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 30, 2006

(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.)

140 West Street New York, New York	10007
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (212) 395-1000

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 30, 2006 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. This also includes current and prior periods’ operating revenues and operating expenses of significant operations sold, including Verizon’s Hawaii wireline and directory operations which were sold during the second quarter of 2005. 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, 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 press release.

Management believes that Verizon Wireless’s cash expense per customer 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. Verizon Wireless’s cash expense per customer is determined by subtracting equipment and other revenue from Verizon Wireless’s cost of sales and services and selling, general and administrative expenses, divided by average customers during the period. 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 cash expense per customer, 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. Cash expense per customer is determined by reflecting equipment and other revenue on a net cost basis in order to illustrate the impact of the net cost of selling handsets and other equipment to the customers and other similar transactions with customers. 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 uses to evaluate segment results and perform comparisons to other wireless carriers.

The pro forma financial information presents the combined operating results of Verizon and the former MCI on a comparable basis, before special items. Management believes this presentation of pro forma financial information before special items 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. Management believes that the pro forma financial information provides current and prior period results of operations on a comparable basis and provides trends that are more indicative of future operating results than GAAP results of operations, given the merger during the period and the non-operational and/or non-recurring nature of the special items removed for purposes of reporting results of operations before

special items. Management believes that the combined and Wireline pro forma cash expense information, additional non-GAAP financial measures, are also useful to investors and other users of our financial information in evaluating operating financial performance. Cash expense is determined by subtracting depreciation and amortization expense from operating expenses before special items. Combined pro forma cash expense and Wireline pro forma cash expense are non-GAAP operating performance measures that are used internally to evaluate current operating expense efficiency on a more variable cost basis. Management 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 these pro forma items are provided in the schedules accompanying the press release.

It is management’s intent to provide non-GAAP financial information to enhance understanding of Verizon’s GAAP consolidated financial statements and it 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 30, 2006	/s/ Thomas A. Bartlett
	Thomas A. Bartlett
	Senior Vice President and Controller

EXHIBIT INDEX

Exhibit Number	Description
99	Press release and financial tables, dated October 30, 2006 issued by Verizon Communications Inc. and contained in its investor relations bulletin.

EX-99

Exhibit 99

NEWS RELEASE

FOR IMMEDIATE RELEASE
October 30, 2006	Media contacts:
	Peter Thonis
	212-395-2355
	peter.thonis@verizon.com
	Bob Varettoni
	908-559-6388
	robert.a.varettoni@verizon.com

Verizon Communications Posts Strong Third-Quarter

Results as Organic Growth Initiatives Gain Momentum

Another Quarter of Industry-Leading Profitable Growth at Verizon Wireless,

Supported by Sales Volume Gains at Verizon Telecom and Verizon Business

THIRD-QUARTER 2006 HIGHLIGHTS

Consolidated

• Diluted earnings per share (EPS) of 66 cents, or 68 cents per share before special items (non-GAAP measure)

• Reported revenues of $23.3 billion, up 25.8 percent from third quarter 2005

Wireless

• Verizon Wireless becomes the largest U.S. wireless company, based on revenues; total revenues up 18.2 percent from third quarter 2005; data revenues nearly double year-over-year; EBITDA margin (non-GAAP) of 45.0 percent

• Total service ARPU and retail service ARPU up year-over-year and up from second quarter 2006; retail service ARPU of $51.21

• 1.9 million net customer additions; 56.7 million total customers, up 15.1 percent from third quarter 2005; 54.6 million retail (non-wholesale) customers

• Continued industry-leading low churn rates (customer turnover); 1.24 percent total churn; 1.15 percent retail churn; 0.95 percent retail postpaid churn

Verizon News Release, page 2

Wireline

• 448,000 net new broadband connections at Verizon Telecom, including 147,000 FiOS Internet customers; 6.6 million total broadband connections, up 45.1 percent from third quarter 2005

• Data revenues of $4.1 billion, up 89.3 percent from third quarter 2005, including results from Verizon Business domestic and global operations

• Verizon Business revenue trends continue to improve, with 1.7 percent sequential revenue growth; MCI merger synergies on target

Notes: Prior-period amounts have been reclassified to reflect comparable results. 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. Verizon’s 2006 reported results include revenues and expenses from the former MCI, Inc., which merged with Verizon in January 2006. Discontinued operations include the operations of Verizon Dominicana C. por A. and Telecomunicaciones de Puerto Rico Inc. following second-quarter 2006 agreements to sell the businesses.

NEW YORK — Verizon Communications Inc. (NYSE:VZ) today reported strong financial and operational results for the third quarter 2006, as sales volumes gained momentum in wireless, broadband and enterprise markets.

Verizon reported quarterly earnings of $1.9 billion, or 66 cents per diluted share, compared with $1.9 billion, or 67 cents per share, in the third quarter 2005.

Reported earnings in the third quarter 2006 include a charge of 2 cents per share for special items, including pension settlement charges and Verizon Center relocation and merger integration costs. Reported earnings in the third quarter 2005 had included a net gain of 1 cent per share in special items, principally from gains on a real estate sale and tax benefits, partially offset by asset impairments. In the third quarter 2006, Verizon recognized an $85 million favorable tax benefit at Vodafone Omnitel.

Before special items (non-GAAP), Verizon’s third-quarter 2006 earnings were $2.0 billion, or 68 cents per share. This is an increase of 7.5 percent compared with earnings of $1.8 billion, or 66 cents per share, in the third quarter 2005.

Consolidated third-quarter 2006 operating revenues were $23.3 billion, a 25.8 percent increase compared with the third quarter 2005. Consolidated total operating expenses were $19.3 billion, a 29.0 percent increase compared with the third quarter 2005. Verizon’s third-quarter 2006 reported results include revenues and expenses from the former MCI.

Verizon News Release, page 3

Comparing third quarter 2006 with third quarter 2005 on a pro-forma (non-GAAP) basis:

• Adjusted operating revenues increased 3.6 percent, supported by increasing sales volumes in markets that the company has been growing organically rather than through acquisition.

• Adjusted cash expenses increased 4.4 percent.

• Adjusted operating income increased 6.6 percent.

Adjusted operating income margins, including the effects of net pension and OPEB (other post-retirement benefits) costs, were 17.3 percent in third quarter 2006, compared with 16.8 percent in third quarter 2005. Pro-forma, adjusted information presents the combined operating results of Verizon and the former MCI on a comparable basis.

Long-Term Shareholder Value

“Verizon continues to win customers and market share for wireless, broadband and enterprise services,” said Ivan Seidenberg, Verizon chairman and CEO. “These organic growth initiatives gained momentum in the third quarter, and we are confident this growth is sustainable. We are building long-term shareholder value on a foundation of infrastructure and technology investment, supported by innovative marketing and customer service initiatives.

“Once again, Verizon Wireless has posted another industry-leading quarter of profitable growth, while our other network-based businesses continue to establish new customer relationships. Verizon Telecom reported an excellent quarter in adding broadband and video customers. Verizon Business again delivered sequential revenue growth as it focuses on increasing its penetration of U.S.-based multi-national accounts, and the integration of the former MCI is producing significant operational benefits and synergies that are on plan.”

Verizon News Release, page 4

Seidenberg added, “We are maintaining strong consolidated cash flows that we have used in part to continue our share repurchase program in the third quarter.”

Verizon Wireless Leads Industry

Verizon Wireless again delivered strong revenue growth, profitability, net customer additions and low churn that were significantly ahead of the industry.

Verizon Wireless is now the largest U.S. wireless carrier in terms of revenue. The company is also the largest wireless data provider based on data revenue, and it has the most retail customers — that is, businesses and consumers directly served by Verizon Wireless and who buy Verizon Wireless-branded service, rather than customers of the company’s resellers.

