VERIZON COMMUNICATIONS INC: 1st Quarter Results

 Verizon Reports Fifth Consecutive Quarter of Double-Digit Operating Income and                               Earnings Growth                                  NEW YORK, April 24, 2014 --                                   1Q 2014 HIGHLIGHTS  Consolidated    * $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    * 7.5 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).   * Added 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  * 6.2 percent year-over-year increase in consumer revenues; consumer ARPU  (average revenue per user) up 11.3 percent year over year.   * 15.5 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    * Driven 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.   * Continued effective cost management drove first-quarter 2014 operating  income to $7.2 billion, a 15.1 percent increase compared with first-quarter  2013.   * Consolidated 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.   * Cash 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.   * Free 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    * Total 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.   * Retail postpaid ARPA (average revenue per account) increased 6.3 percent  over first-quarter 2013, to $159.67 per month.    * In 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    * Verizon Wireless added 549,000 retail net connections, including 539,000     retail postpaid net connections, in the first quarter. These additions   exclude acquisitions and adjustments.   * At 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.   * Verizon 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.   * At 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.   * Retail 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.   * The 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.   * Verizon 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    * In 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.   * Representing 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.   * Wireline 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.   * Sales 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    * In 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.   * FiOS 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.   * By 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.   * Broadband 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.   * Verizon 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.   * In 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 expense    8,332          8,148         2.3    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     businesses                                     1,902             (5)          *      Other income and (expense), net                 (894)            39           *      Interest expense                              (1,214)          (537)          *      Income Before Provision for Income Taxes       6,954          5,719        21.6         Provision for income taxes                      (968)          (864)       12.0      Net Income                                   $ 5,986        $ 4,855        23.3                                                                                    Net income attributable to  noncontrolling interests                     $ 2,039          2,903        (29.8)   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            $ 1.15          $ .68        69.1                                                                            Weighted average number of common        shares (in millions)                           3,425          2,866                                                                                                      Diluted Earnings per Common Share (1)                                           Net income attributable to Verizon            $ 1.15          $ .68        69.1                                                                           Weighted average number of common                                               shares-assuming dilution (in millions)         3,430          2,872                                                                                                                                                                       Footnotes:                                                                                                                                                   (1) Diluted Earnings per Common Share includes the dilutive effect of 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                             businesses                               889        3,432      (2,543)  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           liabilities                           14,984       16,453      (1,469)  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 (in millions)             4,141       2,862           Total employees                   176,900     176,800                             Quarterly cash dividends                                                     declared per common share         $ 0.530     $ 0.530                                                                                                            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. Ended    3 Mos. 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  businesses, net of dividends received       (1,894)             14             (1,908)  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 software)                       (4,150)         (3,602)              (548)  Acquisitions of investments and  businesses, net of cash acquired              (157)            (21)              (136)  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 lease obligations               (7,951)            (73)            (7,878)              Increase in short-term obligations,  excluding current maturities                   252             581               (329)  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 equivalents                       (50,621)          2,382            (53,003)             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                            $ 17,246        $ 16,169          6.7              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 expense  5,644           5,448          3.6              Depreciation and amortization expense        2,061           2,006          2.7   Total Operating Expenses                    13,561          13,105          3.5                                                                                          Operating Income                           $ 7,318         $ 6,418         14.0             Operating Income Margin                       35.0%           32.9%                                                                                                        Segment EBITDA                             $ 9,379         $ 8,424         11.3             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 account (2)                              2.77             2.67         3.7                                                                             Churn Detail                                                                   Retail postpaid                          1.07%            1.01%                     Retail                                   1.37%            1.30%                                                                                                 Retail Postpaid Connection Statistics  Total Smartphone postpaid % of phones activated                         90.1%            84.3%                     Total Smartphone postpaid  phone base (2)                           72.3%            61.4%                     Total Internet postpaid base (2)         11.3%             9.6%                                                                                                  Other Operating Statistics                                                     Capital expenditures (in millions)    $ 2,554          $ 1,992        28.2                                                                          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                     $ 3,840         $ 3,616       6.2             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              administrative expense                2,151           2,265      (5.0) Depreciation and amortization          expense                               2,033           2,095      (3.0)            Total Operating Expenses              9,643           9,817      (1.8)                                                                                          Operating Income                      $ 147            $ 13         *              Operating Income Margin                 1.5%            0.1%                                                                                                         Segment EBITDA                      $ 2,180         $ 2,108       3.4             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 connections    4,350         3,531        23.2     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 connections                          