Verizon Wireless and FiOS Growth Fuels Continued Strong Cash Flow at Verizon in 3Q

Mon Oct 26, 2009 7:25am EDT

* Reuters is not responsible for the content in this press release.

Verizon Wireless and FiOS Growth Fuels Continued Strong Cash Flow at Verizon
in 3Q
Gains Reported in Customers and Revenues for Wireless, Fiber-Optic Services

NEW YORK, Oct. 26 /PRNewswire/ --

3Q 2009 HIGHLIGHTS

Consolidated Earnings
    --  41 cents in EPS and 60 cents in adjusted EPS (non-GAAP), compared with
        3Q 2008 EPS of 59 cents and 66 cents, respectively.

    --  $23.1 billion in cash flow from operations through the first nine
months
        of 2009, up $3.2 billion, or 16.0 percent.


Wireless
    --  89.0 million total customers, up 25.7 percent; 86.3 million retail
        customers, up 25.4 percent; 1.2 million net customer additions,
        excluding acquisitions and adjustments.

    --  24.4 percent increase in total revenues compared with 3Q 2008;
continued
        low retail postpaid churn, 1.13 percent; data revenues up 48.1
percent;
        28.3 percent operating income margin and 46.1 percent EBITDA margin on
        service revenues (non-GAAP).


Wireline
    --  198,000 net new FiOS Internet customers and 191,000 net new FiOS TV
        customers, with increased sales penetration for both services; 3.3
        million total FiOS Internet customers and 2.7 million total FiOS TV
        customers.

    --  12.6 percent increase in consumer ARPU.



Verizon Communications Inc. (NYSE: VZ) generated strong and improved cash flow
in the third quarter 2009, with continued revenue and customer growth in
wireless and broadband markets.

Verizon today reported diluted earnings per share (EPS) of 41 cents in the
third quarter, compared with 59 cents per share in the third quarter 2008.  On
an adjusted basis (non-GAAP), Verizon posted EPS of 60 cents in the third
quarter 2009, compared with 66 cents in the third quarter 2008.

Verizon's total operating revenues grew 10.2 percent to $27.3 billion,
compared with the third quarter 2008.  This includes revenues from Alltel
Corporation, which Verizon acquired in January 2009.  On a pro forma basis
(consolidating the operating results of Verizon and the former Alltel as
though the acquisition had occurred on Jan. 1, 2008), operating revenue growth
was 0.6 percent.

Cash flow from operations totaled $23.1 billion for the first nine months of
2009, up 16.0 percent, or $3.2 billion, over the same period last year.  Free
cash flow (cash flow from operations minus capital expenditures) totaled $10.7
billion, up $3.3 billion over the same period last year.  Verizon paid
shareowners $3.9 billion in dividends during the first three quarters of 2009,
and its Board of Directors approved a 3.3 percent quarterly dividend increase
last month.

Long-Term Shareowner Value
"Verizon continues to generate strong cash flow, which we have used in
building the foundation for sustainable, long-term shareowner value," said
Verizon Chairman and CEO Ivan Seidenberg.  "Even through the worst of the
recession, we have continued to raise our dividend and to add new customers,
expand markets and grow revenues based on the power and innovation of
Verizon's wireless, broadband and global networks."

He added, "The Verizon network is now an engine for next-generation
communications services that will create new short- and long-term
opportunities for us.  As the U.S. economic and employment picture improves,
and as we accelerate reductions in our own cost structure, we are
well-positioned to quickly and significantly improve our growth profile."

Seidenberg also noted that a simplified organizational structure announced
earlier this month will enable Verizon to achieve improved levels of
productivity.  The realignment has combined two former Wireline business
groups, Verizon Telecom and Verizon Business, into one organization.

Wireless Delivers Industry-Leading Profitability, Strong Customer Growth
Verizon Wireless continued to lead the industry with the highest profit
margins.  In the third quarter 2009:

    --  Wireless retail (non-wholesale) gross customer additions were up 15.0
        percent over the prior year.  On a pro forma basis, retail gross
        customer additions decreased by 8.3 percent.
    --  Verizon Wireless had 89.0 million customers at the end of the quarter,
        an increase of 25.7 percent year over year, and 6.3 percent on a pro
        forma basis.  Verizon Wireless is the largest wireless company in the
        U.S. in terms of total customers and revenues.
    --  The company also has the most retail customers of any U.S. wireless
        provider and continued to grow its high-quality base, adding 1.0
million
        net retail customers in the quarter, excluding acquisitions and
        adjustments, for a total of 86.3 million retail customers.
    --  Total churn and retail postpaid churn were 1.49 percent and 1.13
        percent, respectively.
    --  Revenues totaled $15.8 billion, up 24.4 percent year over year and up
        4.9 percent on a pro forma basis.  Service revenues were $13.5
billion,
        up 23.7 percent year over year and up 6.1 percent on a pro forma basis
        as demand continued to grow for data services.  Data revenue grew to
        $4.1 billion, up 48.1 percent and up 28.9 percent on a pro forma
basis.
    --  Total service ARPU (average monthly service revenue per user)
decreased
        2.2 percent year over year and 0.8 percent on a pro forma basis to
        $51.04.  Total data ARPU increased to $15.59, up 17.2 percent year
over
        year and 20.7 percent on a pro forma basis.

    --  Wireless operating income margin, adjusted for merger integration and
        acquisition costs, was 28.3 percent, up 1.0 percentage point year over
        year and up 1.4 percentage points pro forma.  Adjusted on the same
        basis, EBITDA (earnings before interest, taxes, depreciation and
        amortization) margin on service revenues (non-GAAP) was 46.1 percent,
an
        increase of 1.9 percentage points year over year and 1.3 percentage
        points on a pro forma basis.