Verizon Wireless revenues grew 18.2 percent year-over-year to $9.9 billion in the third quarter 2006, driven by strong customer growth and demand for data services. This was the fourth consecutive quarter of 18 percent or better revenue growth. Service ARPU (average revenue per user) increased year-over-year for the second consecutive quarter, and wireless data revenues grew to 14.1 percent of total wireless service revenues.

Verizon Wireless operating income margin was 26.2 percent in the quarter, its highest level ever, reflecting the company’s ability to improve its industry-leading cost efficiency even as it added the most retail customers.

Wireless EBITDA margin was 45.0 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.)

Verizon News Release, page 5

Verizon Wireless added 1.9 million net customers in the third quarter 2006, for a total of 56.7 million customers nationwide, a 15.1 percent increase in total customers from the end of the third quarter last year. During the past 12 months, the company has added nearly 7.5 million net customers, more than any other wireless carrier. All of the net additions in the third quarter and almost all net additions in the past 12 months were retail customers.

Key to the company’s strong net add performance was its continued industry-leading low churn level. For the third quarter 2006, total churn was 1.24 percent, and churn among the company’s retail postpaid customers — 93 percent of all its customers — was 0.95 percent.

Verizon Telecom Broadband Gains

Verizon Telecom, which serves wireline residential and small-business customers, added 448,000 net broadband connections in the third quarter 2006. These results include new customers of both DSL and FiOS fiber-optic-based Internet access services. Over the past year, Verizon Telecom has added more than 2 million net new DSL and FiOS Internet customers. Verizon Telecom now has 6.6 million total broadband connections, an increase of 45.1 percent compared with the third quarter 2005.

FiOS Internet customers accounted for 147,000 of the net broadband connection additions in the third quarter and now total 522,000. In addition, Verizon Telecom had 118,000 FiOS TV customers at the end of the third quarter.

In the consumer market, Verizon added 120,000 more net broadband and video customers during the third quarter than it lost in primary wireline voice access lines. New broadband and video sales have more than made up for a reduction in primary wireline voice access lines of customers who turned to wireless, cable or Internet protocol (IP) services. Primary residential access lines decreased by 419,000 in the third quarter 2006, compared with the second quarter 2006, while Verizon added 539,000 residential broadband and video customers, including customers with DIRECTV bundles, over the same period.

Verizon News Release, page 6

At the end of the third quarter 2006, there were 46.0 million total domestic wireline access lines — which also include secondary residential lines, public telephones, business lines and wholesale voice connections. This represents a 7.5 percent decrease compared with the end of the third quarter 2005.

Total wireline operating revenues, including Verizon Business, were $12.8 billion in the third quarter 2006, an increase of 35.5 percent compared with the third quarter 2005. On an adjusted basis (non-GAAP), total wireline operating expenses were $11.7 billion in the third quarter 2006, a 43.3 percent increase compared with the third quarter 2005.

On a pro-forma basis, wireline operating revenues decreased 4.7 percent, comparing third quarter 2006 with third quarter 2005, driven in part by a continuation of the expected declines in former MCI operations serving mass market (residential and small business) customers. Wireline revenues were up sequentially for the second quarter in a row, with third quarter 2006 revenues up 0.1 percent over second quarter 2006.

Also on a pro-forma basis, wireline cash expenses (total operating expenses less depreciation and amortization expense) were $9.3 billion in the third quarter 2006, a decrease of 1.3 percent compared with the third quarter 2005.

Verizon Business Continues to Build Momentum

Verizon Business, which provides advanced communications and information technology solutions to large business and government customers globally, continued to build momentum during the third quarter.

Verizon News Release, page 7

Compared with the second quarter 2006, Verizon Business operating revenues increased 1.7 percent to $5.2 billion in the third quarter 2006. Pro-forma revenues from key strategic services, such as IP and managed services, grew nearly 25 percent in the third quarter 2006, compared with the third quarter 2005.

During the third quarter 2006, Verizon Business realized approximately $150 million in incremental synergies from the integration of the former MCI. This brings the year-to-date total to approximately $350 million — on track with the company’s year-end target of $550 million.

Verizon Business once again introduced a series of new products and capabilities for its large business and government customers, and delivered a strong quarterly performance. New offerings during the quarter included expansion of Ethernet access to the Verizon Business Private IP network in six additional European countries and the addition of new IP-based capabilities for its Contact Center Services and VoIP (voice over Internet protocol) portfolio to help businesses enhance customer-service operations and leverage the benefits of VoIP. Verizon Business also unveiled a new unified operations and security center for its federal government customers.

Cash Flows, Share Repurchases and Debt

At the consolidated level, cash flows from continuing operations were $17.9 billion in the first nine months of 2006, compared with $15.0 billion in the first nine months of 2005. Capital expenditures from continuing operations were $12.3 billion in the first nine months of 2006, including a $1.1 billion increase in wireline investment primarily driven by the inclusion of MCI, compared with $11.4 billion over the same period in 2005. Verizon continues to maintain its guidance for full-year 2006 capital expenditures of $17.0 billion to $17.4 billion.

Verizon News Release, page 8

In the third quarter, Verizon repurchased approximately $350 million in shares, bringing total share repurchases to $1.35 billion over the first nine months of 2006, toward a previously announced target of $1.5 billion by year-end.

Verizon’s total debt at the end of the third quarter 2006 was $41.7 billion, compared with $42.4 billion at the end of the second quarter 2006.

Special Items and FAS 158

Special items in the third quarter 2006 included $64 million in after-tax charges, or 2 cents per share, for pension settlement charges, MCI merger integration costs, and relocation and other costs related to establishing the Verizon Center in New Jersey. Special items in the third quarter 2005 included a net gain of 1 cent per share on the sale of a New York City office building and related relocation costs, tax benefits, asset impairments and other costs.

The recently issued Financial Accounting Standard, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans (FAS 158), will be effective at year-end 2006 and requires the recognition of the funded status of defined benefits plans as either an asset or liability on the balance sheet. Based on Verizon’s current estimates, the company expects to decrease shareowners’ equity by approximately $10 billion post-tax as a result of adopting this change. There is no impact on cash flows or earnings as a result of adopting this change.

Updates on Future Transactions

Earlier this month, Verizon announced that its Board of Directors had approved the proposed spin-off of Information Services to its stockholders. The spin-off is expected to close on or about Nov. 17, resulting in a new public company called Idearc Inc.

As a result of the spin-off, Verizon is expected to reduce its outstanding indebtedness by approximately $7 billion through a debt-for-debt exchange as described in the Form 10

Verizon News Release, page 9

Registration Statement filed with the Securities and Exchange Commission. Verizon is also expected to receive approximately $2 billion in cash proceeds from additional borrowings by Idearc in connection with the spin-off.

In April 2006, Verizon announced the execution of definitive agreements to sell its interests in Verizon Dominicana, Telecomunicaciones de Puerto Rico and Compañia Anónima Nacional Teléfonos de Venezuela. These asset sales are proceeding, and Verizon Dominicana and Telecomunicaciones de Puerto Rico are reported as discontinued operations.

Business Highlights

Following are third-quarter 2006 highlights for Verizon’s Wireless, Wireline and Information Services business segments.

Wireless:

• Continuing its focus on retail (non-wholesale) customers, Verizon Wireless added a record 2.0 million net retail customers during the third quarter. Based on publicly available information, the company has the largest retail customer base in the industry — 54.6 million retail customers of its 56.7 million total customers (which includes retail and wholesale).

• Service revenues (which do not include taxes and regulatory fees) increased 16.5 percent to $8.5 billion for the third quarter 2006. Total service ARPU increased to $50.59, up 0.9 percent from the similar period in 2005 and up 1.8 percent from the prior quarter. Retail service ARPU was higher at $51.21 for the quarter, an increase of 1.2 percent over 2005.

