (21)     (136)
of cash acquired
Acquisitions of wireless licenses, net          (213)     (117)    (96)
Other, net                                      (11)      141      (152)
Net cash used in investing activities           (4,531)   (3,599)  (932)
Cash Flows From Financing Activities
Proceeds from long-term borrowings              16,952    500      16,452
Repayments of long-term borrowings and capital  (7,951)   (73)     (7,878)
lease obligations
Increase in short-term obligations, excluding   252       581      (329)
current maturities
Dividends paid                                 (1,517)   (1,472)  (45)
Proceeds from sale of common stock              34        56       (22)
Purchase of common stock for treasury           -         (153)    153
Acquisition of noncontrolling interest          (58,886)  -        (58,886)
Other, net                                      (2,113)   (989)    (1,124)
Net cash used in financing activities           (53,229)  (1,550)  (51,679)
Increase (decrease) in cash and cash            (50,621)  2,382    (53,003)
equivalents
Cash and cash equivalents, beginning of period  53,528    3,093    50,435
Cash and cash equivalents, end of period        $      $     $    
                                                2,907    5,475   (2,568)







Verizon Communications Inc.
Wireless – Selected Financial Results
                                                                  (dollars in
                                                                  millions)
                                     3 Mos. Ended 3 Mos.
                                                    Ended
Unaudited                            3/31/14        3/31/13       % Change
Operating Revenues
Retail service                      $         $        6.7
                                     17,246         16,169
Other service                       741            559           32.6
Service                             17,987         16,728        7.5
Equipment                           1,870          1,813         3.1
Other                                1,022          982           4.1
Total Operating Revenues             20,879         19,523        6.9
Operating Expenses
Cost of services and sales           5,856          5,651         3.6
Selling, general and administrative  5,644          5,448         3.6
expense
Depreciation and amortization        2,061          2,006         2.7
expense
Total Operating Expenses             13,561         13,105        3.5
Operating Income                     $        $       14.0
                                     7,318          6,418
Operating Income Margin              35.0%          32.9%
Segment EBITDA                       $        $       11.3
                                     9,379          8,424
Segment EBITDA Service Margin        52.1%          50.4%

Footnotes:
      The segment financial results and metrics above are adjusted to exclude
      the effects of non-operational items, as the Company's chief operating
      decision maker excludes these items in assessing business unit
      performance.
      Intersegment transactions have not been eliminated.
      Certain reclassifications have been made, where appropriate, to reflect
      comparable operating results.





Verizon Communications Inc.
Wireless – Selected Operating
Statistics
Unaudited                             3/31/14        3/31/13        % Change
Connections ('000)
Retail postpaid                       97,273         93,186         4.4
Retail prepaid                       6,057          5,744          5.4
Retail                               103,330        98,930         4.4
                                      3 Mos. Ended 3 Mos. Ended
Unaudited                             3/31/14        3/31/13        % Change
Net Add Detail ('000)^(1)
Retail postpaid                       539            677            (20.4)
Retail prepaid                       10             43             (76.7)
Retail                               549            720            (23.8)
Account Statistics
Retail Postpaid Accounts ('000)^(2)   35,061         34,943         0.3
Retail postpaid ARPA                  $    159.67 $    150.27 6.3
Retail postpaid connections per       2.77           2.67           3.7
account ^(2)
Churn Detail
Retail postpaid                      1.07%          1.01%
Retail                               1.37%          1.30%
Retail Postpaid Connection Statistics
Total Smartphone postpaid % of phones 90.1%          84.3%
activated
Total Smartphone postpaid phone base  72.3%          61.4%
^(2)
Total Internet postpaid base ^(2)     11.3%          9.6%
Other Operating Statistics
Capital expenditures (in millions)    $          $          28.2
                                      2,554         1,992

Footnotes:
(1)  Connection net additions exclude acquisitions and adjustments.
(2)  Statistics presented as of end of period.
     The segment financial results and metrics above are adjusted to exclude
     the effects of non-operational items, as the Company's chief operating
     decision maker excludes these items in assessing business unit
     performance.
     Intersegment transactions have not been eliminated.
     Certain reclassifications have been made, where appropriate, to reflect
     comparable operating results.





Verizon Communications Inc.
Wireline – Selected Financial Results
                                                                  (dollars in
                                                                  millions)
                                 3 Mos. Ended   3 Mos. Ended
Unaudited                        3/31/14          3/31/13         % Change
Operating Revenues
Consumer retail                 $          $         6.2
                                 3,840            3,616
Small business                   624              638             (2.2)
Mass Markets                     4,464            4,254           4.9
       Strategic services       2,110            2,073           1.8
       Core                      1,496            1,697           (11.8)
Global Enterprise                3,606            3,770           (4.4)
Global Wholesale                1,591            1,699           (6.4)
Other                            129              107             20.6
Total Operating Revenues         9,790            9,830           (0.4)
Operating Expenses
Cost of services and sales       5,459            5,457           -
Selling, general and             2,151            2,265           (5.0)
administrative expense
Depreciation and amortization    2,033            2,095           (3.0)
expense
Total Operating Expenses         9,643            9,817           (1.8)
Operating Income                 $         $        *
                                 147               13
Operating Income Margin          1.5%             0.1%
Segment EBITDA                   $          $         3.4
                                 2,180            2,108
Segment EBITDA Margin            22.3%            21.4%
Footnotes:
       The segment financial results and metrics above are adjusted to
       exclude the effects of non-operational items, as the Company's chief
       operating decision maker excludes these items in assessing business
       unit performance.
       Intersegment transactions have not been
       eliminated.
       Certain reclassifications have been made, where appropriate, to
       reflect comparable operating results.
*      Not meaningful





