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Verizon Communications Reports Strong 4Q 2005 Results, Driven by Continued Growth in Wireless and Broadband

1/26/2006

2005 HIGHLIGHTS
Financial Performance -- Fourth-quarter diluted earnings per share of 59 cents, or 64 cents per share before special items (non-GAAP measure); 2005 earnings per share of $2.65, or $2.56 per share before special items (non-GAAP)
-- Fourth-quarter consolidated operating revenues of $19.3 billion, up 6.7 percent on a comparable basis (non-GAAP) from fourth quarter 2004; 2005 revenues of $75.1 billion
-- $22.0 billion in 2005 Cash Flows From Operations
Operational Performance -- Verizon Wireless fourth-quarter results: Industry-record 2.0 million net customer additions, up 20.5 percent from fourth quarter 2004; 51.3 million total customers, up 17.2 percent from 2004; repeat record-low quarterly churn (customer turnover) of 1.2 percent; total revenues up 18.3 percent from fourth quarter 2004; EBITDA margin (non-GAAP) of 46.8 percent
-- Wireline fourth-quarter results: Industry-record 613,000 net new broadband connections (DSL and Verizon FiOS data lines); 5.1 million total broadband connections, up 47.6 percent from 2004; total data revenues up 9.0 percent from fourth quarter 2004; average monthly revenue per residential customer up 3.9 percent to $51.50
Notes: Reclassifications of prior-period amounts have been made to reflect comparable results excluding Verizon's Hawaii wireline and directory operations, which were sold in the second quarter 2005. See the schedules accompanying this news release and http://www.verizon.com/investor for reconciliations to generally accepted accounting principles (GAAP) for the non-GAAP financial measures included in this announcement. Discontinued operations in the prior-year periods presented include the operations of Verizon Information Services Canada.

NEW YORK, Jan. 26 /PRNewswire/ -- Verizon Communications Inc. (NYSE: VZ - News) today reported strong fourth-quarter and year-end 2005 results, highlighted by an industry-record quarterly total for net new wireline broadband connections, as well as continued record growth and sustained margins at Verizon Wireless.

For the fourth quarter 2005, Verizon reported earnings of $1.7 billion, or 59 cents per diluted share, compared with $3.0 billion, or $1.08 per share, in the fourth quarter 2004. Reported earnings in the fourth quarter 2005 include non-recurring net expenses for previously announced changes to management retirement benefit plans, as well as severance and relocation costs. The fourth quarter 2004 principally included non-recurring gains from sales of non-strategic assets and tax benefits.

Before special items, earnings were 64 cents per share in both the fourth quarter 2005 and the fourth quarter 2004.

For the year, Verizon reported earnings of $7.4 billion, or $2.65 per share, in 2005, compared with $7.8 billion, or $2.79 per share, in 2004. Before special items, earnings were $7.2 billion, or $2.56 per share, in 2005, compared with $7.0 billion, or $2.51 per share, in 2004.

'Strategies Taking Root'

"Verizon finished the year strongly, and as we begin 2006 our strategies are taking root," said Ivan Seidenberg, Verizon chairman and CEO. "We continue to grow what is already a great customer base -- especially as we continue to introduce innovations in wireless and broadband services.

"At the same time, we are investing in our powerful networks to position Verizon for additional growth in the future. We see real momentum in these growth initiatives, and we look forward to seizing the opportunities we see in the large-business market with our new Verizon Business unit."

Continued Revenue Gains

Quarterly consolidated operating revenues reached $19.3 billion in the fourth quarter 2005. On a comparable basis (non-GAAP, excluding revenues in both periods from operations that Verizon sold in 2005), consolidated operating revenues increased 6.7 percent from $18.1 billion in the fourth quarter 2004.

Verizon's growth businesses -- wireless, broadband, data and long-distance services -- contributed 59.6 percent to fourth-quarter 2005 revenues, compared with a 54.9 percent contribution to fourth-quarter 2004 revenues.

Annual consolidated operating revenues were $75.1 billion in 2005, or $74.9 billion excluding revenues from operations since sold. On a comparable basis, this is a revenue increase of 6.0 percent from $70.7 billion in 2004.

Total operating expenses were $15.6 billion in the fourth quarter 2005 and $60.3 billion for the full year, up 4.8 percent and 3.7 percent, respectively, from the similar periods in 2004.