• Cost efficiency continued to lead the industry, as the company’s cash expense per customer in the third quarter declined 5.0 percent year-over-year to $27.85.

• Data services revenues, driven mainly by continued growth in business data revenues, contributed $1.2 billion, nearly double the amount for the same period a year ago. In the third quarter, data revenues were 14.1 percent of all service revenues, up from 8.4 percent in the third quarter of 2005. Data service ARPU continued to grow in the third quarter, increasing by 69 percent over the year-ago quarter. The company now has 30.9 million data customers — a 43 percent increase compared with third quarter 2005.

• Continued expansion of the company’s national 3G EV-DO high-speed data network and a leading lineup of business and consumer devices are propelling its growth in data services revenues. During the third quarter, Verizon Wireless extended its wireless broadband

Verizon News Release, page 10

network reach to include new areas in Alabama, Arizona, Florida, Georgia, Idaho, Illinois, Kansas, Massachusetts, Nebraska, New Hampshire, New Mexico, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, Texas and Vermont. At the end of the third quarter, 13.7 million customers had broadband-capable devices, including phones, PDAs, BlackBerries and laptop PC cards.

• During the third quarter, the company announced supply agreements with Nortel and Motorola for CDMA 1xEV-DO Revision (Rev.) A technology, which will provide significantly faster data speeds for high-bandwidth wireless services such as VoIP and advanced multimedia applications. An agreement with Lucent Technologies was announced in June.

• The company continued to expand its business customer base during the quarter and introduced new devices to enhance business connectivity, including the compact, plug-in Novatel ExpressCard for PCs; two Airlink Wireless rugged modems designed for always-on and location-based solutions; and the BlackBerry 8703e, which runs on the Verizon Wireless high-speed broadband network.

• For consumers, the company launched the G’zOne Type-V, a rugged phone designed to stand up under the roughest conditions, and the MOTOKRZR K1m, the latest in a leading lineup of V CAST Music-enabled phones that allow customers to browse and download from the V CAST Music library of 1.4 million songs. The company now offers 10 music-capable phones, including the Chocolate ^TM, available exclusively from Verizon Wireless.

• Get It Now services continued to hit milestones, for the first time in a single month topping 5 billion text messages and 100 million picture/video messages exchanged, in September. For the quarter, Verizon Wireless customers exchanged a total of 14.4 billion text messages — a company and industry record — and nearly 290 million picture/video messages. Customers also completed more than 68 million downloads of games, ringtones, ringback tones and exclusive content.

• Verizon Wireless continued to expand its distribution, adding post-paid service plans to its prepaid lineup at nearly 1,400 Target stores nationwide.

• The company announced plans to add a new customer service center in Huntsville, Ala., in late 2007 to continue to deliver the best customer service in the industry to its growing customer base. The facility also will be home to a business sales team and a national service team for government customers.

• During the quarter, the company again received third-party recognition for the reliability of its network. Verizon Wireless ranked highest nationally among the top five national wireless providers and scored significantly above the industry average in the J.D. Power and Associates Wireless Call Quality Performance Study Volume 2. In addition, for the sixth consecutive year, Verizon Wireless was included among Working Mother Magazine’s 100 Best Companies for its commitment to helping parents balance work and family. (Working Mother also included Verizon Communications separately on this year’s list.)

Verizon News Release, page 11

Wireline:

• Data revenues were $4.1 billion in the third quarter 2006, up 89.3 percent from the third quarter 2005 — a comparison favorably affected by the inclusion of MCI this year. Data revenues now make up 32 percent of Verizon’s total wireline revenues.

Verizon Telecom

• FiOS data services are becoming increasingly available for sale in 16 states, as Verizon’s FTTP (fiber to the premises) network passed a total of 5.3 million premises by the end of the third quarter and is on target to pass 6 million premises by year-end.

• Penetration of FiOS Internet service now stands at 14 percent across all markets, with the service available for sale to 3.8 million premises as of the end of the third quarter, compared with 12 percent at the end of the second quarter 2006.

• Penetration of FiOS TV service now stands at 10 percent across all markets, with the service available for sale to 1.2 million premises as of the end of the third quarter. As the deployment of FiOS TV ramped up and more premises became open for sale due to successful efforts to obtain cable franchises, the company added a net of 63,000 new FiOS TV customers in the third quarter 2006, compared with 35,000 in the second quarter 2006.

• Churn among FiOS customers remains lower than 1.5 percent per month, and costs associated with customer churn continue to be lower than anticipated. Costs to pass a premises with fiber have declined to $845 in September 2006, already lower than the company’s year-end target of $850. Costs to connect a premises to fiber declined to $900 in September, toward a year-end target of $880. As customer growth ramped up, earnings dilution from FiOS data and video deployment was 9 cents per share in the third quarter. The company increased the full-year 2006 estimate of this dilution to 31 cents to 32 cents per share, from 28 cents to 30 cents per share.

• Complementing the FiOS TV rollout, Verizon now has 496,000 customers who receive a Verizon DIRECTV bundle, adding 64,000 net new customer additions in the quarter. Total net additions of 170,000 year-to-date reflect adjustments for amounts previously reported.

• Approximately 7.5 million Verizon Freedom packages were in service to mass market customers by the end of the third quarter 2006, an increase of approximately 2.5 million since the end of the third quarter 2005. Verizon Freedom packages, which offer local wireline services with various combinations of long-distance and Internet access, are part of a bundling strategy designed to retain retail, primary access line customers.

• Among legacy Verizon customers (that is, excluding former MCI mass market customers), the average monthly revenue per household in the third quarter 2006 was $53.06, an increase of more than 2 percent compared with both third quarter 2005 and second quarter 2006.

Verizon News Release, page 12

Verizon Business

• The Verizon Business IP Web Center continues to be recognized by leading industry authorities for the breadth and depth of its product portfolio, and its service received the prestigious 2006 INTERNET TELEPHONY TMC Labs Innovation Award. IP Web Center, a Web-based, complete hosted contact-center solution, allows companies to quickly start up or expand their customer communications operations in response to rapidly changing business plans or business continuity requirements.

• In addition to a significant expansion of its Ethernet capabilities in Europe, Verizon Business offerings during the third quarter included further expansion of its managed hosting capabilities to support five of the world’s most widely deployed computer operating systems, as well as the launch of a high-definition digital video transport service for broadcast and entertainment companies and other businesses in 13 Northeast and Mid-Atlantic states.

• During the quarter, Verizon Business also opened its new Government Network Operations and Security Center, dedicated to supporting the unique security and operational requirements of its federal government customers. The center, located in Northern Virginia, will support the managed network services Verizon Business provides to nearly every federal government agency from the civilian, intelligence and defense communities.

• Multinational companies including Hearst Corporation, First Data Corporation and Johnson Controls completed agreements with Verizon Business during the quarter for a wide range of communications services. Verizon Business recently completed the deployment of a 60-plus node Private IP multiprotocol label switching (MPLS) network and a global IP network connecting more than 30 sites for Hearst Corporation, a 119-year-old multimedia company with more than 20,000 employees worldwide.

• Verizon Business executed significant extension agreements during the quarter with federal customers including the General Services Administration and the U.S. Postal Service.

• Extended Stay Hotels recently increased the scope of its agreement with Verizon Business to provide Private IP service to CarrAmerica, a recently acquired affiliate. This is in addition to the La Quinta and MeriStar brands added earlier this year. By the end of 2006, Verizon will connect more than 1,200 sites. Dave & Buster’s, a leading operator of upscale restaurant/entertainment complexes, completed a new agreement during the quarter with Verizon Business for Private IP, virtual private network (VPN), and data center and voice services. Verizon Business will help Dave & Buster’s link all their locations nationwide in a secure, reliable advanced IP network environment.