Continued Growth in Consumer Broadband and Video
In addition to strong Wireless results, Verizon posted another quarter of
gains in the number of customers using fiber-optic-based FiOS Internet and
FiOS TV services.  In consumer markets served by Verizon's wireline network,
increased revenues from broadband and video services helped produce overall
revenue growth, as well as ARPU growth.  In the third quarter:

    --  Verizon added 198,000 net new FiOS Internet customers.  The company
        served 3.3 million FiOS Internet customers by the end of the quarter,
a
        49.2 percent year-over-year increase.
    --  FiOS Internet penetration (customers as a percentage of potential
        customers) increased to 28.5 percent by the end of the third quarter,
        with the product available for sale to 11.5 million premises.  This
        compares with a 24.2 percent penetration at the end of the third
quarter
        2008.
    --  Verizon also added 191,000 net new FiOS TV customers.  The company
        served 2.7 million FiOS TV customers by the end of the quarter, a 67.7
        percent year-over-year increase.
    --  FiOS TV penetration increased to 24.9 percent by the end of the third
        quarter, with the product available for sale to 10.9 million premises.

        This compares with a 19.7 percent penetration at the end of the third
        quarter 2008.
    --  Consumer broadband and video revenues in wireline mass markets (which
        include consumer and small-business customers) represented growth of
        30.7 percent compared with the third quarter 2008.  This increase
        contributed to 1.2 percent revenue growth in consumer markets served
by
        Verizon's wireline network.
    --  Revenue growth from broadband and video services boosted consumer ARPU
        to $75.04 in the third quarter 2009, a 12.6 percent year-over-year
        increase.  FiOS ARPU is more than $137, driven primarily by
        "triple-play" bundles of voice, Internet and TV services.

    --  Worldwide sales of strategic business services -- such as IP (Internet
        protocol), managed services, Ethernet and security solutions --
        generated $1.6 billion in revenue in the quarter, up 1.0 percent from
        the third quarter 2008.


Details of Earnings Adjustments
Adjusted earnings in the third quarter 2009 excluded 19 cents per share in
special items:  13 cents for severance, pension and benefit charges in
connection with pension settlements related to previously announced force
reductions; 4 cents for merger integration and acquisition costs primarily in
connection with the Alltel transaction; and 2 cents for costs related to the
pending spinoff of non-strategic Wireline access lines.  Third-quarter 2008
adjusted earnings excluded 7 cents per share in special items: 6 cents for
severance, pension and benefit charges; and 1 cent for merger integration
costs in connection with Verizon's acquisition of MCI in 2006.

Additional Highlights

Wireless
    --  At the end of the third quarter 2009, retail customers (postpaid and
        prepaid) represented nearly 97 percent of the company's customer base.


    --  Verizon Wireless continued to lead the industry in cost efficiency. 
        Monthly cash expense per customer (non-GAAP) decreased in the third
        quarter 2009 to $27.52, from $28.42 in the comparable period in 2008
on
        a pro forma basis.


    --  In the third quarter, data revenues grew to 30.5 percent of all
service
        revenues, up from 25.1 percent in the third quarter 2008 on a pro
forma
        basis.


    --  Verizon Wireless continued to extend the reach of its broadband
network,
        the nation's largest and most reliable 3G (third-generation) network. 
        Verizon's 3G network provides more coverage than any U.S. carrier and
is
        available to approximately 284 million people.


    --  Verizon Wireless marked a significant milestone in its LTE network
        deployment plans in August with the successful completion of the first
        LTE 4G (Long Term Evolution, fourth generation) test data calls over
its
        700 MHz spectrum in Boston and Seattle.  The company also released
        updated specifications for wireless devices that will run on the LTE
        network.  Verizon Wireless plans to offer commercial LTE-based service
        in the U.S. in 2010 in up to 30 markets.


    --  Verizon Wireless and Google have announced a strategic partnership
that
        will leverage the Verizon Wireless network and the best of the Android
        open platform to deliver leading-edge mobile applications, services
and
        devices.  As a result of this agreement, consumers will have access to
        an array of products that combine the speed of the nation's largest
and
        most reliable 3G network with the flexibility of the Android mobile
        platform.  Verizon Wireless expects to launch two Android-based
devices
        before the end of the year.


    --  The company continued to roll out new devices, including the HTC Touch
        Pro2, a 3G global smartphone; the Samsung Rogue, with a full-touch
        display, QWERTY keyboard and one-touch access to popular social
        networking widgets; and the Nokia 7705 Twist, featuring a unique,
        swivel-open square shape.


    --  During the third quarter, Verizon Wireless customers sent or received
        more than 153 billion text messages.  Customers also sent more than
2.8
        billion picture/video messages and completed nearly 38 million music
and
        video downloads.


Wireline
    --  Third-quarter operating revenues in the Wireline segment were $11.6
        billion, a decline of 4.8 percent compared with the third quarter
2008. 
        This is an improvement of 0.4 percentage points compared with the
        year-over-year revenue declines reported in the second quarter 2009.


    --  Broadband connections totaled 9.2 million at the end of the third
        quarter, an 8.5 percent year-over-year increase.  This is a net
increase
        of 63,000 from the second quarter 2009, as the increase in FiOS
Internet
        connections more than offset a decrease in DSL-based High Speed
Internet
        connections.


    --  Over the past year, Verizon has added 1.1 million FiOS TV customers
and
        expanded the availability of FiOS triple-play bundles.  Of the
        approximately 32 million total households in areas covered by
Verizon's
        wireline network, FiOS triple-play bundles were available to 10.9
        million premises at the end of the third quarter 2009, compared with
8.2
        million premises at the end of the third quarter 2008.


    --  As of the end of the quarter, the FiOS network passed 14.5 million
        premises, or approximately more than 45 percent of total households in
        areas covered by Verizon's wireline network.  This is on track to the
        end-of-year target of 15 million.


    --  For global and other large-business customers, Verizon unveiled a
suite
        of managed solutions to help enterprises manage mobile devices, usage
        plans and applications across multiple carriers globally, along with
new
        IT consulting services to support enterprise-wide mobility programs. 
        The company also rolled out a next-generation managed security
services
        platform for enterprises and a program to prevent hacker attacks on
        business applications.


    --  Continuing to widen and deepen its global scope and capabilities,
        Verizon extended availability of its on-demand, "cloud-based"
Computing
        as a Service (CaaS) solution to the company's Amsterdam data center. 
It
        also rolled out both its Managed Services portfolio and Remote IP
        Application Management service in India.


