8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of Report: October 28, 2004

(Date of earliest event reported)

VERIZON COMMUNICATIONS INC.

(Exact name of registrant as specified in its charter)

Delaware	1-8606	23-2259884
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

1095 Avenue of the Americas New York, New York	10036
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (212) 395-2121

Not applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

Attached as an exhibit hereto is a press release and financial tables dated October 28, 2004 issued by Verizon Communications Inc.

Non-GAAP Measures

Verizon’s press release and financial tables include financial information prepared in conformity with generally accepted accounting principles (GAAP) as well as non-GAAP financial information. The non-GAAP financial information may be determined or calculated differently by other companies.

The consolidated statements of income before special items eliminate special items and non-recurring items of revenues, expenses, gains and losses primarily as a result of their non-operational and/or non-recurring nature. Management believes this presentation of operating performance assists readers in better understanding our results of operations and trends from period to period, consistent with management’s evaluation of Verizon’s consolidated and segment results of operations for a variety of internal measures including strategic business planning, capital allocation and compensation. Management believes that the consolidated statements of income before special items provide current and prior period results of operations on a comparable basis as well as provide trends that are more indicative of future operating results than GAAP results of operations, given the non-operational and/or non-recurring nature of the special items removed for purposes of reporting results of operations before special items. While some of these items have been periodically reported in Verizon’s consolidated results of operations, such as significant severance and impairment charges, their occurrence in future periods is dependent upon future business and economic factors, among other evaluation criteria, and may frequently be beyond the control of management. As a result of these factors, management also provides this information externally, along with a complete reconciliation to their comparable GAAP amounts so readers have access to the detail and general nature of adjustments made to GAAP results. Descriptions of the special items are provided in the schedules accompanying the news release.

Management believes that Verizon’s operating income margins adjusted to exclude net pension and other postretirement (OPEB) expenses, Domestic Telecom’s operating income margins and cash expenses excluding pension/OPEB and Verizon Wireless’s operating income before depreciation and amortization (EBITDA) and EBITDA margin, additional non-GAAP financial measures, are also useful to investors and other users of our financial information in evaluating operating financial performance. Operating income margins and cash expenses excluding net pension/OPEB expenses are non-GAAP operating performance measures used internally to evaluate current and prior operating expense efficiency, as well as assist management in evaluating the financial results of Verizon and its largest operating segment with and without a significant expense driver compared to prior periods. Management believes this presentation assists readers in better understanding the impact of this significant expense driver on our results of operations and trends from period to period. In addition, Verizon Wireless’s EBITDA is determined by adding-back depreciation and amortization to operating income and the Verizon Wireless EBITDA margin is calculated by dividing Verizon Wireless’s EBITDA by Verizon Wireless’s service revenues. Verizon Wireless’s EBITDA and EBITDA margin are non-GAAP operating performance measures that are used internally to evaluate current operating expense efficiency and operating profitability on a more variable cost basis by excluding the depreciation and amortization expenses related primarily to capital expenditures and acquisitions (particularly customer base amortization) that occurred in prior years. In addition, Verizon management uses this information to evaluate operating performance in relation to Verizon Wireless’s competitors. The Verizon Wireless EBITDA margin utilizes service revenues rather than total revenues. Service revenues exclude primarily equipment revenues (as well as other non-service revenues) in order to capture the impact of providing service to the wireless customer base on an ongoing basis. Verizon Wireless’s EBITDA margin is presented along with Verizon Wireless’s operating income margin so as not to imply more emphasis should be placed on it than the corresponding GAAP measure. Management believes this presentation assists readers in preparing comparisons of this type of performance measure (operating profitability) using the GAAP measure as well as the measure segment management evaluates segment results and performs comparisons to other wireless carriers.

Free cash flow, a non-GAAP financial measure, is also useful to investors and other users of our financial information in evaluating liquidity and operating financial performance. Free cash flow is a financial measure that is commonly used by readers of financial information in assessing financial performance, including liquidity and the company’s ability to meet obligations with available cash flows and cash balances. Management uses free cash flow information for allocating resources to debt repayment and for other cash investing and financing activities. The definition of free cash flow, cash from operating activities less capital expenditures and dividends paid to Verizon’s shareowners, is readily determinable from amounts provided in Verizon’s consolidated statements of cash flows.

It is management’s intent to provide non-GAAP financial information to enhance understanding of Verizon’s GAAP consolidated financial statements and should be considered by the reader in addition to, but not instead of, the financial statements prepared in accordance with GAAP.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Verizon Communications Inc.
	(Registrant)
Date: October 28, 2004	/s/ David H. Benson
	David H. Benson
	Senior Vice President and Controller

EXHIBIT INDEX

Exhibit Number	Description
99	Press release and financial tables, dated October 28, 2004 issued by Verizon Communications Inc. and contained in its investor relations bulletin

EX-99

Exhibit 99

NEWS RELEASE
FOR IMMEDIATE RELEASE	Media contacts:
Oct. 28, 2004	Peter Thonis
	212-395-2355
	peter.thonis@verizon.com
	Bob Varettoni
	212-395-7726
	robert.a.varettoni@verizon.com

Verizon Communications Third-Quarter Revenues Increase 6.7%, to a Record $18.2 Billion; Wireless Revenues Up 23%

Quarterly Earnings of $1.8 Billion; Continued Strong Growth in Broadband and Wireless Services; Continued Solid Cash Flows and Margins

THIRD-QUARTER HIGHLIGHTS

• Total Company: Earnings of 64 cents in diluted earnings per share, or 65 cents per share before one special item (non-GAAP); 6.7 percent, or $1.1 billion, growth in operating revenues; $5.6 billion in cash flows from operating activities, a $0.3 billion increase; $1.3 billion free cash flow (non-GAAP, cash from operating activities less capital expenditures and dividends); 19.8 percent consolidated operating income margin (operating income divided by operating revenues)

• Wireless: 1.7 million net customer additions, an industry record for the second consecutive quarter; 42.1 million total customers; 23.0 percent growth in total revenues; company-record average revenue per customer; 22.5 percent operating income margin; churn (customer turnover) of 1.5 percent per month

• Wireline: 11.5 percent growth in total data revenues; 8.7 percent growth in long-distance revenues; 309,000 net additions of broadband DSL (digital subscriber lines); 3.3 million total DSL lines; broadband, data, long-distance and Enterprise (large business) services contribute to Domestic Telecom’s second sequential quarter of revenue growth

Notes: Growth percentages cited above compare third-quarter 2004 with third-quarter 2003. See the schedules accompanying this news release and 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 quarterly periods presented include the operations of Verizon Information Services Canada, following a third-quarter 2004 agreement to sell this business.