• Internationally, Verizon Business also signed significant new business during the quarter, including several notable deals for VoIP services. The Queen Elizabeth II Conference Centre in Westminster, London, an executive agency of the newly-created Department for Communities and Local Government, is one of the first U.K. government agencies to migrate its voice services to a VoIP system using IP Integrated Access. Separately, the U.K. National

Verizon News Release, page 13

Health Service’s Eastern Region Tariffs Consortium is conducting an IP Integrated Access VoIP trial in preparation for a full VoIP rollout across its sites.

• Atos Worldline, a major European player in the processing of large volume electronic exchanges, signed a new contract with Verizon Business for Global Inbound Services to support customer communications. The London Stock Exchange has also extended its existing relationship with Verizon Business, signing a new four-year contract to manage its overall wide area network (WAN). Network reliability to support trading market data was cited as a key reason for contract renewal.

• Personal computer manufacturer Acer Europe Services has also extended its relationship with Verizon Business, implementing Private IP in a two-year contract to link its European sites with its overall global network. Other customers that have extended their relationship with Verizon Business include Ubisoft Entertainment Inc., a computer and video game publisher, and Alliance Atlantis Communications Inc., a leading specialty broadcaster in Canada. Both customers use Verizon Internet bandwidth and co-location services.

Information Services:

Since the spin-off process described above is still ongoing, Information Services results of operations, financial position and cash flows continue to be reported in continuing operations in the third quarter.

• Information Services third-quarter operating revenues were $804 million compared with $857 million in the third quarter of 2005, a 6.2 percent decline, primarily driven by reductions in domestic print-advertising revenue and the impact of the sale of small international operations.

• In the third quarter, Information Services’ domestic online directory and search service, SuperPages.com, achieved revenue growth of 22.4 percent compared with the third quarter of 2005, and Internet yellow pages searches increased 84.5 percent over the same period.

Verizon Communications Inc. (NYSE:VZ), a Dow 30 company, is a leader in delivering broadband and other wireline and wireless communication innovations to mass market, business, government and wholesale customers. Verizon Wireless operates America’s most reliable wireless network, serving nearly 57 million customers nationwide. Verizon Business operates one of the most expansive wholly-owned global IP networks. Verizon Telecom is deploying the nation’s most advanced fiber-optic network to deliver the benefits of converged communications, information and entertainment services to 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 www.verizon.com.

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Verizon News Release, page 14

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NOTE: This news release contains statements about expected future events and financial results that are forward-looking and subject to risks and uncertainties. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. The following important factors could affect future results and could cause those results to differ materially from those expressed in the forward-looking statements: materially adverse changes in economic and industry conditions and labor matters, including workforce levels and labor negotiations, and any resulting financial and/or operational impact, in the markets served by us or by companies in which we have substantial investments; material changes in available technology; technology substitution; an adverse change in the ratings afforded our debt securities by nationally accredited ratings organizations; the final results of federal and state regulatory proceedings concerning our provision of retail and wholesale services and judicial review of those results; the effects of competition in our markets; the timing, scope and financial impacts of our deployment of fiber-to-the-premises broadband technology; the ability of Verizon Wireless to continue to obtain sufficient spectrum resources; changes in our accounting assumptions that regulatory agencies, including the SEC, may require or that result from changes in the accounting rules or their application, which could result in an impact on earnings; the timing of the closings of the sales of our Latin American and Caribbean properties; 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)

Unaudited	3 Mos. Ended 9/30/06			3 Mos. Ended 9/30/05			% Change		9 Mos. Ended 9/30/06			9 Mos. Ended 9/30/05			% Change
Operating Revenues	$	23,254		$	18,486		25.8		$	67,990		$	54,221		25.4
Operating Expenses
Cost of services and sales		8,982			6,361		41.2			26,349			18,390		43.3
Selling, general & administrative expense		6,720			5,195		29.4			19,587			15,382		27.3
Depreciation and amortization expense		3,628			3,433		5.7			10,947			10,219		7.1
Sales of businesses, net		—			—		*			—			(530	)	(100.0	)
Total Operating Expenses		19,330			14,989		29.0			56,883			43,461		30.9
Operating Income		3,924			3,497		12.2			11,107			10,760		3.2
Equity in earnings of unconsolidated businesses		288			182		58.2			616			553		11.4
Other income and (expense), net		101			88		14.8			264			290		(9.0	)
Interest expense		(572	)		(525	)	9.0			(1,798	)		(1,601	)	12.3
Minority interest		(1,088	)		(748	)	45.5			(2,942	)		(2,069	)	42.2
Income Before Provision for Income Taxes, Discontinued Operations and Cumulative Effect of Accounting Change		2,653			2,494		6.4			7,247			7,933		(8.6	)
Provision for income taxes		(855	)		(702	)	21.8			(2,421	)		(2,386	)	1.5
Income Before Discontinued Operations and Cumulative Effect of Accounting Change		1,798			1,792		0.3			4,826			5,547		(13.0	)
Income from discontinued operations, net of tax (1)		124			77		61.0			381			192		98.4
Cumulative effect of accounting change, net of tax		—			—		*			(42	)		—		*
Net Income	$	1,922		$	1,869		2.8		$	5,165		$	5,739		(10.0	)
Basic Earnings per Common Share (3)
Income before discontinued operations and cumulative effect of accounting change	$	.62		$	.65		(4.6	)	$	1.66		$	2.00		(17.0	)
Income from discontinued operations, net of tax		.04			.03		33.3			.13			.07		85.7
Cumulative effect of accounting change, net of tax		—			—		*			(.01	)		—		*
Net income	$	.66		$	.68		(2.9	)	$	1.77		$	2.07		(14.5	)
Weighted average number of common shares (in millions)		2,907			2,765					2,911			2,767
Diluted Earnings per Common Share (2) (3)
Income before discontinued operations and cumulative effect of accounting change	$	.62		$	.64		(3.1	)	$	1.65		$	1.98		(16.7	)
Income from discontinued operations, net of tax		.04			.03		33.3			.13			.07		85.7
Cumulative effect of accounting change, net of tax		—			—		*			(.01	)		—		*
Net income	$	.66		$	.67		(1.5	)	$	1.76		$	2.05		(14.1	)
Weighted average number of common shares-assuming dilution (in millions)		2,923			2,817					2,945			2,818

Footnotes:

(1) Discontinued Operations includes our interests in Telecomunicaciones de Puerto Rico, Inc. and Verizon Dominicana, C. por A.

(2) Diluted Earnings per Share includes (i) income related to share dilution (exchangeable equity interests and zero coupon convertible debt) of $4 million and $31 million for the third quarter and year-to-date 2006, respectively, and $15 million and $43 million for the third quarter and year-to-date 2005, 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. The zero coupon debt was retired on May 15, 2006. The exchangeable equity interest was converted on August 15, 2006 by issuing 29.5 million Verizon shares.

(3) EPS totals may not add due to rounding.

* Not meaningful

Verizon Communications Inc.