    --  New agreements with multinational customers included ING, Manulife,
NYSE
        Euronext and Sandvik.  Verizon also signed new contracts with several
        U.S. government agencies, including the U.S. Citizenship and
Immigration
        Service.



NOTE: Comparisons are year over year unless otherwise noted.  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 news release.  Reclassifications of prior-period
amounts have been made in accordance with the adoption of the accounting
standard on noncontrolling interests in consolidated financial statements and,
where appropriate, to reflect comparable operating results for the spinoff of
the Wireline segment's non-strategic local exchange and related business
assets in Maine, New Hampshire and Vermont in the first quarter of 2008. 
Unless stated otherwise, segment results shown are adjusted for special items.


Verizon Communications Inc. (NYSE: VZ), headquartered in New York, is a global
leader in delivering broadband and other wireless and wireline communications
services to mass market, business, government and wholesale customers. 
Verizon Wireless operates America's most reliable wireless network, serving
more than 89 million customers nationwide.  Verizon also provides converged
communications, information and entertainment services over America's most
advanced fiber-optic network, and delivers innovative, seamless business
solutions to customers around the world.  A Dow 30 company, Verizon employs a
diverse workforce of more than 230,000 and last year generated consolidated
revenues of more than $97 billion.  For more information, visit
www.verizon.com.


VERIZON'S ONLINE NEWS CENTER: Verizon news releases, executive speeches and
biographies, media contacts, high-quality video and images, and other
information are available at Verizon's News Center on the World Wide Web at
www.verizon.com/news.  To receive news releases by e-mail, visit the News
Center and register for customized automatic delivery of Verizon news
releases.

NOTE: This document contains statements about expected future events and
financial results that are forward-looking and subject to risks and
uncertainties.  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 could affect
future results and could cause those results to differ materially from those
expressed in the forward-looking statements: the effects of adverse conditions
in the U.S. and international economies; the effects of competition in our
markets; materially adverse changes in labor matters, including workforce
levels and labor negotiations, and any resulting financial and/or operational
impact, in the markets served by us or by companies in which we have
substantial investments; the effect of material changes in available
technology; any disruption of our suppliers' provisioning of critical products
or services; significant increases in benefit plan costs or lower investment
returns on plan assets; the impact of natural or man-made disasters or
existing or future litigation and any resulting financial impact not covered
by insurance; technology substitution; an adverse change in the ratings
afforded our debt securities by nationally accredited ratings organizations or
adverse conditions in the credit markets impacting the cost, including
interest rates, and/or availability of financing; any changes in the
regulatory environments in which we operate, including any loss of or
inability to renew wireless licenses, and the final results of federal and
state regulatory proceedings and judicial review of those results; the timing,
scope and financial impact of our deployment of fiber-to-the-premises
broadband technology; changes in our 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; our ability to complete acquisitions and dispositions; our ability
to successfully integrate Alltel Corporation into Verizon Wireless' business
and achieve anticipated benefits of the acquisition; 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                 9/30/09             9/30/08      % Change
    ---------              ------------       ------------     --------

    Operating Revenues          $27,265           $24,752          10.2

    Operating Expenses
    Cost of services
     and sales                   10,996            10,048           9.4
    Selling, general &
     administrative
     expense                      8,111             6,879          17.9
    Depreciation and
     amortization
     expense                      4,172             3,652          14.2
                                  -----             -----
    Total Operating
     Expenses                    23,279            20,579          13.1
                                 ------            ------

    Operating Income              3,986             4,173          (4.5)
    Equity in
     earnings of
     unconsolidated
     businesses                     166               211         (21.3)
    Other income and
     (expense), net                  13               105         (87.6)
    Interest expense               (704)             (440)         60.0
                                   ----              ----
    Income Before
     Provision for
     Income
     Taxes                        3,461             4,049         (14.5)
    Provision for
     income taxes                  (574)             (850)        (32.5)
                                   ----              ----
    Net income                   $2,887            $3,199          (9.8)
                                 ======            ======

    Net income
     attributable to
     noncontrolling
     interest                     1,711             1,530          11.8
    Net income
     attributable to
     Verizon                      1,176             1,669         (29.5)
                                  -----             -----
    Net Income                   $2,887            $3,199          (9.8)
                                 ======            ======

    Basic Earnings
     per Common Share
    Net income
     attributable to
     Verizon                       $.41              $.59         (30.5)

    Weighted average
     number of
     common shares (in
     millions)                    2,841             2,844

    Diluted Earnings per
     Common Share (1)
    Net income
     attributable to
     Verizon                       $.41              $.59         (30.5)

    Weighted average
     number of common
      shares-assuming
       dilution (in
       millions)                  2,841             2,845




                            9 Mos. Ended      9 Mos. Ended
    Unaudited                 9/30/09            9/30/08       % Change
    ---------               ------------      ------------     --------

    Operating Revenues          $80,717           $72,709          11.0

    Operating Expenses
    Cost of services
     and sales                   31,785            29,031           9.5
    Selling, general &
     administrative
     expense                     23,543            19,808          18.9
    Depreciation and
     amortization
     expense                     12,291            10,818          13.6
                                 ------            ------
    Total Operating
     Expenses                    67,619            59,657          13.3
                                 ------            ------

    Operating Income             13,098            13,052           0.4
    Equity in
     earnings of
     unconsolidated
     businesses                     422               458          (7.9)
    Other income and
     (expense), net                  77               220         (65.0)
    Interest expense             (2,416)           (1,302)         85.6
                                 ------            ------
    Income Before
     Provision for
     Income
     Taxes                       11,181            12,428         (10.0)
    Provision for
     income taxes                (1,924)           (2,776)        (30.7)
                                 ------            ------
    Net income                   $9,257            $9,652          (4.1)
                                 ======            ======

    Net income
     attributable to
     noncontrolling
     interest                     4,953             4,459          11.1
    Net income
     attributable to
     Verizon                      4,304             5,193         (17.1)
                                  -----             -----
    Net Income                   $9,257            $9,652          (4.1)
                                 ======            ======

    Basic Earnings
     per Common Share
    Net income
     attributable to
     Verizon                      $1.51             $1.82         (17.0)

    Weighted average
     number of
     common shares (in
     millions)                    2,841             2,852

    Diluted Earnings per
     Common Share (1)
    Net income
     attributable to
     Verizon                      $1.51             $1.82         (17.0)

    Weighted average
     number of common
      shares-assuming
       dilution (in
       millions)                  2,841             2,854


    Footnotes:
    (1) Diluted Earnings per Share includes the dilutive effect of shares
        issuable under our stock-based compensation plans, which represents
        the only potential dilution.