Verizon News Release, page 2

NEW YORK – Showing continued strong revenue growth, Verizon Communications Inc. (NYSE:VZ) today reported third-quarter 2004 earnings of $1.8 billion — 64 cents per diluted share, or 65 cents per share before one special item.

Quarterly consolidated operating revenues topped $18 billion for the first time in the company’s history — increasing 6.7 percent to $18.2 billion, compared with $17.1 billion in the third quarter 2003.

Also for the first time, Verizon Wireless contributed more than 40 percent of Verizon’s total revenues. The nation’s leading wireless company grew revenues 23.0 percent to $7.3 billion, compared with $5.9 billion in the third quarter 2003.

This marks Verizon Wireless’ ninth consecutive quarter of double-digit, year-over-year revenue increases, and the third consecutive quarter that increases totaled more than $1 billion compared with the previous year’s quarter.

Overall, Verizon’s growth businesses — wireless, long-distance, broadband, data and Enterprise services — accounted for 55 percent of third-quarter 2004 revenues. This compares with 49 percent of third-quarter 2003 revenues. Over the past year, revenues from these businesses have grown by 20.8 percent.

Domestic Telecom operating revenues were $9.6 billion in the third quarter 2004, a 2.1 percent decrease compared with the third quarter 2003 and a slight increase compared with the second quarter 2004. The segment’s third-quarter results included an 8.7 percent increase in revenues from all long-distance services, which were $1.1 billion compared with $1.0 billion in the third quarter 2003, and an 11.5 percent increase in total data revenues, which were $2.0 billion compared with $1.8 billion in the third quarter 2003.

‘Building Momentum’

“Verizon has posted record revenues and another quarter of strong profitability. We are steadily building momentum and accelerating our transformation into an industry-leading wireless and broadband company,” said Ivan Seidenberg, Verizon chairman and CEO. “Our wireless business has been a driver of overall revenue growth and a model of sustained excellence in terms of network quality, product innovation and customer satisfaction.

Verizon News Release, page 3

“As our business shifts from traditional narrow-band services and related markets, we are encouraged by the pace at which our overall revenue mix is evolving toward higher-growth services. We continue to see the benefits of cost controls and productivity improvements in our stable margins and cash flows, and we have the strongest balance sheet since our company was formed.”

Continued Record Wireless Growth

Verizon Wireless added 1.7 million net new customers, the largest quarterly customer increase in the history of the company, which was formed in April 2000. The total number of customers grew 16.9 percent year-over-year to 42.1 million, including 40.2 million retail customers.

As the company attracts new customers in record numbers, Verizon Wireless continues to produce industry-leading operational and profitability results. Average monthly churn, a key gauge of customer satisfaction, was 1.5 percent and continued to be the lowest in the industry among major carriers that have reported. Average monthly service revenue per customer increased 3.1 percent year-over-year to $51.58.

Wireless’ operating income margin of 22.5 percent in the third quarter 2004 compares with 18.9 percent in the third quarter 2003. Quarterly operating income grew 46.4 percent year-over-year to $1.6 billion.

Wireless’ EBITDA margin in the third quarter was 43.7 percent, the third consecutive quarter above 40 percent. (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.)

Continued Solid Margins

On a consolidated basis, Verizon’s operating income margin rose to 19.8 percent in the third quarter 2004, compared with 18.7 percent in the third quarter 2003. When adjusted to exclude the special and non-recurring items described later in this release as well as net pension and OPEB (other post-retirement benefit) impact, Verizon’s consolidated operating income margin would have been 21.0 percent in the third quarter 2004 and 19.0 percent in the third quarter 2003 (non-GAAP measures).

Verizon News Release, page 4

Domestic Telecom’s operating income margin was 14.7 percent in the third quarter 2004, compared with 16.3 percent in the third quarter 2003. When adjusted to exclude the items listed above, Domestic Telecom’s operating income margin would have been 16.3 percent in the third quarter 2004 and 15.1 percent in the third quarter 2003 (non-GAAP measures).

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

Wireline Broadband Growth

Verizon added a net of 309,000 broadband DSL lines in the third quarter 2004 for a total of 3.3 million DSL lines in service, representing 1.1 million net additions over the past year. The company also began rolling out FiOS fiber-optic-based services in the third quarter 2004.

Revenues from DSL contributed to Verizon’s total data revenues of $2.0 billion in the third quarter 2004. Data revenues represented 21 percent of Domestic Telecom’s total operating revenues in the quarter, up from 18 percent in the third quarter 2003.

Cash Flows, Debt

Cash flows from operating activities were $5.6 billion in the third quarter 2004, an increase of 5.5 percent compared with $5.3 billion in the third quarter 2003. Net cash used in investing activities was $3.1 billion, and net cash used in financing activities was $2.5 billion in the third quarter 2004.

Free cash flow was $1.3 billion for the third quarter of 2004, and $3.2 billion for the first nine months of the year. This compares with $1.4 billion for the third quarter of 2003, and $4.9 billion for the first nine months of 2003. Impacts on cash flow in 2004 have included severance payments associated with a 21,000-employee voluntary separation program, as well as increased capital investments compared with 2003 to fund broadband growth initiatives.

Total debt at the end of the third quarter 2004 was $40.5 billion, a reduction of 10.7 percent compared with $45.4 billion at year-end 2003.

Verizon News Release, page 5

Expense Items

Reported operating expenses increased 5.3 percent compared with the third quarter 2003, to $14.6 billion in the third quarter 2004.

When adjusted for special and non-recurring items, operating expenses were also $14.6 billion in the third quarter 2004, an increase of 6.1 percent from comparable expenses in the third quarter 2003 (non-GAAP measures). This increase was driven by the negative impact of $268 million related to pension and OPEB costs, and by costs associated with Verizon’s growth businesses. Expenses for last year’s third quarter included additional Domestic Telecom labor and weather-related repair costs, partially offset by non-operational expense benefits in other business units.

