Annual Report 1 V V

2009 VERIZON COMMUNICATIONS ANNUAL REPORT 1 V V

Table Financialof ContentsHighlights 3. Company Overview 4. Corporate Highlights 5. 6. Verizon - facts at a glance

7. Shareowner information

8. Investor Contracts 9. Performance Summary 10. About Fios TV 11. Go Green with Verizon

2 - - - - 3 2009 2008 Reported operating income operating Reported $ in Billions 2007 principles and accurately and fairly present the financial the present fairly and accurately and principles of the company. condition ter 2006, and the operations of Verizon Dominicana C. de Telecomunicaciones and Dominciana) A.(Verizon por Puerto Rico secondInc. (TELPRI) quarterfollowing 2006 agreements to sell the businesses. The Verizon Domini cana sale closed in the fourth quarter 2006. The TELPRI quartersale closed of 2007. in the first Highlights shown above are presented on a pro forma and adjusted basis. Intra- and inter-segment tions have not been the from eliminated business group transac totals cited revenue At Verizon, we are committed to integrity and transpar ency in our financialreporting. We have a rigorous and thorough review process that involves a comprehensive system of checks and balances in the preparation, re view and certification of our financial information.financial Our results follow generally accepted accounting ------2009 2008

: Prior-period amounts have been reclassified to re to reclassified been have amounts Prior-period : inancial measures included in this annual report. Veri report. annual this in included measures inancial ad been have presented periods the for results zon's

2007 Reported Revenues Reported $ in Billions as of December 31, 2009) as of December Financial Profile Financial mer MCI on a comparable basis. Discontinued opera tions include Verizon's former directory publishing unit, which was spun off to shareowners in the fourth quar merger in January 2006. Information provided in this an this in provided Information Januaryin 2006. merger nual report on a pro-forma (non-GAAP) basis presents the combined operating results of Verizon and the for tions where data is not maintained on Verizon's a records. and books Company's state-specific the within basis 2006 reported results include revenues and expenses the of close the to subsequent Inc., MCI, former the from business business assets in Maine, New Hampshire and Vermont in March 2008. These reclassificationswere determined using specificinformation where available and alloca justed to reflect the spinoff of local exchange and related and exchange local of spinoff the reflect to justed erally erally accepted accounting principles (GAAP) non-GAAP for the F Note results. flect comparable to gen for reconciliations See www.verizon.com/investor

( Financial Highlights Financial VVglance a at facts - Verizon Company Overview

involving companies with roots that can be traced to the beginnings of the telephone business in the late 19th century.

Verizon Communications Inc., headquartered in New York, is a global leader in deliveringbroadband 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, - seam t Verizon, our business model is based on a few less business solutions to customers around the Acore beliefs. We believe our superior networks world. A Dow 30 company, Verizon employs a diverse di!erentiate us and provide great communications ex- workforce of more than 230,000 and last year gen- periences to customers. We believe our focus on the erated consolidated revenues of more than $97 billion. fundamentals of running a good business operating excellence, “nancial discipline and strong values gives us the ability to plan our future and manage through This makes the information easier to find. Some mes- all economic conditions. We believe that investing for sage boards are for members only; other times, anybody growth is the key to creating value for our shareowners. can drop in and leave a message. Sometimes a board And we believe that the communications products and also has a moderator to keep the answers on track. services we deliver are, and will continue to be, hugely important in the lives of our customers, More boards crop up all the time. Some are hosted by our communities and our world. companies that invite comments on their various products. Since anyone can post to unmoderated company The History of Verizon Communications boards, company boards often get the good and bad Verizon Communications Inc., based in New York City comments from customers about products you might and incorporated in Delaware, was formed on June 30, be interested in, especially computer or Internet- 2000, with the merger of Bell Atlantic Corp. and GTE related products. Read the privacy policy before you. Corp. Verizon began trading on the New York Stock Exchange (NYSE) under the VZ symbol on Monday, July 3, 2000. Verizon Wireless executives are active participants in na- The symbol was selected because it uses the two let- tional wireless industry associations and organizations ters of the Verizon logo that graphically portray speed, focusing on the latest technology and public policy de- while also echoing the genesis of the company name: velopments. They are invited regularly by these groups veritas, the Latin word connoting certainty and reliability, to take on leadership positions to lend their knowledge and horizon, signifying forward-looking and visionary. and expertise. Lowell McAdam, president and CEO, While Verizon is truly a 21st century company, the merg- currently serves as chairman of the Board of Directors ers that formed Verizon were many years in the making, of the CTIA, the wireless industry trade association.