Consolidated Statements of Income Before Special Items

(dollars in millions, except per share amounts)

Unaudited	3 Mos. Ended 9/30/06			3 Mos. Ended 9/30/05			% Change		9 Mos. Ended 9/30/06			9 Mos. Ended 9/30/05			% Change
Operating Revenues (1)
Wireline	$	12,797		$	9,445		35.5		$	38,061		$	28,257		34.7
Domestic Wireless		9,869			8,351		18.2			27,944			23,615		18.3
Information Services		804			857		(6.2	)		2,443			2,608		(6.3	)
Other		(216	)		(167	)	29.3			(458	)		(461	)	(0.7	)
Total Operating Revenues		23,254			18,486		25.8			67,990			54,019		25.9
Operating Expenses (1)
Cost of services and sales		8,976			6,361		41.1			26,343			18,317		43.8
Selling, general & administrative expense		6,624			5,134		29.0			18,969			15,270		24.2
Depreciation and amortization expense		3,628			3,433		5.7			10,947			10,219		7.1
Total Operating Expenses		19,228			14,928		28.8			56,259			43,806		28.4
Operating Income		4,026			3,558		13.2			11,731			10,213		14.9
Operating income impact of operations sold (1)		—			—		*			—			78		(100.0	)
Equity in earnings of unconsolidated businesses		288			182		58.2			616			553		11.4
Other income and (expense), net		101			98		3.1			264			300		(12.0	)
Interest expense		(572	)		(525	)	9.0			(1,772	)		(1,601	)	10.7
Minority interest		(1,088	)		(748	)	45.5			(2,942	)		(2,069	)	42.2
Income Before Provision for Income Taxes and Discontinued Operations		2,755			2,565		7.4			7,897			7,474		5.7
Provision for income taxes		(893	)		(794	)	12.5			(2,665	)		(2,294	)	16.2
Income Before Discontinued Operations		1,862			1,771		5.1			5,232			5,180		1.0
Income from discontinued operations, net of tax (2)		124			77		61.0			381			192		98.4
Net Income Before Special Items	$	1,986		$	1,848		7.5		$	5,613		$	5,372		4.5
Basic Earnings per Common Share (4)
Income before discontinued operations	$	.64		$	.64		*		$	1.80		$	1.87		(3.7	)
Income from discontinued operations, net of tax		.04			.03		33.3			.13			.07		85.7
Net income	$	.68		$	.67		1.5		$	1.93		$	1.94		(0.5	)
Weighted average number of common shares (in millions)		2,907			2,765					2,911			2,767
Diluted Adjusted Earnings per Common Share (3) (4)
Income before discontinued operations	$	.64		$	.63		1.6		$	1.79		$	1.85		(3.2	)
Income from discontinued operations, net of tax		.04			.03		33.3			.13			.07		85.7
Net income	$	.68		$	.66		3.0		$	1.92		$	1.92		*
Weighted average number of common shares-assuming dilution (in millions)		2,923			2,817					2,945			2,818
________________ Footnotes: (1)    Reclassifications of prior period amounts have been made, where appropriate, to reflect comparable operating results excluding primarily Wireline access lines sold, as follows:
Revenues	$	—		$	—				$	—		$	202
Expenses	$	—		$	—				$	—		$	124

(2) Discontinued Operations includes our interests in Telecomunicaciones de Puerto Rico, Inc. and Verizon Dominicana, C. por A.

(3) Diluted Earnings per Share includes (i) income related to share dilution (exchangeable equity interests and zero coupon convertible debt) of $4 million and $31 million for the third quarter and year-to-date 2006, respectively, and $15 million and $43 million for the third quarter and year-to-date 2005, 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. The zero coupon debt was retired on May 15, 2006. The exchangeable equity interest was converted on August 15, 2006 by issuing 29.5 million Verizon shares.

(4) EPS totals may not add due to rounding.

* Not meaningful

Verizon Communications Inc.

Consolidated Statements of Income - Reconciliations

(dollars in millions, except per share amounts)

	3 Mos. Ended 9/30/06 Reported (GAAP)			Special and Non-Recurring Items									3 Mos. Ended 9/30/06 Before Special Items
Unaudited				Merger Integration Costs			Verizon Center Relocation, net			Severance, Pension and Benefits Charges
Operating Revenues	$	23,254		$	—		$	—		$	—		$	23,254
Operating Expenses
Cost of services and sales		8,982			(6	)		—			—			8,976
Selling, general & administrative expense		6,720			(19	)		(48	)		(29	)		6,624
Depreciation and amortization expense		3,628			—			—			—			3,628
Total Operating Expenses		19,330			(25	)		(48	)		(29	)		19,228
Operating Income		3,924			25			48			29			4,026
Equity in earnings of unconsolidated businesses		288			—			—			—			288
Other income and (expense), net		101			—			—			—			101
Interest expense		(572	)		—			—			—			(572	)
Minority interest		(1,088	)		—			—			—			(1,088	)
Income Before Provision for Income Taxes and Discontinued Operations		2,653			25			48			29			2,755
Provision for income taxes		(855	)		(9	)		(17	)		(12	)		(893	)
Income Before Discontinued Operations		1,798			16			31			17			1,862
Income from discontinued operations, net of tax		124			—			—			—			124
Net Income	$	1,922		$	16		$	31		$	17		$	1,986
Basic Earnings per Common Share (1)
Income before discontinued operations	$	.62		$	.01		$	.01		$	.01		$	.64
Income from discontinued operations, net of tax		.04			—			—			—			.04
Net income	$	.66		$	.01		$	.01		$	.01		$	.68
Diluted Earnings per Common Share (1)
Income before discontinued operations	$	.62		$	.01		$	.01		$	.01		$	.64
Income from discontinued operations, net of tax		.04			—			—			—			.04
Net income	$	.66		$	.01		$	.01		$	.01		$	.68

	3 Mos. Ended 9/30/05 Reported (GAAP)			Special and Non-Recurring Items												3 Mos. Ended 9/30/05 Before Special Items
Unaudited				Verizon Center Relocation, Net			Lease Impairment and Other Special Items			Tax Benefits			Tax on Repatriated Earnings
Operating Revenues	$	18,486		$	—		$	—		$	—		$	—		$	18,486
Operating Expenses
Cost of services and sales		6,361			—			—			—			—			6,361
Selling, general & administrative expense		5,195			64			(125	)		—			—			5,134
Depreciation and amortization expense		3,433			—			—			—			—			3,433
Sales of businesses, net		—			—			—			—			—			—
Total Operating Expenses		14,989			64			(125	)		—			—			14,928
Operating Income		3,497			(64	)		125			—			—			3,558
Equity in earnings of unconsolidated businesses		182			—			—			—			—			182
Other income and (expense), net		88			—			10			—			—			98
Interest expense		(525	)		—			—			—			—			(525	)
Minority interest		(748	)		—			—			—			—			(748	)
Income Before Provision for Income Taxes and Discontinued Operations		2,494			(64	)		135			—			—			2,565
Provision for income taxes		(702	)		27			(4	)		(94	)		(21	)		(794	)
Income Before Discontinued Operations		1,792			(37	)		131			(94	)		(21	)		1,771
Income from discontinued operations, net of tax		77			—			—			—			—			77
Net Income	$	1,869		$	(37	)	$	131		$	(94	)	$	(21	)	$	1,848
Basic Earnings per Common Share (1)
Income before discontinued operations	$	.65		$	(.01	)	$	.05		$	(.03	)	$	(.01	)	$	.64
Income from discontinued operations, net of tax		.03			—			—			—			—			.03
Net income	$	.68		$	(.01	)	$	.05		$	(.03	)	$	(.01	)	$	.67
Diluted Earnings per Common Share (1)
Income before discontinued operations	$	.64		$	(.01	)	$	.05		$	(.03	)	$	(.01	)	$	.63
Income from discontinued operations, net of tax		.03			—			—			—			—			.03
Net income	$	.67		$	(.01	)	$	.05		$	(.03	)	$	(.01	)	$	.66

Footnote:

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

Note: See www.verizon.com/investor for a reconciliation of other non-GAAP measures 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 9/30/06 Reported (GAAP)			Extinguishment of Debt			Impact of Accounting for Share Based Payments		Merger Integration Costs			Verizon Center Relocation, Net			Severance, Pension and Benefits Charges			9 Mos. Ended 9/30/06 Before Special Items
Operating Revenues	$	67,990		$	—		$	—	$	—		$	—		$	—		$	67,990
Operating Expenses
Cost of services and sales		26,349			—			—		(6	)		—			—			26,343
Selling, general & administrative expense		19,587			—			—		(151	)		(138	)		(329	)		18,969
Depreciation and amortization expense		10,947			—			—		—			—			—			10,947
Total Operating Expenses		56,883			—			—		(157	)		(138	)		(329	)		56,259
Operating Income		11,107			—			—		157			138			329			11,731
Equity in earnings of unconsolidated businesses		616			—			—		—			—			—			616
Other income and (expense), net		264			—			—		—			—			—			264
Interest expense		(1,798	)		26			—		—			—			—			(1,772	)
Minority interest		(2,942	)		—			—		—			—			—			(2,942	)
Income Before Provision for Income Taxes, Discontinued Operations and Cumulative Effect of Accounting Change		7,247			26			—		157			138			329			7,897
Provision for income taxes		(2,421	)		(10	)		—		(58	)		(50	)		(126	)		(2,665	)
Income Before Discontinued Operations and Cumulative Effect of Accounting Change		4,826			16			—		99			88			203			5,232
Income from discontinued operations, net of tax		381			—			—		—			—			—			381
Cumulative effect of accounting change, net of tax		(42	)		—			42		—			—			—			—
Net Income	$	5,165		$	16		$	42	$	99		$	88		$	203		$	5,613
Basic Earnings per Common Share (1)
Income before discontinued operations and cumulative effect of accounting change	$	1.66		$	.01		$	—	$	.03		$	.03		$	.07		$	1.80
Income from discontinued operations, net of tax		.13			—			—		—			—			—			.13
Cumulative effect of accounting change, net of tax		(.01	)		—			.01		—			—			—			—
Net income	$	1.77		$	.01		$	.01	$	.03		$	.03		$	.07		$	1.93
Diluted Earnings per Common Share (1)
Income before discontinued operations and cumulative effect of accounting change	$	1.65		$	.01		$	—	$	.03		$	.03		$	.07		$	1.79
Income from discontinued operations, net of tax		.13			—			—		—			—			—			.13
Cumulative effect of accounting change, net of tax		(.01	)		—			.01		—			—			—			—
Net income	$	1.76		$	.01		$	.01	$	.03		$	.03		$	.07		$	1.92

				Special and Non-Recurring Items
Unaudited	9 Mos. Ended 9/30/05 Reported (GAAP)			Sales of Businesses, Net			Impact of Operations Sold			Verizon Center Relocation, Net			Lease Impairment and Other Special Items			Tax Benefits			Tax on Repatriated Earnings		9 Mos. Ended 9/30/05 Before Special Items
Operating Revenues	$	54,221		$	—		$	(202	)	$	—		$	—		$	—		$	—	$	54,019
Operating Expenses
Cost of services and sales		18,390			—			(73	)		—			—			—			—		18,317
Selling, general & administrative expense		15,382			—			(51	)		64			(125	)		—			—		15,270
Depreciation and amortization expense		10,219			—			—			—			—			—			—		10,219
Sales of businesses, net		(530	)		530			—			—			—			—			—		—
Total Operating Expenses		43,461			530			(124	)		64			(125	)		—			—		43,806
Operating Income		10,760			(530	)		(78	)		(64	)		125			—			—		10,213
Operating income impact of operations sold		—			—			78			—			—			—			—		78
Equity in earnings of unconsolidated businesses		553			—			—			—			—			—			—		553
Other income and (expense), net		290			—			—			—			10			—			—		300
Interest expense		(1,601	)		—			—			—			—			—			—		(1,601	)
Minority interest		(2,069	)		—			—			—			—			—			—		(2,069	)
Income Before Provision for Income Taxes and Discontinued Operations		7,933			(530	)		—			(64	)		135			—			—		7,474
Provision for income taxes		(2,386	)		194			—			27			(4	)		(336	)		211		(2,294	)
Income Before Discontinued Operations		5,547			(336	)		—			(37	)		131			(336	)		211		5,180
Income from discontinued operations, net of tax		192			—			—			—			—			—			—		192
Net Income	$	5,739		$	(336	)	$	—		$	(37	)	$	131		$	(336	)	$	211	$	5,372
Basic Earnings per Common Share (1)
Income before discontinued operations	$	2.00		$	(.12	)	$	—		$	(.01	)	$	.05		$	(.12	)	$	.08	$	1.87
Income from discontinued operations, net of tax		.07			—			—			—			—			—			—		.07
Net income	$	2.07		$	(.12	)	$	—		$	(.01	)	$	.05		$	(.12	)	$	.08	$	1.94
Diluted Earnings per Common Share (1)
Income before discontinued operations	$	1.98		$	(.12	)	$	—		$	(.01	)	$	.05		$	(.12	)	$	.07	$	1.85
Income from discontinued operations, net of tax		.07			—			—			—			—			—			—		.07
Net income	$	2.05		$	(.12	)	$	—		$	(.01	)	$	.05		$	(.12	)	$	.07	$	1.92

Footnote:

(1) EPS totals may not add 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	9/30/2006			9/30/2005
Debt to debt and shareowners’ equity ratio-end of period		47.4	%		49.7	%
Book value per common share	$	15.85		$	14.19
Common shares outstanding (in millions)
End of period		2,920			2,765
Total employees (1)		249,965			215,035

Unaudited	3 Mos. Ended 9/30/06		3 Mos. Ended 9/30/05		9 Mos. Ended 9/30/06		9 Mos. Ended 9/30/05
Capital expenditures (including capitalized software)
Wireline	$	2,334	$	2,172	$	7,344	$	6,216
Domestic Wireless		1,623		1,623		4,801		4,962
Information Services		14		20		40		53
Other		36		10		133		132
Total	$	4,007	$	3,825	$	12,318	$	11,363
Cash dividends declared per common share	$	.405	$	.405	$	1.215	$	1.215

Footnote:

(1) Prior period has been reclassified to reflect comparable amounts.

Verizon Communications Inc.

Consolidated Balance Sheets

(dollars in millions)

Unaudited	9/30/06			12/31/05			$ Change
Assets
Current assets
Cash and cash equivalents	$	1,846		$	776		$	1,070
Short-term investments		1,589			2,498			(909	)
Accounts receivable, net		10,834			8,784			2,050
Inventories		1,650			1,714			(64	)
Assets held for sale		3,597			3,336			261
Prepaid expenses and other		2,099			2,168			(69	)
Total current assets		21,615			19,276			2,339
Plant, property and equipment		201,967			188,278			13,689
Less accumulated depreciation		120,565			115,125			5,440
		81,402			73,153			8,249
Investments in unconsolidated businesses		4,478			4,604			(126	)
Wireless licenses		48,318			47,781			537
Goodwill		5,709			392			5,317
Other intangible assets, net		5,220			4,193			1,027
Other assets		18,937			18,731			206
Total Assets	$	185,679		$	168,130		$	17,549
Liabilities and Shareowners’ Investment
Current liabilities
Debt maturing within one year	$	11,529		$	6,688		$	4,841
Accounts payable and accrued liabilities		14,501			12,066			2,435
Liabilities related to assets held for sale		2,065			1,865			200
Other		7,218			5,551			1,667
Total current liabilities		35,313			26,170			9,143
Long-term debt		30,154			31,569			(1,415	)
Employee benefit obligations		20,231			18,198			2,033
Deferred income taxes		21,905			22,715			(810	)
Other liabilities		4,274			3,363			911
Minority interest		27,523			26,435			1,088
Shareowners’ investment
Common stock		297			277			20
Contributed capital		31,423			25,369			6,054
Reinvested earnings		17,471			15,905			1,566
Accumulated other comprehensive loss		(1,516	)		(1,783	)		267
Common stock in treasury, at cost		(1,575	)		(353	)		(1,222	)
Deferred compensation - employee stock ownership plans and other		179			265			(86	)
Total shareowners’ investment		46,279			39,680			6,599
Total Liabilities and Shareowners’ Investment	$	185,679		$	168,130		$	17,549

Verizon Communications Inc.