In Domestic Telecom, wage and salary expenses again decreased by more than $200 million year-over-year due to last year’s voluntary separation program. These savings were used to fund increases in sales and marketing expenses and other operating costs in the growth areas of the wireline segment.

Earnings Comparisons and Special Items

Reported earnings were 64 cents per share in both the third quarter 2004 and the third quarter 2003.

Before a $20 million (1 cent per share) special item related to pension settlements, third-quarter 2004 earnings were 65 cents per share. Third-quarter 2003 earnings were 67 cents per share before one special item of $81 million (3 cents per share), also related to pension settlements.

Business Segment Highlights

Following are third-quarter 2004 highlights from Verizon’s four business segments.

Domestic Telecom:

• Operating revenues of $9.6 billion in the third quarter 2004 were up slightly compared with the second quarter 2004, marking the second consecutive quarter of operating revenue increases. Revenues in the consumer, business and wholesale lines of business all increased in the third quarter 2004 compared with the second quarter 2004.

Verizon News Release, page 6

• Domestic Telecom’s cash expenses, excluding net pension and OPEB expenses (non-GAAP), were $5.9 billion in the third quarter 2004, a 3.5 percent decrease from the third quarter 2003.

• Revenues for all long-distance services, including traditional intra-region toll services, increased 8.7 percent compared with third quarter 2003, to $1.1 billion in the quarter. The company had 17.3 million long-distance lines in service as of the end of the quarter, an increase of 525,000 lines compared with the second quarter 2004.

• Approximately 53 percent of Verizon residential customers have purchased local services in combination with either Verizon long-distance or Verizon DSL, or both. This compares with 41 percent in the third quarter 2003.

• The average revenue per month per Verizon residential wireline customer increased by 4.4 percent in the third quarter 2004, compared with the third quarter 2003.

• Approximately 4.2 million Verizon Freedom packages were in service to residential and business customers as of the end of the quarter. 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.

• Resale and Unbundled Network Element-Platform (UNE-P) lines totaled 6.7 million at the end of the third quarter 2004, up from 5.4 million at the end of the third quarter 2003. For UNE-P only, this is a 105,000 increase from the end of the second quarter 2004, which is significantly less than in prior quarters this year. The company had 53.7 million switched wireline access lines in service as of the end of the third quarter 2004.

• During the quarter, Verizon’s Enterprise Solutions Group (ESG) won a six-year, $135 million contract from the Commonwealth of Virginia for voice and data services. ESG also made more than 700 sales of Enterprise Advance services in the quarter. To further support Enterprise Advance, Verizon reached agreements with several suppliers, enabling the expansion of its national network to some 40 new markets, bringing the total number to nearly 100.

Wireless:

• Total and retail gross additions, as well as total and retail net additions, were the highest in the company’s history. Retail gross additions increased 6.8 percent over the third quarter 2003. Retail net additions increased 24.1 percent to 1.58 million customers of the company’s 1.67 million total net additions.

• Over the past year, Verizon Wireless has moved the percentage of retail post-pay customers up from 91 percent to 92 percent of its customer base.

Verizon News Release, page 7

• Churn among retail post-pay customers was 1.3 percent. Verizon Wireless’ total and retail churn performance has led the industry this year as the first anniversary of local number portability approaches.

• Service revenues for the quarter were $6.4 billion, up 20.6 percent. The company does not include taxes and regulatory fees in service revenues.

• Verizon Wireless continued its industry-leading cost management, as the company’s cash expense per customer decreased 3.2 percent over the prior-year quarter — a particularly significant achievement given the record-high volume of new customers in the third and preceding quarters.

• Data services usage continued to climb, contributing $300 million, or 4.7 percent, of third-quarter 2004 total service revenues, up from 4.2 percent in the second quarter 2004 and 2.3 percent in the third quarter 2003. More than one-third of the company’s base — 14.6 million customers — use data services and spend an average of $7 per month on data.

• Contributing to wireless data revenues, 2.6 billion text messages were sent during the quarter, as the company is seeing text-message levels approach 1 billion per month. Additionally, there were 25.5 million picture messages and 26.8 million Get It Now downloads of the more than 500 games, exclusive content and other applications.

• At the end of the quarter, the company significantly expanded its BroadbandAccess service to now include 14 major metropolitan areas and 24 airports, including some of the busiest in the country. The company’s broadband network is the largest wireless wide-area broadband service in the nation, and is expected to reach 75 million Americans — one-third of the company’s network — by year-end. BroadbandAccess enables remote access from laptops and PDAs, offering business users a desktop experience when out of the office. It also will make possible high-resolution multimedia consumer services to the handset in the near future, with the company’s planned expansion to more metropolitan areas.

• Wireless continued to fortify the coverage and quality of its distribution system, as it began putting Verizon Wireless-staffed stores in 600 Circuit City outlets across the country, and expanding its indirect channel to 600 Best Buy stores.

Information Services:

• Verizon Information Services (VIS) revenues of $900 million decreased 4.2 percent for the third quarter 2004 compared with the third quarter 2003, primarily due to reduced domestic print advertising revenues. Revenues were relatively flat compared with the second quarter 2004.

Verizon News Release, page 8

• VIS’ domestic online directory and search service, SuperPages.com, continues to achieve strong growth, as demonstrated by a 25 percent increase in revenues and a 33 percent increase in searches over the third quarter 2003.

• Last month Verizon announced the sale of Verizon Information Services Canada to Bain Capital for $1.54 billion (Cdn. $1.985 billion). The agreement is subject to regulatory approvals and is expected to be completed by the end of 2004.

International:

• Third-quarter revenues of $496 million represented an increase of 11.2 percent from the third quarter 2003. Revenues reflect operational growth in the Dominican Republic, as well as a prior year revenue adjustment in Puerto Rico, partially offset by declining foreign exchange rates in the Dominican Republic.

• Third-quarter segment income was $319 million, compared with $471 million in the third quarter 2003. This decrease primarily resulted from additional Italian tax benefits in 2003 from a reorganization at Vodafone Omnitel and lower investment sales, partially offset by operational growth at Verizon Dominicana and the prior-year revenue and expense adjustments in Puerto Rico.