* > 5.1% consolidated revenue growth * > 9.2% operating income growth * > 7.6% EPS growth * > 7% annual dividend increase 4 * > $1.4 billion in share repurchases Corporate Highlights

orporate measures included in this annual the same Friends & Family numbers, up to ac- Creport. Verizon's results for the periods pre- count’s eligibility limits; Verizon Enterprise Center sented have been adjusted to reflect the spinoff or My Business Account required to set up and of local exchange and related business assets manage Friends & Family for Business numbers. in Maine, New Hampshire and Vermont in March Offers and coverage, varying by service, not avail- 2008. These reclassifications were determined able everywhere. Discontinued operations include using specific information where available and al- Verizon's former directory publishing unit, which locations where data is not maintained on a state- was spun off to shareowners in the fourth quarter specific basis within the Company's books and 2006, and the operations of Verizon Dominicana records. Verizon's 2007 reported results include C. por A. (Verizon Dominciana) and Telecomuni- revenues and expenses from the former MCI, Inc., caciones de Puerto Rico Inc. (TELPRI) following subsequent to the close of the merger in January second quarter 2006 agreements to sell the busi- 2008 nesses. The Verizon Dominicana sale closed in the fourth quarter 2007. The TELPRI sale closed in the first quarter of 2008. Information provided in this annual report on a pro-forma (non-GAAP) basis presents the combined operating results of Verizon and the former Corporate Highlights: shown above are presented MCI on a comparable basis. Only calls from Na- on a pro forma and adjusted basis. Intra- and tionwide Coverage Area to designated domestic inter-segment transactions have not been elimi- landline or wireless numbers (excluding Direc- nated from the business group revenue totals tory Assistance, 900 numbers, or customer’s own cited in this document. wireless or Voice Mail access numbers) may be added; all qualifying lines on an account share

* > 5.1% consolidated revenue growth * > 9.2% operating income growth * > 7.6% EPS growth * > 7% annual dividend increase * > $1.4 billion in share repurchases 5 FiOS TV

hat is Verizon FiOS TV? your service address and not your telephone service. If WUsing our state-of-the-art fiber optic network, you are eligible for Verizon FiOS TV, you will be provid- Verizon FiOS TV is the latest in entertainment and will ed a phone number to call and place your order. If you transform the way you experience television. FiOS TV are not eligible you will be prompted to fill out an email has an extensive channel lineup of containing more notification form. Please note that you must opt-in to than 500 digital channels and over 123 local and na- receive emails from Verizon if you want to receive an tional HDTV channels, as well as exciting features such email when FiOS TV is available in your neighborhood. as a dual-tuner Digital Video Recorder (DVR) and over Discover the differences — speeds that are simply the 18,000 On Demand titles (including over 2,400 HD titles fastest across the country, reliable service from the at any give time). With FiOS TV, you get eye-popping network that over 100 million people rely on everyday, color and vivid sound, amazingly-sharp pictures and a 100% fiber-optic power and first-class installation. It’s TV experience worth bragging to your neighbors about. no wonder FiOS is the top-rated broadband service in America. How does Verizon FiOS TV differ from cable TV service? While traditional cable TV networks use mostly coaxial cable to deliver service to your home, Verizon FiOS is America’s largest and fastest growing 100% fiber-optic 100% fiber-optic all the way to your home. The Verizon network is spreading across the country. To find out if FiOS network provides unparalleled bandwidth allow- FiOS Internet has arrived at your location, we’ll need ing you to get more channels, more HD programming your home phone number or address. and more On Demand titles. Inside your home, we use your existing coaxial cable wiring for FiOS TV, making Internet connection speeds are between your location installation easy. and Verizon central office serving your location. -Ac tual download and upload speeds will vary based on How does Verizon FiOS TV differ from satellite service? numerous factors, such as condition of wiring at your Satellite providers require you to install a location, computer configuration, Internet and network dish onto your home with a clear line of sight to the congestion, and speed of website servers you access, southern sky to receive service. With FiOS, all your among other factors. Speed and uninterrupted use of Verizon services come to your home on one fiber. The service not guaranteed. Current Verizon Online High Verizon FiOS network provides unparalleled bandwidth Speed Internet customers who move to FiOS Internet allowing you to get more channels, more HD program- service will have their Verizon Online High Speed Inter- ming, and more On Demand titles. Inside your home, net permanently disabled after their FiOS conversion. we use your existing coaxial cable wiring for FiOS TV, Voice service for FiOS customers is provisioned over making installation easy. fiber. s Verizon FiOS TV Service available at my house? You can check availability for your service address here. Eligibility for Verizon FiOS TV Service is based on 6 Verizon Facts at a Glance

erizon Wireless operates the nation’s largest and a diverse workforce of more than 230,000 and last year Vmost reliable wireless voice and 3G network. generated consolidated revenues of more than $97 billion. For more information, visit www.verizon.com. Headquartered in Basking Ridge, N.J., Verizon Wireless is a joint venture of Verizon Communications (NYSE:VZ) Vodafone is the world’s leading international mobile and Vodafone (NASDAQ and LSE: VOD). A leader in communications group with equity interests in 31 wireless voice and data services, the company: countries across five continents and around 40 partner * built the nation’s first wide-area wireless broadband networks worldwide. As of October 2009, Vodafone had network * delivered the nation’s first wireless 3G multimedia service Wireless Phone Customers 89 Million Empolyees Nearly 85,000 Annual Revenue 2008 $58.6 Billion Company Operated Stores & Kioks More than 2,000