    Verizon Communications Inc.
    Condensed Consolidated Statements of Income Before Special Items
    ----------------------------------------------------------------


                         (dollars in millions, except per share amounts)

                            3 Mos. Ended      3 Mos. Ended
    Unaudited                  9/30/09           9/30/08        % Change
    ---------               -----------       ------------      --------

    Operating Revenues (1)
      Domestic Wireless         $15,797           $12,699          24.4
      Wireline                   11,569            12,158          (4.8)
      Other                        (101)             (105)         (3.8)
                                   ----              ----
    Total Operating
     Revenues                    27,265            24,752          10.2
                                 ------            ------

    Operating Expenses (1)
      Cost of services
       and sales                 10,914            10,043           8.7
      Selling, general &
       administrative
       expense                    7,340             6,569          11.7
      Depreciation and
       amortization
       expense                    4,076             3,652          11.6
                                  -----             -----
    Total Operating
     Expenses                    22,330            20,264          10.2
                                 ------            ------

    Operating Income              4,935             4,488          10.0
    Operating income
     impact of divested
     operations (1)                   -                 -             -
    Equity in earnings of
     unconsolidated
     businesses                     166               211         (21.3)
    Other income and
     (expense), net                  13               105         (87.6)
    Interest expense               (704)             (440)         60.0
                                   ----              ----
    Income Before
     Provision for
     Income
     Taxes                        4,410             4,364           1.1
    Provision for
     income taxes                  (833)             (969)        (14.0)
                                   ----              ----
    Net Income Before
     Special Items               $3,577            $3,395           5.4
                                 ======            ======

    Net income
     attributable to
     noncontrolling
     interest                     1,885             1,530          23.2
    Net income
     attributable to
     Verizon                      1,692             1,865          (9.3)
                                  -----             -----
    Net Income Before
     Special Items               $3,577            $3,395           5.4
                                 ======            ======

    Basic Adjusted
     Earnings per Common
     Share
    Net income
     attributable to
     Verizon                       $.60              $.66          (9.1)

    Weighted average
     number of common
     shares (in millions)         2,841             2,844

    Diluted Adjusted Earnings
     per Common Share (2)
    Net income attributable
     to Verizon                    $.60              $.66          (9.1)

    Weighted average
     number of common
     shares-assuming
     dilution (in millions)       2,841             2,845

    Footnotes:
    (1) Reclassifications of prior period amounts have been made, where
        appropriate, to reflect comparable operating results for the spin-off
        of the wireline segment's non-strategic local exchange and related
        business assets in Maine, New Hampshire and Vermont in the first
        quarter of 2008.  Reclassifications were determined using specific
        information where available and allocations where data is not
        maintained on a state-specific basis within the Company's books and
        records as follows:

          Revenues                  $ -               $ -
          Expenses                  $ -               $ -

    (2) Diluted Earnings per Share includes the dilutive effect of shares
        issuable under our stock-based compensation plans, which represents
        the only potential dilution.




                             9 Mos. Ended      9 Mos. Ended
    Unaudited                   9/30/09           9/30/08      % Change
    ---------                -----------       ------------    --------

    Operating Revenues (1)
      Domestic Wireless         $46,399           $36,486          27.2
      Wireline                   34,624            36,297          (4.6)
      Other                        (306)             (332)         (7.8)
                                   ----              ----
    Total Operating
     Revenues                    80,717            72,451          11.4
                                 ------            ------

    Operating Expenses (1)
      Cost of services
       and sales                 31,618            28,896           9.4
      Selling, general &
       administrative
       expense                   22,150            19,306          14.7
      Depreciation and
       amortization
       expense                   12,059            10,758          12.1
                                 ------            ------
    Total Operating
     Expenses                    65,827            58,960          11.6
                                 ------            ------

    Operating Income             14,890            13,491          10.4
    Operating income
     impact of divested
     operations (1)                   -                44        (100.0)
    Equity in earnings
     of unconsolidated
     businesses                     422               458          (7.9)
    Other income and
     (expense), net                  79               220         (64.1)
    Interest expense             (2,161)           (1,302)         66.0
                                 ------            ------
    Income Before Provision
     for Income Taxes            13,230            12,911           2.5
    Provision for income
     taxes                       (2,655)           (2,942)         (9.8)
                                 ------            ------
    Net Income Before
     Special Items              $10,575            $9,969           6.1
                                =======            ======

    Net income attributable
     to noncontrolling
     interest                     5,296             4,459          18.8
    Net income attributable
     to Verizon                   5,279             5,510          (4.2)
                                  -----             -----
    Net Income Before
     Special Items              $10,575            $9,969           6.1
                                =======            ======

    Basic Adjusted Earnings
     per Common Share
    Net income attributable
     to Verizon                   $1.86             $1.93          (3.6)

    Weighted average number
     of common shares (in
     millions)                    2,841             2,852

    Diluted Adjusted Earnings
     per Common Share (2)
    Net income attributable
     to Verizon                   $1.86             $1.93          (3.6)

    Weighted average number
     of common shares-assuming
     dilution (in millions)       2,841             2,854


    Footnotes:
    (1) Reclassifications of prior period amounts have been made, where
        appropriate, to reflect comparable operating results for the spin-off
        of the wireline segment's non-strategic local exchange and related
        business assets in Maine, New Hampshire and Vermont in the first
        quarter of 2008.  Reclassifications were determined using specific
        information where available and allocations where data is not
        maintained on a state-specific basis within the Company's books and
        records as follows:

          Revenues                  $ -              $258
          Expenses                  $ -              $214

    (2) Diluted Earnings per Share includes the dilutive effect of shares
        issuable under our stock-based compensation plans, which represents
        the only potential dilution.