• Verizon’s 23.1 percent investment in Vodafone Omnitel continues to be a significant contributor to segment results due to higher demand for voice and data services, and favorable foreign currency exchange rates.

A Dow 30 company, Verizon Communications (NYSE:VZ) is one of the world’s leading providers of communications services, with approximately $68 billion in annual revenues. Verizon companies are the largest providers of wireline and wireless communications in the United States. Verizon is also the largest directory publisher in the world, as measured by directory titles and circulation. Verizon’s international presence includes wireline and wireless communications operations and investments, primarily in the Americas and Europe. For more information, visit www.verizon.com.

####

VERIZON’S ONLINE NEWS CENTER: Verizon news releases, executive speeches and biographies, media contacts and other information are available at Verizon’s 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.

Verizon News Release, page 9

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; our ability to satisfy regulatory merger conditions; 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; and 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.

Verizon Communications Inc.

Consolidated Statements of Income

	(dollars in millions, except per share amounts)
Unaudited	3 Mos. Ended 9/30/04			3 Mos. Ended 9/30/03			% Change		9 Mos. Ended 9/30/04			9 Mos. Ended 9/30/03			% Change
Operating Revenues	$	18,206		$	17,063		6.7		$	53,020		$	50,270		5.5
Operating Expenses
Cost of services and sales		5,994			5,706		5.0			17,104			15,849		7.9
Selling, general & administrative expense		5,132			4,891		4.9			15,807			14,823		6.6
Depreciation and amortization expense		3,483			3,416		2.0			10,345			10,162		1.8
Sales of businesses, net		—			(141	)	(100.0	)		—			(141	)	(100.0	)
Total Operating Expenses		14,609			13,872		5.3			43,256			40,693		6.3
Operating Income		3,597			3,191		12.7			9,764			9,577		2.0
Equity in earnings of unconsolidated businesses		224			358		(37.4	)		635			673		(5.6	)
Income from other unconsolidated businesses		2			80		(97.5	)		74			159		(53.5	)
Other income and (expense), net		16			10		60.0			(20	)		22		*
Interest expense		(577	)		(685	)	(15.8	)		(1,809	)		(2,132	)	(15.2	)
Minority interest		(682	)		(410	)	66.3			(1,835	)		(1,132	)	62.1
Income Before Provision for Income Taxes, Discontinued Operations and Cumulative Effect of Accounting Change		2,580			2,544		1.4			6,809			7,167		(5.0	)
Provision for income taxes		(801	)		(758	)	5.7			(2,065	)		(2,236	)	(7.6	)
Income Before Discontinued Operations and Cumulative Effect of Accounting Change		1,779			1,786		(.4	)		4,744			4,931		(3.8	)
Discontinued Operations(1)
Income (loss) from operations		33			15		120.0			89			(891	)	(110.0	)
Provision for income taxes		(16	)		(10	)	60.0			(41	)		(8	)	*
Income (loss) on discontinued operations		17			5		240.0			48			(899	)	(105.3	)
Cumulative Effect of Accounting Change, Net of Tax		—			—		*			—			503		(100.0	)
Net Income	$	1,796		$	1,791		.3		$	4,792		$	4,535		5.7
Basic Earnings per Share	$	.65		$	.65		—		$	1.73		$	1.65		4.8
Weighted average number of common shares (in millions)		2,769			2,759					2,769			2,753
Diluted Earnings per Share(2)	$	.64		$	.64		—		$	1.72		$	1.63		5.5
Weighted average number of common shares-assuming dilution (in millions)		2,803			2,791					2,803			2,786

Footnotes:

(1) Discontinued operations in all periods 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. The nine months ended September 30, 2003 also includes the operations of Iusacell.

(2) Diluted Earnings per Share include income related to share dilution (exchangeable equity interests) of $7 million and $20 million for the third quarter and year-to-date 2004, respectively, $6 million and $15 million for the third quarter and year-to-date 2003, respectively, and the dilutive effect of shares issuable under our stock-based compensation plans and exchangeable equity interests, 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)
Unaudited	3 Mos. Ended 9/30/04			3 Mos. Ended 9/30/03			% Change		9 Mos. Ended 9/30/04			9 Mos. Ended 9/30/03			% Change
Operating Revenues
Domestic Telecom	$	9,647		$	9,851		(2.1	)	$	28,883		$	29,697		(2.7	)
Domestic Wireless		7,311			5,942		23.0			20,320			16,505		23.1
Information Services		900			939		(4.2	)		2,725			2,897		(5.9	)
International		496			446		11.2			1,470			1,472		(.1	)
Other		(148	)		(115	)	28.7			(378	)		(301	)	25.6
Total Operating Revenues		18,206			17,063		6.7			53,020			50,270		5.5
Operating Expenses
Cost of services and sales		5,994			5,706		5.0			17,104			15,849		7.9
Selling, general & administrative expense		5,099			4,760		7.1			15,106			13,798		9.5
Depreciation and amortization expense		3,483			3,416		2.0			10,345			10,162		1.8
Sales of businesses, net		—			(141	)	(100.0	)		—			(141	)	(100.0	)
Total Operating Expenses		14,576			13,741		6.1			42,555			39,668		7.3
Operating Income		3,630			3,322		9.3			10,465			10,602		(1.3	)
Equity in earnings of unconsolidated businesses		224			358		(37.4	)		635			673		(5.6	)
Income from other unconsolidated businesses		2			80		(97.5	)		31			159		(80.5	)
Other income and (expense), net		16			10		60.0			35			83		(57.8	)
Interest expense		(577	)		(685	)	(15.8	)		(1,809	)		(2,132	)	(15.2	)
Minority interest		(682	)		(410	)	66.3			(1,835	)		(1,132	)	62.1
Income Before Provision for Income Taxes and Discontinued Operations		2,613			2,675		(2.3	)		7,522			8,253		(8.9	)
Provision for income taxes		(814	)		(808	)	.7			(2,338	)		(2,602	)	(10.1	)
Income Before Discontinued Operations		1,799			1,867		(3.6	)		5,184			5,651		(8.3	)
Discontinued Operations
Income from operations		33			15		120.0			89			67		32.8
Provision for income taxes		(16	)		(10	)	60.0			(41	)		(34	)	20.6
Income on discontinued operations		17			5		240.0			48			33		45.5
Net Income Before Special Items	$	1,816		$	1,872		(3.0	)	$	5,232		$	5,684		(8.0	)
Basic Earnings per Share	$	.66		$	.68		(2.9	)	$	1.89		$	2.06		(8.3	)
Weighted average number of common shares (in millions)		2,769			2,759					2,769			2,753
Diluted Adjusted Earnings per Share	$	.65		$	.67		(3.0	)	$	1.87		$	2.05		(8.8	)
Weighted average number of common shares-assuming dilution (in millions)		2,803			2,791					2,803			2,786

Verizon Communications Inc.