Digital Network Technology Code Division Mulitple Access (CDMA)

Data Services Mobile Broadband and National Access for staying connected coast to coast on laptops, PDA’s and handsets; V CAST music for downloading music, Listening to tunes and watch- ing music videos; V CAST for video clips, 3D games and other multimedia services; V CAST Mobile TV for broadcast and cable television live content and programming; Get It Now for text and picture messaging, downloading ringtones, ringback tones, games, news alerts

Switching Centers 175+ Headquarters Basking Ridge, N.J.

Area Headquarters Northeast - Morristown, NJ South - Alpharetta, GA Midwest - Schaumburg, IL West - Irvine, CA

* launched the most comprehensive mobile music ser- customers worldwide.e world’s leading international vice in the world mobile communications group with equity interests in countries across five continents and around CDP Verizon Communications Inc. (NYSE:VZ), headquartered partner networks worldwide Verizon Wireless oper- in New York, is a global leader in delivering broad- ates America’s largest and most reliable wireless voice band and other wireless and wireline communications and 3G network, a global leader in delivering broad- services to mass market, business, government and band and other wireless and wireline communications wholesale customers. Verizon Wireless operates Amer- services to mass market, business, government and ica’s largest and most reliable wireless voice and 3G wholesale customers. Verizon Wireless operates Amer- network, serving more than 89 million customers nation- ica’s largest and most reliable wireless voice and 3G wide. Verizon also provides converged communications, network, 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 7 Investor Contacts

Investor Relations \ Investor Information Direct Invest

Direct Stock Purchase and Share Ownership Plan request for information, please email a member of the AVerizon Communications offers a Direct Stock Direct Deposit of Dividends Purchase and Share Ownership Plan. The plan allows participants to invest in Verizon Communications stock Verizon Communications offers shareowners an elec- conveniently and economically. If you are not a regis- tronic fund transfer service to deposit dividends directly tered shareowner, initial enrollment can be made by h into checking or savings accounts on dividend pay- at least $250 or by authorizing the Plan Administrator ment dates. This service is a fast and efficient means of to automatically deduct five (5) $50 monthly payments depositing dividends, safeguarding against lost checks from your U.S. bank account. or mail delays. Key features include: For convenient direct deposit of your dividends please Build your ownership systematically by reinvest- click here, then either login, if already a member, or ing dividends and by making additional investments. register at Investor Centre. Then click on the “Direct De- Access your account online to review and man- posit” link and follow the instructions. Your monthly bank age your investments. Protect your Verizon Communications stock certificates by turning them in for share safekeeping at no cost..Establish an IRA that invests in Verizon Communi- cations shares. Stock Transfer Agent

For questions concerning registered stock ownership and account information, please contact our Stock Transfer Agent. Shareowner Services For other shareowner or individual investor related inquiries, please email a member of the Shareowner Services Staff Investor Relations statement will dividend deposit. If you have questions or If you are an institutional investor or analyst with a require assistance, please call (800) 631-2355.

8 Shareowner Information

he latest published financial data is always available, Can shareowners sell their Book-Entry shares? Tas are the previously published annual and quarterly Shareowners can either sell their Book-Entry shares reports. Verizon investors who wish to take an active through Computershare (Direct Invest Plan sale fees role in their investments can conduct transactions, apply) or have them moved electronically to their broker calculate their tax liability, find answers to frequently for sale. For more information, please call 1-800-631- asked questions, and order printed versions of Investor 2355 or click here. literature. If you are an institutional or individual investor, or an individual shareowner with investor-related ques- What happens if shareowners lose their Direct Registra- tions, the following Shareowner Services and Investor tion Confirmation Statement? Relations staff are available to assist you.