    Verizon Communications Inc.
    Condensed Consolidated Statements of Income - Reconciliations
    -------------------------------------------------------------

                              (dollars in millions, except per share amounts)

                                  Special and Non-Recurring Items
                                   -----------------------------

                           3 Mos.    Merger   Severance, Access   3 Mos. Ended
                            Ended  Integration Pension    Line      9/30/09
                          9/30/09      and       and    Spin-Off     Before
                          Reported Acquisition Benefit   Related    Special
    Unaudited              (GAAP)     Costs    Charges   Charges     Items
    ---------             --------  ---------  -------   -------    --------

    Operating Revenues     $27,265        $-        $-        $-     $27,265
    Operating Expenses
    Cost of services
     and sales              10,996       (79)        -        (3)    10,914
    Selling, general &
     administrative
     expense                 8,111      (102)     (610)      (59)     7,340
    Depreciation and
     amortization
     expense                 4,172       (96)        -         -      4,076
                            -----        ---       ---       ---      -----
    Total Operating
     Expenses              23,279       (277)     (610)      (62)    22,330
                           ------       ----      ----       ---     ------

    Operating Income        3,986        277       610        62      4,935
    Equity in earnings of
     unconsolidated
     businesses               166          -         -         -        166
    Other income and
     (expense), net            13          -         -         -         13
    Interest expense         (704)         -         -         -       (704)
                             ----        ---       ---       ---       ----
    Income Before
     Provision for
     Income Taxes           3,461        277       610        62      4,410
    Provision for
     income taxes            (574)         -      (238)      (21)      (833)
                             ----        ---      ----       ---       ----
    Net income             $2,887       $277      $372       $41     $3,577
                           ======       ====      ====       ===     ======

    Net income
     attributable to
     noncontrolling
     interest               1,711        174         -         -      1,885
    Net income
     attributable to
     Verizon                1,176        103       372        41      1,692
                            -----        ---       ---        --      -----
    Net income             $2,887       $277      $372       $41     $3,577
                           ======       ====      ====       ===     ======

    Basic Earnings per
     Common Share  (1)
    Net income
     attributable to
     Verizon                 $.41       $.04      $.13      $.02       $.60

    Diluted Earnings
     per Common
     Share (1)
    Net income
     attributable to
     Verizon                 $.41       $.04      $.13      $.02       $.60



                            (dollars in millions, except per share amounts)

                                  Special and Non-Recurring
                                             Items
                                  --------------------------
                                                               3 Mos. Ended
                     3 Mos. Ended                  Severance,     9/30/08
                        9/30/08        Merger     Pension and      Before
                        Reported    Integration     Benefit       Special
    Unaudited            (GAAP)        Costs        Charges         Items
    ---------           --------    -----------     --------      --------

    Operating Revenues   $24,752            $-            $-       $24,752

    Operating Expenses
    Cost of services
     and sales            10,048            (5)            -        10,043
    Selling, general &
     administrative
     expense               6,879           (45)         (265)        6,569
    Depreciation
     and amortization
     expense               3,652             -             -         3,652
                           -----           ---           ---         -----
    Total Operating
     Expenses             20,579           (50)         (265)       20,264
                          ------           ---          ----        ------

    Operating Income       4,173            50           265         4,488
    Equity in earnings
     of unconsolidated
     businesses              211             -             -           211
    Other income and
     (expense), net          105             -             -           105
    Interest expense        (440)            -             -          (440)
                            ----           ---           ---          ----
    Income Before
     Provision for
     Income Taxes          4,049            50           265         4,364
    Provision for
     income taxes           (850)          (18)         (101)         (969)
                            ----           ---          ----          ----
    Net income            $3,199           $32          $164        $3,395
                          ======           ===          ====        ======

    Net income
     attributable
     to noncontrolling
     interest              1,530             -             -         1,530
    Net income
     attributable
     to Verizon            1,669            32           164         1,865
                           -----            --           ---         -----
    Net income            $3,199           $32          $164        $3,395
                          ======           ===          ====        ======

    Basic Earnings per
     Common Share (1)
    Net income
     attributable
     to Verizon             $.59          $.01          $.06          $.66


    Diluted Earnings
     per Common Share (1)
    Net income
     attributable
     to Verizon             $.59          $.01          $.06          $.66

    Footnote:
    (1)  EPS totals may not add due to rounding.

    Note: See www.verizon.com/investor for a reconciliation of other non-GAAP
    measures.



    Verizon Communications Inc.
    Condensed Consolidated Statements of Income - Reconciliations
    -------------------------------------------------------------

                              (dollars in millions, except per share amounts)

                                  Special and Non-Recurring Items
                                  -------------------------------
                           9 Mos.    Merger   Severance, Access   9 Mos. Ended
                            Ended  Integration Pension    Line      9/30/09
                          9/30/09      and       and    Spin-Off     Before
                          Reported Acquisition Benefit   Related    Special
    Unaudited              (GAAP)     Costs    Charges   Charges     Items
    ---------             --------  ---------  -------   -------    ---------


    Operating Revenues     $80,717         $-       $-        $-     $80,717
    Operating Expenses
    Cost of services
     and sales              31,785       (164)       -        (3)     31,618
    Selling, general &
     administrative
     expense                23,543       (308)  (1,026)      (59)     22,150
    Depreciation and
     amortization
     expense               12,291        (232)       -         -      12,059
                           ------        ----      ---       ---      ------
    Total Operating
     Expenses              67,619        (704)  (1,026)      (62)     65,827
                           ------        ----   ------       ---      ------