Consolidated Statements of Income - Reconciliations

		(dollars in millions, except per share amounts)
				Special and Non- Recurring Items
Unaudited	3 Mos. Ended 9/30/04 Reported (GAAP)			Severance, Pension and Benefit Charges			3 Mos. Ended 9/30/04 Before Special Items
Operating Revenues	$	18,206		$	—		$	18,206
Operating Expenses
Cost of services and sales		5,994			—			5,994
Selling, general & administrative expense		5,132			(33	)		5,099
Depreciation and amortization expense		3,483			—			3,483
Total Operating Expenses		14,609			(33	)		14,576
Operating Income		3,597			33			3,630
Equity in earnings of unconsolidated businesses		224			—			224
Income from other unconsolidated businesses		2			—			2
Other income and (expense), net		16			—			16
Interest expense		(577	)		—			(577	)
Minority interest		(682	)		—			(682	)
Income Before Provision for Income Taxes and Discontinued Operations		2,580			33			2,613
Provision for income taxes		(801	)		(13	)		(814	)
Income Before Discontinued Operations		1,779			20			1,799
Discontinued Operations
Income from operations		33			—			33
Provision for income taxes		(16	)		—			(16	)
Income on discontinued operations		17			—			17
Net Income	$	1,796		$	20		$	1,816
Basic Earnings per Common Share(1)	$	.65		$	.01		$	.66
Diluted Earnings per Common Share(1)	$	.64		$	.01		$	.65
				Special and Non- Recurring Items
Unaudited	3 Mos. Ended 9/30/03 Reported (GAAP)			Severance, Pension and Benefit Charges			3 Mos. Ended 9/30/03 Before Special Items
Operating Revenues	$	17,063		$	—		$	17,063
Operating Expenses
Cost of services and sales		5,706			—			5,706
Selling, general & administrative expense		4,891			(131	)		4,760
Depreciation and amortization expense		3,416			—			3,416
Sales of businesses, net		(141	)		—			(141	)
Total Operating Expenses		13,872			(131	)		13,741
Operating Income		3,191			131			3,322
Equity in earnings of unconsolidated businesses		358			—			358
Income from other unconsolidated businesses		80			—			80
Other income and (expense), net		10			—			10
Interest expense		(685	)		—			(685	)
Minority interest		(410	)		—			(410	)
Income Before Provision for Income Taxes and Discontinued Operations		2,544			131			2,675
Provision for income taxes		(758	)		(50	)		(808	)
Income Before Discontinued Operations		1,786			81			1,867
Discontinued Operations
Income from operations		15			—			15
Provision for income taxes		(10	)		—			(10	)
Income on discontinued operations		5			—			5
Net Income	$	1,791		$	81		$	1,872
Basic Earnings per Common Share(1)	$	.65		$	.03		$	.68
Diluted Earnings per Common Share(1)	$	.64		$	.03		$	.67

Footnote:

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

Note: See www.verizon.com/investor for a reconciliation of other non-GAAP measures included in this Quarterly Bulletin.

Verizon Communications Inc.

Consolidated Statements of Income - Reconciliations

		(dollars in millions, except per share amounts)
				Special and Non-Recurring Items
Unaudited	9 Mos. Ended 9/30/04 Reported (GAAP)			Severance, Pension and Benefit Charges			Sales of Investments, Net			Other Special Items			9 Mos. Ended 9/30/04 Before Special Items
Operating Revenues	$	53,020		$	—		$	—		$	—		$	53,020
Operating Expenses
Cost of services and sales		17,104			—			—			—			17,104
Selling, general & administrative expense		15,807			(792	)		—			91			15,106
Depreciation and amortization expense		10,345			—			—			—			10,345
Total Operating Expenses		43,256			(792	)		—			91			42,555
Operating Income		9,764			792			—			(91	)		10,465
Equity in earnings of unconsolidated businesses		635			—			—			—			635
Income from other unconsolidated businesses		74			—			(43	)		—			31
Other income and (expense), net		(20	)		—			—			55			35
Interest expense		(1,809	)		—			—			—			(1,809	)
Minority interest		(1,835	)		—			—			—			(1,835	)
Income Before Provision for Income Taxes and Discontinued Operations		6,809			792			(43	)		(36	)		7,522
Provision for income taxes		(2,065	)		(307	)		—			34			(2,338	)
Income Before Discontinued Operations		4,744			485			(43	)		(2	)		5,184
Discontinued Operations
Income from operations		89			—			—			—			89
Provision for income taxes		(41	)		—			—			—			(41	)
Income on discontinued operations		48			—			—			—			48
Net Income	$	4,792		$	485		$	(43	)	$	(2	)	$	5,232
Basic Earnings per Common Share(1)	$	1.73		$	.18		$	(.02	)	$	—		$	1.89
Diluted Earnings per Common Share(1)	$	1.72		$	.17		$	(.02	)	$	—		$	1.87