Growth in Total Customer Connections

Verizon's total customer connections -- which include wireline switched access lines, wireless customers, and wireline and wireless customers using broadband connections (EV-DO, DSL or FiOS) -- increased to 105.3 million at the end of the fourth quarter 2005. This is an increase of 5.7 percent compared with the fourth quarter 2004, and an increase of 1.8 million customer connections compared with the end of the third quarter 2005.

Switched access lines totaled 48.8 million at the end of the fourth quarter 2005, a decline of 6.7 percent compared with the end of the fourth quarter 2004. This has been more than offset by increases of 47.6 percent in wireline broadband connections and 17.2 percent in total wireless customers over the same period.

Continued Solid Margins, Cash Flows

Verizon's consolidated operating income margin was 19.2 percent in the fourth quarter 2005, compared with 18.4 percent in the fourth quarter 2004. When adjusted to exclude the special and non-recurring items as well as net pension and OPEB (other post-retirement benefits) impact, Verizon's consolidated operating income margin would have been 22.1 percent in the fourth quarter 2005 and 20.2 percent in the fourth quarter 2004 (non-GAAP measures) -- the fourth consecutive quarter of gains in consolidated margins.

Cash Flows From Operations were $22.0 billion in 2005, compared with $21.8 billion in 2004. In 2005, net cash used in investing activities was $18.5 billion, including $15.3 billion in capital expenditures. Net cash used in financing activities was $5.0 billion.

Verizon's total debt decreased $0.3 billion compared with year-end 2004, to $39.0 billion at year-end 2005.

Wireless Builds on Momentum of Sustained Strong Performance

At Verizon Wireless, record growth and profitability in the fourth quarter 2005 built on the momentum of its sustained strong performance, quarter after quarter. This was the 14th consecutive quarter of double-digit, year-over- year revenue growth; the seventh consecutive quarter that the company added more than 1.5 million customers, and the fourth consecutive quarter of EBITDA margins of more than 40 percent.

Verizon Wireless added 7.5 million net new customers over the last 12 months and now has 51.3 million customers nationwide.

The company continued to set records for low churn, a key measure of customer loyalty, with total churn of 1.2 percent for the fourth quarter 2005 (matching the company's previous quarterly record) and 1.3 percent for the year. Churn among the company's 47 million retail postpaid customers was even lower -- 1.0 percent for the quarter and 1.1 percent for the year.

Verizon Wireless revenues were $8.7 billion in the fourth quarter 2005, an 18.3 percent increase compared with $7.3 billion in the fourth quarter 2004 -- driven by continued strong customer growth and demand for data services. Full-year 2005 wireless revenues were $32.3 billion, an increase of 16.8 percent compared with 2004.

Wireless operating income margins were 25.8 percent for the fourth quarter and 22.8 percent for the year, the result of the company's continued focus on managing costs and efficiencies as it added record numbers of customers.

Wireless EBITDA margins were 46.8 percent for the fourth quarter and 43.2 percent for the year. (EBITDA -- or earnings before interest, taxes, depreciation and amortization -- is a non-GAAP measure that adds depreciation and amortization to operating income; EBITDA margin is calculated by dividing EBITDA by wireless service revenues.)

Record Wireline Broadband Growth

Verizon's wireline business segment added a net of 613,000 wireline broadband connections in the fourth quarter 2005. This is a broadband industry record, topping any prior quarterly total posted by a telecommunications or cable company.

This brings the company's year-end total to 5.1 million wireline broadband connections, representing 1.7 million net additions in 2005 -- a growth rate of 47.6 percent compared with year-end 2004. Wireline broadband connections include totals for both DSL and FiOS, Verizon's next-generation, fiber-optic- based service.

Operating revenues on a comparable basis at Domestic Telecom were $9.4 billion in the fourth quarter 2005, a 1.8 percent decrease compared with the fourth quarter 2004. For the year, comparable wireline operating revenues were $37.6 billion, a 1.1 percent decrease compared with 2004.

Revenues from DSL and FiOS data contributed to total wireline data revenues of $2.2 billion in the fourth quarter 2005, a 9.0 percent increase compared with the fourth quarter 2004. For the year, data revenues of $8.5 billion grew 10.5 percent compared with 2004 and now represent 23.4 percent of total wireline revenues, up from 21.1 percent at the end of 2004.

Long-distance services including regional toll services, another wireline growth area, contributed $1.1 billion to total wireline revenues in the fourth quarter 2005 and $4.3 billion in the full year, up 2.7 percent and 5.0 percent, respectively, compared with the similar periods in 2004.