    Operating Income       13,098         704    1,026        62      14,890
    Equity in earnings
     of unconsolidated
     businesses               422           -        -         -         422
    Other income and
     (expense), net            77           2        -         -          79
    Interest expense       (2,416)        255        -         -      (2,161)
                           ------         ---      ---       ---      ------
    Income Before
     Provision
     for Income
     Taxes                 11,181         961    1,026        62      13,230
    Provision for
     income taxes          (1,924)       (309)    (401)      (21)     (2,655)
                           ------        ----     ----       ---      ------
    Net income             $9,257        $652     $625       $41     $10,575
                           ======        ====     ====       ===     =======

    Net income
     attributable to
     noncontrolling
     interest               4,953         343        -         -       5,296
    Net income
     attributable to
     Verizon                4,304         309      625        41       5,279
                            -----         ---      ---        --       -----
    Net income             $9,257        $652     $625       $41     $10,575
                           ======        ====     ====       ===     =======

    Basic Earnings per
     Common Share (1)
    Net income
     attributable to
     Verizon                $1.51        $.11     $.22      $.02       $1.86

    Diluted Earnings per
     Common Share (1)
    Net income
     attributable to
     Verizon                $1.51        $.11     $.22      $.02       $1.86



                              (dollars in millions, except per share amounts)

                                  Special and Non-Recurring Items
                                  -------------------------------
                               9 Mos. Ended            Access Line
                                  9/30/08    Merger       Spin-
                                 Reported  Integration Off Related
    Unaudited                     (GAAP)      Costs      Charges
    ---------                    --------   ---------   -----------

    Operating Revenues            $72,709          $-            $-
    Operating Expenses
    Cost of services and
     sales                         29,031         (18)          (16)
    Selling, general &
     administrative
      expense                      19,808         (97)          (87)
    Depreciation
     and amortization
     expense                       10,818           -             -
                                   ------         ---           ---
    Total Operating
     Expenses                      59,657        (115)         (103)
                                   ------        ----          ----

    Operating Income               13,052         115           103
    Operating income impact
     of divested operations             -           -             -
    Equity in earnings of
     unconsolidated
     businesses                       458           -             -
    Other income and
     (expense), net                   220           -             -
    Interest expense               (1,302)          -             -
                                   ------         ---           ---
    Income Before Provision
     for Income Taxes              12,428         115           103
    Provision for income taxes     (2,776)        (43)          (22)
                                   ------         ---           ---
    Net income                     $9,652         $72           $81
                                   ======         ===           ===

    Net income attributable
     to noncontrolling
     interest                       4,459           -             -
    Net income attributable
     to Verizon                     5,193          72            81
                                    -----          --            --
    Net income                     $9,652         $72           $81
                                   ======         ===           ===

    Basic Earnings per
     Common Share  (1)
    Net income attributable
     to Verizon                     $1.82        $.02          $.03

    Diluted Earnings per
     Common Share  (1)
    Net income attributable
     to Verizon                     $1.82        $.02          $.03



                                  Special and Non-Recurring Items
                                  -------------------------------
                                                          9 Mos. Ended
                                            Severance,      9/30/08
                                Impact of  Pension and      Before
                                Divested     Benefit        Special
    Unaudited                  Operations    Charges         Items
    ---------                  ----------  ----------      --------

    Operating Revenues              $(258)         $-       $72,451
    Operating Expenses
    Cost of services and
     sales                           (101)          -        28,896
    Selling, general &
     administrative
      expense                         (53)       (265)       19,306
    Depreciation
     and amortization
     expense                          (60)          -        10,758
                                      ---         ---        ------
    Total Operating
     Expenses                        (214)       (265)       58,960
                                     ----        ----        ------

    Operating Income                  (44)        265        13,491
    Operating income impact
     of divested operations            44           -            44
    Equity in earnings of
     unconsolidated
     businesses                         -           -           458
    Other income and (expense),
     net                                -           -           220
    Interest expense                    -           -        (1,302)
                                      ---         ---        ------
    Income Before Provision
     for Income Taxes                   -         265        12,911
    Provision for income taxes          -        (101)       (2,942)
                                      ---        ----        ------
    Net income                         $-        $164        $9,969
                                       ==        ====        ======

    Net income attributable
     to noncontrolling
     interest                           -           -         4,459
    Net income attributable
     to Verizon                         -         164         5,510
                                      ---         ---         -----
    Net income                         $-        $164        $9,969
                                       ==        ====        ======

    Basic Earnings per
     Common Share  (1)
    Net income attributable
     to Verizon                        $-        $.06         $1.93

    Diluted Earnings per
     Common Share  (1)
    Net income attributable
     to Verizon                        $-        $.06         $1.93


    Footnote:
    (1)  EPS totals may not add due to rounding.

    Note: See www.verizon.com/investor for a reconciliation of other non-GAAP
    measures.



    Verizon Communications Inc.
    Selected Financial and Operating Statistics
    -------------------------------------------


                               (dollars in millions, except per share amounts)
    Unaudited                                           9/30/09       9/30/08
    ---------                                           -------       -------

    Debt to debt and Verizon's equity ratio-end of
     period (1)                                            59.3%         46.8%

    Book value per common share (1)                      $15.20        $17.95

    Common shares outstanding (in millions)
      End of period                                       2,841         2,840

    Total employees                                     230,340       228,315




                              3 Mos.       3 Mos.        9 Mos.       9 Mos.
                              Ended        Ended         Ended        Ended
    Unaudited                9/30/09      9/30/08       9/30/09       9/30/08
    ---------                -------      -------       -------       -------
    Capital expenditures
     (including capitalized
     software)
      Domestic Wireless       $1,800       $1,473        $5,134        $4,723
      Wireline                 2,273        2,483         6,614         7,318
      Other                      283          222           702           534
                                 ---          ---           ---           ---
      Total                   $4,356       $4,178       $12,450       $12,575
                              ------       ------       -------       -------


    Cash dividends
     declared per
     common share             $0.475       $0.460        $1.395        $1.320

    Footnote:
    (1) Calculations are based on the equity position attributable to
     Verizon, which excludes noncontrolling interests.