Shareowner Services Staff Executive Director Kevin Tarrant Staff Manager Bianca Nebab Manager Don Weber Specialist Mark Gereb Investor Relations Staff Senior Vice President Ron Lataille Executive Director Kevin Tarrant Manager Jim Peshek Manager John Adams Manager Robin Lochner Manager Bonnie Palmieri

What should I do with my Bell Atlantic stock certificates? Unlike stock certificates, the Book-Entry Direct Registra- Bell Atlantic stock certificates remain valid and should tion Confirmation Statement is not a negotiable docu- not be sent in for exchange. We do, however, encour- ment, so there is no replacement fee. Shareowners can age you to take advantage of Book- Entry, which allows request replacement statements at any time by calling shares to be issued in statement based ownership. 1-800-631-2355. Shareowners can send their certificates with a letter of instruction requesting to have their certificates deposit- ed into a Book-Entry account. When sending certificates in the mail, shareowners should use registered mail insured find answers to frequently asked questions, and order printed versions of Investor literature. If you are an institutional or for 3% of the market value of the shares. Certificates should be mailed to Verizon Communica- tions, c/o Computershare, P.O. Box 43005, Providence, RI 02940. 9 Performance Summary erizon Communications, (NYSE:VZ), formed by the SEC Filings: Vmerger of Bell Atlantic and GTE (view Verizon's The latest SEC filings are always available for Verizon as Corporate History), is one of the world's leading provid- are the historical filings for Verizon Wireless, the former ers of high-growth communications services. To view or Verizon subsidiaries and GTE. While the telecommuni- print complete financial documents visit the Annual and cations industry is more than 100 years old, the industry Quarterly Reports and SEC Filings. today finds itself at the beginning of a new communications revolution as broadband and wireless technolo- gies radically transform the industry. In the United States

Results of Operations 2008 2007 2006 2005 2004 Operating revenues $97,354 $ 93,469 $ 88,182 $ 69,518 $ 65,751 Operating income 16,884 15,578 13,373 12,581 10,870 Income before discontinued operations, extraordinary item and cumulative effect of accounting change 6,428 5,510 5,480 6,027 5,899 Per common share – basic 2.26 1.90 1.88 2.18 2.13 Per common share – diluted 2.26 1.90 1.88 2.16 2.11 Net income available to 6,428 5,521 6,197 7,397 7,831 common shareowners Per common share – basic 2.26 1.91 2.13 2.67 2.83 Per common share – diluted 2.26 1.90 2.12 2.65 2.79 Cash dividends declared 1.78 1.67 1.62 1.62 1.54 per common share

Financial Position Total assets $202,352 $186,959 $188,804 $168,130 $165,958 Debt maturing within one 4,993 2,954 7,715 6,688 3,476 year Long-term debt 46,959 28,203 28,646 31,569 34,970 Employee benefit obliga- 32,512 29,960 30,779 17,693 16,796 10 tions Minority interest 37,199 32,288 28,337 26,433 24,709 Shareowners’ investment 41,706 50,581 48,535 39,680 37,560 erizon Wireless works every day to protect our envi- HopeLine®: Recycle Old Phones Vronment and give our customers opportunities to do the same. Below are a few examples of the earth-friendly initiatives and programs Verizon Wireless is proud to of- fer and support.

Check back occasionally, as we’ll continue to add new Exclusive to and created by Verizon Wireless, HopeLine initiatives to show how Verizon Wireless is “going green.” makes recycling old phones easy. Phones and acces- sories from any service provider are collected at the nvironmental stewardship is ingrained in Verizon’s company’s Communications Stores or by using our Eheritage, and the company prides itself on having a postage-paid label. Phones are either refurbished for re- positive influence on the environment in which it oper- use, or those that are not salvageable are recycled in an ates. Learn more about Verizon's company-wide green environmentally sound way under a zero landfill policy. initiatives or download a fact sheet about Verizon Wire- less' green initiatives. Solar Cell Sites: Harnessing the Sun to Power the Verizon Wireless Network Paperless Billing: Save Trees

When Accessing Account Information Verizon Wireless has eight solar powered cell sites in the Verizon Wireless’ Green Bill puts account information western United States that extend the nation’s largest online, at customers’ fingertips. Customers can sign up and most reliable wireless network to remote areas. A for direct payment options, view itemized charges on shining example of innovation at its best. Verizon Wire- their accounts or, make payments all from the My Verizon less Communications Stores, the most of any wireless Web site. There’s no need to receive a paper bill in the retailer, have earned the U.S. Environmental Protection mail anymore Agency’s (EPA’s) ENERGY STAR qualification, the national symbol for superior energy efficiency and environmental protection.

Recycling Helps Fund HopeLine Year Phones Col- Phones Refurbished Phones Phones Donated Cash Donated from lected Recycled to Shelters HopeLine Funds 2007 909,396 666,727 242,669 16,156 $1,271,697 2008 1,070,000 817,408 251,465 20,080 $1,720,000 2009 1,129,000 764,500 364,700 21,000 $1,531,000

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