Operating income margin for the wireline segment was 11.1 percent in fourth quarter 2005 and 12.7 percent for the year, compared with 15.0 percent and 14.9 percent in the similar periods in 2004. When adjusted to exclude the net pension and OPEB impact, wireline's operating income margin would have been 14.5 percent in the fourth quarter 2005 and 16.1 percent for the year, compared with 17.1 percent and 17.0 percent in the similar periods in 2004 (non-GAAP measures). For 2006, Verizon is targeting comparable annual operating income margins of about 16 percent.

Consistent with past practice, Verizon believes that excluding the impact of net pension and OPEB expenses or credits enhances comparability, providing a better picture of operating cost management.

Earnings Comparisons and Special Items

Verizon's reported fourth-quarter 2005 earnings of $1.7 billion, or 59 cents per share, primarily included non-recurring expenses of $59 million, or 2 cents per share, to recognize the net effect of the restructuring of management retirement benefit plans announced in December 2005, and 1 cent per share in expenses each for a voluntary severance program for union-represented employees ($36 million) and for net relocation costs associated with the new Verizon Center in New Jersey ($29 million).

Fourth-quarter 2004 earnings of $1.08 per share included net gains of $1.0 billion, or 36 cents per share, from the sales of Verizon Information Services Canada and Verizon's investment stake in TELUS Corp.; and tax benefits of $234 million, or 8 cents per share, from previous investment-related losses.

Verizon's reported year-end 2005 earnings of $7.4 billion, or $2.65 per share, also included non-recurring gains of $336 million each, or 12 cents per share each, related to the sale of wireline and directory operations in Hawaii, and for tax benefits recognized on prior-year investment losses. These gains were partially offset by net tax expense of $206 million, or 7 cents per share, for the repatriation of foreign earnings, as well as asset impairments at Verizon's leasing operations and other costs of $133 million, or 5 cents per share.

Reported year-end 2004 earnings of $7.8 billion, or $2.79 per share, also included $499 million, or 18 cents per share, in severance-related charges, partially offset by a $43 million, or 2 cents per share, gain on the sale of an investment.

Net pension and OPEB costs reduced Verizon's earnings by 30 cents per share in 2005, compared with 21 cents per share in 2004. The earnings dilution from FiOS was 15 cents per share in 2005, compared with 4 cents per share in 2004.

2006 Guidance Items

In 2006, Verizon expects that net pension and OPEB costs will reduce earnings by 34 cents to 36 cents per share, compared with the 30 cents per share noted above.

Regarding 2006 capital spending, the company reiterated previous guidance of from $15.4 billion to $15.7 billion, excluding capital related to Verizon's recently closed merger with MCI, Inc. Verizon announced today that, with MCI, total 2006 capital spending is expected to be from $17.0 billion to $17.4 billion. This includes about $550 million in integration capital in 2006 to improve efficiencies and help achieve merger synergies, which have a net present value of approximately $8 billion in incremental revenues and operational savings, including investments in network and systems to achieve these savings.

Network savings represent nearly half of the synergies, as bringing traffic onto Verizon's networks is expected to save more than $200 million in 2006. Workforce reductions and information technology savings each represent about 20 percent of the synergy totals.

Verizon Business

Related to the merger closing, Verizon Business -- the industry's new provider of advanced communications and information technology solutions to large businesses and government -- earlier this week unveiled a robust line of integrated services, including new integrated wireless and wireline network access offerings.

Business Segment Highlights
Following are highlights from Verizon's 2005 business segments.

Wireline:
-- By the end of 2005, the company was deploying or selling FiOS fiber-to-
the-premises (FTTP) broadband data services in 16 states, passing a
cumulative 3 million homes and businesses. In markets where Verizon
has been selling FiOS data services for at least nine months, the
average penetration rate at the nine-month mark was 14 percent.

-- Verizon has franchises covering 1 million households for FiOS video
services. Market penetration in Keller, Texas -- Verizon's first video
market -- is 21 percent in four months. Verizon announced it had begun
sales of FiOS video in markets in Massachusetts and New York earlier
this week, and it expects to announce sales in a California market
shortly.

-- Approximately 65 percent of Verizon residential customers have
purchased local services in combination with either Verizon long-
distance or a Verizon broadband connection, or both. This compares
with approximately 55 percent in the fourth quarter 2004. In addition,
Verizon now has nearly 350,000 customers who receive a Verizon DirecTV
bundle.

-- Consumer demand for value-added services has increased average monthly
revenue per wireline customer to $51.50, up 3.9 percent from the fourth
quarter 2004.

