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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