    Verizon Communications Inc.
    Condensed Consolidated Balance Sheets
    -------------------------------------


                                                (dollars in millions)

    Unaudited                      9/30/09     12/31/08    $ Change
    ---------                      -------    ----------  ----------

    Assets
      Current assets
        Cash and cash equivalents   $1,216        $9,782     $(8,566)
        Short-term investments         474           509         (35)
        Accounts receivable, net    12,489        11,703         786
        Inventories                  2,554         2,092         462
        Prepaid expenses and
         other                       5,290         1,989       3,301
                                     -----         -----       -----
      Total current assets          22,023        26,075      (4,052)
                                    ------        ------      ------
      Plant, property and
       equipment                   226,470       215,605      10,865
        Less accumulated
         depreciation              135,636       129,059       6,577
                                   -------       -------       -----
                                    90,834        86,546       4,288
                                    ------        ------       -----
      Investments in
       unconsolidated
       businesses                    3,808         3,393         415
      Wireless licenses             71,899        61,974       9,925
      Goodwill                      22,190         6,035      16,155
      Other intangible assets,
       net                           6,948         5,199       1,749
      Other investments                  -         4,781      (4,781)
      Other assets                   8,702         8,349         353
                                     -----         -----         ---
    Total Assets                  $226,404      $202,352     $24,052
                                  --------      --------     -------

    Liabilities and Equity
      Current liabilities
        Debt maturing within
         one year                   $5,443        $4,993        $450
        Accounts payable and
         accrued liabilities        14,643        13,814         829
        Other                        7,219         7,099         120
                                     -----         -----         ---
      Total current liabilities     27,305        25,906       1,399
                                    ------        ------       -----
      Long-term debt                57,374        46,959      10,415
      Employee benefit
       obligations                  31,881        32,512        (631)
      Deferred income taxes         18,652        11,769       6,883
      Other liabilities              6,610         6,301         309

      Equity
        Common stock                   297           297           -
        Contributed capital         40,100        40,291        (191)
        Reinvested earnings         19,591        19,250         341
        Accumulated other
         comprehensive loss        (12,058)      (13,372)      1,314
        Common stock in treasury,
         at cost                    (4,834)       (4,839)          5
        Deferred compensation -
         employee stock
         ownership plans and
         other                          90            79          11
        Noncontrolling interest     41,396        37,199       4,197
                                    ------        ------       -----
      Total equity                  84,582        78,905       5,677
                                    ------        ------       -----
    Total Liabilities
     and Equity                   $226,404      $202,352     $24,052
                                  --------      --------     -------

    The unaudited consolidated balance sheets are based on preliminary
    information.



    Verizon Communications Inc.
    Condensed Consolidated Statements of Cash Flows
    -----------------------------------------------


                                                (dollars in millions)

                                     9 Mos.       9 Mos.
                                     Ended        Ended
    Unaudited                      9/30/09       9/30/08     $ Change
    ---------                      -------       -------     -------
    Cash Flows From
     Operating Activities
    Net income                      $9,257        $9,652       $(395)
    Adjustments to reconcile net
     income to net cash provided
     by operating activities:
        Depreciation and
         amortization expense       12,291        10,818       1,473
        Employee retirement
         benefits                    2,533         1,232       1,301
        Deferred income
         taxes                       2,672         2,240         432
        Provision for
         uncollectible
         accounts                      917           724         193
        Equity in earnings of
         unconsolidated
         businesses, net
         of dividends
         received                       21           303        (282)
        Changes in current assets
         and liabilities,
         net of effects from
         acquisition/
         disposition of
         businesses                 (2,337)       (2,458)        121
        Other, net                  (2,236)       (2,577)        341
                                    ------        ------         ---
    Net cash provided
     by operating
     activities                     23,118        19,934       3,184
                                    ------        ------       -----

    Cash Flows From Investing
     Activities
    Capital expenditures
     (including capitalized
     software)                     (12,450)      (12,575)        125
    Acquisitions of
     licenses, investments
     and businesses, net of
     cash acquired                  (5,627)      (15,978)     10,351
    Net change in short-
     term investments                   78         1,238      (1,160)
    Other, net                          51          (567)        618
                                        --          ----         ---
    Net cash used in
     investing activities          (17,948)      (27,882)      9,934
                                   -------       -------       -----

    Cash Flows From Financing
     Activities
    Proceeds from long-
     term borrowings                12,040        12,552        (512)
    Repayments of long-
     term borrowings and
     capital lease
     obligations                   (18,966)       (3,398)    (15,568)
    Increase (decrease)
     in short-term
     obligations,
     excluding current
     maturities                     (1,454)        4,132      (5,586)
    Dividends paid                  (3,920)       (3,687)       (233)
    Proceeds from sale
     of common stock                     -            16         (16)
    Purchase of common
     stock for treasury                  -        (1,369)      1,369
    Other, net                      (1,436)         (755)       (681)
                                    ------          ----        ----
    Net cash provided
     by (used in) financing
     activities                    (13,736)        7,491     (21,227)
                                   -------         -----     -------

    Decrease in cash
     and cash equivalents           (8,566)         (457)     (8,109)
    Cash and cash equivalents,
      of period                      9,782         1,153       8,629
                                     -----         -----       -----
    Cash and cash equivalents,
     end of period                  $1,216          $696        $520
                                    ------          ----        ----



    Verizon Communications Inc.
    Verizon Wireless - Selected Financial Results
    ---------------------------------------------

                                                        (dollars in millions)

                                  3 Mos. Ended      3 Mos. Ended
    Unaudited                       9/30/09            9/30/08     % Change
    ---------                     ------------      ------------   --------
    Revenues
      Service revenues                 $13,525           $10,935       23.7
      Equipment and other                2,272             1,764       28.8
                                         -----             -----
    Total Revenues                      15,797            12,699       24.4
                                        ------            ------

    Operating Expenses
      Cost of services
       and sales                         5,025             4,178       20.3
      Selling, general &
       administrative expense            4,540             3,689       23.1
      Depreciation and
       amortization expense              1,758             1,366       28.7
                                         -----             -----
    Total Operating Expenses            11,323             9,233       22.6
                                        ------             -----