-- Approximately 5.5 million Verizon Freedom packages were in service to
residential and business customers by the end of the fourth quarter
2005, an increase of 1.1 million since the end of the fourth quarter
2004. Verizon Freedom plans help retain and win back customers by
offering local services with various combinations of long-distance,
wireless and Internet access, available on one bill. Freedom packages
for business customers have passed the 1 million mark and are up 38
percent since year-end 2004.

-- Wholesale voice connections -- which includes resale, Unbundled Network
Element-Platform (UNE-P) and end-to-end wholesale voice services
provided under commercial agreements -- totaled 5.5 million at the end
of the fourth quarter 2005, down 16.1 percent from the end of the
fourth quarter 2004. At the same time, continued growth from sales of
wholesale special access products -- such as high-speed DS1 and DS3
circuits -- contributed to $2.1 billion in fourth-quarter 2005
wholesale revenues, an increase of 1.6 percent compared with the fourth
quarter 2004.

-- Comparing fourth quarter 2005 with fourth quarter 2004, consumer
revenues were $3.8 billion, down 1.1 percent, and business revenues
were $2.8 billion, down 4.4 percent.

-- For the year, wireline total operating revenues were $37.6 billion,
down 1.1 percent from 2004. Total operating expenses were $32.8
billion in 2005, up 1.4 percent from 2004.

Wireless:
-- Retail gross additions increased 4.6 percent over the fourth quarter
2004. Retail net additions increased 15.4 percent, to 1.8 million of
the company's 2.0 million total net additions. Retail customers are 96
percent of the company's customer base.

-- Service revenues (which do not include taxes and regulatory fees) were
$7.4 billion for the fourth quarter 2005, up 14.9 percent. For the
year, service revenues were $28.1 billion, up 15.3 percent. Average
monthly service revenue per customer was $49.36 for the quarter and
$49.49 for the full year, down 1.9 percent and 1.5 percent,
respectively, from the similar periods in 2004.

-- Verizon Wireless continued to deliver industry-leading cost efficiency,
even as it added a record-high volume of new customers. Cash expense
per customer declined 2.9 percent for the full year and 13.7 percent,
to $26.27, for the fourth quarter, achieving the company's lowest-ever
annual and quarterly per-customer expense levels.

-- Data services revenues in 2005 more than doubled over the previous
year, contributing $2.2 billion in revenues. In the fourth quarter,
$731 million, or 9.8 percent, of service revenues came from data
services, up from 5.6 percent in the prior year's quarter. The company
now has 23.7 million data customers -- a 43 percent increase compared
with 2004.

-- Verizon Wireless, the first to build a national wireless broadband
network, continued to extend the reach of its 3G EV-DO high-speed
network. During the fourth quarter, the company expanded its award-
winning broadband network to now include 180 major metropolitan areas
covering approximately 150 million Americans coast to coast.

-- More than 3.5 million customers had broadband-capable devices at the
end of the fourth quarter 2005, as the company continued its stream of
new broadband devices, including the first EV-DO enabled Motorola RAZR;
Palm's Treo 700, the first Windows Mobile-based Treo smartphone; and
aircards embedded in laptops and PDAs from major manufacturers.

-- The company's broadband network also made possible its launch earlier
this month of V CAST Music, the world's most comprehensive mobile music
service. Customers can download music over the air directly to their
wireless phones and to their Windows XP PCs, and can transfer new and
existing digital music from the PC to their wireless phone. Two new V
CAST Music-capable handsets are available. One million songs will be
available on V CAST Music by spring from artists at major music labels,
Warner Music Group, EMI Music, Universal and Sony/BMG, and at
independent providers, including The Orchard.

-- Usage of the company's Get It Now services continued to climb, with an
industry-leading 7.4 billion text messages during the fourth quarter.
In addition, customers exchanged more than 134 million picture and
video messages and had nearly 35 million downloads of games, exclusive
content, ringtones and ringback tones.

-- During the fourth quarter, the company continued to expand and
diversify its distribution channels with the opening of stores inside
117 BJ's Wholesale Clubs, mainly in the Northeast. Customers can now
purchase Verizon Wireless service and equipment at more than 2,000
Verizon Wireless communications stores including stores in Circuit City
and BJ's, and from 7,000 Verizon Wireless agents nationwide including
Best Buy and Costco.