Condensed Consolidated Statements of Cash Flows

(dollars in millions)

Unaudited	9 Mos. Ended 9/30/06			9 Mos. Ended 9/30/05			$ Change
Cash Flows From Operating Activities
Net Income	$	5,165		$	5,739		$	(574	)
Adjustments to reconcile net income to net cash provided by operating activities - continuing operations:
Depreciation and amortization expense		10,947			10,219			728
Sales of businesses, net		—			(530	)		530
Employee retirement benefits		1,500			1,231			269
Deferred income taxes		(540	)		(945	)		405
Provision for uncollectible accounts		916			982			(66	)
Equity in earnings of unconsolidated businesses		(616	)		(553	)		(63	)
Cumulative effect of accounting change, net of tax		42			—			42
Changes in current assets and liabilities, net of effects from acquisition/disposition of businesses		(1,601	)		(1,916	)		315
Other, net		2,123			773			1,350
Net cash provided by operating activities - continuing operations		17,936			15,000			2,936
Net cash provided by operating activities - discontinued operations		315			275			40
Net cash provided by operating activities		18,251			15,275			2,976
Cash Flows From Investing Activities
Capital expenditures (including capitalized software)		(12,318	)		(11,363	)		(955	)
Acquisitions, net of cash acquired, and investments		1,037			(4,630	)		5,667
Proceeds from disposition of businesses		—			1,326			(1,326	)
Net change in short-term investments		1,521			938			583
Other, net		576			293			283
Net cash used in investing activities - continuing operations		(9,184	)		(13,436	)		4,252
Net cash used in investing activities - discontinued operations		(138	)		(189	)		51
Net cash used in investing activities		(9,322	)		(13,625	)		4,303
Cash Flows From Financing Activities
Proceeds from long-term borrowings		3,958			1,486			2,472
Repayments of long-term borrowings and capital lease obligations		(8,706	)		(2,371	)		(6,335	)
Increase in short-term obligations, excluding current maturities		1,831			1,109			722
Dividends paid		(3,537	)		(3,308	)		(229	)
Proceeds from sale of common stock		115			37			78
Purchase of common stock for treasury		(1,348	)		(221	)		(1,127	)
Other, net		5			30			(25	)
Net cash used in financing activities - continuing operations		(7,682	)		(3,238	)		(4,444	)
Net cash used in financing activities - discontinued operations		(177	)		(86	)		(91	)
Net cash used in financing activities		(7,859	)		(3,324	)		(4,535	)
Increase (decrease) in cash and cash equivalents		1,070			(1,674	)		2,744
Cash and cash equivalents, beginning of period		776			2,290			(1,514	)
Cash and cash equivalents, end of period	$	1,846		$	616		$	1,230

Verizon Communications Inc.

Wireline – Selected Financial Results

(dollars in millions)

Unaudited	3 Mos. Ended 9/30/06			3 Mos. Ended 9/30/05			% Change		9 Mos. Ended 9/30/06			9 Mos. Ended 9/30/05			% Change
Wireline Operating Revenues
Verizon Telecom
Mass Markets	$	5,640		$	5,145		9.6		$	17,014		$	15,376		10.7
Wholesale		2,104			2,284		(7.9	)		6,262			6,807		(8.0	)
Other		581			627		(7.3	)		1,828			1,885		(3.0	)
Verizon Business
Enterprise Business		3,562			1,501		137.3			10,338			4,521		128.7
Wholesale		844			351		140.5			2,515			1,029		144.4
International and Other		795			—		*	*		2,318			—		*	*
Eliminations		(729	)		(463	)	57.5			(2,214	)		(1,361	)	62.7
Total Operating Revenues	$	12,797		$	9,445		35.5		$	38,061		$	28,257		34.7
Operating Expenses
Cost of services and sales		6,205			3,932		57.8			18,326			11,633		57.5
Selling, general & administrative expense		3,093			2,016		53.4			9,142			6,288		45.4
Depreciation and amortization expense		2,376			2,197		8.1			7,164			6,582		8.8
Total Operating Expenses	$	11,674			8,145		43.3		$	34,632		$	24,503		41.3
Operating Income	$	1,123		$	1,300		(13.6	)	$	3,429		$	3,754		(8.7	)
Operating Income Margin		8.8	%		13.8	%				9.0	%		13.3	%
Segment Income	$	393		$	537		(26.8	)	$	1,200		$	1,500		(20.0	)

** Not Meaningful

Verizon Communications Inc.

Wireline – Selected Operating Statistics

Unaudited	9/30/06	9/30/05	% Change
Switched access lines in service* (000)
Residence	28,523	31,629	(9.8	)
Business	17,095	17,660	(3.2	)
Public	355	400	(11.3	)
Total	45,973	49,689	(7.5	)
Wholesale voice connections** (000)	3,621	5,841	(38.0	)
Broadband connections (000)	6,573	4,531	45.1

Unaudited	3 Mos. Ended 9/30/06		3 Mos. Ended 9/30/05		% Change	9 Mos. Ended 9/30/06		9 Mos. Ended 9/30/05		% Change
High capacity and digital data revenues ($ in millions)***
Data transport	$	3,814	$	1,943	96.3	$	11,092	$	5,690	94.9
Data solutions		278		219	26.9		752		608	23.7
Total revenues	$	4,092	$	2,162	89.3	$	11,844	$	6,298	88.1

Footnotes:

* Includes former MCI In-Franchise retail lines in 2006.

** Resale and UNE-P lines, including lines covered under commercial agreements. Wholesale voice connections in 2006 exclude in-region UNE-P lines purchased by former MCI entities as retail lines.

*** High capacity and digital data revenues for the nine months ended September 30, 2006 exclude approximately $96 million, attributable to amounts earned by the former MCI prior to the completion of the merger with Verizon.

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.

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

Verizon Communications Inc.

Verizon Wireless – Selected Financial Results

(dollars in millions)

Unaudited	3 Mos. Ended 9/30/06			3 Mos. Ended 9/30/05			% Change	9 Mos. Ended 9/30/06			9 Mos. Ended 9/30/05			% Change
Revenues
Service revenues	$	8,469		$	7,270		16.5	$	24,114		$	20,701		16.5
Equipment and other		1,400			1,081		29.5		3,830			2,914		31.4
Total Revenues		9,869			8,351		18.2		27,944			23,615		18.3
Operating Expenses
Cost of services and sales		2,930			2,519		16.3		8,347			6,899		21.0
Selling, general & administrative expense		3,132			2,814		11.3		8,837			8,051		9.8
Depreciation and amortization expense		1,220			1,199		1.8		3,684			3,524		4.5
Total Operating Expenses		7,282			6,532		11.5		20,868			18,474		13.0
Operating Income	$	2,587		$	1,819		42.2	$	7,076		$	5,141		37.6
Operating Income Margin		26.2	%		21.8	%			25.3	%		21.8	%
Segment Income	$	804		$	574		40.1	$	2,164		$	1,524		42.0

Verizon Communications Inc.