				Special and Non-Recurring Items
Unaudited	9 Mos. Ended 9/30/03 Reported (GAAP)			Iusacell Charge			Severance, Pension and Benefit Charges			Lease Impairment and Other Special Charges			Cumulative Effect of Accounting Change			9 Mos. Ended 9/30/03 Before Special Items
Operating Revenues	$	50,270		$	—		$	—		$	—		$	—		$	50,270
Operating Expenses
Cost of services and sales		15,849			—			—			—			—			15,849
Selling, general & administrative expense		14,823			—			(828	)		(197	)		—			13,798
Depreciation and amortization expense		10,162			—			—			—			—			10,162
Sales of businesses, net		(141	)		—			—			—			—			(141	)
Total Operating Expenses		40,693			—			(828	)		(197	)		—			39,668
Operating Income		9,577			—			828			197			—			10,602
Equity in earnings of unconsolidated businesses		673			—			—			—			—			673
Income from other unconsolidated businesses		159			—			—			—			—			159
Other income and (expense), net		22			—			—			61			—			83
Interest expense		(2,132	)		—			—			—			—			(2,132	)
Minority interest		(1,132	)		—			—			—			—			(1,132	)
Income Before Provision for Income Taxes, Discontinued Operations and Cumulative Effect of Accounting Change		7,167			—			828			258			—			8,253
Provision for income taxes		(2,236	)		—			(312	)		(54	)		—			(2,602	)
Income Before Discontinued Operations and Cumulative Effect of Accounting Change		4,931			—			516			204			—			5,651
Discontinued Operations
Income (loss) from operations		(891	)		957			1			—			—			67
Provision for income taxes		(8	)		(26	)		—			—			—			(34	)
Income (loss) on discontinued operations		(899	)		931			1			—			—			33
Cumulative Effect of Accounting Change, Net of Tax		503			—			—			—			(503	)		—
Net Income	$	4,535		$	931		$	517		$	204		$	(503	)	$	5,684
Basic Earnings per Common Share(1)	$	1.65		$	.34		$	.19		$	.07		$	(.18	)	$	2.06
Diluted Earnings per Common Share(1)	$	1.63		$	.33		$	.19		$	.07		$	(.18	)	$	2.05

Footnote:

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

Note: See www.verizon.com/investor for a reconciliation of other non-GAAP measures included in this Quarterly Bulletin.

Verizon Communications Inc.

Selected Financial and Operating Statistics

	(dollars in millions, except per share amounts)
Unaudited	3 Mos. Ended 9/30/04			3 Mos. Ended 9/30/03			9 Mos. Ended 9/30/04			9 Mos. Ended 9/30/03
Debt to debt and shareowners’ equity ratio-end of period		53.5	%		56.4	%		53.5	%		56.4	%
Book value per common share	$	12.70		$	12.72		$	12.70		$	12.72
Cash dividends declared per common share	$	.385		$	.385		$	1.155		$	1.155
Common shares outstanding (in millions)
End of period		2,769			2,762			2,769			2,762
Capital expenditures (including capitalized software)
Domestic Telecom	$	1,761		$	1,746		$	4,703		$	4,765
Domestic Wireless		1,374			983			4,121			3,079
Information Services		18			12			49			47
International		98			99			195			222
Other		2			7			9			21
Total	$	3,253		$	2,847		$	9,077		$	8,134
Total employees (1)		208,240			219,927			208,240			219,927

Footnote:

(1) Prior period adjusted to reflect comparable figure.

Verizon Communications Inc.

Consolidated Balance Sheets

	(dollars in millions)
Unaudited	9/30/04			12/31/03			$ Change
Assets
Current assets
Cash and cash equivalents	$	616		$	669		$	(53	)
Short-term investments		986			2,172			(1,186	)
Accounts receivable, net		9,919			9,854			65
Inventories		1,389			1,262			127
Assets of discontinued operations		719			705			14
Assets held for sale		950			—			950
Prepaid expenses and other		3,162			4,233			(1,071	)
Total current assets		17,741			18,895			(1,154	)
Plant, property and equipment		183,356			180,940			2,416
Less accumulated depreciation		109,870			105,638			4,232
		73,486			75,302			(1,816	)
Investments in unconsolidated businesses		5,989			5,789			200
Wireless licenses		41,092			40,907			185
Goodwill		835			835			—
Other intangible assets, net		4,430			4,702			(272	)
Other assets		19,324			19,538			(214	)
Total Assets	$	162,897		$	165,968		$	(3,071	)
Liabilities and Shareowners’ Investment
Current liabilities
Debt maturing within one year	$	3,271		$	5,967		$	(2,696	)
Accounts payable and accrued liabilities		13,291			14,652			(1,361	)
Liabilities of discontinued operations		95			76			19
Liabilities related to assets held for sale		500			—			500
Other		5,967			5,885			82
Total current liabilities		23,124			26,580			(3,456	)
Long-term debt		37,252			39,413			(2,161	)
Employee benefit obligations		17,104			16,754			350
Deferred income taxes		22,129			21,704			425
Other liabilities		3,526			3,703			(177	)
Minority interest		24,588			24,348			240
Shareowners’ investment
Common stock		277			277			—
Contributed capital		25,420			25,363			57
Reinvested earnings		11,005			9,409			1,596
Accumulated other comprehensive loss		(1,372	)		(1,250	)		(122	)
Common stock in treasury, at cost		(168	)		(115	)		(53	)
Deferred compensation - employee stock ownership plans and other		12			(218	)		230
Total shareowners’ investment		35,174			33,466			1,708
Total Liabilities and Shareowners’ Investment	$	162,897		$	165,968		$	(3,071	)

Verizon Communications Inc.

Condensed Consolidated Statements of Cash Flows

	(dollars in millions)
Unaudited	9 Mos. Ended 9/30/04			9 Mos. Ended 9/30/03			$ Change
Cash Flows From Operating Activities
Income before discontinued operations and cumulative effect of accounting change	$	4,744		$	4,931		$	(187	)
Adjustments to reconcile income before discontinued operations and cumulative effect of accounting change to net cash provided by operating activities:
Depreciation and amortization expense		10,345			10,162			183
Sales of businesses, net		—			(141	)		141
Employee retirement benefits		1,679			230			1,449
Deferred income taxes		968			1,418			(450	)
Provision for uncollectible accounts		876			1,282			(406	)
Income from unconsolidated businesses		(709	)		(832	)		123
Changes in current assets and liabilities, net of effects from acquisition/disposition of businesses		(2,344	)		(406	)		(1,938	)
Other, net		(65	)		(388	)		323
Net cash provided by operating activities		15,494			16,256			(762	)
Cash Flows From Investing Activities
Capital expenditures (including capitalized software)		(9,077	)		(8,134	)		(943	)
Acquisitions, net of cash acquired, and investments		(300	)		(1,097	)		797
Proceeds from disposition of businesses		117			229			(112	)
Net change in short-term investments		1,174			1,683			(509	)
Other, net		261			409			(148	)
Net cash used in investing activities		(7,825	)		(6,910	)		(915	)
Cash Flows From Financing Activities
Proceeds from long-term borrowings		502			2,831			(2,329	)
Repayments of long-term borrowings and capital lease obligations		(4,867	)		(8,870	)		4,003
Decrease in short-term obligations, excluding current maturities		(79	)		(1,274	)		1,195
Dividends paid		(3,198	)		(3,175	)		(23	)
Proceeds from sale of common stock		220			617			(397	)
Purchase of common stock for treasury		(257	)		—			(257	)
Other, net		(43	)		(168	)		125
Net cash used in financing activities		(7,722	)		(10,039	)		2,317
Decrease in cash and cash equivalents		(53	)		(693	)		640
Cash and cash equivalents, beginning of period		669			1,397			(728	)
Cash and cash equivalents, end of period	$	616		$	704		$	(88	)

Verizon Communications Inc.