6,224         7,593       (18.0)   Primary residence connections              10,574        11,124       (4.9)                                                                                 Total retail residence voice connections   11,048        11,725       (5.8)    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 connections       102            304      (66.4)   FiOS Digital connections                       257            661      (61.1)                                                                                HSI                                            (82)           (89)      (7.9)     Total Broadband connections                     16             99      (83.8)   Primary residence switched  access connections                            (257)          (389)     (33.9)   Primary residence connections                 (155)           (85)      82.4                                                                                  Total retail residence voice connections      (181)          (124)      46.0      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 Enterprise revenues                     58.5%          55.0%                                                                             Other Operating Statistics                                                      Capital expenditures (in millions)         $ 1,385        $ 1,434       (3.4)                                                                      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 ('000)          15,530         14,703                 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. Ended   3 Mos. Ended Unaudited                                               3/31/13        3/31/14  Consolidated Operating Revenues                        $ 29,420       $ 30,818    Adjusted EBITDA                                                                                           (dollars in  millions)                                  3 Mos. Ended 3 Mos. Ended 3 Mos. Ended 3  Mos. Ended Unaudited                               6/30/12      9/30/12     12/31/12       3/31/13 Verizon Consolidated EBITDA Consolidated net income (loss)          $ 4,285      $ 4,292    $ (1,926)       $ 4,855 Add / (Subtract): Provision (benefit) for income taxes        793          631      (2,810)         864 Interest expense                            679          632          575         537 Other (income) and expense, net            (34)         (10)        1,079          (39) Equity in earnings of unconsolidated businesses                  (72)         (62)         (87)          5 Operating income (loss)                   5,651        5,483      (3,169)         6,222 Add Depreciation and amortization expense                                   4,128        4,167        4,137         4,118 Consolidated EBITDA                     $ 9,779      $ 9,650        $ 968     $  10,340  Other Items (Before Tax) Severance, Pension, and Benefit Charges (Credits)                             -            -        7,186          - Gain on Spectrum License Transactions                                  -            -            -          - Litigation Settlements                        -          384            -          - Other Non-Operational Costs                   -            -          276                -                                               -          384        7,462           - Consolidated Adjusted EBITDA            $ 9,779     $ 10,034      $ 8,430     $  10,340  Consolidated Operating Income Margin                                              21.1% Consolidated EBITDA Margin                                                        35.1%                                  3 Mos. Ended 3 Mos. Ended 3 Mos. Ended  3  Mos. Ended Unaudited                                6/30/13      9/30/13     12/31/13        3/31/14 Verizon Consolidated EBITDA Consolidated net income (loss)           $ 5,198      $ 5,578      $ 7,916        $ 5,986 Add / (Subtract): Provision (benefit) for income taxes         988        1,034        2,844         968 Interest expense                             514          555        1,061        1,214 Other (income) and expense, net              (25)         (20)         250         894 Equity in earnings of unconsolidated businesses                   (120)         (19)          (8)        (1,902) Operating income (loss)                    6,555        7,128       12,063        7,160 Add Depreciation and amortization expense                       4,151        4,154        4,183        4,137 Consolidated EBITDA                     $ 10,706     $ 11,282     $ 16,246       $ 11,297  Other Items (Before Tax) Severance, Pension, and Benefit Charges (Credits)                   (237)           -       (5,995)          - Gain on Spectrum License Transactions                                   -         (278)           -           - Litigation Settlements                         -            -            -           - Other Non-Operational Costs                    -            -            -                 -                                             (237)        (278)      (5,995)             -  Consolidated Adjusted EBITDA            $ 10,469     $ 11,004     $ 10,251       $ 11,297  Consolidated Operating Income Margin                                               23.2% Consolidated EBITDA Margin                                                              36.7%                                                                                               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 equivalents                             5,475           53,528         2,907                  Net Debt                                                $ 47,406        $  40,063     $ 106,862    Net Debt to Adjusted EBITDA Ratio                            1.2x             1.0x          2.5x                   Free Cash Flow                                                                                                    (dollars in millions)                                                                   3 Mos. Ended   3 Mos.  Ended                         Unaudited                                                 3/31/13         3/31/14        $ Change                                                Net cash provided by operating activities                 $ 7,531        $  7,139  Less Capital expenditures                                   3,602           4,150                                 Free Cash Flow                                            $ 3,929        $  2,989       Less free cash flow attributable  to noncontrolling interest                                  2,404              -                Illustrative Free Cash Flow Attributable to Verizon       $ 1,525        $  2,989         $ 1,464   Verizon Communications Inc.                                                     Reconciliations - Consolidated Verizon                                                                                                                       Adjusted and Illustrative Net Income - Verizon         (dollars in millions)                                                                   3 Mos. Ended       Unaudited                                                           3/31/14          Reported Net Income attributable to Verizon                         $ 3,947              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 noncontrolling interest                          1,183           Wireless transaction costs                                             (267)           Elimination of Omnitel equity income                                    (24)            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 credits        -          (1.29)            -               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 noncontrolling interest                            0.29            Wireless transaction costs                                             (0.06)          Elimination of Omnitel equity income                                   (0.01)          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  amortization expense                   2,006            2,089           2,061         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 margin        32.9%            29.5%           35.0%         Wireless Segment EBITDA service margin  50.4%            47.0%           52.1%                                                                                      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  amortization expense                   2,095            2,073           2,033         Wireline Segment EBITDA              $ 2,108          $ 2,204         $ 2,180             Wireline total operating revenues    $ 9,830          $ 9,845         $ 9,790            Wireline operating income margin         0.1%             1.3%            1.5%          Wireline Segment EBITDA margin          21.4%            22.4%           22.3%            SOURCE  Verizon Communications, Inc.  CONTACT: Bob Varettoni, 908-559-6388, robert.a.varettoni@verizon.com, or Ray McConville, 908-559-3504, raymond.mcconville@verizon.com  END 
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