Verizon Communications Inc.
Wireline – Selected Operating
Statistics
Unaudited                           3/31/14         3/31/13         % Change
Connections ('000)
FiOS Video Subscribers              5,319           4,895           8.7
FiOS Internet Subscribers           6,170           5,612           9.9
FiOS Digital Voice residence        4,350           3,531           23.2
connections
FiOS Digital connections            15,839          14,038          12.8
HSI                                2,861           3,282           (12.8)
Total Broadband connections         9,031           8,894           1.5
Primary residence switched access   6,224           7,593           (18.0)
connections
Primary residence connections       10,574          11,124          (4.9)
Total retail residence voice        11,048          11,725          (5.8)
connections
Total voice connections             20,733          22,191          (6.6)
                                    3 Mos. Ended  3 Mos. Ended
Unaudited                           3/31/14         3/31/13         % Change
Net Add Detail ('000)
FiOS Video Subscribers              57              169             (66.3)
FiOS Internet Subscribers           98              188             (47.9)
FiOS Digital Voice residence        102             304             (66.4)
connections
FiOS Digital connections            257             661             (61.1)
HSI                                (82)            (89)            (7.9)
Total Broadband connections         16              99              (83.8)
Primary residence switched access   (257)           (389)           (33.9)
connections
Primary residence connections       (155)           (85)            82.4
Total retail residence voice        (181)           (124)           46.0
connections
Total voice connections             (352)           (312)           12.8
Revenue and ARPU Statistics
Consumer ARPU                       $    120.17  $    107.95  11.3
FiOS revenues (in millions)         $     3,041 $     2,633 15.5
Strategic services as a % of total  58.5%           55.0%
Enterprise revenues
Other Operating Statistics
Capital expenditures (in millions)  $           $           (3.4)
                                    1,385          1,434
Wireline employees ('000)          80.9            85.2
FiOS Video Open for Sale ('000)     15,184          14,374
FiOS Video penetration              35.0%           34.1%
FiOS Internet Open for Sale         15,530          14,703
('000)
FiOS Internet penetration           39.7%           38.2%

Footnotes:
      The segment financial results and metrics above are adjusted to exclude
      the effects of non-operational items, as the Company's chief operating
      decision maker excludes these items in assessing business unit
      performance.
      Intersegment transactions have not been eliminated.
      Certain reclassifications have been made, where appropriate, to reflect
      comparable operating results.



Verizon Communications Inc.
Reconciliations - Consolidated Verizon
                                                                 (dollars in
                                                                 millions)
                                                                 3 Mos.  3 Mos.
                                                                 Ended   Ended
Unaudited                                                        3/31/13  3/31/14
                                                                 $      $   
Consolidated Operating Revenues                                  29,420    
                                                                          30,818
Adjusted
EBITDA
                                                                 (dollars in
                                                                 millions)
                3 Mos. 3 Mos. 3 Mos.  3 Mos. 3 Mos. 3 Mos. 3 Mos.  3 Mos.
                Ended  Ended  Ended   Ended  Ended  Ended  Ended   Ended
Unaudited       6/30/12 9/30/12 12/31/12 3/31/13 6/30/13 9/30/13 12/31/13 3/31/14
Verizon
Consolidated
EBITDA
Consolidated    $    $    $     $    $    $    $     $   
net income      4,285  4,292  (1,926)  4,855  5,198  5,578  7,916      
(loss)                                                                    5,986
Add /
(Subtract):
Provision
(benefit) for   793     631     (2,810)  864     988     1,034   2,844    968
income taxes
Interest        679     632     575      537     514     555     1,061    1,214
expense
Other (income)
and expense,    (34)    (10)    1,079    (39)    (25)    (20)    250      894
net
Equity in
earnings of     (72)    (62)    (87)     5       (120)   (19)    (8)      (1,902)
unconsolidated
businesses
Operating       5,651   5,483   (3,169)  6,222   6,555   7,128   12,063   7,160
income (loss)
Add
Depreciation
and             4,128   4,167   4,137    4,118   4,151   4,154   4,183    4,137
amortization
expense
Consolidated    $    $    $     $     $     $     $      $   
EBITDA          9,779  9,650    968 10,340 10,706 11,282 16,246    
                                                                          11,297
Other Items
(Before Tax)
Severance,
Pension, and    -       -       7,186    -       (237)   -       (5,995)  -
Benefit Charges
(Credits)
Gain on
Spectrum        -       -       -        -       -       (278)   -        -
License
Transactions
Litigation      -       384     -        -       -       -       -        -
Settlements
Other
Non-Operational -       -       276      -       -       -       -        -
Costs
                -       384     7,462    -       (237)   (278)   (5,995)  -
Consolidated    $    $     $     $     $     $     $      $   
Adjusted EBITDA 9,779  10,034 8,430   10,340 10,469 11,004 10,251    
                                                                          11,297
Consolidated Operating                   21.1%                            23.2%
Income Margin
Consolidated                             35.1%                            36.7%
EBITDA Margin
Net Debt to Adjusted
EBITDA Ratio
                                                                 (dollars in
                                                                 millions)
Unaudited                                                3/31/13 12/31/13 3/31/14
Verizon Net
Debt
Debt maturing                                            $     $     $   
within one year                                          10,888 3,933      
                                                                          2,152
Long-term debt                                           41,993  89,658   107,617
Total Debt                                               52,881  93,591   109,769
Less Cash and cash                                       5,475   53,528   2,907
equivalents
                                                         $     $      $   
Net Debt                                                 47,406 40,063   
                                                                          106,862
Net Debt to Adjusted                                     1.2x  1.0x   2.5x
EBITDA Ratio
Free Cash
Flow
                                                                 (dollars in
                                                                 millions)
                                                         3 Mos. 3 Mos.
                                                         Ended  Ended
Unaudited                                                3/31/13 3/31/14  $
                                                                          Change
Net cash provided by                                     $    $   
operating activities                                     7,531  7,139
Less Capital                                            3,602   4,150
expenditures
Free Cash Flow                                          $    $   
                                                         3,929  2,989
Less free cash flow
attributable to noncontrolling                           2,404   -
interest
Illustrative Free Cash Flow                              $    $     $   
Attributable to Verizon                                  1,525  2,989      
                                                                          1,464