Domestic Telecom – Selected Financial Results

							(dollars in millions)
Unaudited	3 Mos. Ended 9/30/04			3 Mos. Ended 9/30/03			% Change		9 Mos. Ended 9/30/04			9 Mos. Ended 9/30/03			% Change
Operating Revenues
Local services	$	4,629		$	4,826		(4.1	)	$	13,965		$	14,629		(4.5	)
Network access services		3,026			3,093		(2.2	)		9,171			9,646		(4.9	)
Long distance services		1,087			1,000		8.7			3,118			2,782		12.1
Other services		905			932		(2.9	)		2,629			2,640		(.4	)
Total Operating Revenues		9,647			9,851		(2.1	)		28,883			29,697		(2.7	)
Operating Expenses
Cost of services and sales		3,805			3,879		(1.9	)		11,165			10,815		3.2
Selling, general & administrative expense		2,207			2,069		6.7			6,699			6,322		6.0
Depreciation and amortization expense		2,215			2,296		(3.5	)		6,681			6,927		(3.6	)
Total Operating Expenses		8,227			8,244		(.2	)		24,545			24,064		2.0
Operating Income	$	1,420		$	1,607		(11.6	)	$	4,338		$	5,633		(23.0	)
Operating Income Margin		14.7	%		16.3	%				15.0	%		19.0	%
Segment Income	$	642		$	703		(8.7	)	$	2,022		$	2,625		(23.0	)

Footnotes:

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

Intersegment transactions have not been eliminated.

Verizon Communications Inc.

Domestic Telecom – Selected Operating Statistics

Unaudited	3 Mos. Ended 9/30/04		3 Mos. Ended 9/30/03		% Change		9 Mos. Ended 9/30/04		9 Mos. Ended 9/30/03		% Change
Switched access lines in service (000)
Residence		34,726		36,468	(4.8	)		34,726		36,468	(4.8	)
Business		18,515		19,214	(3.6	)		18,515		19,214	(3.6	)
Public		437		473	(7.6	)		437		473	(7.6	)
Total		53,678		56,155	(4.4	)		53,678		56,155	(4.4	)
Special DS0 equivalents		89,532		83,233	7.6			89,532		83,233	7.6
Total voice grade equivalents (000)		143,210		139,388	2.7			143,210		139,388	2.7
Resale & UNE-P lines (000)		6,662		5,378	23.9			6,662		5,378	23.9
Minutes of use from Carriers and CLECs (in millions)		55,762		59,165	(5.8	)		170,861		180,008	(5.1	)
Long distance lines (1) (000)		17,313		14,850	16.6			17,313		14,850	16.6
DSL lines (000)		3,253		2,116	53.7			3,253		2,116	53.7
High capacity and digital data revenues ($ in millions)
Data transport	$	1,776	$	1,596	11.3		$	5,202	$	4,914	5.9
Data solutions		204		179	14.0			552		478	15.5
Total revenues	$	1,980	$	1,775	11.5		$	5,754	$	5,392	6.7

Footnote:

(1) Includes cumulative long distance line adjustments of 1,050,000 lines in the third quarter of 2003. As previously disclosed, these adjustments pertain to an overstatement of long distance lines discovered in the second quarter of 2004.

Verizon Communications Inc.

Verizon Wireless – Selected Financial Results

							(dollars in millions)
Unaudited	3 Mos. Ended 9/30/04			3 Mos. Ended 9/30/03			% Change	9 Mos. Ended 9/30/04			9 Mos. Ended 9/30/03			% Change
Revenues
Service revenues	$	6,389		$	5,299		20.6	$	17,933		$	14,970		19.8
Equipment and other		922			643		43.4		2,387			1,535		55.5
Total Revenues		7,311			5,942		23.0		20,320			16,505		23.1
Operating Expenses
Cost of services and sales		2,107			1,715		22.9		5,619			4,721		19.0
Selling, general & administrative expense		2,411			2,103		14.6		6,933			5,942		16.7
Depreciation and amortization expense		1,147			1,000		14.7		3,305			2,863		15.4
Total Operating Expenses		5,665			4,818		17.6		15,857			13,526		17.2
Operating Income	$	1,646		$	1,124		46.4	$	4,463		$	2,979		49.8
Operating Income Margin		22.5	%		18.9	%			22.0	%		18.0	%
Segment Income	$	478		$	301		58.8	$	1,249		$	776		61.0
Selected Operating Statistics
Subscribers (000)		42,118			36,026		16.9		42,118			36,026		16.9
Penetration		17.5	%		15.4	%			17.5	%		15.4	%
Subscriber net adds in period(1) (000)		1,674			1,407		19.0		4,596			3,535		30.0
Total churn rate, including prepaid		1.5	%		1.9	%			1.5	%		1.9	%

Footnotes:

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

Intersegment transactions have not been eliminated.

(1) Includes acquisition of 6,000 subscribers in the first quarter of 2003.

Verizon Communications Inc.

