Verizon Caps Successful Year With Strong 4Q Results

Note: Comparisons are year over year unless otherwise noted. Prior-period amounts have been reclassified to reflect comparable results. 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. Discontinued operations include Verizon Information Services, as well as Verizon's interests in Verizon Dominicana C. por A. and Telecomunicaciones de Puerto Rico, Inc. The dispositions of these non-strategic businesses were completed on Nov. 17, 2006; Dec. 1, 2006; and March 30, 2007, respectively.

Verizon Communications Inc. (NYSE: VZ) today reported continued strong quarterly financial and operational results, as the company again produced significant gains in strategic growth areas such as wireless, broadband, data, video and global IP.

Verizon reported fourth-quarter 2007 earnings of 37 cents in fully diluted earnings per share (EPS). This compares with fourth-quarter 2006 earnings of 48 cents per share before income from discontinued operations that have since been divested.

On an adjusted basis (non-GAAP), fourth-quarter 2007 earnings were 62 cents per share from continuing operations. This is a 19.2 percent increase, compared with 52 cents per share from continuing operations in the fourth quarter 2006.

On an annual basis, Verizon reported 2007 EPS of $1.90, compared with $1.88 per share from continuing operations. On an adjusted annual basis, 2007 EPS was $2.36, a 14.6 percent increase, compared with 2006 EPS of $2.06 from continuing operations.

Special items reflected in fourth-quarter 2007 EPS are: 16 cents per share for severance and other related expenses recognized as a result of workforce reductions that began in the fourth quarter and will continue throughout 2008; 5 cents per share for taxes and expenses associated with an increase in the distributable earnings from the company's Vodafone Omnitel N.V. investment, including cash distributions received in December 2007; 2 cents per share for merger integration costs; and 1 cent per share for costs related to the spinoff of wireline access lines in Maine, New Hampshire and Vermont. Further detail on earnings adjustments is provided later in this release.

Delivering Value to Shareowners

"In the fourth quarter, the momentum of revenue growth and margin expansion continued to drive double-digit earnings growth, and we once again reported strong growth in sales of all our strategic products," said Verizon Chairman and CEO Ivan Seidenberg.

"Throughout 2007 Verizon's results consistently showed success in what we set out to do: grow revenue, capture market share, improve margins, increase productivity and provide the best customer experience," he said. "In 2008 we are focused on these same strategic imperatives, and we are confident that our performance will continue to deliver value to shareowners. We see significant opportunities to grow revenues and expand our leadership in wireless and broadband markets, while reducing operating expenses."

Revenue Growth, Cash Flows Highlight Consolidated Results

Verizon's consolidated operating revenues grew 5.5 percent in the fourth quarter 2007 and 6.0 percent in the full year, compared with fourth-quarter and full-year 2006. Total 2007 revenue was $93.5 billion, an increase of $5.3 billion over 2006. On an adjusted basis (non-GAAP), 2007 revenue increased 6.1 percent over 2006, and on a pro-forma basis (non-GAAP, calculated as if Verizon and MCI had merged on Jan. 1, 2006), this increase was 5.8 percent, or $5.2 billion.

Verizon's operating income declined 0.6 percent to $3.4 billion, compared with the fourth quarter 2006. On an adjusted basis (non-GAAP), operating income grew 18.5 percent to $4.3 billion, compared with the fourth quarter 2006.

Operating income margin was 14.4 percent for the fourth quarter 2007 and 16.7 percent for the full year, compared with 15.2 percent in both the same periods in 2006. On an adjusted basis (non-GAAP), Verizon's operating income margin rose to 18.2 percent in the fourth quarter 2007 and 17.9 percent for the full year, compared with 16.2 percent and 16.1 percent, respectively, for the same periods in 2006.

Cash flows from continuing operations totaled $26.3 billion in 2007. This is an increase of 14.2 percent, compared with $23.0 billion in 2006. Capital expenditures in 2007 totaled $17.5 billion, compared with $17.1 billion in 2006.

Verizon's Board of Directors increased the quarterly dividend 6.2 percent beginning with the November 2007 payment, reflecting confidence in the company's ability to sustain strong cash flows. Verizon also repurchased more than $1.1 billion of its shares in the fourth quarter 2007, for a total of more than $2.8 billion for the year and $4.5 billion over the past two years.

Year-end total debt was less than $31.2 billion. The company paid down more than $5 billion in debt during 2007.

Wireless Strength Continues for Quarter, Full Year

Verizon Wireless continues to be the most profitable domestic wireless company and the largest in terms of retail customers. In the fourth quarter:

Continued Strong Growth in FiOS, Strategic Services

Verizon's Wireline business, which consists of Verizon Telecom and Verizon Business, reported continued strong growth in customers of FiOS fiber-optic services and sales of strategic services to enterprise customers. In the fourth quarter:

Details of Prior EPS Adjustments

Special items for full-year 2007 totaled 49 cents per share. This includes the fourth-quarter charges detailed earlier, along with charges for taxes on foreign distributions, charges related to the access line spinoff and merger integration costs, as well as credits and charges associated with the disposition of Compania Anonima Nacional Telefonos de Venezuela and the net gain on the sale of Telecomunicaciones de Puerto Rico. As previously announced, Verizon received gross proceeds of approximately $980 million from this sale -- $100 million of which was contributed to the Verizon Foundation.

Special items reflected in fourth-quarter 2006 EPS included 27 cents per share related to the sale of Verizon Dominicana; pension settlement charges; and costs related to the spin-off of Verizon's directories business, merger integration and relocation of employees to the Verizon Center. In the first three quarters of 2006, there were additional settlement charges and costs for integration and relocation, as well as charges for the extinguishment of debt and the cumulative effect of an accounting change. Special items for full- year 2006 totaled 42 cents per share.

Verizon Communications Inc. (NYSE: VZ), headquartered in New York, is a leader in delivering broadband and other wireline and wireless communication innovations to mass market, business, government and wholesale customers. Verizon Wireless operates America's most reliable wireless network, serving nearly 66 million customers nationwide. Verizon's Wireline operations include Verizon Business, which delivers innovative and seamless business solutions to customers around the world, and Verizon Telecom, which brings customers the benefits of converged communications, information and entertainment services over the nation's most advanced fiber-optic network. A Dow 30 company, Verizon employs a diverse workforce of nearly 235,000 and last year generated consolidated operating revenues of $93.5 billion. For more information, visit www.verizon.com.

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NOTE: This news release 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: materially adverse changes in economic and industry conditions and 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; material changes in available technology, including disruption of our suppliers' provisioning of critical products or services; the impact on our operations of natural or man-made disasters 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; the final results of federal and state regulatory proceedings concerning our provision of retail and wholesale services and judicial review of those results; the effects of competition in our markets; the timing, scope and financial impacts of our deployment of fiber-to-the-premises broadband technology; the ability of Verizon Wireless to continue to obtain sufficient spectrum resources; 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; the ability to complete acquisitions and dispositions; and the extent and timing of our ability to obtain revenue enhancements and cost savings following our business combination with MCI, Inc.

SOURCE Verizon