Verizon Communications Inc.
Reconciliations - Consolidated Verizon
Adjusted and Illustrative Net                               (dollars in
Income - Verizon                                            millions)
                                                            3 Mos. Ended
Unaudited                                                   3/31/14
Reported Net Income attributable                            $     3,947
to Verizon
Wireless transaction costs                                  260
Early debt redemption costs                                 575
Gain on sale of Omnitel interest                            (1,888)
Adjusted Net Income                                         2,894
Income from Vodafone                                        1,183
noncontrolling interest
Wireless transaction costs                                  (267)
Elimination of Omnitel equity                               (24)
income
Illustrative Net Income                                     $     3,786
Adjusted and Illustrative EPS
                                  3 Mos. Ended 3 Mos. Ended 3 Mos. Ended
Unaudited                         3/31/13      12/31/13     3/31/14
Earnings Per Common Share,        $       $       $     
Reported                          0.68         1.76        1.15
Severance, pension and benefit    -            (1.29)       -
credits
Early debt redemption costs       -            -            0.17
Wireless transaction costs        -            0.19         0.08
Gain on sale of Omnitel interest  -            -            (0.55)
Adjusted EPS                     $       $       $     
                                  0.68         0.66        0.84
Income from Vodafone                                        0.29
noncontrolling interest
Wireless transaction costs                                  (0.06)
Elimination of Omnitel equity                               (0.01)
income
Dilutive effect of share issuance                           (0.14)
Illustrative EPS                                            $     
                                                            0.91
Note: EPS may not add due to rounding.



Verizon Communications Inc.
Reconciliations - Segments
Wireless
                                                               (dollars in
                                                               millions)
                               3 Mos. Ended  3 Mos. Ended  3 Mos. Ended
Unaudited                      3/31/13         12/31/13        3/31/14
Wireless Segment EBITDA
Operating income               $         $         $      
                               6,418           6,229           7,318
Add Depreciation and           2,006           2,089           2,061
amortization expense
Wireless Segment EBITDA        $         $         $      
                               8,424           8,318           9,379
Wireless total operating       $          $          $     
revenues                       19,523          21,125          20,879
Wireless service revenues      $          $          $     
                               16,728          17,711          17,987
Wireless operating income      32.9%           29.5%           35.0%
margin
Wireless Segment EBITDA        50.4%           47.0%           52.1%
service margin
Wireline
                                                               (dollars in
                                                               millions)
                               3 Mos. Ended  3 Mos. Ended  3 Mos. Ended
Unaudited                      3/31/13         12/31/13        3/31/14
Wireline Segment EBITDA
Operating income               $        $        $       
                                 13          131            147
Add Depreciation and           2,095           2,073           2,033
amortization expense
Wireline Segment EBITDA        $         $         $      
                               2,108           2,204           2,180
Wireline total operating       $         $         $      
revenues                       9,830           9,845           9,790
Wireline operating income      0.1%            1.3%            1.5%
margin
Wireline Segment EBITDA        21.4%           22.4%           22.3%
margin



SOURCE Verizon Communications, Inc.

Website: http://www.verizon.com
Contact: Bob Varettoni, 908-559-6388, robert.a.varettoni@verizon.com, or Ray
McConville, 908-559-3504, raymond.mcconville@verizon.com
 
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