Information Services:
-- Verizon Information Services' (VIS) fourth-quarter operating revenues
were $844 million, bringing full-year revenues to $3.45 billion,
compared with $874 million and $3.55 billion in the fourth quarter and
full-year 2004, respectively. This fourth-quarter decrease of 3.4
percent and full-year decrease of 2.7 percent were primarily driven by
reductions in domestic print advertising revenue. However, reductions
in total operating expenses have resulted in an improved operating
income margin for both the fourth quarter and the full year when
compared with the similar periods in 2004.

-- In 2005, VIS' domestic online directory and search service,
SuperPages.com, achieved revenue growth of 18.4 percent compared with
2004, and Internet yellow pages searches increased 17.1 percent over
the same period.

-- In December, Verizon announced that it is exploring divesting VIS
through a spin-off, sale or other strategic transaction.

International:
-- Fourth-quarter revenues were $567 million, bringing full-year revenues
to $2.2 billion, compared with $544 million and $2.0 billion in the
fourth quarter and full-year 2004, respectively. The fourth-quarter
increase of 4.2 percent was primarily driven by wireless growth in
Puerto Rico and the Dominican Republic, partially offset by unfavorable
foreign exchange rates in the Dominican Republic. The full-year
increase of 8.9 percent primarily reflects favorable foreign exchange
impacts in the Dominican Republic.

-- During the fourth quarter, the second part of the Vodafone Omnitel
share buyback was completed, resulting in Verizon receiving
approximately $1.0 billion in proceeds before taxes. During the second
quarter of 2005, the board of directors and shareowners of Vodafone
Omnitel approved a share buyback in two parts -- resulting in total
cash proceeds before taxes of $2.2 billion for the year.

Verizon Communications Inc. (NYSE: VZ - News), a Dow 30 company, is a leader in delivering broadband and other communication innovations to wireline and wireless customers. Verizon operates America's most reliable wireless network, serving 51.3 million customers nationwide; one of the most expansive wholly-owned global IP networks; and one of the nation's premier wireline networks, serving home, business and wholesale customers. Based in New York, Verizon has a diverse workforce of approximately 250,000 and generates annual consolidated operating revenues of approximately $90 billion. For more information, visit http://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 http://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 press 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; 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; and the extent and timing of our ability to obtain revenue enhancements and cost savings following our business combination with MCI, Inc.


Verizon Communications Inc.
Consolidated Statements of Income

(dollars in millions, except per share amounts)

3 Mos. 3 Mos. 12 Mos. 12 Mos.
Ended Ended % Ended Ended %
Unaudited 12/31/05 12/31/04 Change 12/31/05 12/31/04 Change

Operating Revenues $19,326 $18,263 5.8 $75,112 $71,283 5.4

Operating Expenses
Cost of services
and sales 6,552 6,064 8.0 25,469 23,168 9.9
Selling, general &
administrative
expense 5,494 5,281 4.0 21,312 21,088 1.1
Depreciation and
amortization expense 3,573 3,565 .2 14,047 13,910 1.0
Sales of
businesses, net - - - (530) - *
Total Operating
Expenses 15,619 14,910 4.8 60,298 58,166 3.7

Operating Income 3,707 3,353 10.6 14,814 13,117 12.9
Equity in earnings of
unconsolidated
businesses 134 1,056 (87.3) 689 1,691 (59.3)
Income from other
unconsolidated
businesses 35 1 * 92 75 22.7
Other income and
(expense), net (11) 42 * 237 22 *
Interest expense (540) (575) (6.1) (2,180) (2,384) (8.6)
Minority interest (955) (574) 66.4 (3,045) (2,409) 26.4
Income Before Provision
for Income Taxes and
Discontinued
Operations 2,370 3,303 (28.2) 10,607 10,112 4.9
Provision for income
taxes (712) (786) (9.4) (3,210) (2,851) 12.6
Income Before
Discontinued
Operations 1,658 2,517 (34.1) 7,397 7,261 1.9
Discontinued
Operations(1)
Income from operations - 1,027 (100.0) - 1,116 (100.0)
Provision for
income taxes - (505) (100.0) - (546) (100.0)
Income on discontinued
operations - 522 (100.0) - 570 (100.0)
Net Income $1,658 $3,039 (45.4) $7,397 $7,831 (5.5)

Basic Earnings per
Share $.60 $1.10 (45.5) $2.67 $2.83 (5.7)
Weighted average
number of common
shares (in millions) 2,764 2,770 2,766 2,770