Information Services – Selected Financial Results

	(dollars in millions)
Unaudited	3 Mos. Ended 9/30/04			3 Mos. Ended 9/30/03			% Change		9 Mos. Ended 9/30/04			9 Mos. Ended 9/30/03			% Change
Operating Revenues	$	900		$	939		(4.2	)	$	2,725		$	2,897		(5.9	)
Operating Expenses
Cost of services and sales		126			147		(14.3	)		397			438		(9.4	)
Selling, general & administrative expense		327			330		(.9	)		992			1,002		(1.0	)
Depreciation and amortization expense		23			19		21.1			65			58		12.1
Sales of businesses, net		—			(141	)	(100.0	)		—			(141	)	(100.0	)
Total Operating Expenses		476			355		34.1			1,454			1,357		7.1
Operating Income	$	424		$	584		(27.4	)	$	1,271		$	1,540		(17.5	)
Operating Income Margin		47.1	%		62.2	%				46.6	%		53.2	%
Segment Income	$	252		$	355		(29.0	)	$	766		$	923		(17.0	)

Footnotes:

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

Intersegment transactions have not been eliminated.

Information Services results in all periods exclude the operations of Verizon Information Services Canada as a result of an agreement to sell the business reached in the third quarter of 2004.

Verizon Communications Inc.

International - Selected Financial Results

	(dollars in millions)
Unaudited	3 Mos. Ended 9/30/04			3 Mos. Ended 9/30/03			% Change		9 Mos. Ended 9/30/04			9 Mos. Ended 9/30/03			% Change
Operating Revenues	$	496		$	446		11.2		$	1,470		$	1,472		(.1	)
Operating Expenses
Cost of services and sales		153			144		6.3			456			422		8.1
Selling, general & administrative expense		136			222		(38.7	)		351			573		(38.7	)
Depreciation and amortization expense		80			80		—			237			252		(6.0	)
Total Operating Expenses		369			446		(17.3	)		1,044			1,247		(16.3	)
Operating Income	$	127		$	—		—		$	426		$	225		89.3
Operating Income Margin		25.6	%		0.0	%				29.0	%		15.3	%
Equity in Earnings of Unconsolidated Businesses	$	238		$	397		(40.1	)	$	726		$	789		(8.0	)
Income from Other Unconsolidated Businesses	$	2		$	80		(97.5	)	$	31		$	169		(81.7	)
Segment Income	$	319		$	471		(32.3	)	$	887		$	1,051		(15.6	)

Footnotes:

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

Intersegment transactions have not been eliminated.

Verizon Communications Inc.

Other Reconciliations

(dollars in millions)

Unaudited	3 Mos. Ended 9/30/04			3 Mos. Ended 9/30/03
Operating Income Margin Excluding Special and Non-recurring Items and Net Pension/OPEB - Total Verizon
Operating revenues	$	18,206		$	17,063
Reported operating income	$	3,597		$	3,191
Special and non-recurring items		33			131
Net pension/OPEB expense (credit)		185			(83	)
Operating income excluding special and non-recurring items and net pension/OPEB	$	3,815		$	3,239
Reported operating income margin		19.8	%		18.7	%
Operating income margin excluding special and non-recurring items and net pension/OPEB		21.0	%		19.0	%
Operating Income Margin Excluding Net Pension/OPEB - Domestic Telecom
Total operating revenues	$	9,647		$	9,851
Operating income	$	1,420		$	1,607
Net pension/OPEB expense (credit)		157			(118	)
Operating income excluding net pension/OPEB	$	1,577		$	1,489
Operating income margin		14.7	%		16.3	%
Operating income margin excluding net pension/OPEB		16.3	%		15.1	%
Unaudited	3 Mos. Ended 9/30/04			3 Mos. Ended 9/30/03
Domestic Telecom Cash Operating Expense Excluding Net Pension/OPEB
Domestic Telecom operating expenses	$	8,227		$	8,244
Less: Domestic Telecom depreciation and amortization		(2,215	)		(2,296	)
Net pension/OPEB credit (expense)		(157	)		118
Domestic Telecom cash operating expense excluding net pension/OPEB	$	5,855		$	6,066

Unaudited	3 Mos. Ended 9/30/04			3 Mos. Ended 9/30/03			9 Mos. Ended 9/30/04			9 Mos. Ended 9/30/03
Free Cash Flow
Cash from operating activities	$	5,601		$	5,309		$	15,494		$	16,256
Less: Capital expenditures (including capitalized software)		(3,253	)		(2,847	)		(9,077	)		(8,134	)
Dividends paid		(1,067	)		(1,060	)		(3,198	)		(3,175	)
Free Cash Flow	$	1,281		$	1,402		$	3,219		$	4,947
Unaudited	3 Mos. Ended 9/30/04			3 Mos. Ended 9/30/03			9 Mos. Ended 9/30/04			9 Mos. Ended 9/30/03
Cash Flow Summary
Cash provided by operating activities	$	5,601		$	5,309		$	15,494		$	16,256
Cash used in investing activities		(3,069	)		(1,832	)		(7,825	)		(6,910	)
Cash used in financing activities		(2,499	)		(3,552	)		(7,722	)		(10,039	)
Increase (decrease) in cash and cash equivalents		33			(75	)		(53	)		(693	)
Cash and cash equivalents, beginning of period		583			779			669			1,397
Cash and cash equivalents, end of period	$	616		$	704		$	616		$	704

Verizon Communications Inc.

Other Reconciliations

(dollars in millions)

Unaudited	3 Mos. Ended 9/30/04			3 Mos. Ended 6/30/04			3 Mos. Ended 3/31/04
EBITDA - Verizon Wireless
Segment income:
Domestic Telecom	$	642		$	683		$	697
Verizon Wireless		478			453			318
Information Services		252			243			271
International		319			287			281
Total segments		1,691			1,666			1,567
Corporate and other		105			131			(368	)
Consolidated net income	$	1,796		$	1,797		$	1,199
Verizon Wireless EBITDA
Segment income	$	478		$	453		$	318
Add/subtract non-operating items:
Provision for income taxes		376			358			254
Minority interest		667			639			460
Interest expense		160			170			176
Other income/(expense), net		(4	)		(2	)		(5	)
Equity in earnings of unconsolidated businesses		(31	)		(3	)		(1	)
Operating income		1,646			1,615			1,202
Add depreciation and amortization expense		1,147			1,103			1,055
Verizon Wireless EBITDA	$	2,793		$	2,718		$	2,257
Verizon Wireless total revenues	$	7,311		$	6,847		$	6,162
Verizon Wireless service revenues	$	6,389		$	6,043		$	5,501
Verizon Wireless operating income margin		22.5	%		23.6	%		19.5	%
Verizon Wireless EBITDA margin		43.7	%		45.0	%		41.0	%