    Operating Income                    $4,474            $3,466       29.1
    Operating Income Margin               28.3%             27.3%



                                   9 Mos. Ended     9 Mos. Ended
    Unaudited                         9/30/09          9/30/08     % Change
    ---------                      ------------     ------------   --------
    Revenues
      Service revenues                  $39,949          $31,572       26.5
      Equipment and other                 6,450            4,914       31.3
                                          -----            -----
    Total Revenues                       46,399           36,486       27.2
                                         ------           ------

    Operating Expenses
      Cost of services and sales         14,510           11,507       26.1
      Selling, general &
       administrative expense            13,451           10,806       24.5
      Depreciation and
       amortization expense               5,234            3,989       31.2
                                          -----            -----
    Total Operating Expenses             33,195           26,302       26.2
                                         ------           ------

    Operating Income                    $13,204          $10,184       29.7
    Operating Income Margin                28.5%            27.9%



    Verizon Communications Inc.
    Verizon Wireless - Selected Operating Statistics
    ------------------------------------------------

                                                      (numbers in thousands)


                                   3 Mos. Ended     3 Mos. Ended
    Unaudited                        9/30/09          9/30/08     % Change
    ---------                      ------------     ------------   --------

    Total Customer net adds in
     period (1)                           1,319            2,127      (38.0)
    Retail Customer net adds in
     period (2)                           1,051            2,127      (50.6)

    Total churn rate                       1.49%            1.33%
    Retail churn rate                      1.49%            1.32%




    Unaudited                         9/30/09           9/30/08    % Change
    ---------                       -----------      -----------   --------

    Total Customers                      89,013           70,808       25.7
    Retail Customers                     86,291           68,807       25.4


                                   9 Mos. Ended     9 Mos. Ended
    Unaudited                         9/30/09          9/30/08     % Change
    ---------                       -----------     ------------   --------

    Total Customer net adds in
     period (1)                          16,957            5,101          *
    Retail Customer net adds in
     period (2)                          16,270            5,072          *

    Total churn rate                       1.44%            1.21%
    Retail churn rate                      1.44%            1.20%


    Footnotes:
    (1) Includes acquisitions and adjustments of 46 and 646 customers in the
        second and third quarter of 2008, respectively; and 13,219, 1, and 79
        customers in the first, second and third quarter of 2009,
        respectively.

    (2) Includes acquisitions and adjustments of 46 and 627 customers in the
        second and third quarter of 2008, respectively; and 12,813, 1, and 81
        customers in the first, second and third quarter of 2009,
        respectively.

    The segment financial results above are adjusted to exclude the effects of
    special and non-recurring items.  The company's chief decision maker
    excludes these items in assessing business unit performance, primarily due
    to their non-operational nature.

    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 Financial Results
    -------------------------------------

                                                     (dollars in millions)

                                3 Mos. Ended      3 Mos. Ended
    Unaudited                      9/30/09           9/30/08      % Change
    ---------                    -----------      ------------   ---------
    Wireline Operating Revenues
      Mass Markets                 $4,947            $4,991          (0.9)
      Global Enterprise             3,797             4,010          (5.3)
      Global Wholesale              2,426             2,595          (6.5)
      Other                           399               562         (29.0)
                                      ---               ---
    Total Operating Revenues       11,569            12,158          (4.8)
                                   ------            ------

    Operating Expenses
      Cost of services and
       sales                        6,208             6,155           0.9
      Selling, general
       & administrative
       expense                      2,615             2,689          (2.8)
      Depreciation and
       amortization
       expense                      2,302             2,268           1.5
                                    -----             -----
    Total Operating Expenses       11,125            11,112           0.1
                                   ------            ------

    Operating Income                 $444            $1,046         (57.6)
    Operating Income Margin           3.8%              8.6%




                              9 Mos. Ended     9 Mos. Ended
    Unaudited                     9/30/09         9/30/08         % Change
    ---------                  -----------     ------------       --------
    Wireline Operating Revenues
      Mass Markets                $14,830           $14,830             -
      Global Enterprise            11,244            11,858          (5.2)
      Global Wholesale              7,224             7,832          (7.8)
      Other                         1,326             1,777         (25.4)
                                    -----             -----
    Total Operating Revenues       34,624            36,297          (4.6)
                                   ------            ------

    Operating Expenses
      Cost of services
       and sales                   18,050            18,233          (1.0)
      Selling, general
       & administrative
       expense                      8,107             8,193          (1.0)
      Depreciation and
       amortization expense         6,777             6,722           0.8
                                    -----             -----
    Total Operating Expenses       32,934            33,148          (0.6)
                                   ------            ------

    Operating Income               $1,690            $3,149         (46.3)
    Operating Income Margin           4.9%              8.7%



    Verizon Communications Inc.
    Wireline - Selected Operating Statistics
    ----------------------------------------

                                                     (numbers in thousands)

    Unaudited                     9/30/09          9/30/08       % Change
    ---------                     -------          -------       --------

    Switched access lines
     in service
    Total Residence
     (includes Primary
     residence)                    18,960           21,626         (12.3)
      Primary residence            16,692           18,543         (10.0)

    Business                       14,213           15,192          (6.4)
    Public                            196              254         (22.8)
                                      ---              ---
    Total                          33,369           37,072         (10.0)
                                   ------           ------

    Broadband connections           9,174            8,459           8.5
    FIOS Internet Subscribers       3,280            2,199          49.2
    FIOS TV Subscribers             2,708            1,615          67.7


    Footnotes:
    The segment financial results above are adjusted to exclude the effects of
    special and non-recurring items.  The company's chief decision maker
    excludes these items in assessing business unit performance, primarily due
    to their non-operational nature.

    Intersegment transactions have not been eliminated.

    Certain reclassifications have been made, where appropriate, to reflect
    comparable operating results.



SOURCE  Verizon Communications Inc.

Peter Thonis, +1-212-395-2355, peter.thonis@verizon.com, or Bob Varettoni,
+1-908-559-6388, robert.a.varettoni@verizon.com
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.