Diluted Earnings
per Share(2) $.59 $1.08 (45.4) $2.65 $2.79 (5.0)
Weighted average
number of common
shares-assuming
dilution (in millions) 2,816 2,823 2,817 2,831

Footnotes:
(1) Discontinued Operations includes the operations of Verizon
Information Services Canada as a result of an agreement to sell the
business reached in the third quarter of 2004.
(2) Diluted Earnings per Share include (i) income related to share
dilution (exchangeable equity interests and zero coupon convertible
debt) of $17 million and $60 million for the fourth quarter and
year-to-date 2005, respectively, and $14 million and $68 million for
the fourth quarter and year-to-date 2004, respectively, and (ii) the
dilutive effect of shares issuable under our stock-based compensation
plans, exchangeable equity interests and zero coupon convertible
debt, which represent the only potential dilution.
* Not meaningful



Verizon Communications Inc.
Consolidated Statements of Income Before Special Items

(dollars in millions, except per share amounts)

3 Mos. 3 Mos. 12 Mos. 12 Mos.
Ended Ended % Ended Ended %
Unaudited 12/31/05 12/31/04 Change 12/31/05 12/31/04 Change

Operating Revenues(1)
Domestic Telecom $9,359 $9,533 (1.8) $37,616 $38,021 (1.1)
Domestic Wireless 8,686 7,342 18.3 32,301 27,662 16.8
Information Services 844 874 (3.4) 3,452 3,549 (2.7)
International 567 544 4.2 2,193 2,014 8.9
Other (130) (181) (28.2) (652) (558) 16.8
Total Operating
Revenues 19,326 18,112 6.7 74,910 70,688 6.0

Operating Expenses(1)
Cost of services and
sales 6,552 6,013 9.0 25,396 22,975 10.5
Selling, general &
administrative expense 5,291 5,111 3.5 20,997 20,093 4.5
Depreciation and
amortization expense 3,573 3,565 .2 14,047 13,881 1.2
Total Operating
Expenses 15,416 14,689 4.9 60,440 56,949 6.1

Operating Income 3,910 3,423 14.2 14,470 13,739 5.3
Operating income impact
of operations sold(1) - 53 (100.0) 78 202 (61.4)
Equity in earnings of
unconsolidated
businesses 134 269 (50.2) 689 904 (23.8)
Income from other
unconsolidated
businesses 35 1 * 92 32 187.5
Other income and
(expense), net (7) 42 * 251 77 226.0
Interest expense (540) (575) (6.1) (2,180) (2,384) (8.6)
Minority interest (955) (574) 66.4 (3,045) (2,409) 26.4
Income Before Provision
for Income Taxes

and Discontinued
Operations 2,577 2,639 (2.3) 10,355 10,161 1.9
Provision for income
taxes (798) (842) (5.2) (3,204) (3,180) .8
Income Before
Discontinued
Operations 1,779 1,797 (1.0) 7,151 6,981 2.4
Discontinued
Operations(2)
Income from operations - 10 (100.0) - 99 (100.0)
Provision for income
taxes - (4) (100.0) - (45) (100.0)
Income on discontinued
operations - 6 (100.0) - 54 (100.0)
Net Income Before
Special Items $1,779 $1,803 (1.3) $7,151 $7,035 1.6


Basic Earnings per
Share $.64 $.65 (1.5) $2.59 $2.54 2.0
Weighted average number
of common
shares (in millions) 2,764 2,770 2,766 2,770

Diluted Adjusted
Earnings per Share(3) $.64 $.64 - $2.56 $2.51 2.0
Weighted average number
of common
shares-assuming
dilution (in millions) 2,816 2,823 2,817 2,831

Footnotes:
(1) Reclassifications of prior period amounts have also been made, where
appropriate, to reflect comparable operating results excluding
significant operations sold, principally the previously announced
Domestic Telecom access lines, as follows:
Revenues $ - $151 $202 $595
Expenses $ - $98 $124 $393
(2) Discontinued Operations includes the operations of Verizon
Information Services Canada as a result of an agreement to sell the
business reached in the third quarter of 2004.
(3) Diluted Earnings per Share include (i) income related to share
dilution (exchangeable equity interests and zero coupon convertible
debt) of $17 million and $60 million for the fourth quarter and
year-to-date 2005, respectively, and $14 million and $68 million for
the fourth quarter and year-to-date 2004, respectively, and (ii) the
dilutive effect of shares issuable under our stock-based compensation
plans, exchangeable equity interests and zero coupon convertible
debt, which represent the only potential dilution.
* Not meaningful

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