Verizon Wireless – Selected Operating Statistics

Unaudited	9/30/06		9/30/05		% Change
Subscribers (000)	56,747		49,291		15.1
Penetration	22.2	%	19.9	%

Unaudited	3 Mos. Ended 9/30/06		3 Mos. Ended 9/30/05		% Change		9 Mos. Ended 9/30/06		9 Mos. Ended 9/30/05		% Change
Subscriber net adds in period (1) (000)	1,912		1,918		(0.3	)	5,410		5,475		(1.2	)
Total churn rate, including prepaid	1.2	%	1.3	%			1.2	%	1.3	%

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.

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

(1) Includes acquisition of 17,000 and 7,000 subscribers in the first and second quarters of 2006 respectively; and 32,000, 4,000, and 11,000 subscribers in the first, second, and third quarters of 2005, respectively.

Verizon Communications Inc.

Information Services – Selected Financial Results

(dollars in millions)

Unaudited	3 Mos. Ended 9/30/06			3 Mos. Ended 9/30/05			% Change		9 Mos. Ended 9/30/06			9 Mos. Ended 9/30/05			% Change
Operating Revenues	$	804		$	857		(6.2	)	$	2,443		$	2,608		(6.3	)
Operating Expenses
Cost of services and sales		131			141		(7.1	)		420			444		(5.4	)
Selling, general & administrative expense		278			252		10.3			812			826		(1.7	)
Depreciation and amortization expense		22			23		(4.3	)		67			69		(2.9	)
Total Operating Expenses		431			416		3.6			1,299			1,339		(3.0	)
Operating Income	$	373		$	441		(15.4	)	$	1,144		$	1,269		(9.9	)
Operating Income Margin		46.4	%		51.5	%				46.8	%		48.7	%
Segment Income	$	249		$	279		(10.8	)	$	728		$	798		(8.8	)

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.

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

Verizon Communications Inc.

Other Reconciliations

(dollars in millions)

Unaudited	3 Mos. Ended 9/30/06
EBITDA - Verizon Wireless
Segment income:
Wireline	$	393
Verizon Wireless		804
Information Services		249
Total segments		1,446
Corporate and other		476
Consolidated net income	$	1,922
Verizon Wireless EBITDA
Segment income	$	804
Add/subtract non-operating items:
Provision for income taxes		607
Minority interest		1,089
Interest expense		95
Other income/(expense), net		—
Equity in earnings of unconsolidated businesses		(8	)
Operating income		2,587
Add depreciation and amortization expense		1,220
Verizon Wireless EBITDA	$	3,807
Verizon Wireless total revenues	$	9,869
Verizon Wireless service revenues	$	8,469
Verizon Wireless operating income margin		26.2	%
Verizon Wireless EBITDA margin		45.0	%

(dollars in millions)

Unaudited	3 Mos. Ended 9/30/05			3 Mos. Ended 9/30/06
Domestic Wireless Cash Cost Per Customer
Domestic Wireless Cost of Services and Sales	$	2,519		$	2,930
Domestic Wireless Selling, General & Administrative Expense		2,814			3,132
Less Equipment and Other Revenue		(1,081	)		(1,400	)
Cash Expense	$	4,252		$	4,662
Cumulative average subscribers (millions)		145.04			167.39
Cash Expense Per Subscriber	$	29.32		$	27.85

Verizon Communications Inc.

Other Reconciliations

Operating Income and Margin Unaudited (dollars in millions)

TOTAL VERIZON - ADJUSTED	3 Mos. Ended 9/30/05			3 Mos. Ended 9/30/06
Reported Revenue	$	18,486		$	23,254
Adjustments (see Consolidated Statements of Income - Reconciliations)		—			—
Adjusted Revenue	$	18,486		$	23,254
Pro forma adjustments (1)		3,968			—
Pro forma Adjusted Revenue	$	22,454		$	23,254
Reported Operating Income	$	3,497		$	3,924
Adjustments (see Consolidated Statements of Income - Reconciliations)		61			102
Adjusted Operating Income	$	3,558		$	4,026
Pro forma adjustments (1)		219			—
Pro forma Adjusted Operating Income	$	3,777		$	4,026
Reported Operating Income Margin		18.9	%		16.9	%
Pro forma Adjusted Operating Income Margin		16.8	%		17.3	%
Cash Expense
Unaudited		(dollars in millions)
TOTAL VERIZON (Adjusted)	3 Mos. Ended 9/30/05			3 Mos. Ended 9/30/06
Reported Operating Expenses	$	14,989		$	19,330
Less Adjustments (see Consolidated Statements of Income - Reconciliations)		(61	)		(102	)
Less Depreciation and Amortization		(3,433	)		(3,628	)
Cash Operating Expenses	$	11,495		$	15,600
Pro forma adjustments (1)	$	3,454		$	—
Pro forma Cash Operating Expenses	$	14,949		$	15,600

(1) For the three months ended September 30, 2005, the unaudited pro forma adjusted information contains the actual combined operating results of Verizon and the former MCI, with the results prior to the acquisition date (January 6, 2006) adjusted to include the pro forma impact of: the elimination of transactions between Verizon and the former MCI; the adjustment of amortization of acquired intangible assets and depreciation of fixed assets based on the preliminary purchase price allocation; the elimination of merger expenses incurred by the former MCI; and the elimination of severance expense incurred by the former MCI.

Verizon Communications Inc.

Other Reconciliations

(dollars in millions)

Unaudited	3Q’06 Before Special Items		Pro Forma Adjustments		3Q’06 Pro Forma Before Special Items
Total Wireline Operating Revenues	$	12,797	$	—	$	12,797
		(dollars in millions)
Unaudited	3Q’05 Before Special Items		Pro Forma Adjustments (1)		3Q’05 Pro Forma Before Special Items
Total Wireline Operating Revenues	$	9,445	$	3,982	$	13,427

(1) For the three months ended September 30, 2005, the unaudited pro forma adjusted information contains the actual combined operating results of Verizon and the former MCI, with the results prior to the acquisition date (January 6, 2006) adjusted to include the pro forma impact of the elimination of transactions between Verizon and the former MCI.

Verizon Communications Inc.

Other Reconciliations

Wireline Pro Forma Strategic Services
Unaudited	(dollars in millions)

	3Q’06 Before Special Items		Pro Forma Adjustments		3Q’06 Pro Forma Before Special Items
Strategic Services Revenue (2)	$	1,053	$	—	$	1,053
All Other Verizon Business Revenues		4,148		—		4,148
Verizon Business Revenues	$	5,201	$	—	$	5,201
	3Q’05 Before Special Items		Pro Forma Adjustments (1)		3Q’05 Pro Forma Before Special Items
Strategic Services Revenue (2)	$	138	$	706	$	844
All Other Verizon Business Revenues		1,714		2,722		4,436
Verizon Business Revenues	$	1,852	$	3,428	$	5,280

Cash Expense Unaudited		(dollars in millions)
Wireline (Adjusted)	3 Mos. Ended 9/30/05			3 Mos. Ended 9/30/06
Wireline Operating Expenses	$	8,145		$	11,674
Less: Depreciation and Amortization		(2,197	)		(2,376	)
Cash Operating Expenses	$	5,948		$	9,298
Pro forma adjustments (1)	$	3,469		$	—
Pro forma Cash Operating Expenses	$	9,417		$	9,298

(1) For the three months ended September 30, 2005, the unaudited pro forma adjusted information contains the actual combined operating results of Verizon and the former MCI, with the results prior to the acquisition date (January 6, 2006) adjusted to include the pro forma impact of: the elimination of transactions between Verizon and the former MCI; the adjustment of amortization of acquired intangible assets and depreciation of fixed assets based on the preliminary purchase price allocation; the elimination of merger expenses incurred by the former MCI; and the elimination of severance expense incurred by the former MCI.

(2) Private IP, IP VPN, Security, Managed Network Data, Hosting, Ethernet and Ring Services; excludes Dial-up (pro forma basis).